2. Layer-Cake Regulation – How Systemic vs. Non-Systemic Split the Deck

• Tier-1 (BoE): 40 % reserve balance must sit sterile at the Bank—no interest, no re-hypothecation—plus daily liquidity stress-tests.

• Tier-2 (FCA): wallet-label disclosures, e-money guard-rails, lighter touch.
  Start-ups cry foul: “The 40 % dead cash is a stealth tax that only Big-Tech or bank consortia can afford.”
  Regulators shrug: systemic risk is binary, not egalitarian.

3. Brexit Dividend – FSMA 2023 & the Digital Securities Sandbox
Outside Brussels’ orbit, H.M. Treasury stuffed FSMA 2023 with a “Digital Securities Sandbox” (DSS)—live market testing for tokenised gilts, equities and fund units.
Firms get 24 months to bend rules on settlement cycles, custody and trading hours; in return they open their ledgers to BoE/FCA node-level inspection.
First cohort: ClearToken (T+0 DvP), Archax (tokenised money-market fund), Quant (DLT interoperability). DSS is the U.K.’s answer to the EU’s DLT Pilot – but with common-law flexibility and lawyer-less no-action letters.

4. CARF – The Global Data Dragnet Starts 1 Jan 2026
U.K. will swap crypto-transaction data with ~70 jurisdictions under OECD’s CARF.
Exchanges, De-Fi front-ends, even NFT market-places must KYC self-certify new users by 31 Dec 2025 and file by 31 May 2027.
HMRC is already spam-warnings HODLers: “We see your on-chain footprint; declare before we knock.”
Expect compliance premiums (10-15 bps) on U.K. venues and migration of privacy-centric liquidity to non-CARF harbours.

5. Market Plumbing – When Gilts Meet ERC-20
BoE’s repo window will accept tokenised short-gilts as collateral once the Digital Securities Sandbox graduates in 2026.
ClearToken’s CT Settle (DvP in 45 seconds) and Fnality’s sterling on-chain settlement plug directly into the Real-Time Gross Settlement upgrade (RTGS²).
Net effect: RWA originators can issue a bond at 9 a.m., repo it at 9:45 a.m. and mint a stablecoin backed 1:1 by that repo position—all inside London’s legal perimeter.

6. Competitive Chessboard – Running Slower, Thinking Deeper

• U.S.: GENIUS Act inching through Senate; no unified federal cap.

• EU: MiCAR live in 30 days; 2 % weekly redemption cap, brutal audit cycle.

• UAE: VARA grants in 90 days; 100 % cash or UAE sovereign required.

• Singapore: single-tier, 100 % cash in trust, but no gilts allowed.
  The U.K. sits left-of-centre: safer than VARA, softer than MiCAR, gilts-friendly, retail-capped, wholesale-welcoming.
  Deputy Governor Breeden: “We will keep pace with Washington—no faster, no slower.” Translation: innovation is fine, provided it doesn’t outrun the gilt curve.

7. Looking Ahead – Digital Sterling & the 2027 Reform Tsunami

• CBDC: “Britcoin” pilot wallet API expected Q2 2026; wholesale-only at first, programmable interest to steer bank-deposit flight.

• Statute refresh: Electronic Trade Documents Act 2023 already tokenises bills of lading; Property Act tweaks (2027) will extend to tokenised land registry entries.

• Projected market impact: IG Group forecasts +20 % crypto-to-RWA AUM in London next year, implying £50–60 bn of tokenised gilts, funds and carbon credits—a drop in the £10 trn U.K. debt ocean, but a psychological beach-head.

8. Key Take-away – Tradition as Innovation’s Moat
Britain’s message to global RWA issuers is subtle:
“If you want to tokenise risk-free rates, come to the country that invented them. Just don’t spill them on the Kingston-upon-Thames pavement.”
Regulation is no longer the enemy; it is the product differentiator. In the race to securitise reality, the U.K. is betting that slow, trusted and gilt-backed will outrun fast, permissionless and unstable.

Core Objectives:

• Establish open standards through blockchain technology, enabling seamless agent collaboration, negotiation, and value exchange.

• Avoid limitations of traditional "walled garden" ecosystems.

Key Mechanisms:

• Agent Registry: Allows agents to publicly list skills, pricing, and reputation for easy discovery and comparison.

• Smart Contracts & On-Chain Verification: Automates task settlement, payments, and reputation updates to ensure transparency and trust.

• Modular Architecture: Supports agent specialization and complex task collaboration through composable workflows.

Application Scenarios:
Spans trading, media, prediction markets, and more. Over 18,000 agents are already operational in the Virtuals ecosystem, with monthly active addresses exceeding 176,000.

Competitive Advantages:

• Built on Ethereum Virtual Machine (EVM) for security and composability.

• Fosters network effects through open protocols, enabling continuous ecosystem expansion.

Future Challenges:
Addressing security risks, regulatory compliance, and strategic decisions for multi-vertical expansion to maintain leadership as a foundational protocol for the agent economy.

The Battle of AI Models Intensifies
Every company is vying to make its Large Language Model (LLM) the next champion. However, the key question is no longer which model excels technically, but how to leverage these models to drive meaningful, tangible impact. The answer lies in autonomous, specialized AI agents.

OpenAI’s release of ChatGPT Agent signals early maturation of the agent economy. While most agents remain single-purpose tools, we are beginning to see interconnected clusters enabling complex collaboration.

In the crypto space, the 2024 AI agent token boom saw hundreds of projects promising sophisticated, general-purpose AI agents—many of which have since stalled. A sustainable agent economy requires specialization, not generalization. Just as the internet thrived on interoperable protocols, the agent economy needs standardized ways for specialized AI entities to collaborate, transact, and create value. Unlocking this collaboration will drive the meaningful real-world impact people desire, but it remains a key challenge to overcome.

Virtuals addresses this with its Agent Commerce Protocol (ACP). As a blockchain-powered foundation, ACP supports interconnected clusters of specialized agents to tackle this core challenge of collaboration. It enables agents to coordinate, negotiate, and transact value permissionlessly.

The Promise and Hurdles of AI Agents
AI-driven autonomous agents promise to reshape industries but face significant barriers in conducting transactions—trust issues, fragmented workflows, and unreliable payment mechanisms. The lack of a standardized framework makes commercial interactions between AIs inefficient, leading to miscommunication, failed transactions, and economic friction.

As agents begin collaborating in clusters rather than operating in isolation, we are entering a new era of productivity—akin to the assembly line replacing individual artisans during the Industrial Revolution.

Today, over 18,000 agents are active in the Virtuals ecosystem, with more than 176,000 monthly active addresses interacting with agent-driven applications. Through its standardized commercial轨道 (tracks), AI agents can discover, collaborate, and exchange value globally. Virtuals’ value proposition rests on three pillars:

1. Standardized Agent Commerce: On-chain escrow, revenue sharing, and reputation systems enhance trust and credibility among agents.

2. EVM-Native Infrastructure: Built on battle-tested Ethereum infrastructure, providing security and composability for agents.

3. Scalable Specialization: Specialized agents enable flexible collaboration, unlocking the potential of intelligent supply chains.

The Economic Potential of the Agent Economy
To understand the economic potential of the emerging agent economy, it’s best viewed through the lens of Gross Agent Product (GAP)—a term coined by the Virtuals team representing the total value created by autonomous agents in the network.

To date, over 1 million agents generate approximately $1 billion in annual value. On average, each agent creates about $1,000 per year. If this trend continues, the agent economy could exceed $1 trillion by 2035.

Design Overview
ACP is built on a modular and verifiable architecture, providing agents with the tools and rules to collaborate flexibly and securely across multiple open protocols. Its core comprises plug-and-play components:

• Agent Registry: Allows developers to register specialized agents and define their roles and capabilities.

• Standardized APIs & Contracts: Define how agents allocate tasks, collaborate, and organize work, making every action transparent and easily auditable on-chain.

This modular design is crucial. ACP encourages agents to focus on a single function rather than building agents that attempt to handle all tasks. Agents delegate tasks outside their expertise to other specialized agents registered in the ACP directory via composable workflows. This approach improves performance and reliability while allowing agent clusters to scale and adapt as new demands emerge.

Think of ACP’s registry as a crypto-native version of Fiverr. Just as freelancers on Fiverr create profiles, list services, and set prices, agents in the ACP ecosystem publish their skills, work history, and pricing directly in the registry. Buyers (whether human or agent) can search, compare, and select based on reputation, past performance, and cost.

Unlike Fiverr, where rankings, fee structures, and disputes are platform-controlled, ACP encodes every listing, contract, and review on-chain. Terms of service, deadlines, and revenue sharing are programmable and transparent. Verification is performed objectively by assessment agents, payments are settled automatically via smart contracts, and no centralized company intermediates.

Workflow
Here’s how value, work, and reputation flow in the agent marketplace:

1. Discovery: Agent A browses the ACP registry to find a suitable machine learning agent. Instead of relying on hidden algorithms, Agent A can quickly compare experts by examining their on-chain reputation, past work, and pricing.

2. Negotiation: After selecting an expert, Agent A and Agent B agree on terms such as price and scope. These terms are written into a smart contract, forming a clear, verifiable agreement before work begins.

3. On-Chain Verification: When Agent B completes the work, a third-party oracle or assessment agent checks if the results meet agreed standards. This verification is recorded on-chain, allowing anyone to validate the delivered value.

4. Trustless Settlement: Once work is verified, the smart contract automatically triggers payment and updates both agents’ reputations. No delays or manual steps—everything happens instantly and transparently.

The end-to-end market process unlocked by ACP’s modular design and on-chain automation creates a transparent, reliable system for agent collaboration. This, in turn, forms the foundation for value exchange, enabling agent clusters to scale reliably, specialize, and build reputation.

Addressing Core Challenges in Agent Coordination
As a coordination layer, ACP provides agents with the tools needed to collaborate reliably in complex digital environments. Instead of relying on blind trust or isolated agents, ACP’s modular infrastructure makes each agent’s role and deliverables explicit, verifiable, and transparent. This design allows specialized agents to focus on what they do best while seamlessly delegating or accepting tasks from others, with built-in accountability mechanisms coordinating multi-agent workflows.

Based on these principles, ACP directly addresses three enduring challenges in agent coordination: discovery, trust, and settlement.

Discovery

• Challenge: Agent networks are often siloed, making it difficult to find, evaluate, and onboard trusted service providers.

• ACP’s Solution: The ACP Agent Registry serves as a master directory listing each agent’s skills, track record, reputation, and pricing. This registry simplifies searching, comparing, and selecting the right agent for the job.

Trust

• Challenge: Interactions between agents often rely on unverified reputations due to the lack of clear on-chain records, creating opportunities for bad actors. It’s also difficult to hold agents accountable to agreed terms.

• ACP’s Solution: ACP records every agent interaction and uses on-chain escrow, oracle-verified proof-of-work, and assessment agents to ensure payment occurs only after results are validated.

Settlement

• Challenge: In traditional agent systems, settling payments and completing tasks require intermediaries and manual steps, with low transparency.

• ACP’s Solution: Leverages smart contracts to automate settlement and distribute revenue and rewards according to agreed terms. When conditions are met, payments are automatic, eliminating intermediaries and reducing administrative overhead.

Open Standards vs. "Walled Gardens"
ACP’s competitive edge lies in its role as an open standard for agent commerce, contrasting with the proprietary "walled gardens" of major tech companies. Examples include Google’s Agent-to-Agent (A2A) protocol and Anthropic’s Model Context Protocol (MCP). Although these protocols are publicly available, users must access the companies’ systems and obtain permission to use them.

This approach offers tight integration, reliability, and security. However, the lack of a permissionless economic layer and centralized governance limits truly open cross-platform agent interactions—especially at scale, slowing the pace of innovation.

In contrast, ACP injects transparency, programmable incentives, and composable integration across any agent framework or blockchain into every on-chain commercial transaction. Its chain- and platform-agnostic design means any agent, regardless of origin, can interact with the ACP ecosystem.

Network Effects
ACP’s open coordination standard generates network effects far stronger and more enduring than those of isolated ecosystems. Each new agent, developer, or user enriches the ACP marketplace and registry, deepening reputation data, liquidity, and service variety for all stakeholders. This creates a virtuous cycle of accumulating value across the ecosystem.

ACP’s recommendation mechanism actively supports new service provider agents joining the network, helping them gain visibility and build reputation even without a track record.

The goal is to sustain network growth and ease onboarding for new participants, rather than letting incumbents dominate. To this end, the team has improved user onboarding and tools, offering Python and Node SDKs, user-friendly plugins, and a "graduation" process to help agents deploy into production smoothly.

As ACP expands into new domains like agent-driven prediction markets and DeFAI, its network effects will accelerate in ways proprietary, closed frameworks cannot match.

EVM and Continuous Iteration
Building ACP on the Ethereum Virtual Machine (EVM) was a strategic decision. While other virtual machines like Solana’s SVM and Aptos’s MoveVM offer high throughput, they cannot match EVM’s mature token standards, deep liquidity, and security safeguards.

These attributes are particularly important for agents that need to hold assets, sign contracts, and settle value globally. Although many ecosystems support open-source development and staking, Ethereum stands out for its community depth, scale, and credibility.

Since launch, the Virtuals team has pushed near-weekly upgrades to ACP, incorporating community feedback and unlocking numerous new features that significantly enhance the developer and user experience.

ACP’s front-end interface, Butler, is evolving from a simple insights generator into a full on-chain execution platform. Currently live on X (where it can generate content when tagged), Butler plans to expand to other platforms.

Rather than forcing users to adapt to new dashboards or applications, Virtuals integrates with interfaces users already know. In the future, Butler will expand beyond content into areas like trading—all integrated within platforms users already use.

All of Butler’s functionalities are built on ACP, which already enables registered agents to connect, exchange services, and process payments. However, large-scale inter-agent collaboration will take time to realize. In the interim, agents can list services via Butler and earn revenue from high user demand. Thus, ACP provides both a long-term foundation for complex agent networks and immediate opportunities for adoption and monetization. Butler is the most direct access point for end-users, while ACP remains open to any platform or developer to build their own tools and integrations.

ACP is expanding its list of integrable verticals. Agents in the ecosystem can handle on-chain revenue management, capital allocation, and trade execution—with prediction markets and sports betting coming soon. Additionally, developers can now leverage Python and Node SDKs and plugin support to deploy production-ready agent clusters more efficiently.

Security and Regulatory Challenges at Scale
As the broader agent ecosystem grows rapidly, ACP’s future success will depend on its ability to:

• Address emerging technical and regulatory risks

• Expand its reach into new domains

• Maintain its position as a leading open standard

With rapid ecosystem development, ACP faces new challenges in security, governance, and adapting to regulatory uncertainty. As fintech evolves, maintaining robust security measures for smart contracts and agent wallets becomes increasingly complex.

To mitigate these risks, Virtuals has undergone third-party audits and maintains on-chain governance processes, including timelocks that provide an additional layer of protection compared to non-crypto open-source models.

As agent commerce expands into applications like trading, yield management, and prediction markets, the compliance landscape and unpredictable regulatory changes remain a critical challenge.

Virtuals stands out with its multi-tiered, modular governance architecture:

• ProtocolDAO oversees the entire ecosystem

• GenesisDAO approves new agent clusters

• Each Virtuals agent cluster is managed by its own AgentDAO

These AgentDAOs handle upgrades, assess agent track records, and allocate rewards. This enables tailored governance for specific agents, incorporates community input, and allows flexibility in adapting to new regulatory or technical challenges.

Future Strategic Decisions
Moving forward, a series of key execution decisions will play a critical role in shaping ACP’s trajectory. Currently, Base meets ACP’s needs for settlement speed, cost, and trust. The strategic challenge will be to remain vigilant for signs that settlement methods may need adjustment—such as spikes in agent transaction volume or new agent behaviors stressing existing infrastructure.

Another strategic decision involves prioritizing agent clusters and market verticals that can generate network effects earliest and most significantly. Should ACP deepen its influence in trading and media, or accelerate expansion into verticals like prediction markets and DeFAI? This remains an open and evolving consideration.

Finally, Virtuals will continue iterating on incentive models for agent onboarding, evaluation, and reputation. Designing these models to attract and retain high-quality agents while deterring bad actors is essential for a sustainable, competency-based ecosystem.

To prevent spam and manipulation, Virtuals requires agents to establish an on-chain track record before earning higher rewards. New agent clusters can participate and earn from the start, but must reach certain contribution milestones to unlock greater permissions and rewards. Influence within the ecosystem depends on proven on-chain performance, not just tenure.

Conclusion
Without a robust, open infrastructure, the agent economy could end up like today’s fragmented tech landscape: siloed, closed systems unable to coordinate or share value across platforms. Open infrastructure ensures workflows remain portable and trustworthy at scale. As specialized, autonomous agents grow more capable and assume larger roles in digital labor, universal commerce protocols like ACP are no longer optional—they are a necessary step for the agent economy to realize its potential in reshaping global markets.

Author: Delphi Digital
Compiled by: Felix, PANews (abridged and adapted)

Lower Infrastructure Costs: Ethereum's Dencun upgrade pushed Layer 2 fees down over 90%, Solana's compression tech enables low-cost mass issuance, and Bitcoin inscriptions have formed an independent collectibles track, collectively supporting practical applications.

Key Role of Distribution Channels: Base has become a core channel thanks to social distribution and low-cost minting. Built-in passkeys and gas sponsorship in wallets lower user barriers; growth of wallets like Phantom aids mobile penetration.

Evolution of Royalty Models: Royalties became optional in open marketplaces, shifting creator revenue to primary sales, IP partnerships, and retail tie-ins. Closed platforms enforce royalties for premium brands, creating a dual-track system.

Application Scenarios Scale Up: Sports NFT trading volume surged 337%, gaming assets saw steady growth, IP licensing (e.g., Pudgy Penguins in Walmart) bridges physical consumption, and loyalty programs leverage on-chain integration for recurring value.

Future Scenarios & Risks: The baseline annualized trading volume forecast is $5-6.5 billion. Growth depends on wallet UX, royalty policies, project expansion, and distribution breakthroughs. Risks include wash trading distorting data and incentive cycles.

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NFT trading activity showed signs of recovery in the third quarter of 2025, breaking the prolonged downward trend of the post-hype era.

After two years of market contraction and narrative shifts, the on-chain market has found a new footing. Its growth momentum no longer stems from blue-chip collections or speculative art, but from lower-cost infrastructure, loyalty programs, and sports-related assets. The core value of these assets lies in their utility, not status symbolism.

NFT Trading Volume Rebounds, Sales Hit Record Highs

As Ethereum's scaling upgrades push activity to L2s, Solana holds its ground with high throughput and compression, and Bitcoin inscriptions develop a collectibles culture tied to fee market cycles, the NFT market's focus has shifted to low-cost infrastructure and practical applications.

Today, the keys to market growth are fee levels and distribution channels, not profile picture NFTs (PFPs).

The Dencun upgrade reshaped the economic landscape. Ethereum's EIP-4844 proposal reduced data costs for rollups, driving L2 transaction fees down to cents and enabling gasless or sponsored minting processes for mainstream users. Post-upgrade, L2 fees fell over 90%, a change reflected in minting behavior and propelling Base as a core distribution channel.

In the Solana ecosystem, compression technology allows for the mass issuance of NFTs for loyalty programs and access-gated applications. Deploying 10 million compressed NFTs costs approximately 7.7 SOL, with median transaction fees remaining near $0.003 even under high load.

Bitcoin inscriptions have carved out an independent niche, their development closely linked to mempool cycles and miner income. By February 2025, over 80 million inscriptions had been created, ranking Bitcoin among the top three chains by historical NFT sales volume.

Demand-Side Rebound with Underlying Concerns

Data from DappRadar shows NFT trading volume nearly doubled QoQ in Q3 2025 to $1.58 billion, with sales volume reaching 18.1 million, a record high for quarterly transaction count.

Sports NFTs performed particularly well, with trading volume surging 337% QoQ to $71.1 million. The periodic utility value, access rights, and loyalty benefits of these assets decouple consumption behavior from floor price.

The summer market saw a rapid rebound followed by cooling off. According to CryptoSlam, sales reached $574 million in July 2025 (the second-highest monthly total for the year), but fell about 25% MoM in September as overall crypto market risk appetite declined.

This trend confirms the market has entered a new phase of lower "average selling prices" and shows that even if unique active wallets and utility-based categories remain stable, total NFT trading volume still fluctuates with the broader crypto market.

The Key Role of Distribution Channels Becomes Prominent

Wallets with built-in passkeys and gas sponsorship mechanisms eliminate the friction costs that hindered user onboarding in previous cycles.

Coinbase Smart Wallet offers passkey login and gas sponsorship in supported apps. Phantom reported 15 million monthly active users in January 2025, a user base providing traffic support for mobile and social minting channels.

This distribution reach is crucial in blockchain networks where culture and social traffic reinforce each other, with Base being a prime example.

This year, leveraging low-cost minting, Zora's batch minting rhythm, and distribution channels linked to Farcaster, Base has surpassed Solana in some NFT trading volume metrics.

This trend means creators, when choosing a launch platform, are beginning to model distribution data first before matching it with a fee solution.

Royalties Are No Longer the Core of Revenue Structure

After the 2022 market peak, creator royalty income plummeted as competition among marketplaces made royalties optional on most platforms. Nansen data shows royalty revenue hit a two-year low in 2023 and failed to recover to previous levels.

Conversely, marketplaces enforcing royalties have gradually emerged. In late 2023, Magic Eden partnered with Yuga Labs to launch an Ethereum marketplace enforcing creator royalties, creating a protected distribution channel for influential brands.

The current market has formed a dual-track pattern: in open marketplaces, low fees, primary sales, IP collaborations, and retail integrations constitute the main profit sources for creators. Closed ecosystems enforce royalties via contractual agreements, catering to high-end NFT issuances.

In areas where incentive mechanisms dominate capital flow, marketplace market share remains dynamic. In the Solana ecosystem, Magic Eden and Tensor form a duopoly, with their market shares fluctuating based on reward programs and design adjustments, typically ranging between 40% and 60% during different periods.

This isn't a structural change but the result of incentive cycles; market share charts might appear to show a shift, but they ultimately revert to the mean. For creators, the key takeaway is to negotiate distribution plans during the launch planning stage, rather than defaulting to a single platform.

User Flow Reveals Short-Term Development Path

Sports, ticketing, and loyalty programs can achieve scale because their benefits are periodic and repeatable, and core on-chain functions are embedded into existing ticketing and e-commerce workflows.

DappRadar's Q3 2025 data shows sports NFT trading volume growth has outpaced the overall market, and this is without factoring in full-season or league-wide partnerships.

Growth in the gaming sector is more稳健. According to Messari, Immutable's zkEVM architecture and real-time data show sustained transaction growth. Its design of "Ethereum-level security with L2-optimized user experience" highly aligns with the needs of asset custody and persistent secondary trading fees.

Intellectual property and licensing partnerships are another crucial bridge for NFTs transitioning from digital collectibles (JPEGs) to consumer channels. Pudgy Penguins has entered over 3,000 Walmart stores, building a tangible channel from NFTs to physical retail and licensing revenue.

For creators, the costs and user experience across different blockchains are now clearly distinguishable:

* Ethereum L1 still dominates provenance and high-value art; most platforms have volatile Gas fees, and royalty collection is optional.

Post-Dencun, *Ethereum L2s (like Base)** have transaction fees of a few cents, support sponsored or gasless transactions, and Base offers social distribution channels via the Farcaster ecosystem.

* Solana's compression technology allows the issuance of millions of NFTs for dollar-level costs, leveraging its mobile-first wallet ecosystem for broad reach.

* Bitcoin inscriptions focus on the scarce collectibles niche, where rising fees are a market feature, not a bug.

Macro-Environmental Landscape Evolution

The annualized NFT market trading volume for 2025 is projected to be in the $5-6.5 billion range, with the average sale price in the first half of the year stabilizing between $80-$100, forming the baseline for next year's market scenarios.

Using CryptoSlam's monthly sales data as core data, combined with DappRadar's category breakdown analysis:

* Bear Case: If the overall crypto market stagnates and the average sale price drops, total NFT trading volume could fall to $4-5 billion. Fee-sensitive applications would concentrate on Solana and Ethereum L2s, the Ethereum L1 art market would remain stable, and the inscriptions market would fluctuate with Bitcoin fee cycles.

* Base Case: If embedded wallets and social minting channels continue to expand, sports and live event projects scale across seasons, and brands experiment with launches on royalty-enforcing platforms, total NFT trading volume could reach $6-9 billion.

* Bull Case: If mobile distribution achieves breakthrough growth (Base and passkey logins普及 minting, Phantom MAU surpasses 20 million, ticketing pilots become mainstream, gaming assets form sustainable markets), total NFT trading volume could hit $10-14 billion.

In all three scenarios, Ethereum L2s and Solana are expected to dominate market share, Ethereum L1 will focus on niche areas, and Bitcoin inscriptions will remain stable as a scarce collectibles track.

Six Key Variables Determine Growth Pace

1. Wallet User Experience & Distribution Capability: Key metrics include passkey adoption rates, usage of gas sponsorship, and MAU for Phantom and Coinbase Smart Wallet.

2. Reach of Royalty Enforcement: Impacts high-end NFT issuance, including OpenSea's potential policy shift and the health of creator-friendly marketplaces on Ethereum.

3. Scalability of Sports & Ticketing Partnerships: Expansion from pilot projects to full-season partnerships turns one-off volume into recurring revenue.

4. Base & Zora's Launch Cadence: Judging the sustainability of social distribution channels via monthly mint volume, Base's share of total NFT volume, and the synergy with Farcaster Frames.

5. Adoption Rate of Solana Compression: Gauging whether loyalty programs and media applications are moving from pilots to normalization via compressed NFT mint counts and deployment cost per million assets.

6. Bitcoin Fee Cycle: Its connection to inscriptions and Runes, fluctuating with mempool congestion, continuously affects collectibles pricing.

However, two risks persist. Wash trading and spam still distort GMV and sales figures; therefore, consulting dashboards that filter for average sales and organic search is safer.

Marketplace incentive mechanisms can create the illusion of a "paradigm shift" in market share charts (driven by airdrop cycles), especially within Solana's duopoly. Thus, creators' launch plans should account for this volatility from the start.

Another operational constraint is revenue design: with royalties mostly optional in open marketplaces, primary sales, IP licensing, and retail partnerships bear more responsibility for income. Royalty-enforcing closed platforms only provide a high-end launch channel for a minority of brands, which most creators cannot leverage.

Industry Transition from 'Endgame' to 'Migration'

The JPEG hype frenzy is over. NFT infrastructure costs have dropped significantly, application scenarios have pivoted to ticketing, sports, gaming, and IP, and the wallet and distribution systems are beginning to integrate into users' existing environments.

For investors who once spent six figures on AWS-hosted JPEGs from flagship blue-chip projects like Bored Ape Yacht Club, the situation remains precarious. One such NFT, purchased for over 74 ETH in 2021, is now worth just 9 ETH, an 87% drop in three years.

The speculative mania in non-fungible tokens may have ended, but can the underlying technology gain recognition through practical use cases in the real world?

The answer remains to be seen, but current signs are promising—though this hope offers little solace to those who bought at the peak. The Q3 2025 NFT market closed with $1.58 billion in volume and 18.1 million sales, while its structure continues evolving steadfastly towards utility.

China’s response is unique. Instead of choosing “permission-less innovation” or “blanket prohibition”, Beijing is running a three-track strategy:

1. A sovereign retail CBDC (e-CNY) as the anchor of monetary power;

2. A hard ban on domestic stable-coin issuance, but a licensed sandbox in Hong Kong;

3. A state-sanctioned RWA market that tokenises green power, cultural tourism and infrastructure to feed real-economy funding needs.

The following pages decode each track and show how they fit together.

I. e-CNY – From Domestic Micropayments to Geopolitical Rail

1.1 Scale & Scene Depth – Crossing the Tipping-point

• By Aug-25 more than 260 million individual wallets have been opened in the 26 pilot cities; Beijing alone clears > RMB 300 billion a month.

• Use-cases have jumped the retail fence: agricultural subsidies released via smart-contract “money packets” that auto-execute when satellite data confirm harvest delivery; maglev trains in Shanghai accept offline, battery-less hard wallets—no network, no power, still pay.

• Treasury single-account reform is migrating to e-CNY rails, letting Ministry of Finance trace every yuan of local-government spending in real time.

1.2 Going Abroad – mBridge & the Dollar Bypass

• Oct-25: PBOC and Macau AMC sign a connectivity MoU; merchants on both sides of the Zhuhai-Macau border now settle instantly in e-CNY / MOP.

• Hong Kong: 38 000 local POS terminals upgraded; wallet limit lifted to RMB 50 000 p.a. for HKID holders.

• mBridge – the BIS-hosted DLT corridor with Thailand, UAE and HK – left beta in Sep-25. A Shanghai “Digital-RMB International Operations Centre” provides 24-hour liquidity; average FX leg cut from 2 days to 7 seconds, cost down 60 %.

• Policy wording: “e-CNY is the sole legal digital form of cash; no private ‘CNY-equivalent’ tokens may circulate onshore.” Translation: the CBDC is the sovereign rail, but offshore experiments can run if they feed back into yuan usage.

II. Stable-coins – Red Line onshore, Sand-box offshore

2.1 Mainland – Absolute Monetary Monopoly

• Early-25 PBoC explicitly blocked Ant & JD’s Hong Kong plans to mint CNH-backed stable-coins, citing “competitive disintermediation of monetary policy”.

• Zhou Xiao-chuan: “Stable-coins are quasi-money; unregulated they fracture the unit-of-account.”

• Yet industry not silenced: MIIT think-tanks continue to model tokenised freight bills and cross-border trade receivables – technology is studied, issuance is state-only.

2.2 Hong Kong – Licenced Gate-keeper Regime

• 1 Aug-25 Stable-Coin Ordinance live. Requirements:
  – Full banking licence or 100 % custody with an HKMA-approved bank;
  – Paid-in capital ≥ HKD 25 million;
  – Monthly attestations;
  – No algorithmic coins.

• Sandbox already houses two consortia:
  – ZA-Bank + Ant Digital for a CNH-linked coin focused on Belt-and-Road trade;
  – HSBC + HashKey for tokenised treasury bills aimed at MMFs.

• End-game: an offshore, fully-backed CNH coin that rides on mBridge, settling in e-CNY on the mainland leg – a two-tier “CNY currency area” on-chain.

2.3 Global – Guarding Against Regulatory Arbitrage

• FSB Oct-25 report flags “dangerous gaps” – US GENIUS Act demands US-Treasuries backing; Korea rushes capital-flight bill after USD 40.6 bn outflow in Q1-25.

• China’s stance: observe, participate in rule-setting (CPMI, FSB), but insulate domestic liquidity with fire-walled Hong Kong conduit.

III. RWA – Tokenise the Real, Green the Economy

3.1 First Movers – Green Electrons & Tourist Islands

• Anhui “Xun-Ying” battery-swap cabinets: 50 MW distributed storage tokenised on Conflux Tree-Graph; global investors subscribe via security tokens, smart-contract auto-splits 25 % IRR cash-flow.

• Dalian Xiao-Ping-Island: idle real-estate bundled into 1 m²-parcel NFTs; revenue from marina, hotel and fishing rights distributed daily in e-CNY.

• Benchmarking world: Synthesys in Singapore, Franklin Templeton’s Benji on BNB Chain; China’s twist – asset selection must serve carbon-neutrality or regional-development KPIs.

3.2 Tech & Compliance Stack

• IoT meters stream power-output data → hashed to chain → triggers coupon payment.

• HKMA “Project Ensemble” sandbox offers legal certainty for tokenised MMFs, bonds, carbon credits.

• Shenzhen Futian SOE’s RMB 50 billion offshore digital bond (Aug-25) settled coupon & principal in e-CNY – first on-chain debt instrument cleared in sovereign digital cash.

3.3 Strategic Upside – A 16 Trillion USD Market by 2030

• BCG forecast implies 10 % of global GDP could sit on tokenised balance-sheets.

• China’s play: export surplus + green infrastructure = underlying collateral; Hong Kong = pricing venue; e-CNY = settlement medium.

• End-goal: graduate yuan from “trade invoice currency” to “global capital-market pricing unit” without fully opening the capital account.

Conclusion – One Ledger, Three Speeds

China is building a digital-finance stack that is vertically integrated yet horizontally porous where required:

• Layer 0 – Monetary sovereignty: e-CNY, domestically monopolistic, programmable, identity-layered.

• Layer 1 – Regulatory membrane: Hong Kong licences foreign-facing stable-coins that must channel reserves back into CNH assets and, ultimately, PBOC rails.

• Layer 2 – Asset transformation: permissioned block-chains turn green kilowatt-hours, toll roads and UNESCO-rated islands into bearer instruments settled in state digital cash.

The architecture is cautious, deliberate and unapologetically top-down. It prizes financial stability over founder-led disruption, and national development goals over “community ownership” memes. Yet by keeping one foot in global rule-making forums and the other in experimental sandboxes, Beijing is positioning the yuan – and the real assets it can collateralise – at the centre of the next-generation monetary order.

The rest of the world can watch, participate or compete, but it can no longer ignore the blueprint.

Market Nature: The perpetual futures market is inherently a zero-sum game. The system consists only of a cash pool, simulating asset price fluctuations through rules, with long and short positions always maintaining balance.

Liquidation Mechanism: When sharp price movements deplete one party's margin, the system forces liquidation. Under normal conditions, liquidations are absorbed by new capital via the order book.

Insurance Fund Intervention: When order book liquidity is insufficient, the exchange's insurance fund steps in to cover losing positions, but its capital is limited.

ADL Activation: If the insurance fund cannot cover the losses, the system forcibly closes profitable positions (typically prioritizing "whales" with high profits, high leverage, and large positions) to restore long-short balance.

Necessity: Although ADL may seem unfair, it is essential for maintaining the system's overall solvency and preventing market collapse due to one side's capital depletion.

This mechanism reveals the virtual nature of perpetual futures markets—when the boundaries of the simulated world are breached, ADL becomes the final defense for system stability.

---

Summary

Author: Doug Colkitt

Compiled by: Deep Tide TechFlow

Given that many have woken up to find their perpetual futures (perps) positions liquidated and are wondering what "Auto-Deleveraging" (ADL) means, here’s a concise primer.

What is ADL? How does it work? Why does it exist?

First, we need to understand perpetual futures markets from a broader perspective. Take the BTC perpetual market as an example—interestingly, no actual BTC exists in this system. The system only holds a pool of idle cash.

What perpetual futures markets (or any derivatives market, broadly) do is redistribute this cash pool among participants. They operate through a set of rules designed to create synthetic instruments that mimic BTC, even though no real BTC is involved.

The most critical rule is: the market has longs and shorts, and their positions must be perfectly balanced; otherwise, the system cannot function. Additionally, both longs and shorts must contribute cash (as margin) to this pool.

This cash pool is continuously redistributed among participants as BTC prices fluctuate.

During this process, when BTC prices swing drastically, some participants lose all their funds and are forcibly exited ("liquidated").

Remember, longs can only profit if shorts have funds to lose (and vice versa). So, when funds are depleted, you can no longer participate in the market.

Moreover, every short must be perfectly matched with a solvent long. If a long in the system has no more funds to lose, by definition, the corresponding short on the other side has no funds to gain (and vice versa).

Thus, if a long is liquidated, one of two things must happen in the system:

A) A new long position enters, bringing fresh capital to replenish the pool;

B) The corresponding short position is closed, rebalancing the system.

Ideally, this is achieved through normal market mechanisms. As long as willing buyers are available at fair market prices, no forced actions are needed. In normal liquidations, this process is typically handled via the perpetual market's order book.

In a healthy, liquid perpetual market, this works seamlessly. Liquidated long positions are sold into the order book, where the best bid becomes the new long, injecting fresh capital into the pool. Everyone is satisfied.

But sometimes, order book liquidity is insufficient, or at least not enough to close the original position without exceeding its remaining funds.

This becomes a problem because it means the cash pool lacks sufficient funds to meet other participants' obligations.

Typically, the next "rescue step" involves an "insurance vault" or "insurance fund" stepping in. The vault, backed by the exchange, is a special cash pool that absorbs the other side of liquidations during extreme liquidity events.

Insurance vaults tend to be highly profitable in the long run, as they can buy at deep discounts and sell at premiums during sharp price movements. For instance, Hyperliquid’s vault earned ~$40 million in about an hour tonight.

But the insurance vault is not magic—it’s just another participant in the system. Like others, it must inject funds into the pool, follow the same rules, and its risk-bearing capacity and capital are limited.

Thus, the system must have a final "rescue step."

This is what we call "Auto-Deleveraging" (ADL). It’s the last resort and (hopefully) a rare occurrence, as it involves forcibly closing someone’s position without paying them out. It happens so infrequently that even experienced perpetual traders often barely notice its existence.

Think of it like an overbooked flight. First, the airline uses market mechanisms to resolve the overbooking, such as increasing compensation to incentivize volunteers to take a later flight. But if no one accepts, certain passengers must be forcibly removed.

If longs are depleted and no one is willing to take their place, the system has no choice but to force at least some shorts to exit and close their positions. Different exchanges have varying processes for selecting which positions to close and at what price.

Typically, ADL systems use a ranking mechanism to select profitable positions for closure based on: 1) highest profits, 2) leverage, and 3) position size. In other words, the largest, most profitable "whales" are sent home first.

Naturally, people resent ADL because it seems unfair. You’re at the peak of your profits, yet forced to exit your position. But to some extent, it’s necessary. No exchange, no matter how robust, can guarantee an infinite supply of losing participants to replenish the cash pool.

Imagine a winning streak in Texas Hold'em. You enter a casino, beat everyone at one table, move to the next and beat them too, and then another. Eventually, everyone else in the casino runs out of chips. That’s the essence of ADL.

The beauty of perpetual futures markets is that they are always zero-sum, so the system as a whole can never be insolvent.

There isn’t even real BTC to depreciate—just a pool of mundane cash. Like the laws of thermodynamics, value in the system is neither created nor destroyed.

ADL is somewhat like the ending of The Truman Show. Perpetual markets construct an elaborate simulation, appearing as a real world tied to spot markets.

But in the end, it’s all virtual. Most of the time, we don’t need to think about it… but sometimes, we hit the boundaries of the simulation.

Leverage ≠ Capital Efficiency; Leverage = Emotion Steroids
10× turns a 5 % move into a 50 % equity shock, but the real product is hormonal. Cortisol and dopamine spikes print more volume than any APY table. The exchange’s edge is keeping the hormonal loop humming long after rational agents would walk away.

Winner UI: Turn Ego into Open Interest
Leaderboards, flashing green “+127 %” badges, one-tap Twitter brags—every pixel is engineered to harvest over-confidence. The protocol quietly increases default leverage on the next position; the brain, awash in dopamine, reads it as skill validation. Net result: the same wallet increases notional 3-4× within 48 h of a big win.

Loser UI: Regret Is a Renewable Resource
Liquidation pop-ups that highlight “price missed your stop by $0.18”, instant coupons for fee rebates, and a red “Revenge Trade” button that pre-fills the opposite side—each pattern interrupts the logical response (quit) and triggers the limbic one (double down). Loss-aversion pain is ~2× the pleasure of an equivalent gain; the exchange monetises the gap.

Liquidity Spiral: From Neurochemistry to Moat

1. Addicted core → predictable tape → tighter spreads → prop MM capital → deeper book → lower slippage → more addicts.

2. Once the book depth exceeds CEX equivalents, “mercenary” quant funds park inventory permanently; exit liquidity becomes entry liquidity.

3. Competitors now need eight-figure depth subsidies to match the user experience—an impossible ask without the same psychological flywheel.

Catalyst Design: Pay for Rank, Not for Click
Flat trading rebates are dead. Effective campaigns pay only the top-10 % P&L leaderboard, zero-sum style. The 90 % who miss the cut leave with fresh resentment and a trading plan for next week—no inflationary token required. The protocol buys behavioural addiction cheaper than it buys liquidity.

Sustainable Bubble Thesis
PVP systems are polyvinylpyrrolidone for speculation: they don’t eliminate froth, they cross-link it into a resilient film. Volume survives volatility because the emotional stakes are stickier than any yield. In the next funding round, investors will not ask “What’s your taker fee?”—they will ask “What’s your median user heart-rate delta on liquidation?” The exchange that can answer wins.

India: Biggest Pool, Bottom-Up Momentum
India remains the outright heavyweight, generating $338 B in on-chain value over the latest 12-month period. Growth is driven from the ground up:

• 20-million-plus diaspora remittances converted through stable-coins

• Young retail traders treating crypto as a second income

• A fintech-savvy population already comfortable with UPI and e-RUPI
  Institutional interest is now catching up: the India Web-3 Council lobbies for clear rules, while local start-ups have attracted over $3 B in venture funding since 2021 .

Japan: Policy Reform Ignites 120 % YoY Spike
No large market expanded faster than Japan, where on-chain value jumped 120 % year-over-year. Three policy levers explain the lift:

1. Crypto included in revised investment-fund rules

2. A pending tax overhaul that may cut rates from 55 % to 20 %

3. First licensed yen-backed stablecoin issuer approved in 2025
   Trading flows show Japanese investors rotating heavily into XRP (US$21.7 B JPY purchases) ahead of Ripple’s partnership with SBI, while fresh ETF applications for XRP + BTC mix products aim to bring institutions off the sidelines .

South Korea: Speculation, Stable-coins & Pro Traders
Korea keeps its long-time #2 slot thanks to high-octance speculation and the region’s deepest KRW liquidity. New exchange pairs (USDT/KRW) pushed stable-coin inflows to US$59 B in the last year, and 46 % of all Korean on-chain value sits in the “professional” $10 k–$1 M band—double the global share. The upcoming Virtual-Asset User Protection Act is expected to green-light bank-issued KRW stable-coins, potentially locking even more value on-shore.

Vietnam & Pakistan: Utility, Not Trading
Smaller economies use crypto for real-life needs:

• Vietnam—gaming, freelance payments and remittances; crypto is now a parallel savings vehicle

• Pakistan—350 B annual remittances, double-digit inflation and a young, mobile-first population turn USDT into a “hard-currency” checking account, especially among gig-economy workers

Australia, Singapore, Hong Kong: Clarity as a Service
These markets opt for regulatory sandboxes and updated AML/CFT rules rather than moral panic. The result is deeper institutional participation, tokenized-asset pilots and a growing share of over-$1 M “whale” transactions that lift average ticket sizes.

Key Take-away
Asia–Pacific is no longer an emerging region for crypto—it is the market. From India’s grassroots volume to Japan’s policy-led re-rating and Korea’s trader culture, the continent shows that crypto can thrive under wildly different economic models, regulatory styles and user profiles. Expect the diversity itself—rather than any single country—to shape global adoption narratives for the next cycle.

1. What Just Happened – And What Didn’t

Score weighs float, revenue, tokenomics, roadmap.

Take-away: the headlines are tokens, the engine is Base itself.
Coinbase is cross-subsidising gas, on-ramping institutions and white-labeling its stack – exactly the same playbook that pumped Arbitrum a year ago.
Bet on the casino if you want, but the real edge is owning the casino’s picks and shovels before they list.

2. New DeFi Playbook – From Emotion to Engineering

2021 recipe: “TVL up = number-go-up”
2025 recipe:

• Tech moat – order-book throughput, low-latency matching, sub-2 bp slippage for 8-figure clips.

• Eco-system flywheel – clear incentives for market-makers, integrators and ve-token lockers.

• Valuation gap – FDV / annualised protocol revenue < 15× and float > 30 %.
  Ignore any project that can’t tick at least two boxes; the rest are fireworks.

3. Orderly Network – The AWS of On-Chain Perps

Why it is different

• Unified order-book shared by 58 integrated dApps (BSX, EdgeX, LogX etc.) → network effect.

• 15 k tx / sec matching engine off-chain, settlement on-chain → CEX feel, DeFi self-custody.

• Cumulative cleared notional > US $50 bn, OI US $220 m, average daily turnover US $450 m – all visible on-chain.

• Revenue share: 60 % of fees go to ORDER stakers, buy-and-make programme adds permanent bid-wall.

Valuation gap
Fully-diluted value = US $180 m (token $0.15).
Annualised protocol revenue = US $36 m → P/F 5×.
Comparable perp DEXs trade 12-25×.
Even a conservative 12× re-rating = $2.30 / ORDER, 15× upside.
Float is 42 % – low enough for scarcity, high enough not to be a supply overhang.

Catalyst calendar

• October: veORDER vote-escrow live (fee switch on).

• November: integration with Coinbase Wallet-native perp (already in test-net).

• December: cross-margin with BTC/ETH spot from Base custodians → institutional angle.
  Each checkpoint is a fresh narrative loop and higher probability of exchange listings.

4. Barbell Strategy – Airdrop Cash + Infrastructure Equity

Short-dated calls (next 4-8 weeks)

• Keep 10 % capital in hot wallets for point-farming: LogX, EdgeX, Parcl (Solana), Surf (Base).

• Take first 200 % of any airdrop off the table immediately; let the rest ride cost-free.

• Use portfolio margin on Hyperliquid to short the same token against your free float – locks in the delta while keeping upside.

Core positions (6-18 months)

• 35 % ORDER (spot + locked veORDER for yield).

• 15 % BSX (same thesis, different chain).

• 10 % ARB (liquidity hub, still cheapest L2 token).

• 30 % stables in 6-9 % Coinbase USDC or USDA (Aave) – dry powder for the next rotation.
  Rebalance monthly; partial exit any position that hits 5× and roll profits into stables.

Risk kill-switches

• Base sequencer downtime > 2 h → flatten leverage.

• ORDER weekly close below $0.11 (200 D MA) → cut 50 %.

• Perp aggregate OI > US $8 bn on Base → raise cash to 50 % (late-cycle signal).

5. Checklist Before You Approve Any DeFi Bet

1. Is protocol revenue growing faster than token emissions?

2. Does the token accrue at least 40 % of that revenue (buy, burn, distribute)?

3. Is circulating supply > 35 % of total within 12 months?

4. Can the order-book handle a US $5 m market order without > 3 bp slippage?

5. Are three or more independent teams building on top of the infra?
   If “No” to two or more, pass – no matter how loud CT screams.

Bottom Line

This heat-wave will cool, airdrop farmers will rotate, and only the revenue-generating rails will keep humming.
Use the fireworks for spending money, use the infra for wealth.
Orderly ticks every engineering and valuation box; give it the same allocation you gave ARB in early 2023 and let the Base flywheel do the rest.

Flat-Pack Revolt: No Leader, No Single Point of Failure
When police bullets killed 19 peaceful protesters, fury detonated across Nepal.
Within hours, tens of thousands self-organised inside Discord guilds—each channel a mini-headquarters for logistics, medical aid and real-time intel.
No charismatic icon could be arrested or bribed; if one server vanished, ten new invites popped up. The movement regenerated faster than the state could shut it down—an immune-system response to authoritarian over-reach.

Corruption Is a Global Pre-Existing Condition
From Lagos to Lima, elites funnel public money into private vaults through opaque tenders, kick-backs and nepotist monopolies.
Citizens feel it, shrug, mutter “that’s just how it is”.
Nepali Gen-Z refused the shrug. They torched the symbols of graft—parliament gates, ministerial SUVs, luxury villas—live-streamed in 4K and immortalised as shareable GIFs.

Hashtag as Bugle, Meme as Molotov
TikTok trends became mobilisation orders; memes turned into political ordinance.
“#EnoughIsEnough” trended worldwide, crowdfunded riot-gear kits and VPN subs.
Over-night, “lazy screen-addicts” became a synchronised street army—proof that attention is the pre-cursor to ammunition.

Crypto: the Fuel Line You Can’t Cut
Banks closed accounts, remittance corridors froze, cash ran dry.
Protest wallets spun up on Phoenix, Trust and Rabby; QR codes for USDT (TRC-20) replaced donation buckets.
A meme-coin launched on Pump.fun acted as both war-chest and banner—every trade a micro-vote of confidence, every green candle a morale boost.
No NGO paperwork, no Swift gatekeepers, 3-second settlement, 24/7.

Follow the Quiet Engine: Economic Opportunity
Rage is the spark; money is the octane.
Youth unemployment > 25 %, starting salaries lower than a minister’s bar tab.
Even if the new cabinet promises “reform”, can a decentralised horde build wealth, not just burn palaces?
Yes—if they keep the peer-to-peer rails alive.
Tour guides accepting BUSD, freelancers billing in USDC, farmers selling coffee beans via lightning-invoices chop out 10-50 % middle-man leakage and pocket the spread themselves.
A circular crypto economy turns savings into seed capital without ever touching a kleptocratic bank.

The Blueprint Is Now Open-Source
Nepal’s overnight revolution will be copy-pasted:

• Discord for command-and-control

• Stable-coins for uncensorable funding

• Meme-coins for narrative leverage and speculative upside

• DAO-like voting for tactical decisions
  Expect similar flash-revolts in Delhi, Jakarta, Bogotá, Lagos—some will fizzle, some will shake parliaments.
  The common denominator: blockchains don’t ask for protest permits.

Next Question: Whose Flag Falls Tomorrow?
The weapons are free, the code is open, the playbook is viral.
All that’s left is courage—and a Wi-Fi signal.

• 8/20 list on Binance Alpha → instant dump, -45 % first week.

• 9/1 low → 9/10 high: +110 %; 24 h volume $20 m → $200 m.

• Options flow: Sept-30 $0.20 calls 25 % OI, skew flipped from puts—retail FOMO back.

2. Team Pedigree – Base Royalty + Tokenisation OG

• CEO Rowan Stone – ex-co-founder of Base (yes, the Base).

• CSO Trevor Koverko – founder Polymath, co-author ERC-1400 RWA standard.

• Seed raise: $15.5 m (Apr + Oct 2024) led by Primitive, Animoca, YGG.

• Signal: Coinbase alumni + RWA lawyer = compliance-first design—exactly what Fortune-500 buyers want.

3. Product – Proof-of-Quality (PoQ) in One Graphic

User journey:  
Stake SPEN → Submit label → Peer review (≥3) → Consensus > 80 % → Earn stablecoin + SPEN bonus  
Slashing: 25-100 % of stake for spam; reputation on-chain → future earning multiplier.

• TAM: high-precision verticals—oncology imaging, LiDAR segmentation, retail SKU tagging.

• Live case: radiologist in Turkey $400/h labeling tumour scans; cost 30 % below AWS SageMaker Ground-Truth.

4. Traction – Web2 Giants Already Paying

• 29 customers, 1.87 B tasks completed, 1.8 M registered contributors, 50 % MoM user growth.

• Revenue run-rate Q3-25: $18 m ARR (token + cash) → >100 % YoY.

5. Base-Ecosystem Fit – AI Lego Block

• Base TVL $68 b (#5 L2); AI sub-sector $20 b TVL—Sapien is #1 data layer.

• Venice DIEM (tokenised GPU) + Sapien (verifiable human data) = end-to-end AI pipe on Base.

• Coinbase internal 40 % code AI-generated (Armstrong tweet) → enterprise PoC sandbox for Sapien.

6. Tokenomics – Utility, Not Meme

• Ticker: SPEN (ERC-20 on Base)

• Triple sink: stake-to-label, customer payment rail, governance (parameter/fee votes).

• Float: 18 % circulating; 65 % ecosystem/lock (4 yr cliff + 24 mo linear).

• Burn: 20 % of cash revenue used to market-buy & burn quarterly—first burn Sept-30 (est. $1 m).

7. Risks – Scale, Law, Model-Obsolescence

• Quality decay: marginal reviewer cost ↑ with scale; reputation grinding can turn into Sybil treadmill.

• Cross-border data: medical & geo-imagery ITAR/EAR controlled—US Treasury fine >$10 m if breached.

• AI-model shift: self-supervised & synthetic data could erase 30-50 % demand by 2027.

• Token concentration: top 9 wallets hold 42 % SPEN; VC unlock #1 in Apr-26.

8. Valuation Quick-Sketch

• Trad-comps: Scale AI (last $13 b), Snorkel ($1 b) → 12-18× ARR.

• Crypto premium: network ownership + burn → 25× ARR not insane.

• $18 m ARR × 25 = $450 m FDV → current $390 m FDV = fair-value band; upside if ARR doubles in 6 mo (historical 50 % MoM implies >2×).

9. How to Play It
Bulls

• Accumulate spot ahead of 30 Sep burn; theta-neutral via selling Dec-25 $0.30 calls (30 % IV) to fund downside protection.

Bears

• Apr-26 VC unlock = 12 % supply; short via calendar put-spread (buy Apr-26 $0.15, sell Jan-26 $0.10).

Enterprise watch-list

• If Amazon AWS or Google Cloud white-label PoQ → $1 b FDV becomes floor.

10. One-Sentence Summary
Sapien turned human data-labeling into a stake-for-truth economy, landed Fortune-500 cash-flow before most crypto projects have a working app, and is one regulatory green-light away from becoming the Chainlink of AI datasets—all while trading at only a 1.2× revenue premium.

1. The CPU Era (2009–2010): Mining on a Laptop

• Setting: Bitcoin’s first blocks were mined by Satoshi with an ordinary CPU.

• Reality: A 2009 MacBook could mine thousands of BTC—today worth hundreds of millions.

• Limit: Hash-rate soon outpaced CPUs; energy per hash became prohibitive.

2. The GPU Boom (2010–2013): Parallel Power

• Breakthrough: Miners discovered GPUs excel at parallel SHA-256 math.

• Performance: 50-100× speed-up over CPUs.

• Trade-offs: High power draw, roaring fans, and rising household electricity bills.

3. FPGA Interlude (2012–2013): Efficiency First

• Concept: Field-Programmable Gate Arrays could be rewired for specific algorithms.

• Edge: 30-40 % better energy efficiency vs. top GPUs.

• Barrier: Complex firmware; limited production runs kept FPGAs niche.

4. ASIC Supremacy (2013–Present): Purpose-Built Dominance

• Definition: Application-Specific Integrated Circuits designed solely for one hash function.

• Impact:
  – 10-100× performance per watt vs. GPUs.
  – Rapid obsolescence cycles (18-24 months).

• 2025 Snapshot:
  – Bitcoin: Bitmain Antminer S21e XP Hyd (SHA-256).
  – Dogecoin/Litecoin: ElphaPex DG2+ (Scrypt).

2025 Miner Cheat-Sheet

Bitcoin (SHA-256) – Top Picks

Dogecoin/Litecoin (Scrypt) – Top Picks

(Estimates assume PPS pool, $0.08/kWh electricity; ROI varies with coin price and difficulty.)

How to Choose Your Rig in 2025

1. Define the Coin: BTC = SHA-256; DOGE/LTC = Scrypt; others may favor GPUs.

2. Crunch the Numbers: Use live calculators—electricity > $0.15/kWh often kills margins.

3. Mind the Site:

   • Home? Prefer water-cooled or low-noise rigs.

   • Farm? Factor in cooling, maintenance contracts, and local regulations.

4. Hedge Volatility: Lock-in future prices via futures or “hash-rate forwards.”

The Road Ahead

• Efficiency: 3-nm ASICs in 2026 could cut power another 25 %.

• Green Mining: Hydro-cooled farms and renewable PPA deals are becoming standard.

• Home Renaissance: Quiet, sub-1 kW Scrypt miners may reopen the door to hobbyists.

• Decentralization Dilemma: ASIC centralization is real; future PoW tweaks or new ASIC-resistant algorithms could rebalance the scales.

Bottom Line
Hardware history is a story of relentless specialization.
Today, SHA-256 is the domain of industrial ASICs, while Scrypt and GPU-friendly coins still invite small players.
Whichever path you choose, remember: cheap power, solid uptime, and fast ROI math are still the only real mining advantages.

• Establishing minimum security standards for wallets, requiring transparent transactions and intrusion-resistant interfaces;

• Addressing blind signing issues through projects like Verifier Alliance to improve transaction readability;

• Creating a smart contract vulnerability database to help developers detect risks early;

• Encouraging the development of minimalist wallets and enterprise-grade solutions to lower barriers to entry.

Wallets, as the first line of defense for users, are evolving from complex tools into "default-secure on-chain financial assistants." Wallets like imToken have already implemented features such as readable transactions, authorization management, and risk identification, aligning with Ethereum’s upgrade trajectory. In the future, Ethereum will further solidify its position as the default global entry point for applications by leveraging its security and experience advantages, attracting more capital, users, and developers back to its ecosystem.

Summary
Author: imToken

"Ronin is coming home to Ethereum."

On August 15, Ronin—a sidechain that had been expanding its DeFi and consumer DApp offerings just months earlier—suddenly announced its "return," planning to transition from an Ethereum sidechain to an L2 solution.

At the same time, the Ethereum Foundation is driving another milestone event: the official launch of the second phase of its "Trillion-Dollar Security Plan" (1TS), shifting focus from底层 consensus and security mechanisms to wallet user experience and application-layer usability.

These developments signal that the next wave of the Ethereum ecosystem—a dual upgrade in security and experience—is already underway.

1. Phase 2 of 1TS: Transitioning from Security to Experience
As early as May this year, the Ethereum Foundation (EF) unveiled the blueprint for its "Trillion-Dollar Security Plan" (1TS), with the goal of establishing Ethereum as the ultimate settlement layer capable of supporting billions of users and trillions of dollars in economic activity.

Subsequently, the EF adjusted its internal governance structure and released the first 1TS report in June, categorizing Ethereum’s main security challenges into six areas: user experience (UX), smart contract security, infrastructure and cloud security, consensus protocol security, security incident response and mitigation mechanisms, and social layer and governance security. This marked the beginning of Ethereum’s systematic approach to addressing ecological security challenges (for further reading, see "Is User Experience a Security Issue? Understanding the UX Challenges in Ethereum’s Trillion-Dollar Security Blueprint").

On August 20, the Ethereum Foundation announced the launch of Phase 2 of the 1TS plan, explicitly shifting its core focus from底层 security to user experience and wallet safety. Key actions include:

• Collaborating with Walletbeat to establish minimum security standards for Ethereum wallets, including requirements for transparent transactions and intrusion-resistant interfaces;

• Supporting projects like Verifier Alliance (VERA) to address blind signing issues and enhance transaction decoding capabilities;

• Creating an open-source smart contract vulnerability database to help developers detect code vulnerabilities before deployment;

Additionally, the EF encourages the community to develop "minimalist wallets" for non-technical users and enterprise-grade solutions that meet compliance and privacy needs, further reducing barriers to using Ethereum.

In other words, 1TS has moved from blueprint to implementation. Ethereum aims not only to remain the most secure infrastructure but also to become the most usable and trustworthy public foundation, creating a siphon effect. After all, wherever higher security standards and smoother user experiences are provided, capital, users, and developers will flock.

2. Security and Experience: Building a New Moat
"If users cannot understand the transactions they are signing or properly manage their keys, then no matter how secure Ethereum’s底层 is, their experience remains vulnerable." This statement underscores the fundamental goal of Phase 2 of 1TS: to transform interactions with wallets and applications from security challenges into "security guardrails."

Ronin’s "return" is a typical signal. It once left due to high gas fees and complex interactions to build an independent blockchain. But as Rollup technology matures and Ethereum upgrades both security and experience, Ronin realizes that reintegrating into the Ethereum ecosystem offers greater value:

Returning to Ethereum means immediate access to mature liquidity, unified standards, the richest developer tools, and the most robust security backing, thereby reducing costs and improving体验.

Rather than struggling independently, it is more beneficial to reconnect with Ethereum’s vast ecosystem.

From this perspective, if Phase 1 Ethereum won the trust of core applications like DeFi, stablecoins, and NFTs through "security," then Phase 2 demonstrates its siphon effect on user experience and ecological prosperity.

This is precisely the strategic intent of "Phase 2 of 1TS"—solutions for wallet blind signing, the introduction of minimum security standards, and the establishment of a vulnerability database are not just security measures but also experience upgrades. Together, they will lower user barriers, enabling Ethereum to transition from "only geeks and Crypto-native users can use it" to "anyone or any institution globally can use it with confidence."

Ronin is not the first, nor will it be the last. Today, it’s a gaming blockchain returning; tomorrow,更多公链 that once chose "independent development" may follow suit, transitioning to L2s on Ethereum. Ultimately, Ethereum’s position as a settlement layer will become more solid, and its ecological scale will expand further.

After security, experience is the new moat. Once Ethereum completes this moat, it will not only be the first choice for developers but also the default entry point for global users.

3. Wallets: The First Line of Defense for Trillion-Dollar Applications
If Ethereum’s 1TS is a systematic upgrade project, then wallets are the first cornerstone of this project. This is why the EF explicitly supports developers and contributors in establishing minimum security standards for wallets:

Promoting transaction readability and simulation to彻底解决 blind signing issues, while also creating vulnerability databases and developer tools to help wallets and DApps identify issues before launch. These actions essentially build "guardrails" for wallets, transforming them from mere entry points into trustworthy guardians of user asset security and experience.

From a user perspective, future wallets will no longer be "complex crypto tools" but will evolve into "default-secure on-chain financial assistants." From a developer perspective, wallet standardization and security mean that ecological applications can reach users faster and with lower risk.

For current wallet service providers, this is both a challenge and an opportunity. Taking imToken as an example, its continuous iterations around transaction readability, authorization management centers, and risk identification mechanisms align with the direction proposed by the EF:

• For common contract call requests, it has achieved readable signature requests, clearly displaying authorization targets, amounts, whether it is an infinite authorization, and other information, helping users identify the actual operation content and significantly reducing the risk of mistaken signatures due to lack of understanding;

• The authorization management page incorporates revoke functionality, allowing users to quickly view and manage all DApp authorization histories and supporting one-click revocation;

• It integrates an on-chain address blacklist system, DApp risk scoring mechanism, and third-party security services to identify malicious links, disguised frontends, phishing contracts, and other risk sources in advance;

Wallets are not just entry points; they are the first line of defense for Ethereum’s ability to support trillion-dollar applications. Those who率先对标 standards, establish guardrails, and respond systematically will become the true beneficiaries of the "great return."

Today’s Ethereum is no longer just "the world’s largest smart contract platform." It is steadily upgrading into a settlement layer and infrastructure for global trillion-dollar applications.

It is foreseeable that in the coming years, Ethereum will not only continue to dominate the crypto-financial world but also gradually integrate into broader real-world financial and daily application scenarios—from cross-border payments to corporate treasuries, from gaming and entertainment to social networks.

As witnesses, we will directly observe how trillion-dollar innovations and applications are redefined on Ethereum.

1. April 2022: Kevin Rose launches the series; floor rockets to 38.5 ETH.

2. August 2022: Rose unilaterally flips Moonbirds to CC0; trust collapses, floor falls to 2 ETH.

3. May 2025: Spencer Tucker (Orange Cap Games) buys the project; floor rebounds from 0.3 ETH to 4 ETH in three months—a 1 000 %+ “birb bounce.”

How Spencer Pulled It Off

• No grand roadmap, just radical transparency. Spencer tweets daily, answers every DM, and publicly pivots: “We’re not finishing Kevin’s vision—we’re building our own.”

• Proven track record. He previously rescued Pudgy Penguins, turning them into a $150 M brand with the Vibes TCG card game.

• Community-first playbook.
  – 51 days after takeover: OpenSea swaps its avatar to a Moonbird; trading volume tops Ethereum NFT charts for five straight days; TG group hits 25 k members.
  – A $1.4 M prize pool is crowdfunded from sticker raffles.

What “G-Birb” Actually Is
“G-Birb” is Spencer’s shorthand for the next phase: Growth-Birb. Think:

• Licensed merch drops (rumored deals with Adidas and Lego).

• A mobile TCG that uses Moonbirds as playable heroes.

• Cross-chain staking rewards in the form of “Feather Points” redeemable for physical collectibles.

The Bull Case

• Spencer’s diamond-hand reputation (he once bought 144 Pudgys at the 2022 bottom) signals long-term conviction.

• Yuga Labs retains a minority stake and has granted IP rights back to holders—creating a potential Otherside integration without the baggage.

• Floor still sits 90 % below ATH, leaving room for another 10× if the brand hits mainstream.

The Bear Traps

• CC0 stigma lingers—some brands still won’t touch an IP that was once open-source.

• NFT market liquidity remains thin; a 1 000 % rally can unwind just as fast.

• Spencer’s success at Pudgy was in a bull cycle; can the same tactics work if macro turns?

Bottom Line
Moonbirds is no longer a Kevin Rose experiment; it’s a Spencer Tucker turnaround story. If G-Birb delivers even half of its promised partnerships, 4 ETH may look cheap. If not, the owls risk a second nosedive. Either way, the next six months will decide whether this is a true phoenix flight—or just a well-timed pump.

Traditional Yardsticks vs. Bitcoin Companies
In legacy equities, free-cash-flow-per-share (FCF/Share) is the North Star.
In bitcoin-treasury companies, the equivalent is bitcoin-per-share growth. The compounding rate of the underlying asset dwarfs that of any traditional business:

• Bitcoin’s 5–10 yr CAGR: 60–80 %

• Elite cash-flow compounders: ≈ 15 %

Yet investors willingly pay 25–30× earnings for the latter. The same willingness—scaled to an asset compounding four times faster—explains why premiums to NAV can be rational, not reckless.

Meet mNAV—the New P/B for Bitcoin Firms
mNAV = market cap ÷ (bitcoin holdings × spot price).
Like price-to-book in TradFi:

• mNAV > 1 signals market confidence in future bitcoin-per-share growth, cheap funding, and operational leverage.

• mNAV < 1 may flag governance risk, broken financing rails, or an undervalued opportunity—context is everything.

The S&P 500’s P/B has ranged 1.5–5.5× for decades; MSTR’s average mNAV sits in the same corridor. The difference is that the “book” is an appreciating bearer asset, not depreciating plant and equipment.

Why the Premium Persists
Retail investors simply cannot replicate a corporate treasury’s toolkit:

• Sub-1 % convertible debt—effectively free leverage.

• Operating leverage—issuing equity or prefs at a premium to NAV.

• Narrative moat—every headline purchase reinforces the brand and the balance sheet.

These advantages compound into a flywheel: more BTC → higher collateral value → cheaper funding → more BTC.

MSTR’s Financial Alchemy
MicroStrategy has perfected the art of capital-structure jiu-jitsu:

1. Issue low-coupon converts when equity is rich.

2. Use proceeds to stack bitcoin.

3. Rising BTC price lifts collateral, enabling yet larger raises.

4. Dilution is minimal because converts strike far above spot.

The result: bitcoin-per-share grows faster than share count, the exact analogue of a traditional firm growing FCF/Share faster than shares outstanding.

When mNAV Discounts Are Real
Of 167 publicly traded BTC-treasury companies tracked by Bitcoin Treasuries, 21 trade at mNAV < 1. Like a 5× P/E stock, the discount often screams value trap:

• Weak governance

• Broken financing model

• Operational drag

A sub-1 mNAV can also tempt management to sell BTC and buy back stock. MSTR resisted that siren song even in the 2022 bear, choosing instead to restructure debt and keep every sat. Only one other firm—Japan’s Metaplanet—earns the same “HODL at any cost” conviction.

Technical Snapshot: Is MSTR Oversold?

• 200-day SMA: Price ($353) is kissing the 200-DMA for only the second green reset of this cycle—historically a springboard.

• Z-Score: At –2σ, MSTR sits in the statistical bargain bin; prior excursions below –1σ marked sharp mean-reversion rallies.

• Oscillator: Deep oversold—past readings here produced double-digit bounces.

• BTC-denominated MSTR: The risk-oscillator is near all-time lows, a classic setup for lagging price to catch up with coin-denominated value.

Long-Term Lens: Why I Lose Zero Sleep Over Price Lags
The metric that matters—bitcoin-per-share—keeps ticking higher every week. Short-term P&L noise is irrelevant; structural improvement is everything. When sentiment flips and mNAV re-expands, the compression-to-expansion swing can be violent to the upside.

As with traditional compounders whose FCF/Share marches upward while the stock wiggles, temporary discounts are gifts for investors who understand the flywheel.

Risk Checklist for Any BTC-Treasury Stock
Before chasing any mNAV discount, ask:

1. Rate of change—is BTC-per-share actually rising?

2. Revenue diversification—any non-dilutive cash flow?

3. Funding durability—will the model survive a 50 % drawdown?

MSTR scores high on all three; most copycats do not.

Bottom Line
Companies like MicroStrategy are not merely “buying bitcoin.” They are re-engineering what equity value can mean in a world where the best collateral is digital, scarce, and natively internet-native. mNAV is the new P/E, the premium is the price of access to leverage you can’t replicate, and every dip is a referendum on conviction, not on bitcoin itself.

Key Developments:

• The attack on Monero led Kraken exchange to suspend deposits, raising concerns about the security of Proof-of-Work (PoW) systems, though Monero’s core functionality remains unaffected.

• Qubic’s founder claims the motivation is to redirect electricity wasted on PoW to artificial intelligence (AI) purposes but has not disclosed specific details.

• Experts are divided on the success of the attack: Monero developers deny a full takeover, while cybersecurity firm SlowMist warns that Qubic may already possess the ability to censor transactions and rewrite the blockchain.

Implications for Dogecoin:
As a top-ten cryptocurrency by market cap, Dogecoin could trigger market-wide ripple effects if attacked. However, it remains unclear whether Qubic can overcome its larger hashrate defenses.

Broader Risks and Controversies:
The incident exposes potential vulnerabilities in PoW mechanisms. Qubic’s plan to leverage controlled hashrate for token buybacks and burns continues to fuel debate.

Author: Amin Ayan
Compiled by: Saoirse, Foresight News

Full Analysis:

Qubic’s Strategic Shift to Dogecoin
Days after claiming control over most of Monero’s hashrate, the Qubic community has voted to target Dogecoin (DOGE) for its next 51% attack. The move signals an aggressive expansion of Qubic’s campaign to dominate PoW networks.

The Monero Precedent
Qubic’s announcement last week that it had seized majority control of Monero’s hashrate sent shockwaves through the crypto industry. After a month-long battle with Monero miners, Qubic’s mining pool successfully reorganised six blocks. According to MiningPoolStats, the pool’s hashrate currently stands at approximately 2.32 GH/s, making it the most powerful in the Monero network.

While Qubic emphasised that Monero’s core features—including privacy and transaction speed—remain intact, it revealed its "ultimate goal" is to have Qubic miners safeguard Monero’s security. The attack forced Kraken to temporarily suspend Monero deposits, citing "potential risks to network integrity." Withdrawals and trading were unaffected, and deposits are expected to resume once exchanges deem the network stable.

Motivations and Divergent Perspectives
When questioned about the motivation behind the attacks, Qubic founder Sergey Ivancheglo (known as "Come-from-Beyond" in crypto circles) stated on X: "Vast amounts of electricity are wasted on meaningless Proof-of-Work. We need to redirect this power to artificial intelligence." He added, "These words may sound unclear now, and I cannot reveal more at this time, but everyone will understand in the future."

Despite Qubic’s claims of a complete takeover, Monero developers have pushed back. Luke Parker, lead developer of SeraiDEX, argued that the reorganization of six blocks does not conclusively prove a successful 51% attack, suggesting it might simply indicate "an attacker with substantial hashrate got lucky."

However, others hold contrasting views. Zhong Chenming, co-founder of cybersecurity firm SlowMist, stated that the attack "appears successful" and warned that Qubic’s pool could theoretically rewrite the blockchain and censor any transaction.

Economic Incentives and Dogecoin’s Vulnerability
The confrontation began in late June when Qubic announced it would repurpose its PoW model—originally designed for AI-related tasks—to mine Monero. The Monero (XMR) obtained through mining will be used to buy back and burn Qubic tokens, creating a direct economic incentive for Qubic to dominate the Monero network.

Qubic’s expansion plans have sparked fresh concerns about PoW-based cryptocurrencies. By targeting well-established networks like Dogecoin, the project is testing the resilience of some of crypto’s most mature blockchains. A 51% attack occurs when a single entity controls most of a network’s mining hashrate, enabling double-spending and block reorganizations.

Although Dogecoin’s larger size makes it a more challenging target, the Qubic community’s vote demonstrates clear intent to attempt an attack. As one of the most recognizable meme coins and a top-ten digital asset by market cap, any disruption to Dogecoin could send ripple effects throughout the crypto market.

Editor’s Note:
This incident highlights evolving threats to PoW networks and the need for robust defensive strategies. While Qubic’s ambitions blend technological experimentation with economic incentives, the ethical and practical implications of such attacks remain contentious.

In this article, Yash analyzes lessons from crypto × AI's journey so far and predicts key trends for the next 6–12 months and beyond.

Phase 1: Speculation, Bubble, and Experiments

The frenzy began with Truth Terminal ($GOAT) in October 2024, peaking from November to January 2025 as crypto AI agent market cap surpassed $10B. While little of substance emerged, this phase revealed possibilities:

• Weekly experimental tokens (pumping to $50M MC before crashing).

• "AI Agent L1" frameworks/launchpads hyped by KOLs.

• Overvalued ChatGPT-style UIs (e.g., Griffain, Venice) promising on-chain actions (but delivering only demos).

• Autonomous hedge fund whitepapers (with no real products).

Phase 2: The Collapse

February–April 2025 was brutal:

• Liquidity drain: TRUMP’s launch triggered 50–90% token crashes.

• Stalled development: Teams behind $1M–$100M tokens went silent.

• Community disillusionment: Tokens with no utility beyond speculation collapsed.

• Narrative death: "AI Agent L1s" faded as zero consumer adoption became obvious.

Comparable to the dot-com bubble, this purge left few survivors—but like the internet era, viable ideas may yet emerge.

Solana AI Hackathon: Silver Linings

Despite the crash, SendAI delivered:

• First open-source Multi-Chain Protocol (MCP) server for on-chain actions.

• Upgraded Solana Agent Suite v2 (more modular).

• 50+ protocol integrations (from 11 at launch).

Current State of Crypto × AI

1. Broken Chat Frontends

40–50 teams built UIs (e.g., Griffain, Neur), but most fail in production:

• Poor context understanding for crypto transactions.

• Simple swaps take 8–10 seconds (vs. manual UI’s instant execution).

2. Dead AI Agent Infrastructure Narrative

• Open-source frameworks lack monetization.

• Token launchpads devolved into memecoins (e.g., Grok’s Ani).

• "Vibe coding" tools (e.g., dev.fun) remain niche due to security risks.

3. Solana AI Token Wipeout

147+ AI tokens (>$1M MC each) now trade as memecoins, with developers abandoning projects:

• ai16z ($150M), Alch ($140M), GOAT ($100M), Griffain ($50M), etc.

Future of Crypto × AI: A Two-Stage Outlook

Next 6–12 Months

1. Smarter Chat Agents

• Models (Claude Sonnet 4, Kimi K2) are improving at tool calling and proactive workflows.

• MCP standard enables cross-app composability (e.g., price feeds + swaps via one API).

• Chain-enabled AI agents (with embedded wallets) will execute tasks autonomously.

2. Consumer Crypto × AI ("Vibe Coding")

• AI lowers creation costs; tokens attract attention.

• Examples: Gamified TikTok (endless tokenized mini-games) or AI companion platforms (e.g., Grok’s Ani).

• "AI × Tokens = Internet’s capital markets moment."

Beyond 1 Year

1. Agents as Stablecoin’s Trojan Horse

• AI agents will prefer stablecoins over legacy payments (Visa/Mastercard).

• Stripe’s AI agent SDK (post-Bridge/Privy acquisitions) could catalyze adoption.

2. AI-Embedded Crypto Protocols

• Context-aware AI will suggest DeFi strategies (e.g., looping yields) or generate assets (e.g., Jup Studio’s AI-powered token code).

3. Crypto-Coordinated AI Networks

• Crypto incentivizes decentralized AI stacks (training/verification).

• Bittensor ($4B ecosystem) hints at potential for agent trust markets.

4. On-Chain Context Layers

• Composable user context (tastes, preferences) stored on-chain (as ZK-proofed NFTs) enables hyper-personalized AI.

• Monetizing context could surpass IP value in an AI-dominated era.

5. Chat-Based Crypto Super Apps

• Intent-centric interfaces (e.g., Perplexity Comet, Donut’s crypto agent browser) will replace traditional web navigation.

• Western resistance to super apps may crumble as AI agents unify fragmented services.

Conclusion: Building for the Second Wave

We stand at the intersection of two transformative technologies (crypto + AI). The first bubble popped, but the foundations—MCP standards, vibe coding, agent-native wallets—are being laid.

Now is the time to build.

The early DeFi ecosystem relied on crude AMM designs where:

• Uniswap V2's x*y=k curve wasted >99% of stablecoin liquidity

• Trading $1M USDC→USDT could incur $100k+ in slippage

• LPs earned 0.3% fees on <0.1% price deviations

Case Study:
During March 2020's "Black Thursday," USDC/USDT spreads reached 15% on Uniswap while remaining <1% on centralized exchanges.

2. Curve's StableSwap Breakthrough (2020)

Curve's hybrid invariant introduced:

• Capital efficiency: 100-1000x better than Uniswap V2

• Predictable IL: <0.1% annualized loss for stablecoin LPs

• Flywheel effect: veCRV rewards attracted $50B+ TVL at peak

Legacy Impact:
Established the "stablecoin trilemma" - no protocol could simultaneously optimize for:

1. Capital efficiency

2. LP profitability

3. Protocol sustainability

3. The Concentrated Liquidity Era (2021-2024)

Uniswap V3's innovation enabled:

• Active liquidity management: LPs could set custom price ranges

• Flexible fees: 1bps tiers for stablecoins vs 30bps for volatile pairs

Unintended Consequences:

• Professional market makers captured >80% of stablecoin volume

• Retail LPs faced negative returns due to gas costs and MEV

4. The Debt Liquidity Paradigm (2025)

Next-gen protocols solved the trilemma by:

Fluid DEX's Model:

1. Borrower deposits ETH collateral

2. Receives blended stablecoin debt (e.g., 60% USDC/40% USDT)

3. Debt pool automatically provides liquidity

4. Trading fees reduce borrowing APR

Results:

• Zero-cost liquidity for USDC/USDT

• 5-10x higher capital efficiency than Curve

• 100% organic volume (no token incentives needed)

5. The Coming Battlegrounds

0xOrb's Multi-Asset Approach:

• Generalized stable pools supporting 1000+ assets

• Potential to absorb long-tail stablecoins

Cross-Chain Challenges:

• CCTP enables native USDC transfers but fragments liquidity

• LayerZero's OFT standard may create new arbitrage vectors

6. The Legacy DEX Dilemma

Curve's Existential Threat:

• TVL dropped from $25B (2023) to $3B (2025)

• Requires complete veCRV model overhaul

Ekubo's Misguided Strategy:

• Subsidizing 0.5bps trades with 8% APY incentives

• $2.6M TVL handling $130M daily volume (50x turnover)

Conclusion: The End of Stablecoin Liquidity Mining

The $100B+ stablecoin market is transitioning:

• 2018-2022: Incentive-driven liquidity

• 2023-2024: Professional market making

• 2025+: Debt-based organic liquidity

Winning Attributes:
✓ Protocol-owned liquidity
✓ Negative-cost capital
✓ MEV-resistant architecture

"The best liquidity is that which doesn't know it's providing liquidity." — Fluid DEX whitepaper

What is Solana Attestation Service (SAS)?

At its core, SAS is an open, permissionless protocol designed to enable secure, verifiable on-chain credentials without exposing sensitive personal data. It allows trusted third parties ("issuers") to create attestations about a user’s identity or qualifications, which are then stored in the user’s wallet.

These attestations can verify:

• KYC status

• Geographic eligibility

• Accredited investor status

• Age verification

• Affiliations with real-world organizations or events

Unlike traditional systems, SAS does not leak raw data—it provides cryptographic proof that a claim has been verified by a trusted party. This balances privacy with seamless access to services.

The Solana Identity Group: Pioneering On-Chain Identity

SAS is the first major release from the Solana Identity Group, a collaboration among key ecosystem players:

• Solana Foundation: Backing network growth and security.

• Civic: A leader in decentralized identity solutions.

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

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

• Solid: Building globally interoperable identity tools.

Together, they’re laying the groundwork for a standardized, composable identity layer on Solana.

How SAS Works: A 3-Party Model

SAS operates through a dedicated on-chain program and four key roles:

1. Issuers: Trusted entities (e.g., KYC providers, governments) that create and digitally sign attestations.

2. SAS Program: An on-chain program that issues, validates, and manages attestations—ensuring composability and interoperability.

3. Holders: Users store attestations in wallets (e.g., Phantom, Backpack) and control where they’re shared.

4. Verifiers: DApps or smart contracts that check attestations (e.g., "Is this user over 18?") without seeing underlying data.

Workflow:

1. Define a schema (e.g., "Resident of Japan").

2. Issue attestations: Signed by the issuer’s private key and linked to the holder’s wallet.

3. Store attestations: On-chain or off-chain, depending on privacy needs.

4. Verify: Holders share proofs with verifiers in seconds.

Key Features of SAS

• Portable credentials: Verify once, reuse everywhere.

• Privacy by default: Only necessary data is shared—no retention of sensitive info.

• Composable & interoperable: Stack attestations for complex use cases.

• Instant verification: No backend systems needed; one SDK call confirms validity.

• Open infrastructure: No central authority governs issuers or verifiers.

Getting Started with SAS

To integrate SAS:

1. Install the SDK:

   • JavaScript/TypeScript: npm install @solana/attestation-service

   • Rust: cargo add solana-attestation-service-client

2. Review docs: Official SAS Documentation

3. Implement logic: Use SDK functions to create, sign, and verify attestations.

4. Test on Devnet: Ensure functionality before mainnet deployment.

5. Go live: Deploy to Solana mainnet and start issuing/verifying.

Core Use Cases

• KYC Passport: One-time KYC for exchanges, DeFi, and launchpads.

• Geo-gated access: Restrict services by jurisdiction (e.g., compliant token sales).

• Sybil resistance: Prove uniqueness to block bots and ensure fair token distribution.

• Investor accreditation: Verify eligibility for RWA platforms.

• DAO reputation: Reward contributions with attestation-based voting power.

• DePIN verification: Confirm hardware/location for decentralized infrastructure.

Who’s Adopting SAS?

• Civic: Civic Pass holders now auto-get SAS-compatible credentials.

• Solana.ID: Issues immutable employment verification.

• Solid: "Priority Pass" combines KYC + social credentials.

• Trusta Labs: AI + SAS for DeFi identity checks.

• RNS.ID: Government-backed digital IDs (e.g., Palau).

• Sumsub: KYC provider enabling cross-platform reusable identities.

SAS vs. World Network (World ID)

Criticism of World Network:

• Banned in multiple jurisdictions (Spain, Hong Kong, Germany) over biometric data concerns.

• Edward Snowden warned about risks of centralized iris scanning.

• Lacks SAS’s flexibility for enterprise/compliance use cases.

The Future of Programmable Identity on Solana

SAS embodies the next-gen identity stack:
✅ User-controlled
✅ Regulator-friendly
✅ Privacy-preserving
✅ Developer-first

As demand grows for identity-aware DApps in DeFi, gaming, and RWAs, SAS positions Solana as the leader in scalable, compliant blockchain identity.

Conclusion

SAS isn’t just a protocol—it’s the foundation for a smarter, safer Web3. With backing from top identity providers, intuitive SDKs, and real-world adoption, SAS is poised to become the gold standard for on-chain identity.

For users: Take back control.
For builders: Ship faster, compliant apps.
For regulators: Auditable without compromises.

SAS is here—and this is just the beginning.

TL;DR:

• SAS replaces KYC with reusable, privacy-focused attestations.

• No biometrics—just cryptographic proofs from trusted issuers.

• Already adopted by Civic, Solana.ID, and institutional players.

• Outperforms World ID in compliance and flexibility.

• The future of identity on Solana is programmable, portable, and private.

Summary
Bitcoin’s massive capital base remains underutilized, but BTCFi is poised to change this:

Over 14 million BTC are currently idle, as Bitcoin lacks the capital efficiency seen in Ethereum’s DeFi ecosystem. BTCFi unlocks liquidity by transforming BTC into interest-bearing assets, enabling its use in lending, staking, insurance, and other decentralized financial applications built on Bitcoin’s security.

Institutional demand for BTC-native yields is growing, with infrastructure now in place: From compliant custody solutions to real-world yield protocols, the BTCFi ecosystem now includes ETFs, licensed lending, insurance models, and institutional-grade staking protocols.

Technological breakthroughs and Layer-2 innovations have 赋予 BTCFi scalability and programmability. Upgrades like Taproot and emerging Layer-2 platforms now support smart contracts, token issuance, and composable DeFi applications on Bitcoin.

Capital Liquidity Bottlenecks: The Purpose of BTCFi

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Source: Glassnode

Bitcoin now boasts an asset base exceeding $1 trillion, yet most of these assets remain idle. Analysts estimate that 99% of BTC’s market value is "idle"—in other words, nearly all Bitcoin is stored in wallets or cold storage, generating no on-chain returns. On-chain data confirms this: Over 14 million BTC have remained untouched for extended periods.

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Source: DefiLlama

This stands in stark contrast to Ethereum, where vast amounts of ETH are actively deployed in DeFi and staking. For example, Ethereum’s liquid staking protocols have locked up over 14.37 million ETH (approximately $56 billion), transforming ETH into interest-bearing assets and fueling a vibrant on-chain economy.

Ethereum’s DeFi "summer" demonstrated how capital efficiency—via staking rewards, lending interest, and liquidity provision—unlocked immense value for smart contract platforms. In comparison, Bitcoin has long been underutilized; its massive liquidity generates 0% yields and cannot be further composed into financial products at the base layer.

BTCFi (Bitcoin DeFi) aims to unlock this dormant capital. As CoinGecko’s guide explains, Bitcoin DeFi "transforms Bitcoin from a passive asset into a productive one," allowing holders to earn yields on BTC or use it in DeFi applications.

Essentially, BTCFi seeks to achieve for Bitcoin what DeFi did for Ethereum: turning static assets into sources of yield and a foundation for further innovation.

Growing Institutional Demand for Yields

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

History of Bitcoin ETFs. Source: Fioderers

Institutional demand may be the strongest catalyst for BTCFi growth, and this trend is already underway. From late 2023 to 2024, major asset managers applied for and launched spot Bitcoin ETFs, ultimately introducing BTC to mainstream investment portfolios.

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Institutions now view Bitcoin as a strategic reserve asset but remain yield-sensitive. In traditional finance, capital is never idle: bonds pay interest, stocks pay dividends, and even cash is deposited in money market funds. Until recently, however, Bitcoin generated no such yields.

BTCFi is changing this. Institutions are now asking a logical question: What can we do with our BTC holdings? A growing number are exploring lending, staking, or using Bitcoin as collateral to unlock yields, mirroring traditional financial models.

As these options emerge, institutional interest in BTCFi is surging. A 3%-5% annual return on BTC may seem modest, but for managing billions in capital, this incremental gain holds significant value.

As BTCFi matures, BTC holders can now earn 10%-20% annual yields via decentralized protocols, making the opportunity even more attractive. If BTC can offer stable, low-risk returns while retaining price appreciation potential, it will become not just a reserve asset but a monetary anchor for DeFi.

As more institutions and individuals adopt BTC as a long-term reserve asset, the demand to earn yields on idle assets becomes clearer. Yield generation is evolving from a niche strategy to a fundamental component of asset management.

Just as U.S. Treasuries underpin traditional capital markets, Bitcoin could become the foundational yield asset in crypto finance, setting benchmarks for everything from lending rates to DeFi protocol valuations.

Infrastructure is in Place

The BTCFi ecosystem is rapidly rolling out new products and frameworks designed for institutional adoption:

Compliant Custody and Liquidity Tokenization

Firms like Fidelity Digital Assets, Coinbase Custody, and BitGo now support DeFi participation under strict custodial compliance. Emerging solutions like Liquid Custody Tokens (LCTs)—such as BounceBit’s BBTC—enable institutions to hold BTC in compliant custody while deploying it on-chain to earn yields. This allows institutions to maintain regulatory compliance while accessing DeFi’s yield potential.

ETFs and Yield-Integrated Products

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Europe’s first yield-bearing Bitcoin ETP. Source: CoreDAO

Yield-bearing Bitcoin ETPs are already live in Europe. Valour’s BTCD ETP stakes BTC on Bitcoin Layer-2s, offering an approximate 5.6% annual yield by late 2024. Meanwhile, institutions are exploring BTC-linked structured notes, dual-yield products, and basis trading strategies, combining traditional financial instruments with crypto-native yield engines.

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

BounceBit aims to enable institutions to earn yields on BTC. Source: BounceBit

For example, BounceBit Prime combines tokenized U.S. Treasuries with BTC yield strategies in a single product, offering dual returns familiar to traditional investors like family offices and hedge funds—a Bitcoin yield product designed for Wall Street.

Another example is SatLayer, which launched a decentralized insurance tool backed by yield-bearing BTC. Often called "Bitcoin’s Berkshire Hathaway," SatLayer allows any BTC holder to restake assets into on-chain insurance pools and earn a portion of premium income. It is partnering with crypto-native and traditional underwriters (such as Nexus Mutual and Relm) to build a new class of decentralized BTC insurance products.

Protocol Maturity and Institutional Trust

BTCFi protocols like Babylon and Lombard have surpassed billions in Total Value Locked (TVL), passed security audits, and are pursuing SOC2 compliance. Many have also hired Wall Street veterans as advisors and prioritized risk management in their design. These moves build credibility with global capital allocators.

All this points to a future where BTC yields become a cornerstone of institutional portfolios, much like U.S. Treasuries in traditional markets. This shift will have ripple effects: Institutional inflows into BTCFi will not only benefit Bitcoin holders but also enhance cross-chain liquidity, drive new DeFi standards, and provide a trusted, productive capital base for the entire crypto economy.

In short, BTCFi offers institutions the best of both worlds: the reliability of Bitcoin as a premium asset and the opportunity to earn yields.

Why Now? The Tech Stack Fueling BTCFi’s Breakout

BTCFi is no longer just a theoretical concept—it is becoming a reality, thanks to breakthroughs in three areas: technical upgrades to the Bitcoin ecosystem, growing market demand driven by improved infrastructure, and institutional interest spurred by regulatory clarity.

From Taproot to BitVM

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Taproot upgrade enhances Bitcoin’s privacy and efficiency. Source: chaindebrief

Recent upgrades to the Bitcoin protocol and ecosystem have laid the groundwork for more complex financial applications. For example, the 2021 Taproot upgrade improved Bitcoin’s privacy, scalability, and programmability, even "encouraging the use of smart contracts on Bitcoin" by boosting efficiency. Taproot also enabled new protocols like Taro (now Taproot Assets) for issuing tokens and stablecoins on the Bitcoin ledger.

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

BitVM. Source: Bitcoin Illustrated

Similarly, concepts like BitVM—a proposed Bitcoin "virtual machine"—aim to enable Ethereum-like smart contracts on Bitcoin, with a testnet planned for 2025. Equally important, a wave of Bitcoin-native Layer-2 networks and sidechains has emerged.

Platforms like Stacks, Rootstock (RSK), Merlin Chain, and the new BOB Rollup are introducing smart contracts to the Bitcoin ecosystem.

Stacks supports smart contracts via Bitcoin’s hashing power, enables cross-chain tokenization through sBTC, and offers native BTC yields via Proof-of-Transfer (PoX) staking, making Bitcoin more programmable and productive for developers and institutions.

BOB (Build on Bitcoin) is an EVM-compatible Layer-2 using Bitcoin as its finality anchor. It even plans to leverage BitVM to enable Turing-complete contracts secured by Bitcoin.

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

Merlin’s TVL currently exceeds that of many ETH Layer-2s, such as ZkSync, Linea, and Scroll. Source: Merlin

Meanwhile, the Babylon protocol introduced Bitcoin staking to secure other chains, attracting tens of thousands of BTC. By late 2024, Babylon had staked over 57,000 BTC (approximately $6 billion), ranking it among the top DeFi protocols by TVL. Merlin, once the highest-TVL Bitcoin Layer-2, reached approximately $3.9 billion in TVL within 50 days of launch, significantly expanding BTCFi’s reach.

These upgrades and new layers combined solve many early obstacles, allowing Bitcoin to modularly support tokens, smart contracts, and cross-chain interactions.

From Ordinals to BRC-20

Two years after the inscription frenzy, can BTCFi lead another bull run in the Bitcoin ecosystem?

2023 was a breakout year for Ordinals and BRC-20 tokens. Source: Dune @dataalways

Over the past two years, demand for more expressive uses of Bitcoin has grown noticeably. A prime example is the 2023 surge in Ordinals and BRC-20 tokens. Users began inscribing assets and NFTs on satoshis (sats), driving a spike in on-chain activity.

By late 2023, over 52.8 million Ordinal inscriptions had been created, growing to approximately 69.7 million by late 2024. Meanwhile, miners collected hundreds of millions in fees—exceeding 6,900 BTC (approximately $405 million) by Q3 2024.

This frenzy demonstrated users’ willingness to leverage Bitcoin’s block space for more than just holding or payments, revealing demand for Bitcoin NFTs, tokens, and DeFi applications.

The Ordinals protocol fundamentally enabled Bitcoin to host these new asset types, while the BRC-20 standard provided a framework for tokenization. Though technically distinct from Ethereum’s ERC-20, it serves a similar role in expanding Bitcoin’s utility.

All these advancements form a tech stack that did not exist just a few years ago. The Bitcoin ecosystem is now ready to build a complete DeFi infrastructure around its core asset.

In summary, these catalysts have matured BTCFi, and this trend is likely to accelerate in the coming years.

A Two-Variable Auction for Block Space
Base’s sequencer ranks every incoming transaction by:

1. Submission time (latency)

2. Economic incentive (priority fee per unit of gas)

Think of it like a courier truck: parcels are loaded in arrival order, but anyone can pay an express surcharge to jump the queue. The sequencer therefore runs a per-gas auction, identical in spirit to Ethereum’s EIP-1559, balancing speed and spend.

The Logistics Analogy
Imagine a delivery truck with limited cargo room:

• Big box: $50 base fare + $10 tip, half the truck.

• Small box: $20 base fare + $10 tip, tiny footprint.
  The driver—seeking tip-per-cubic-inch—chooses the small box. Base’s sequencer does the same, maximising priority fee per unit of gas, not total fee.

Base vs. Arbitrum: Two Philosophies

• Base: live auction—users bid per transaction for immediate inclusion. Revenue scales with marginal willingness to pay.

• Arbitrum: strict first-come-first-served. Users race on latency, not price; revenue only grows with aggregate demand.
  Arbitrum’s new Timeboost lane adds an express track, but the bid is a blind, fixed fee for a future time-window, making it predictive rather than reactive—less efficient at capturing sudden high-value trades.

Where the Money Comes From
Base’s fees have three components:

1. L1 cost (posting calldata/blobs to Ethereum) – slashed by EIP-4844.

2. Base fee (mandatory, dynamic).

3. Priority fee (optional “tip”).

86 % of Base’s daily profit—$156 k—comes from priority fees.

• Slot #1 in each block alone yields 30–45 % of daily profit.

• Top 10 slots routinely account for 50–80 %.
  A mere 250 addresses supply 65 % of all priority fees; the single biggest tipper has paid $1.99 m over the past year.

Flashblocks & Shifting Slots
After the Flashblocks upgrade on 16 July, high-priority trades began landing in lower slots, diluting the share from slot #1. Yet total revenue stayed robust—evidence that more participants are bidding, not that value is vanishing.

Bottom Line
Base monetises every millisecond of urgency. By letting users pay for exact placement, it turns block space into a real-time marketplace, something most roll-ups have yet to replicate.