1. Strategy Resumes BTC Accumulation, Buys 1,550 BTC; Holdings Rise to 845,300 link

Strategy announced the purchase of 1,550 BTC for approximately 101 million US dollars, bringing its total holdings to 845,256 BTC. The company sold 32 BTC last week to fund preferred stock dividends. Meanwhile, Strategy raised its US dollar reserves from 900 million US dollars to 1 billion US dollars.

Speaking at BTC Prague regarding discussions over Strategy’s Bitcoin sales, Michael Saylor, founder of Strategy, stated he never claimed the company would refrain from selling Bitcoin. He has always advised investors not to hastily offload their Bitcoin. Saylor added that the company has made it clear in earnings calls and public disclosures over the past five years that it will sell Bitcoin when necessary.

2. Tom Lee: Agentic AI May Rely on Blockchain Settlement; BitMine Not Necessarily Holding Over 5% ETH link

Tom Lee, Chairman of BitMine, stated at the DACFP Financial Advisor Conference that the current financial system is built on layered technical architectures and rife with fraudulent transactions, while no fraudulent activities have ever been recorded on the Bitcoin and Ethereum networks. He compared blockchain investment to owning digital real estate, and noted that Agentic AI may rely on blockchain for high-speed settlement and behavioral constraints to prevent out-of-control risks. Lee also said BitMine does not intend to hold more than 5% of Ethereum’s circulating supply, and the company is expected to be included in the Russell 1000 Index by the end of June.

BitMine announced it added 126,971 ETH over the past week. Its total ETH holdings now stand at 5,543,872, accounting for approximately 4.59% of Ethereum’s total supply. The combined value of the company’s crypto assets, cash and strategic investments reaches 9.6 billion US dollars, including 247 million US dollars in cash. A total of 4,718,700 ETH has been staked.

3. CME Launches Nasdaq CME Crypto Index Futures, Covering BTC, ETH & SOL link

CME Group announced the official launch of Nasdaq CME Crypto Index Futures, which are cash-settled against the Nasdaq CME Crypto Settlement Price Index to track the overall performance of the largest and most actively traded cryptocurrencies by market capitalization. As of June 9, 2026, the index constituents include BTC, BCH, ETH, SOL, XRP, ADA, LINK and XLM.

4. 30-Day MA for US Spot Crypto ETF Plunges 78% link

The 30-day average daily trading volume of US spot ETFs has dropped from $4.4 billion in October 2025 to $960 million currently, a decline of 78%. Coupled with a 49% volume fall at DAT, the two major traditional finance channels for Bitcoin have sent the same signal that speculative demand for Bitcoin in traditional markets has faded.

5. Tim Draper: Bitcoin Safer Than Bank Deposits; Banking System Faces Quantum Risks Earlier link

Billionaire investor Tim Draper said in an interview with Benzinga that his Bitcoin holdings are safer than fiat deposits in banks, as quantum computers could crack banking systems faster than blockchains. He argued that should Bitcoin face quantum attacks, the community could roll back to secure blocks via a fork. Draper also stated that Bitcoin is currently at the low point of its four-year cycle, and reaffirmed his long-term view that Bitcoin may eventually surpass the US dollar in importance. However, Jameson Lopp, Chief Security Officer at Casa, previously noted that Bitcoin may take around a decade to complete quantum-resistant upgrades, while the banking system could adapt to quantum threats much faster than the Bitcoin network.

Sponsored by FinTax

6. Arthur Hayes: AI Bubble Burst May Drag Crypto; Sells HYPE, NEAR, WLD, ZEC link

Arthur Hayes, co-founder of BitMEX, wrote that AI has absorbed a large amount of newly injected US dollar liquidity, which is a key reason why Bitcoin failed to rally further amid liquidity expansion. He believes that if rising oil prices, selling pressure from large AI IPOs and US political factors combine to burst the AI stock bubble, the crypto market will also suffer in the short term. Bitcoin may drop first and then rebound ahead of a new round of liquidity injection. Hayes revealed that Maelstrom sold HYPE, NEAR, WLD and ZEC last week while retaining BTC and ETH, and may conduct tactical short selling via derivatives.

7. Over 200 Crypto Firms Urge US Senate to Advance Clarity Act link

More than 200 crypto firms and industry groups including Coinbase, Ripple, Kraken, Circle, a16z and Binance US have jointly sent a letter to the leadership of the U.S. Senate, urging a full Senate vote on the Clarity Act. The bill aims to establish a federal regulatory framework for the digital asset market, clarify regulatory responsibilities and set out compliance registration pathways, and has previously been passed by the Senate Banking Committee.

Dozens of crypto industry executives such as Coinbase CEO Brian Armstrong, a16z crypto partner Chris Dixon, Aave founder Stani Kulechov, BitGo CEO Mike Belshe and Block CEO Jack Dorsey have co-signed a letter to bipartisan leaders of the U.S. Senate, calling for retaining provisions of the Blockchain Regulatory Certainty Act (BRCA) in the CLARITY Act. The joint letter states that these provisions will deliver legal certainty for Bitcoin, DeFi and smart contract developers, clarify that non-custodial software developers and service providers shall not be deemed financial intermediaries, and foster domestic crypto innovation in the United States.

8. Trump Family Crypto Project Nets $2.3B; Investors Lose Equally link

Reuters reported that since Trump’s return to the White House, his family has gained at least $2.3 billion from crypto projects including World Liberty Financial, TRUMP Meme Coin, American Bitcoin, and AI Financial (formerly ALT5 Sigma), while related investors have suffered combined losses of around $2.3 billion. The Trump family profited mainly through brand licensing and token sales with limited personal capital invested, whereas retail investors incurred heavy losses due to sharp drops in token and related stock prices. The White House responded that all actions of the Trump administration serve the interests of the American people and denied any conflicts of interest.

9. Chinese Female Billionaire Scammed Out of RMB 60M by Fake “Middle Eastern Royalty” link

The CEO of a computing technology company in southwest China, surnamed Lv, was defrauded of more than 9.4 million US dollars, equivalent to about 60 million yuan, in the United States. Its mining pool reportedly accounted for approximately 9% of Bitcoin’s total global computing power at its peak. Reports said Lv was trapped by two brothers named Zubair who claimed to be Middle Eastern royals. The elder brother claimed to be a son-in-law of Middle Eastern royalty and said he had access to family funds, international business connections and resources of local US governments. The younger brother presented himself as a hedge fund manager by imitating characters from the American TV series *Billions*. The two also enlisted Michael Smedley, chief of staff to the Mayor of East Cleveland, to vouch for them and lured Lv into signing a contract for the development of a cryptocurrency mining farm.

10. EU Proposes 21st Russia Sanctions: Ban Transactions With 11 Crypto Platforms link

The European Commission formally presented its 21st package of sanctions against Russia on June 9. Focusing on key sectors including energy, financial services and crypto networks, the proposal seeks to ban transactions with 11 crypto platforms based in Belarus, Georgia, Nigeria, Panama, the United Arab Emirates, the Marshall Islands and other regions for aiding Russia in evading Western restrictions. Beyond the crypto sector, the proposal broadens curbs on traditional finance, planning to freeze assets of nearly 90 major banks and impose a full transaction ban on 35 banks inside and outside Russia. The sanctions will only take effect once unanimously approved by all EU member states.

According to Criptovaluta it, apart from the ban on transactions with the 11 crypto platforms, the European Commission plans to introduce for the first time the possibility of imposing blanket bans on crypto asset services in third countries to deter nations hosting platforms that help Russia bypass sanctions. Siobhan McGarry, spokesperson for Internal Market, Industry, Entrepreneurship and SMEs and Financial Services at the European Commission, declined to elaborate on the measure, stating that relevant provisions may be adjusted during the review process. She added that the European Commission aims to get the sanctions package approved by July 15.

Fundraising

• Digital Asset secures $355 million in funding led by a16z. link

• DeFi lending protocol Morpho announces completion of $175 million financing. link

• Tether participates in Germany’s Neura Robotics’ $1.4 billion funding round, valuing the company at approximately $7 billion. link

• Decentralized futures exchange MNX completes $6.4 million financing, to focus on the AI economy market. link

• TVL Capital closes $5 million funding round led by Framework Ventures. link

Learn more, check out crypto-fundraising.info.

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TL;DR:

Three Tech Giants’ Concurrent IPOs Could Trigger One of the Largest Tech Listing Waves in Recent Years: The combined valuation of SpaceX’s target IPO and the latest funding rounds for OpenAI and Anthropic exceeds $3.5 trillion. This not only tests the capital market’s ability to price innovative technologies but also fuels widespread debate over its impact on market liquidity.

SpaceX’s Valuation Logic Pivots from Aerospace to Global Infrastructure: The market’s focus has gradually shifted from rocket launches to the global communication network built by Starlink, prioritizing its long-term growth potential and infrastructure attributes.

OpenAI and Anthropic to Offer First Major Foundation Model Investment Targets: Representing the core productivity of generative AI, their public debuts could force a repricing across the AI sector, intensifying competition for concept-driven AI assets.

The “Siphon Effect” of Mega-IPOs May Be Overstated by the Market: Historical data suggests that massive IPOs primarily drive capital reallocation rather than liquidity evaporation, and rarely serve as direct catalysts for systemic risks.

Crypto Market Faces Phased Capital Competition but Remains Driven by Internal Cycles: While certain AI-concept tokens might suffer from capital diversion, the crypto market’s long-term trajectory will still largely depend on macro liquidity, the regulatory environment, and the Bitcoin cycle.

The Real Concern is Whether Lofty Valuations Can Materialize: Should future revenue growth, commercial progress, or profitability improvements miss market expectations, these companies and the broader tech growth sector could face severe valuation repricing pressure.

The capital market in 2026 is ushering in one of the most highly anticipated waves of tech IPOs in recent years.

Discussions across Wall Street, Silicon Valley, and the crypto market are heating up around the listing processes of three mega-unicorns: SpaceX, OpenAI, and Anthropic. Based on SpaceX’s target IPO valuation and the latest funding valuations of OpenAI and Anthropic, the combined valuation of these three companies exceeds $3.5 trillion. If their listing plans proceed as the market expects, this will become one of the largest tech IPO waves in recent years. Specifically, SpaceX is targeting a valuation of approximately $1.75 trillion, OpenAI is valued at around $852 billion, and Anthropic at roughly $965 billion. It is worth noting that while Anthropic’s current funding valuation is higher than OpenAI’s, this primarily reflects different funding rounds and market pricing expectations, rather than implying its commercial scale has surpassed OpenAI’s. Regardless of how the final offering prices adjust, this will be the largest and most far-reaching wave of tech IPOs in recent memory.

Such massive scale naturally triggers market concerns about liquidity. Some investors believe the public debuts of these three companies could siphon off significant capital, pressuring other growth stocks and potentially even impacting the crypto market. Others worry that the persistent fervor around AI and aerospace concepts is forming a new asset bubble; if post-IPO performance falls short of expectations, it could trigger a valuation repricing across the entire tech sector and even the broader risk asset market.

But at the same time, other market observers note that concerns over this “capital siphon effect” are noticeably exaggerated. The total market capitalization of U.S. equities is already in the tens of trillions of dollars, and mega-IPOs typically result in capital reallocation rather than capital evaporation. Historically, mega-listings like Alibaba and Saudi Aramco sparked similar debates, yet neither acted as a catalyst for a market crash. So, what makes this time different? What do the IPOs of these three companies truly mean? Do they genuinely possess the power to tank the stock and crypto markets?

SpaceX: The Market is No Longer Buying Rockets, but Global Infrastructure

If one had to select the most legendary company among the three, SpaceX would undoubtedly be the strongest candidate. Since its founding in 2002, Elon Musk has spent over two decades evolving a startup into the core force of the global commercial space industry. For a long time, public perception of SpaceX was largely confined to rocket launches and space exploration, but the capital market’s valuation logic for the company has now fundamentally shifted.

According to publicly disclosed prospectus filings, the company’s 2025 revenue was approximately $18.67 billion. Notably, Starlink-related revenue accounted for about $11.39 billion, representing roughly 61% of total revenue and establishing itself as the company’s primary income source. Compared to the rocket launch business, Starlink clearly boasts greater growth potential. By deploying a low-Earth orbit satellite network, Starlink is building a global data communication infrastructure, making its business model closer to an internet platform than a traditional aerospace company. For investors, SpaceX’s core value is no longer just rockets, but a network platform capable of covering users worldwide.

This is a key reason why some investors are willing to support its target IPO valuation of approximately $1.75 trillion. In the eyes of certain investors, SpaceX’s current valuation logic is closer to an “aerospace version of Amazon” or a “space-based AWS.” The market’s focus has gradually shifted from rocket launches to the global communication infrastructure network represented by Starlink. Theoretically, as network deployment matures, the marginal cost of acquiring new users is expected to decline, and user growth could yield long-term, stable cash flows. Meanwhile, government contracts, commercial launches, and the future commercial application of Starship provide additional upside for the company.

Naturally, such a lofty valuation is not without controversy. Public data shows the company still recorded a net loss of approximately $4.9 billion in 2025. For traditional investors, it may seem difficult to justify a trillion-dollar valuation for a company that has yet to achieve stable profitability. Wall Street, however, is clearly more focused on long-term growth capacity. Both Starlink’s expansion and Starship’s development are typical heavy front-loaded investments. The market is willing to tolerate near-term margin pressure, provided it believes these investments will translate into a larger future market share.

More importantly, SpaceX’s IPO is not just a corporate financing event; it is viewed as a major milestone for the commercial aerospace industry. Historically, the space sector has been perceived as capital-intensive, with long cycles and limited exit channels. If SpaceX successfully goes public, it will significantly elevate the financing capabilities and valuation benchmarks of the entire supply chain, benefiting players from satellite manufacturers to ground communication equipment providers and aerospace material suppliers.

Yet, precisely because of its immense size, SpaceX’s listing is a primary source of the market’s liquidity concerns. Based on currently circulating issuance plans, SpaceX could become one of the largest IPOs in history. For large institutional investors, this means they must proactively adjust their portfolios to free up capital for the new offering. Selected tech growth stocks, high-valuation AI concept stocks, and even certain risk assets could become sources of this capital. Consequently, many analysts have dubbed SpaceX the “super liquidity magnet” of this IPO wave.

OpenAI and Anthropic: Two Tickets to the AI Era

If SpaceX represents the infrastructure of the future, then OpenAI and Anthropic represent the productivity of the future.

Over the past three years, generative AI has rapidly evolved from a laboratory technology into one of the most vital investment themes in global capital markets. Since the release of ChatGPT, artificial intelligence has virtually reshaped the development logic of the entire tech industry. Tech giants like Microsoft, Google, and Amazon are all launching new rounds of competition centered around AI. Standing at the center of this wave are OpenAI and Anthropic.

OpenAI is widely regarded as one of the primary beneficiaries of this generative AI wave. With ChatGPT, the company completed a swift transition from a research institution to a commercial platform. API services, enterprise-grade solutions, and ecological partnerships are driving rapid revenue growth. Although the company remains in a phase of heavy investment, investors generally believe OpenAI has the potential to become the next-generation software platform. Following a new funding round in March 2026, the company’s valuation reached approximately $852 billion, and it has confidentially filed for its IPO. The market widely speculates that if the IPO proceeds smoothly, its valuation could edge closer to the $1 trillion mark, though no official valuation guidance has been disclosed yet.

Compared to OpenAI, Anthropic’s development trajectory has been relatively low-profile, but its growth speed has equally captured market attention. Founded much later than OpenAI, the company quickly won the endorsement of enterprise clients through its Claude series models and a sustained commitment to AI safety and reliability. According to disclosures from its latest funding round, Anthropic’s valuation reached approximately $965 billion, surpassing OpenAI’s current funding valuation of $852 billion. Concurrently, the company has also filed confidentially for an IPO. For many institutional investors, Anthropic represents an alternative AI development path — one that places greater emphasis on enterprise scenarios, risk control, and long-term governance structures.

From a capital market perspective, the significance of OpenAI and Anthropic going public extends far beyond the companies themselves. Over the past few years, AI concepts have largely dominated the valuation frameworks of global tech stocks, yet there have been very few pure-play AI leaders available for direct investment. Nvidia is primarily a compute power provider, while Microsoft and Google are integrated tech platforms. OpenAI and Anthropic are among the few companies that directly represent the industrial value of large foundation models.

This means that once these two companies hit the public market, global capital will, for the first time, have the opportunity to directly invest in massive foundation model companies. For many institutions, this appeal might even eclipse that of some traditional tech giants. Because of this, many investors have begun to wonder: when capital flows heavily toward these AI leaders, will other tech assets, and even the crypto market, experience significant capital diversion?

Why Does the Market Fear These Three IPOs Will “Drain” Market Liquidity?

In reality, whenever a mega-IPO hits the market, similar concerns resurface.

The underlying logic is straightforward. An IPO fundamentally transfers new equity supply from private to public markets, and the capital institutional investors use to subscribe does not materialize out of thin air. For large pension funds, mutual funds, sovereign wealth funds, and hedge funds, participating in a new share issuance often requires liquidating existing portfolio positions to free up cash. Thus, when multiple mega-IPOs occur simultaneously, a capital rotation from other assets into the new listings is almost inevitable.

From this perspective, SpaceX, OpenAI, and Anthropic certainly possess the conditions to create a “siphon effect.” Based on current market estimates, their combined valuation exceeds $3.5 trillion. Even if the actual public float percentage is far lower, it is still enough to become one of the most crucial capital allocation destinations in global markets. For many institutions that are long-term bullish on AI and tech innovation, participating in these IPOs is not just an investment opportunity, but a strategic allocation.

The core of the market’s concern is not the IPOs themselves, but where the capital might be drawn from. If institutional investors choose to reduce holdings in existing tech stocks to participate in the offerings, certain growth sectors could face short-term pressure. If the source of funds extends to higher-risk assets, parts of the crypto market could similarly be affected. Therefore, whenever mega-IPOs approach, discussions about a “liquidity drain” inevitably arise.

The catch, however, is that theoretical capital diversion does not equate to a market crash.

The total capitalization of the U.S. stock market approaches $80 trillion, with highly substantial daily trading volumes. Even if all three companies successfully list, the actual percentage of shares entering market circulation will remain limited. Historical experience indicates that the true determinant of market direction is never new equity supply, but rather the overall liquidity environment. During easing cycles, new supply from mega-IPOs is often rapidly absorbed; during tightening cycles, markets may experience corrections due to economic slowdowns or rising interest rates, regardless of IPO activity.

In other words, a mega-IPO acts more as an amplifier than a root cause. If the market is inherently fragile, a massive listing might exacerbate volatility; but if market liquidity is abundant and risk appetite is high, the IPO is often just another part of the capital rotation cycle.

What Does Historical Experience Tell Us?

Looking back over the past two decades in capital markets, mega-IPOs frequently draw massive attention, but cases where they actually trigger systemic risk are exceptionally rare.

In 2014, Alibaba’s debut on the NYSE set a global record for fundraising at the time. The market harbored similar fears that the massive financing would shock the U.S. stock market. However, reality proved that Alibaba’s listing mostly drew global capital attention to the Chinese internet sector without altering the overarching trajectory of U.S. equities. In the years that followed, the U.S. market sustained its bull run.

In 2019, Saudi Aramco raised nearly $30 billion, breaking the global IPO record once again. Given the context of slowing global economic growth and rising geopolitical risks at the time, many analysts believed such massive financing needs could strain market liquidity. Yet, the outcome once again proved that the market’s capacity to absorb mega-IPOs far exceeded expectations.

Even the highly anticipated listing of Arm in recent years did not exert a decisive impact on the overall trend of tech stocks. Short-term volatility was present, but it largely reflected internal capital reallocation within the sector, rather than an evaporation of market-wide liquidity.

The fundamental reason for this phenomenon is that the capital market is not a fixed-capacity pool. The listing of high-quality assets often attracts new capital into the market, rather than simply draining funds from older assets. For global institutional investors in particular, the emergence of truly scarce targets is usually accompanied by incremental allocation demand, not just internal shuffling.

Therefore, drawing from historical experience, while it is unsurprising that SpaceX, OpenAI, and Anthropic will induce market volatility, equating their IPOs directly to a market crash lacks sufficient evidence.

Impact on the Stock Market: Short-Term Volatility is Inevitable, Long-Term Resembles a Valuation Reset

If there is one market segment that will face the most direct impact from these three IPOs, it is undoubtedly the tech sector.

Over the past few years, AI has emerged as one of the most dominant investment themes globally. From Nvidia to cloud computing, from data centers to software services, numerous companies have enjoyed valuation premiums simply for being AI-adjacent. However, companies truly capable of representing the value creation of large foundation models had yet to enter the public markets. The arrival of OpenAI and Anthropic means that investors will have their first opportunity to directly invest in core AI assets.

This shift will likely lead to a repricing within the AI sector.

Companies relying on concept-driven narratives may see their valuation premiums contract as investors finally gain access to purer AI targets. Conversely, enterprises that genuinely benefit from the expansion of AI infrastructure — such as compute providers, data center operators, and enterprise software platforms — will likely continue to receive capital support.

The impact of SpaceX, on the other hand, is somewhat different. For satellite communications, commercial aerospace, and related infrastructure firms, SpaceX’s listing will establish a new valuation anchor for the industry. The market will, for the first time, have a publicly traded commercial space leader as a reference point, potentially driving a repricing across the entire supply chain.

From a long-term perspective, the listing of these three companies is more likely to reinforce the importance of the tech sector rather than weaken it. Over time, once they meet the necessary criteria and are included in major indices, a vast amount of ETFs and index funds will passively allocate to these companies. By then, the scale of global capital inflows might even surpass the IPO phase itself.

Therefore, for the stock market, what truly warrants attention is not the performance on IPO day, but whether these companies can deliver on the growth expectations priced in by the market over the coming years.

Impact on the Crypto Market: Competition Exists, But Doesn’t Necessarily Mean Bearishness

Compared to equities, the crypto market is more sensitive to shifts in capital flows, leading to much more intense debate on this front.

Over the past few years, AI and Crypto have been arguably the two main tracks most closely watched by venture capital. Several venture funds and growth capital firms have simultaneously deployed capital across both AI and Crypto sectors, resulting in a clear overlap in funding sources. Once OpenAI and Anthropic officially enter the public markets, it is highly probable that some institutional capital will pivot toward these AI assets.

This competition could be particularly acute for certain AI-concept tokens.

Before AI companies went public, many investors opted to express their bullishness on the AI industry via AI-related tokens. However, once OpenAI or Anthropic become publicly traded assets, investors will naturally ask: If I can directly hold the most core companies in the AI industry, is it still necessary to bear the higher volatility and risk of concept tokens?

From this perspective, some narrative-driven AI tokens, VC concept projects, and crypto assets lacking genuine revenue support may indeed face capital diversion pressure.

Nevertheless, extrapolating this pressure into a “crypto market crash” also lacks basis.

Bitcoin and the broader crypto market have gradually formed relatively independent operational logic. ETF capital flows, the regulatory environment, global monetary policy, and Bitcoin’s own cycle typically exert a more decisive impact than any single IPO event. Historically, U.S. equities and the crypto market have exhibited both synchronized rallies and significant divergences; it is difficult to explain the trajectory of both through a single event.

More importantly, AI and blockchain are not strictly competing forces. As the scale of AI applications continues to expand, areas such as decentralized compute networks, on-chain data markets, and AI Agent infrastructure may actually discover new growth opportunities. In the long run, the prosperity of the AI industry will not necessarily undermine Crypto; instead, it could forge new scenarios for integration.

The Real Risk is Not the IPOs, but Valuation Expectations

If there is a genuine risk associated with these three mega-IPOs, it stems not from the listings themselves, but from the market’s expectations of future growth.

The current valuations of SpaceX, OpenAI, and Anthropic are all built on highly optimistic assumptions about the future. Investors are willing to award trillion-dollar valuations because they believe these companies will become the world’s most critical infrastructure platforms. If revenue growth slows, commercial progress falls short, or profitability improvements lag behind market expectations, a valuation reset will be unavoidable.

This risk would not hit the entire market first, but rather the AI sector and high-growth tech stocks. The higher the market’s future expectations, the steeper the resulting correction when reality falls short of those projections.

From this vantage point, what the market truly needs to watch is not the IPOs themselves, but the ability of these companies to deliver on their performance targets post-listing.

Conclusion

The public debuts of SpaceX, OpenAI, and Anthropic represent a concentrated pricing exercise by the global capital market regarding the next generation of tech infrastructure and AI platforms, rather than a precursor to a market crash. In the short term, capital diversion, sector rotation, and valuation repricing are almost inevitable, and certain AI concept stocks and crypto assets may face competitive pressure. However, historical experience shows that mega-IPOs rarely trigger systemic risks, let alone dictate the long-term direction of equities or the crypto market.

The true determinants of market trends remain the macro liquidity environment, corporate profitability, and investor risk appetite. For investors, rather than worrying about whether these three IPOs will tank the market, it is better to focus on whether the growth logic underpinning these trillion-dollar valuations will ultimately materialize. After all, capital markets have never feared massive dreams; what truly wounds the market are unfulfilled expectations.

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Original Author | danny (@agintender)

Compiler |WuBlockchain Aki Chen

Original Source Link:

Disclaimer: This article is a reposted piece. Readers may refer to the original source for more information. If the original author has any objections to the form of reposting, please contact us and we will make modifications as requested. The repost is intended solely for information sharing and does not constitute any investment advice, nor does it represent the views or positions of WuBlockchain.

Closing a position and liquidation are a fate every exchange and every trader must eventually confront. If opening a position is the beginning of an affair—laden with emotion, conviction, and projection—then closing is the end of that story, whether willing or reluctant.

In truth, forced liquidation is a thankless task for an exchange: it offends users, and a misstep can blow up the exchange itself—and no one shows mercy when that happens. The real craft lies in calibration: knowing exactly where to extend and where to hold back, how deep to cut and how shallow to pare.

One more point: ignore the noise about “wealth effects”—the liquidation mechanism is where an exchange’s integrity and responsibility reside.

Today we speak only about structure and algorithms. What is the true logic behind forced liquidation? How do liquidation models safeguard the market’s overall stability?

Part I: Core Risk-Management Framework for Perpetual Futures

As a complex derivative, perpetual futures allow traders to amplify capital through leverage, creating the possibility of returns far in excess of initial margin. That same potential, however, comes with commensurate—or greater—risk. Leverage magnifies not only prospective gains but also losses, making risk management an indispensable pillar of perpetuals trading.

At the heart of the framework is the effective containment and resolution of systemic risk arising from high leverage. It is not a single mechanism, but a multi-layered, interlinked, and sequentially triggered defense stack—a terraced risk-control process. Its purpose is to confine losses stemming from individual-account liquidations to a controllable range, preventing spillover and protecting the integrity of the broader trading ecosystem.

In short: channel the force of a waterfall into the suppleness of a stream—permeable yet without leakage, firmness tempered by flexibility.

Three Pillars of Risk Mitigation

Exchanges rely on three primary pillars that together form a comprehensive defense—from the individual account to the entire system, and from routine conditions to extremes:

1. Forced Liquidation. The first—and most commonly used—line of defense. When market movement pushes a position’s margin balance below maintenance requirements, the exchange’s risk engine intervenes and automatically liquidates the losing position.

2. Insurance Fund. The second line of defense, acting as a systemic buffer. In violent markets, the execution price during liquidation may be worse than the position’s bankruptcy price (the level at which losses fully exhaust posted margin). Any resulting shortfall/negative equity (often called a “socialized loss” risk) is covered by the Insurance Fund.

3. Auto-Deleveraging (ADL). The final, rarely triggered backstop, activated only in extreme/black-swan conditions where a wave of liquidations depletes the Insurance Fund. ADL forcibly reduces the most highly leveraged and most profitable opposing positions to absorb residual shortfalls the fund cannot cover, thereby preserving the exchange’s solvency and the market’s ultimate stability.

These three pillars form a tightly reasoned risk-control chain. The design philosophy can be viewed as an economic “social contract” that defines how risk responsibility is sequentially allocated in a high-risk, leveraged environment:

Trader → Insurance Fund → Auto-Deleveraging (ADL)

First, risk is borne by the individual trader, whose duty is to maintain sufficient margin. When the individual obligation cannot be met, risk is transferred to a collective, pre-funded buffer—the Insurance Fund (capitalized via liquidation fees and related sources). Only in extreme scenarios where this collective buffer is also insufficient does risk pass, via ADL, to the most profitable, highly leveraged opposing positions in the market. This tiered structure is designed to isolate and absorb risk to the greatest extent possible, preserving the health and stability of the trading ecosystem.

Part II: Foundations of Risk — Margin and Leverage

In perpetual futures trading, margin and leverage are the two most fundamental variables determining a trader’s risk exposure and potential P&L scale. A thorough grasp of both concepts—and how they interact—is the prerequisite for effective risk management and avoiding forced liquidation.

Initial Margin vs. Maintenance Margin

Margin is the collateral a trader must deposit and lock to open and maintain a leveraged position. It is defined at two key levels:

● Initial Margin (IM). The minimum amount of collateral required to open a leveraged position—the “ticket of admission” to leverage. It is typically position notional ÷ leverage. For example, to open a USDT 10,000 position with 10× leverage, the trader must post USDT 1,000 as initial margin.

● Maintenance Margin (MM). The minimum collateral required to keep an existing position open. This is a dynamic threshold, lower than IM. When adverse price moves cause the trader’s margin balance (initial margin ± unrealized P&L) to fall to the maintenance margin level, the forced-liquidation process is triggered.

● Maintenance Margin Ratio (MMR). The minimum collateralization rate—i.e., the minimum margin-to-notional percentage that must be maintained to avoid liquidation. Breaching the MMR triggers liquidation.

Margin Regimes: A Comparative Analysis

Exchanges typically offer several margin modes to meet different risk-management needs. The three primary ones are:

● Isolated Margin. Margin is allocated per position. The risk is ring-fenced: if forced liquidation occurs, the maximum loss is limited to the margin assigned to that position, without affecting other funds or positions in the account.

● Cross Margin. All available account equity (including unrealized P&L from other positions) is treated as a shared margin pool across positions. Losses on one position can be offset by free balance or unrealized gains elsewhere, reducing single-position liquidation risk. The trade-off is that, once liquidation is triggered, the trader can lose the entire account equity, not just the margin earmarked for one position.

● Portfolio Margin. A more sophisticated, risk-based margining regime designed for institutions and advanced traders. Margin requirements are computed from the net risk of the entire portfolio (spanning spot, futures, options, etc.), recognizing hedge offsets among positions. Well-hedged, diversified portfolios can receive substantially lower margin requirements, materially improving capital efficiency.

Tiered Margin (Risk Limits)

To prevent a single trader’s oversized position from causing severe liquidity shocks during liquidation, exchanges commonly implement tiered margin, also called risk limits. The core logic is straightforward: the larger the position, the greater the risk, and thus the tighter the required controls.

Concretely, the position’s notional value is segmented into multiple tiers. As a trader’s position moves up the tiers, the platform automatically applies two adjustments:

1. Lower maximum allowable leverage. Larger positions are capped at lower leverage multiples.

2. Higher Maintenance Margin Ratio (MMR). The larger the position, the higher the maintenance margin required as a percentage of notional.

This design effectively prevents traders from using high leverage to build systemically hazardous positions. It is an embedded, risk-reducing mechanism that compels large accounts to de-risk as their exposure grows.

Tiered margin (risk limits) is not merely a risk knob; it is the exchange’s core instrument for managing market liquidity and preventing liquidation cascades. A single, large forced-liquidation order—e.g., from a highly levered whale account—can vacuum order-book liquidity across multiple price levels in an instant, printing a sharp downtick with a long lower wick. That sudden plunge may in turn trip the liquidation thresholds of positions that were otherwise safe, setting off a domino effect (for the exchange, this is a negative-equity/shortfall risk).

By imposing lower maximum leverage and higher maintenance-margin requirements on larger positions, the venue materially increases the difficulty for any single actor to assemble a fragile, jumbo position capable of triggering such chain reactions. Higher margin functions as a thicker buffer, able to absorb more violent price shocks and thus shield the ecosystem from the systemic risk of concentrated exposures.

As an illustration, Bitget’s tiered-margin schedule for the BTCUSDT perpetual shows how this risk-management mechanism is applied in practice.

The table makes explicit the inverse relationship between risk and leverage—required margin scales linearly with position size. Once a BTCUSDT position’s notional exceeds USDT 150,000, the maximum allowable leverage is cut from 125× to 100×, while the maintenance margin rate (MMR) increases from 0.40% to 0.50%.

Part III: Liquidation Triggers — Understanding the Key Price References

To execute forced liquidations precisely and fairly, an exchange’s risk engine does not rely on the rapidly fluctuating last-trade price. Instead, it uses a purpose-built set of reference prices.

Mark Price vs. Last Traded Price

● Last Price. The price of the most recent trade on the exchange’s order book. It reflects immediate buy–sell activity and is susceptible to single large prints or short-lived bursts of sentiment.

● Mark Price. A price computed by the exchange specifically for liquidation triggering, intended to approximate the contract’s fair/true value. Unlike the Last Price, the Mark Price aggregates multiple data sources and is constructed to smooth short-term distortions, preventing unnecessary or unfair liquidations caused by thin liquidity, manipulation, or momentary “needle/wick” moves. On modern venues, unrealized P&L and liquidation checks are run off the Mark Price rather than the Last Price.

The method for computing the Mark Price is broadly similar across venues and typically includes these core components:

1. Index Price. A composite price derived by taking a weighted average of the asset’s spot prices across multiple major global exchanges.

2. Funding Basis. To keep the perpetual price anchored near spot, a premium/discount term—i.e., the basis between the contract and the index price—is incorporated.

By combining these inputs, the Mark Price offers a more stable and reliable read on fair value and serves as the sole reference for triggering forced liquidations.

Liquidation Price vs. Bankruptcy Price

Within the Mark Price framework, two threshold levels determine a trader’s fate:

● Liquidation Price. A specific Mark Price level at which the position is triggered for forced liquidation. It corresponds to the point where the trader’s margin balance (initial margin ± unrealized P&L) has fallen to the maintenance margin requirement. (The liquidation price is the trigger for liquidation.)

● Bankruptcy Price. Another level derived from the Mark Price, representing the point at which the trader’s initial margin is fully exhausted—i.e., account equity = 0. (The bankruptcy price is the reference used for liquidation accounting; executions worse than this level create a shortfall that must be absorbed by the insurance fund/ADL.)

Importantly, the liquidation price is always reached before the bankruptcy price.

The price band between the liquidation price and the bankruptcy price constitutes the risk engine’s operational buffer zone. The clearing system’s efficiency is tested within this narrow corridor.

In simple terms, the higher the leverage and the lower the initial margin rate, the narrower this buffer becomes. For example, with 100× leverage, the initial margin rate is just 1%, while the maintenance margin rate might be 0.5%. This means that from entry to liquidation trigger, the trader has only 0.5% of price room.

Example: You open a 100× long. Intuitively, a −1% move would “bankrupt” the position. However, because the maintenance margin rate is 0.5%, a −0.5% move (on the Mark Price) triggers liquidation, and the position is then closed against the bankruptcy price, which corresponds to a −1% move.

This direct linkage between leverage and fragility is the core reason why ultra-high-leverage trading is extraordinarily risky—often in ways that defy intuition.

If the liquidation engine can close the position within this band at an execution better than the bankruptcy price, the residual surplus is credited to the Insurance Fund, and the user does not end up owing the venue.

Conversely, if extreme volatility or a liquidity vacuum leads to execution worse than the bankruptcy price, the resulting shortfall (”negative equity”) must be covered by the Insurance Fund—and, if the fund proves insufficient, by ADL or other venue-specific loss-allocation measures (in some cases, user clawbacks).

Part IV: Forced-Liquidation Workflow — A Step-by-Step Overview

When a position reaches a critical risk point—i.e., the Mark Price touches the Liquidation Price—the exchange’s risk engine immediately initiates a standardized, fully automated forced-liquidation workflow. This process is designed to close the risky exposure in an orderly manner while minimizing market impact.

A brief aside: set the “get-rich” narratives aside—the liquidation mechanism is the true measure of an exchange’s integrity and stewardship.

Liquidation Trigger

The workflow begins when the liquidation condition is met: the Mark Price reaches or breaches the pre-computed Liquidation Price. At the system level, this is equivalent to the position’s Maintenance Margin Ratio (MMR) hitting 100%. Once triggered, the trader loses control of the position; all subsequent actions are taken over by the risk engine.

After the trigger, the position is handed to the liquidation engine and internally booked at the Bankruptcy Price (which is less favorable than the Liquidation Price). The relationship between these two prices captures the core logic of forced liquidation: the exchange’s risk engine initiates the liquidation process as soon as the Liquidation Price is touched, striving to complete the close-out before the Bankruptcy Price is reached.

From Waterfall to Stream: How the Engine Tames a Liquidation Wave

Once the risk engine takes over, it typically executes the following steps in a preset order (venue implementations vary):

1. Cancel open orders.

The first step is to immediately cancel all unfilled orders associated with the risky position.In Isolated Margin, the system cancels all open/add orders for that trading pair.In Cross Margin, the system may cancel any orders across the account that could increase risk exposure.

2. Partial / tiered liquidation.

For large positions in higher risk tiers, the engine does not dump the entire position at once. Instead, it uses a more prudent stepwise liquidation (i.e., partial close-outs). The system computes how much must be reduced to bring the account’s Maintenance Margin Ratio (MMR) back below 100%, and only that slice is sent to market for execution. By decomposing a big liquidation into multiple smaller clips, the engine materially reduces immediate market impact and helps avoid cascade triggers. (Some confuse partial liquidation with ADL; it is not ADL.)

3. Full close-out.

If, after partial liquidation, the MMR remains ≥ 100%, or if the position already sits in the lowest risk tier (no further step-down possible), the engine takes over the remainder of the position and submits market orders to execute at the best available prices on the book until the position is fully closed.

The stepwise liquidation mechanism is a key marker of risk-management maturity at modern crypto-derivatives venues. Early platforms often used an “all-or-nothing” liquidation model—simple to implement, but extremely risky. Forcing a large position out via an instant market order easily produces a sharp flash wick, which in turn trips other traders’ liquidation thresholds and sets off a destructive liquidation cascade.

Liquidation Fees

When a position is forcibly liquidated, the trader—beyond bearing the loss on the position itself—typically pays an additional liquidation fee (also called a clearance/liquidation charge). This fee rate is usually higher than standard trading fees.

Why it exists:

● Incentivize proactive risk management. The elevated fee encourages traders to manage risk actively—for example, by placing stop-loss orders or manually closing positions as they approach the liquidation price—rather than passively waiting for the system to act.

● Capitalize the Insurance Fund. Liquidation fees are a primary funding source for the Insurance Fund. Exchanges allocate collected liquidation fees to this pool to cover future negative-equity shortfalls, thereby supporting the health of the overall risk-management framework.

Part V: The Safety Net — Insurance Fund and Auto-Deleveraging (ADL)

Once the forced-liquidation workflow is initiated, the system’s core challenge is to close the position at prices better than the bankruptcy price before the trader’s margin is exhausted. Under extreme market conditions, this is not always achievable. To address any resulting negative-equity shortfalls, exchanges deploy two critical, system-level safety nets: the Insurance Fund and Auto-Deleveraging (ADL).

Insurance Fund

1. Core purpose. The Insurance Fund is a pool established and administered by the exchange to cover negative-equity shortfalls arising from forced liquidations. When a liquidated position’s execution price ends up worse than its bankruptcy price, the trader’s loss exceeds posted margin; the Insurance Fund steps in to fill the deficit.

2. Sources of capital. Primarily two channels:

● Liquidation fees. Exchanges levy an additional liquidation fee on all forcibly closed positions; this is the fund’s most stable and material revenue source.

● Liquidation surplus. If a forced liquidation is executed better than the bankruptcy price, the residual margin remaining after deducting liquidation fees is swept into the Insurance Fund.

3. Transparency & significance. The size and health of the Insurance Fund are key indicators of an exchange’s loss-absorbing capacity. Reputable venues typically disclose the fund’s balances (and, in some cases, public wallet addresses) on a periodic or real-time basis to demonstrate transparency and solvency.

4. Industry practice. Major exchanges—Binance, OKX, Bybit, Bitget, among others—maintain Insurance Funds as a strategic commitment to market confidence. Doing so reduces the risk that, during a market crash—precisely when the fund is needed most—the platform faces uncovered shortfalls. Accordingly, when selecting a venue, traders should look beyond fees and product menus to assess the fund’s scale, track record, and asset composition—all of which reflect the platform’s long-term stability and user-protection stance.

Auto-Deleveraging (ADL) — The Final Line of Defense

Trigger condition. ADL is the last resort in an exchange’s risk-management stack and is activated only in the most extreme circumstances: when a wave of liquidations produces negative-equity shortfalls that exceed the entire balance of the Insurance Fund.

Core function. ADL is, in essence, a counterparty liquidation. Once the Insurance Fund is depleted, the risk engine automatically selects traders holding opposite-direction positions who rank highest by profitability and leverage, and forcibly reduces part or all of those winning positions. The selected positions are closed at the bankruptcy price of the defaulting position, and the realized proceeds are used to cover the system shortfall.

The existence of ADL ensures that even under the most extreme conditions, the exchange does not fall into a solvency crisis due to uncovered losses, thereby preserving platform continuity. While this is a loss for the selected profitable traders, ADL avoids blanket “socialized losses” across all users and is regarded as the lesser-evil resolution when all other buffers have failed.

Note: Detailed mechanics of ADL are provided in the appendix for readers who wish to dive deeper.

Conclusion: Integrating Risk Management with Trader Responsibility

The risk-management architecture of perpetual futures is a carefully engineered, multi-layered defense, designed to preserve fairness, stability, and continuity in a high-leverage environment. From the individual trader’s margin discipline, to the Insurance Fund as a collective buffer, and—under extremes—the last line of defense, ADL, this cascading, terraced risk-control workflow links each layer to the next, forming a robust bulwark against systemic risk.

Systemic defense—layered logic. The framework embodies a sequential transfer and absorption of risk from the individual to the collective. Forced liquidation first contains losses at the account level, enforcing personal responsibility for position risk. When individual risk overruns and negative-equity shortfalls arise, the Insurance Fund engages, using resources accumulated from prior liquidations to shield other market participants. Only if both lines of defense are breached under extreme stress does ADL intervene, performing counterparty reductions on the most profitable, highly levered opposing positions to preserve the platform’s solvency. Together, these mechanisms are the cornerstone that allows the perps market to function through violent volatility.

Core responsibility of traders. Powerful as the exchange’s automated controls are, the ultimate responsibility for risk lies with the trader. Platform safeguards are baseline protection, not a component of a profit strategy. Relying on forced liquidation as a “final stop-loss” not only incurs additional liquidation fees that erode capital, but may also expose the account to ADL risk in extreme regimes.

Responsible Practices for Leveraged Trading

1. Use risk controls proactively. Before opening any leveraged position, set a sensible stop-loss. This is the most effective way to cap losses and avoid touching the liquidation threshold.

2. Choose leverage prudently. Leverage magnifies risk. Select a leverage multiple that matches your risk tolerance, strategy, and market conditions—do not chase headline returns from high leverage. Understand the implications of notional leverage vs. effective leverage.

3. Understand and monitor margin requirements. Learn the tiered margin (risk-limit) schedule and how the Maintenance Margin Ratio (MMR) steps up with position size. When adding to a position, anticipate how moving into a higher tier will shift your liquidation price.

4. Stay vigilant; monitor actively. Track the distance between your Mark Price and Liquidation Price. In heightened volatility, watch the ADL risk indicator closely; if the risk level rises, promptly de-lever or take partial profits.

Final Words

Liquidation is not a demon—it is the cost of maintaining order in the perps market.

Clearing is not punishment—it is the mechanism that keeps the system alive.

ADL is not prejudice—it is the reluctant, last-resort choice that allows trading to continue.

You may feel strongly; you must still understand the rules. In this game, what counts is never what you “think it’s worth,” but the moment you can afford the cost.

Perpetual futures are not “permanent.” They are simply a redistribution of risk along time.

Know not only what happens, but why it happens.

May we always approach the market with humility and respect.

Appendix: Auto-Deleveraging (ADL) — A Detailed Guide to the Mechanism That Keeps Exchanges in an Unassailable Position

Auto-Deleveraging (ADL) is the exchange’s last-resort risk tool. Its mechanics are intricate but critical for traders running high leverage and large unrealized profits. Understanding its priority rules, execution flow, and how to avoid being selected is essential for any sophisticated perpetual-futures trader.

ADL Priority System

When ADL is triggered, the system does not pick counterparties at random. It follows a strict, risk- and return-based ranking rule. All traders holding opposite-direction positions are placed into a priority queue; those at the top are reduced first.

1. ADL rank formula.

While venues phrase it slightly differently, the core logic is consistent: the ADL score is determined primarily by two variables—PnL Percentage and Effective Leverage.

● For profitable positions:ADL Score = PnL Percentage × Effective Leverage

● For losing positions (rarely selected):ADL Score is typically negative under the same formula, which places such positions at the bottom of the queue.

Definitions (venue-specific in practice):

PnL Percentage ≈ Unrealized PnL / |Position Notional|

Effective Leverage ≈ |Position Notional| / Account Equity (or margin attributed to the position)

Decomposing the Formula’s Core Components

PnL Percentage. The position’s unrealized P&L as a percentage of its entry notional. The larger the profit, the higher this value.

Effective Leverage. The most crucial—and most often misunderstood—term. It is not the leverage multiple selected at entry, but a dynamic leverage that reflects the position’s current risk exposure. Defined as:

Ranking rule.

If PnL% ≥ 0 : ADL Score=PnL × Effective Leverage

If PnL% < 0 :ADL Score=PnL / Effective Leverage

This structure reveals a key dynamic: as a position’s unrealized profit increases, the denominator (equity) grows and effective leverage declines. Conversely, as a position approaches liquidation, unrealized losses compress equity, sending effective leverage sharply higher. As a result, the ADL system tends to prioritize counterparties who are both highly profitable and entered with higher leverage.

ADL Risk Indicator

To make the risk of being ADL’ed intuitive, trading platforms typically display an ADL risk indicator in the positions panel. This indicator often uses five levels (five lights): the more lights illuminated, the higher the position’s rank in the ADL queue and the greater the probability of auto-deleveraging. When all five are lit, the position is at the highest risk tier.

ADL Execution Flow

Assume the market sells off sharply, triggering mass long-side liquidations and exhausting the Insurance Fund. The ADL system is then activated and proceeds as follows:

1. Identify counterparties. The system scans all traders holding short positions.

2. Compute rankings. Using the ADL ranking formula described above, it computes each short position’s ADL score and produces a priority queue (high → low).

3. Execute reductions. Starting from the top-ranked trader, the system forcibly reduces positions. If the shortfall corresponds to 100 BTC, and the top-ranked trader holds a profitable 20 BTC short, the system will force-close 20 BTC from that trader.

4. Price & fees. The reduced positions are settled at the bankruptcy price of the defaulting long that triggered the ADL event. No trading fee is charged to the trader subjected to ADL.

5. Iterate until covered. If the first reduction is insufficient (e.g., 80 BTC of deficit remains), the system continues with the second, third, … traders in order until all shortfalls are fully covered.

If this still feels abstract, consider the following example:

This example makes the core logic of ADL ranking explicit. Although Trader C has the highest PnL% (500%), the lower Effective Leverage (5×) yields an ADL score of 2500, which is below Trader A (250% × 15× = 3,750) and Trader B (150% × 20× = 3,000). This illustrates that ADL preferentially selects traders who have earned outsized profits with high leverage to bear loss absorption first.

Example of the ADL Counterparty Ranking Queue

How to reduce ADL risk

1. Lower the leverage multiple. The most direct lever. Reducing leverage decreases Effective Leverage in the ranking formula and thus lowers the ADL score.

2. Take partial profits (partial close-outs). Realizing part of a strongly profitable position reduces PnL%, which likewise lowers the ADL score and shrinks overall exposure.

3. Monitor the ADL indicator closely. During high volatility, watch your position’s ADL risk indicator. If the level rises, promptly de-lever and/or take partial profits.

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Original Author | danny (@agintender)

Compiler | WuBlockchain Aki Chen

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Why is derivatives trading the exchange’s money printer? Why do some venues dare to take the other side of their customers’ trades? By unpacking the funding-rate mechanics of Bitcoin perpetual futures (perps) and the surrounding market dynamics, we show how traders are led—step by step—into a fatal trap meticulously engineered by the exchange.

The so-called “0.01% equilibrium” in perps—akin, in spirit, to the 0.618 Fibonacci motif—operates as a razor-fine instrument for surgical rent extraction.

Introduction

In the realm of crypto derivatives, Bitcoin (BTC) perpetual futures have become one of the most liquid and influential instruments. Active traders often note a distinctive pattern: across most market conditions, the funding rate on BTC perpetuals appears to gravitate toward about 0.01%. This figure is neither random nor a direct proxy for market sentiment; it is the product of the instrument’s deliberate financial-engineering design.

Based on Coinglass’s recent historical data, the distribution of BTC perpetuals’ funding rate shows a clear clustering pattern. For the vast majority of the past year, the rate hovered tightly around +0.01% as its central tendency. Material deviations typically appeared only during brief bouts of acute market volatility, providing strong quantitative support for the observation that “0.01% is the norm.”

How to Read This Article

From the underlying architecture of perpetuals and the funding-rate formula to arbitrageurs’ behavior and regime shifts in extreme markets, this article attempts to unpack—and demystify—the deeper logic and market dynamics behind the 0.01% equilibrium.

● For beginners or readers seeking theoretical foundations: read Sections I–II in order to understand the core mechanisms and formulas.

● For professional traders and arbitrageurs: focus on Sections III and V for details on arbitrage mechanics, venue differences, and actionable strategies.

● For risk managers: Section IV—the analysis of extreme market conditions—is essential.

I: Architecture of Perpetual Futures and the Funding-Rate Mechanism

To understand the origin of the 0.01%, one must first grasp the design intent and core mechanics of perpetual futures themselves. Perpetuals aim to deliver a futures-like trading experience while cleverly sidestepping the chief complexity of conventional futures—expiry and settlement at maturity.

1.1 The No-Expiry Problem

Traditional futures have a fixed expiry date. As expiry approaches, arbitrage by market participants naturally forces the futures price to converge toward the spot price of the underlying, such that the two are effectively aligned at settlement. In this sense, the expiry date serves as a powerful price anchor.

However, by removing the expiry date, perpetual futures allow traders to hold positions indefinitely. This convenience introduces a serious financial-engineering problem: without the terminal anchor of expiry, how can one ensure that the perpetual’s price does not drift persistently and materially from that of its underlying (e.g., BTC spot)?. Absent an effective anchoring mechanism, the price of a perpetual could wander indefinitely under speculative sentiment, undermining its fundamental roles as a price-discovery and hedging instrument. This design stands in sharp contrast to traditional finance, where interest rates are set by central banks and the interbank market; here the adjustment is endogenous to the market, operating as a peer-to-peer regulatory mechanism.

1.2 Funding Rate: The Core Solution for Price Anchoring

To solve this problem, exchanges designed the funding-rate mechanism. The most important point to understand is this: funding is not a fee charged by the exchange; it is a periodic payment exchanged directly between longs and shorts. In essence, the mechanism is a dynamic, deviation-based compensation system whose sole objective is to anchor the perpetual’s market/mark price to the underlying asset’s spot index price.

Mechanics:

● When the perpetual price > spot price: market bias is bullish and longs dominate. Funding is typically positive, so longs pay shorts. This raises the cost of holding longs and incentivizes traders to sell the perpetual and/or buy spot, pulling the perp back down and/or spot up toward parity.

● When the perpetual price < spot price: market bias is bearish and shorts dominate. Funding is typically negative, so shorts pay longs. This raises the cost of holding shorts and incentivizes traders to buy the perpetual and/or sell spot, pushing the perp up and/or spot down toward convergence.

This design reflects a nuanced governance philosophy: instead of directly intervening in prices, the exchange sets incentive rules that prompt market participants—especially arbitrageurs—to correct price deviations through their own profit-seeking behavior. The result is a system with greater resilience and incentive-based self-correction. Accordingly, the funding rate is not merely a feature of perpetuals; it is the core engine that enables them to function properly.

This design reflects a nuanced governance philosophy: instead of directly intervening in prices, the exchange sets incentive rules that prompt market participants—especially arbitrageurs—to correct price deviations through their own profit-seeking behavior. The result is a system with greater resilience and incentive-based self-correction. Accordingly, the funding rate is not merely a feature of perpetuals; it is the core engine that enables them to function properly.

II: Deconstructing the Funding-Rate Formula — Interest and Premium Components

To answer precisely “why 0.01%,” we must examine the mathematical makeup of the funding rate. The observed 0.01% is not a number directly set by supply–demand; it is chiefly determined by a fixed parameter preset by the exchange.

Most major venues—such as Binance and OKX—use a broadly standardized formula:

Funding Rate = Premium Index + clamp(Interest Rate − Premium Index)

This makes clear that the funding rate comprises two core parts: the Premium Index and the Interest Rate.

2.1 Premium Index: A Direct Readout of Market Sentiment

The Premium Index is the fully market-driven component of the funding rate. It directly measures the gap between the perpetual’s mark/market price and the underlying spot index price. Its calculation is typically more intricate, aiming to reflect genuine buy/sell pressure while deterring manipulation. For example, venues often use depth-adjusted “Impact Bid/Ask Prices” (the average execution price for a reasonably large order, better capturing order-book depth) and apply a moving average over a lookback window to smooth short-term noise. Methods and sampling intervals vary across platforms; traders should consult each exchange’s documentation for exact definitions.

● Premium Index > 0: the perpetual trades above the index price, indicating buy/long demand outweighs sell/short pressure.

● Premium Index < 0: the perpetual trades below the index price, indicating short-side pressure dominates.

In essence, the Premium Index is a barometer of leveraged directional demand.

2.2 Interest Rate: The Source of 0.01%

This section answers the question directly. The 0.01% figure comes from the “Interest Rate” term in the funding-rate formula—a parameter pre-set by the exchange, not an immediate outcome of supply and demand.

Binance, OKX, and Bybit state in their documentation that the interest rate is effectively 0.03% per day (Binance specifies a fixed 0.01% per 8-hour interval). Because funding is settled every 8 hours (i.e., three times per day), the per-interval interest component is 0.03% ÷ 3 = 0.01%.

Why do exchanges set a fixed positive rate? This component is intended to proxy the cost of carry in the real world. For a BTC/USDT perpetual, it represents the interest-rate differential between the quote currency (USDT) and the base asset (BTC). In traditional-finance terms, a 0.03% daily rate translates to roughly 10.95% on a simple annual basis, which corresponds to a relatively elevated USD funding cost and reflects the risk premium inherent in holding highly volatile crypto assets.

Put differently, if you hold a perpetual position you effectively pay ~10% annualized on your levered capital—much like borrowing to buy the asset and paying interest on the funds.

This design has an important structural implication:

1. In a perfectly balanced market—where long/short sentiment offsets—the Premium Index should be ~0.

2. The funding formula collapses to: Funding Rate = 0 + clamp(0.01% − 0), yielding 0.01%.

3. Hence even with no price dislocation, longs still pay shorts 0.01% per funding interval.

This setup is not neutral. It imposes a small but continuous cost of carry on long positions while providing baseline carry income to shorts. On one hand, it gently discourages indefinite, idle, high-leverage longs; on the other, it supplies market makers—who are often net short perps for hedging—with stable base revenue, thereby incentivizing them to supply liquidity.

III: The Invisible Hand of Arbitrage — Forcing the 0.01% Equilibrium

Given that 0.01% is a preset benchmark rate, the next question is: why doesn’t market pressure (i.e., the Premium Index component) typically overwhelm this benchmark and push funding into wide swings? The answer lies in a powerful, efficient market force: arbitrage.

Because the market hosts a large cohort of professional arbitrageurs who relentlessly eliminate opportunities embedded in the Premium Index, the interest-rate term becomes the dominant driver of funding. As a result, 0.01% tends to prevail as the baseline norm.

3.1 Emergence and Removal of Arbitrage Opportunities

Whenever a material divergence arises between the perpetual’s price and the spot/index price, a theoretical risk-free profit opportunity is created. Arbitrageurs, via automated (often co-located) trading systems, detect and execute these trades in milliseconds, rapidly compressing the basis dislocation.

Note 1. Delta-neutral means the portfolio’s value is insensitive to small changes in the underlying asset’s price (i.e., portfolio delta ≈ 0).

Note 2. If, at the time of entry, no spot is purchased for hedging, the position is colloquially called a naked short/long.

This arbitrage flow is also one of the important bridge use-cases connecting CeFi and DeFi: arbitrageurs frequently shuttle assets between the two to capture superior interest-rate or basis opportunities (e.g., Wintermute, DWF Labs, Jump Crypto).

3.2 Evidence of Market Efficiency

Today’s crypto markets are highly institutionalized, saturated with quantitative trading firms deploying sophisticated algorithms. Fierce competition among these firms means any meaningful basis dislocation (i.e., a significant Premium Index) is identified almost instantly and arbitraged away.

Accordingly, the persistent observation that funding hovers around 0.01% is itself strong evidence of a highly efficient market. Behind this stable figure lies continuous high-frequency arbitrage, executed by innumerable arbitrage bots, the “invisible hand” that keeps the Premium Index compressed within a narrow band near zero.

IV: Departures from the Norm — When Funding Moves Away from 0.01%

The 0.01% equilibrium characterizes markets under “normal weather.” Once sentiment turns extreme or stress rises, the supply–demand for leverage can temporarily overpower arbitrage, making the Premium Index the dominant driver of funding and pushing it far from the benchmark.

4.1 Bull-Market Euphoria (High Positive Funding)

● Mechanism. In a strong bull run, large numbers of retail and institutional traders pile into high-leverage long positions. This speculative fervor creates heavy buy pressure in perpetuals, lifting their prices well above spot.

● Outcome. The Premium Index becomes large and positive, far exceeding the 0.01% interest benchmark. The total funding rate can surge to 0.1% per funding interval (e.g., per 8-hour period) or higher, rendering the cost of holding longs extremely expensive.

4.2 Bear-Market Panic (Negative Funding)

● Mechanism. During crashes or panic selling, the dynamic reverses. Traders rush to short perpetuals to hedge risk or chase downside momentum, pushing perp prices well below spot.

● Outcome. The Premium Index turns large and negative. Funding flips to deeply negative, so shorts pay longs substantial fees. Functionally, this “rewards” those willing to catch the falling knife by going long perps amid extreme fear.

Schematic (caption). Cascading Liquidation Risk Pathway — “Long/Short” Position Fuel

4.3 The Role of the “Clamp” Mechanism

To prevent the funding rate from swinging excessively in extreme markets—thereby triggering liquidation cascades and undermining stability—exchanges impose upper and lower bounds on funding. This is the “clamp” (cap/floor) mechanism.

● Purpose. A key risk-control tool designed to ensure the funding rate itself does not become a catalyst for market breakdown.

● Implementation. The function clamp(x, min, max) restricts a variable x to the interval [min, max]. In the funding formula, clamp(Interest Rate − Premium Index, −0.05%, +0.05%) means that whatever value (Interest − Premium) produces, the term used in the formula is forcibly limited to between −0.05% and +0.05% per funding interval. (BTC is used here as an example; for many altcoins the bounds are wider than ±0.05%.)

In effect, the clamp represents the exchange’s trade-off between pure market incentives and system stability—a built-in circuit breaker (or, if you like, a measure of prudential restraint).

V: Strategic Implications for Traders and Investors

A rigorous grasp of the funding-rate mechanism is not mere theory; it can be converted into practical edge.

5.1 Funding Rate: A Real-Time Quantitative Gauge of Market Sentiment

The extent to which funding deviates from the 0.01% benchmark is among the purest, most real-time indicators of leverage sentiment.

● Persistently high positive funding: typically signals extreme greed, excessive leverage, and an overheated market.

● Persistently negative or deeply negative funding: typically signals extreme fear, short crowding, and capitulation.

5.2 Calculating the “Carry Cost” of Long-Term Positions

For investors intending to hold leveraged long positions over time, the 0.01% benchmark funding rate is a direct cost that must be quantified.

Cost calculation.

For a BTC long with 5× leverage on $100 of collateral

the funding payment per 8-hour interval is Funding per interval = 5×$100×0.01% = $0.05

That implies a daily cost of $0.05×3 = $0.15 and a simple annualized cost of $0.15×365 = $54.75

(This assumes funding is +0.01% and that longs pay shorts on that interval; if funding turns negative, the direction of payment reverses.)

Strategic considerations.

This carry erodes P&L for extended holds. The impact falls primarily on overnight/swing and longer-term positions. Intraday traders who flatten before the funding timestamp can avoid the charge entirely.

5.3 Cash-and-Carry (Basis) Arbitrage: A Delta-Neutral Way to Earn Funding

The funding-rate mechanism itself can be used to create a relatively low-risk yield strategy—namely the cash-and-carry (basis) arbitrage referenced earlier.

Execution.

1. Buy 1 BTC on the spot market;

2. Short 1 BTC notional in the perpetuals market.

The combined position is delta-neutral.

Profit source.

All P&L comes from the funding payments collected on the short-perp leg. In “normal” conditions, this approximates the 0.01% benchmark per funding interval (e.g., every 8 hours). In bull-market euphoria, the inflow can become materially larger.

5.4 Using Extreme Funding as a Contrarian Signal

Extremes revert. Extreme funding-rate levels can warn that a trend is overextended and that the probability of reversal is rising.

High-funding alert. When funding reaches historical highs, it implies longs are paying a steep carry for leverage and positioning is exceptionally crowded.

Negative-funding opportunities & case study. When funding turns deeply negative, it signals peak pessimism. A canonical example is May 19, 2021, when Bitcoin fell by nearly 40%, driving funding to deep negative readings not seen for months. For contrarian investors, this marked an extreme in panic and served as an early indicator of the subsequent bottom-and-rebound.

Conclusion

In this high-frequency arena, 0.01% is not an isolated rate parameter but the product of a dynamic balance between market efficiency and capital incentives. It originates from the exchange-set benchmark rate and is maintained by an efficient arbitrage ecosystem, ultimately serving—under stress—as a valuable, real-time gauge of market sentiment.

It is not static; it is a harmonic produced by countless bots and human traders across billions of executions. A deep understanding of this mechanism is required coursework for any serious market participant—from first principles to proficiency. May we always approach the market with humility and respect.

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TL;DR:

• Narrative Shift and Positioning Solidification: The original vision of a “decentralized electronic cash” has largely fallen through, as Bitcoin successfully transitioned into “institutional-grade digital gold” and a macro reserve asset. The realization of this narrative has driven institutional adoption and market cap growth, but it also marks the ceiling of its potential as a daily payment tool.

• Architecture Dictates the Path: The Bitcoin mainnet prioritizes extreme security and decentralization above all else, actively sacrificing scalability to form a layered architecture of an “underlying settlement layer + sidechains/L2s/smart contract public chains.” This design positions Bitcoin as the “central bank” of the crypto ecosystem, rather than a mass-facing payment currency.

• The Inevitability of Practical Compromises: From “one-CPU-one-vote” to capital-intensive mining pool monopolies, from public key anonymity to high on-chain traceability, and the long-term dilemma of transitioning from block rewards to transaction fees — all reflect the self-evolution of a decentralized protocol when confronted with technical limitations, capital logic, and regulatory pressure. These divergences are not failures, but the necessary price for Bitcoin to survive and thrive in the real world.

• Exploration of New Incentive Mechanisms: Innovations such as Ordinals, Runes, DMT-NAT, and Fractal Bitcoin are providing miners with companion asset incentives, attempting to solve the long-term security budget problem. This “bimetallic standard”-style economic model may become a crucial path for maintaining network security after block rewards are completely exhausted.

Since the publication of the whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System in 2008, Bitcoin has weathered over a decade of market trials, evolving from a cryptographic experiment within the geek community into a global macro reserve asset. However, with the practical constraints of underlying technology, deep capital involvement, and the shaping of global regulatory frameworks, Bitcoin’s current ecological structure and operational logic have objectively diverged significantly from Satoshi Nakamoto’s original design. This divergence is not a failure of system design, but the objective outcome of the combined forces of technological limitations, market choices, and regulatory dynamics.

Core Positioning: From “Decentralized Electronic Cash” to “Institutional-Grade Digital Gold”

In the initial design, Satoshi Nakamoto envisioned a payment network free from central banks and financial intermediaries to meet the needs of daily, micro peer-to-peer transactions. However, because the Bitcoin mainnet design restricts block size and block time, its maximum throughput of about 7 transactions per second (TPS) cannot meet the demands of global high-frequency payments. This technical bottleneck triggered the famous “Blocksize War” in crypto history in 2017. At that time, some community members who adhered to the “electronic cash” route advocated expanding block capacity, hard-forking into Bitcoin Cash (BCH). But the ultimate market consensus and the vast majority of computing power remained on the Bitcoin (BTC) mainnet, which maintained small blocks and prioritized decentralization and underlying security above all else.

Real-world payment attempts have also corroborated this shift. El Salvador adopted Bitcoin as legal tender in 2021, but due to high price volatility, locals still prefer using fiat currency in daily life, and Bitcoin serves more as a strategic reserve asset at the national level.

Meanwhile, the entry of Wall Street capital has thoroughly consolidated its “digital gold” narrative. With the approval of spot Bitcoin ETFs from institutions like BlackRock in core global financial markets, Bitcoin’s positioning has been clearly defined as an inflation-resistant, non-sovereign store of value and a macro hedging asset.

Under this positioning transformation, a new crypto macroeconomic architecture is beginning to take shape. The function of the Bitcoin mainnet is gradually evolving into the “central bank” of the crypto ecosystem, focusing on underlying settlement and absolute transparency in asset issuance; while smart contract public chains hosting cross-chain derivative assets play the role of “commercial banks,” utilizing their scalability to provide liquidity for daily high-frequency trading.

Hashrate Distribution: From “One-CPU-One-Vote” to a Capital-Intensive Mining Pool Landscape

In the consensus mechanism design of the whitepaper, Satoshi Nakamoto proposed the concept of “one-CPU-one-vote,” hoping to form a distributed node network consisting of countless ordinary personal computers to maintain ledger security and achieve absolute decentralization of power. However, the economic incentives of hashrate sparked an arms race in hardware computing power. Mining equipment evolved from CPUs to GPUs, and then to Application-Specific Integrated Circuits (ASICs), thoroughly depriving ordinary personal devices of the possibility of participating in block packaging.

Today, Bitcoin mining has evolved into a highly capital-intensive and energy-intensive physical industry, with network hashrate significantly concentrated in a few top mining pools. Judging from recent on-chain data, the combined hashrate share of top mining pools like Foundry USA and AntPool often approaches or exceeds half of the entire network. Large publicly traded mining companies like Marathon Digital also account for the absolute majority of hashrate production. While this highly capitalized and scaled status quo has built an extremely high network security barrier, it has also sparked ongoing industry discussions about the network risks potentially brought by hashrate concentration.

It is worth noting that the competitive logic of the hashrate market has recently been undergoing subtle changes. With the development of new asset protocols and extension networks within the Bitcoin ecosystem, some mining pools (such as SpiderPool, F2Pool, etc.) have significantly attracted hashrate and impacted pool rankings in the short term by supporting merged mining for co-block companion assets like DMT-NAT and networks like Fractal Bitcoin. This reflects that innovative mechanisms within the Bitcoin ecosystem have begun to exert a substantial reverse impact on the hashrate landscape of traditional mining pools.

Privacy State: From Envisioned High Anonymity to Relative On-Chain Traceability

Chapter 10 of the whitepaper envisioned hiding users’ real physical identities on the public ledger through “public key anonymity,” thereby achieving anonymity similar to physical cash. In its early developmental stages (such as the dark web “Silk Road” era), Bitcoin was indeed widely misconstrued as a perfect anonymity tool. But as modern blockchain on-chain analysis technology matured, Bitcoin’s “pseudo-anonymous” nature was thoroughly exposed.

Bitcoin’s underlying UTXO model ensures that every transfer of funds is permanently and publicly recorded across all nodes. In the 2016 Bitfinex exchange hack where approximately 120,000 Bitcoins were stolen, the hackers spent years attempting to launder the funds through coin mixers and hundreds of micro-transfers. US law enforcement, in collaboration with professional on-chain data analysis firms like Chainalysis, tracked the flow of funds through clustering analysis, and combined with traditional judicial forensics (seizing files stored on the suspect’s cloud containing massive wallet addresses and private keys), successfully locked onto the suspects’ real identities.

Coupled with the tightening of global Anti-Money Laundering (AML) regulations, almost all mainstream fiat on/off-ramps have implemented strict KYC (Know Your Customer) policies, deeply binding users’ physical identities to their on-chain addresses.

Faced with the absolute transparency of the mainnet, asset issuance and initial liquidity inevitably possess traceability. Therefore, the focus of Bitcoin privacy protection is shifting towards niche scenarios and the cross-chain ecosystem. For example, once smart public chains like Ethereum complete privacy upgrades, wrapped assets (like WBTC) generated via cross-chain technology will naturally be able to inherit these privacy features during their circulation on smart public chains.

Incentive Mechanism: The Long-Term Challenge and New Solutions in Transitioning to “Transaction Fee-Driven”

To maintain the long-term operation of the network, Satoshi Nakamoto designed the block reward halving mechanism, expecting that as Bitcoin’s issuance gradually approaches the 21 million cap, network incentives for miners would naturally transition from block subsidies to transaction fees.

However, real-world data shows that this transition faces tremendous challenges. Although Bitcoin has undergone multiple block reward halvings (currently, the subsidy per block has dropped to 3.125 BTC), the vast majority of miners’ revenue still relies heavily on block subsidies. If transaction fees are too low, they are far from sufficient to support the “Security Budget” required by the current massive network; if they are too high, they will greatly weaken Bitcoin’s liquidity and usability. Although the previous emergence of Ordinals and Runes protocols briefly caused fee revenue to surpass block subsidies, this is largely viewed as a short-term phenomenon driven by market sentiment cycles.

In response to this dilemma, the industry has begun exploring new models for hashrate feedback. The merged mining model of the Litecoin (LTC) network provides a mature precedent: currently, the main mining incentive for the Litecoin network comes from the companion Dogecoin (DOGE). It is this companion asset that maintains and drives the continuous rise of the entire network’s hashrate.

Following this logic, the economic model of the Bitcoin ecosystem may evolve into something resembling the historical “bimetallic standard.” Under this framework, Bitcoin serves as the underlying core value anchor, while new types of assets born from the same network, same block, and same hashrate (such as DMT-NAT protocol tokens, or extension network assets like Fractal Bitcoin) act as a supplementary medium for daily payments and an additional source of miner incentives.

Conclusion

Looking back at the evolution over the past decade or so, Bitcoin has grown from a cryptographic geek experiment into a strategic asset that cannot be ignored in the global macro-financial landscape. This process is not a betrayal of Satoshi Nakamoto’s ideal, but the inevitable self-adjustment of a decentralized protocol when facing technical constraints, market forces, and regulatory realities. The positioning shift from “electronic cash” to “digital gold,” from “one-CPU-one-vote” to a capital-intensive hashrate landscape, from public key anonymity to on-chain traceability, along with the long-term challenges of the incentive mechanism, have collectively shaped the unique resilience of Bitcoin today.

Understanding these divergences between reality and ideal is not to deny Bitcoin’s value, but to help us see more clearly: it may no longer be the daily payment tool originally envisioned, but it is becoming a type of digital gold that transcends single national sovereignty, backed jointly by the market and computing power. This evolution is both the result of compromise and the necessary price for it to achieve long-term survival and institutional-grade adoption in the real world.

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1. Hong Kong plans legislation to regulate crypto trading & custody, targets tabling bill within 2026 link

Joseph Chan, Acting Secretary for Financial Services and the Treasury of Hong Kong, said on June 1 that following the implementation of licensing regimes for trading platforms and stablecoin regulation, Hong Kong will further roll out comprehensive regulation covering virtual asset trading, custody, advisory and asset management services to realize full-chain supervision of the ecosystem. The proposed regime requires all entities conducting such businesses in Hong Kong to secure a licence or registration from the SFC unless exempted. The scope of trading, advisory and asset management largely aligns with Type 1, Type 4 and Type 9 regulated activities under the existing Securities and Futures Ordinance, whereas custody regulation focuses on risks arising from private key safekeeping. To ensure regulatory certainty, Hong Kong will not adopt a deemed licensed transitional arrangement but allow a grace period for industry adaptation, with a target to submit the relevant legislative amendment bill to the Legislative Council in 2026.

2. Macao completes system integration with mBridge multi-CBDC bridge project link

Macao has completed system integration with the mBridge multi-central bank digital currency bridge project, bringing the initiative’s formal membership count to six following Macao’s official onboarding. Co-led by the People’s Bank of China, Hong Kong Monetary Authority, Bank of Thailand and Central Bank of the United Arab Emirates and coordinated by the BIS Innovation Hub, mBridge is a cross-border CBDC payment and settlement platform built on blockchain and distributed ledger technology.

3. Japan’s ruling party proposes JPY stablecoin promotion and crypto ETF regulatory framework link

The blockchain promotion panel of Japan’s ruling Liberal Democratic Party submitted a proposal to the Minister of Finance, recommending the promotion of yen-pegged stablecoins for cross-border settlements across Asia and the formulation of legal frameworks permitting crypto ETF trading. The proposal argues crypto ETFs offer user-friendly investment access and should be designated as formal financial market instruments. Japan intends to promote yen stablecoins and blockchain innovations during the 2027 Annual Meeting of the Asian Development Bank.

4. South Korea’s banks & tech giants race to form KRW stablecoin alliance per Yonhap News link

Per Yonhap News, despite lingering delays in South Korea’s stablecoin legislation, domestic lenders, fintech firms and crypto exchanges are speeding up coalition building for Korean won-pegged stablecoins. KB Financial Group is privately advancing cooperation with Toss under a plan where KB Kookmin Bank leads issuance, Toss oversees circulation, and Bithumb stands as a prospective supporting participant. Hana Bank previously proposed acquiring an equity stake in Dunamu for roughly USD 660 million, a move widely viewed as an effort to integrate Upbit with Naver Pay and Naver’s shopping ecosystem. Industry insiders note Project Hangang, the central bank’s ongoing deposit token initiative run by the Bank of Korea, is poised to shape upcoming stablecoin legislation.

5. Philippine COMELEC removes blockchain funding from 2028 general election budget link

The Commission on Elections (COMELEC) of the Philippines has removed blockchain modules and voter verification systems from the 2028 general election budget proposal, cutting around 6 billion Philippine pesos (approximately 102 million US dollars) from the original budget of roughly 25 billion Philippine pesos. COMELEC Chairman George Garcia stated the relevant features are non-essential for conducting elections, with budget rationalization and data privacy risks as core considerations, while the adoption of such technologies may be revisited later.

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6. CBR: Domestic investor appetite for crypto investment flatlines link

Russia’s central bank stated in its latest report that Russian residents currently hold crypto-linked financial instruments worth around 3.8 billion rubles (approximately 52.62 million US dollars), nearly unchanged from the 3.7 billion rubles recorded last October, indicating no uptick in retail appetite for crypto-focused investments. Retail investors put 1.7 billion rubles into corporate bonds indexed to cryptocurrencies. The overall market size of crypto-linked bonds stands at 4.1 billion rubles across retail and institutional participants, with retail holdings accounting for 42 percent, and such bonds are predominantly issued by major domestic banks.

7. Russian Finance Ministry opposes regulated access for USD stablecoins; USDT/USDC face freeze risks link

Ivan Chebeskov, Deputy Finance Minister of Russia, said that if foreign stablecoins are allowed into Russia’s regulated trading venues, relevant assets held in user wallets risk being frozen, particularly USDT and USDC and other US dollar stablecoins. He noted Russian legal entities have already faced frozen dollar stablecoins while BTC and ETH have avoided comparable freezes largely due to technical barriers to direct asset seizure. Chebeskov added Russia is debating dedicated stablecoin legislation; regulated markets will prioritize stablecoins pegged to the ruble and currencies of friendly nations, with Russia’s central bank retaining authority to revise the eligible access roster.

8. Coinbase launches direct INR deposit & withdrawal services in India link

Coinbase announced the launch of a direct INR payment channel in India, enabling Indian users to deposit and withdraw Indian rupees via IMPS and trade spot assets and perpetual contracts of major cryptocurrencies. Coinbase stated it has registered with FIU-IND and complied with India’s tax regulations, built a local INR order book and connected it to its global exchange network.

Coinbase Markets confirmed Coinbase has rolled out ETH-INR and SOL-INR trading pairs for Indian users. The two pairs will debut on Coinbase Exchange before sequential rollout across Coinbase.com, Coinbase App and Coinbase Advanced.

9. South Korean police open first-ever illegal gambling probe into domestic Polymarket users link

South Korean police are probing domestic users of prediction marketplace Polymarket on suspicion of illegal gambling. The Gangwon Provincial Police Agency has taken up the probe on commission from the National Police Agency headquarters, marking South Korea’s first-ever law enforcement investigation targeting local Polymarket participants.

Under prevailing South Korean legislation, all wagers placed on third-party betting platforms are unlawful except for Sports Toto run by the Korea Sports Promotion Foundation; implicated users may incur fines of up to 10 million South Korean won pursuant to Article 246 of the country’s Criminal Code. Reports note Polymarket is directly accessible in South Korea without IP circumvention tools, enabling local users to place bets via US dollar stablecoins. The platform rolled out prediction contracts tied to South Korea’s June 3 local elections earlier, with total betting volume hitting hundreds of billions of won nationwide.

10. US imposes sanctions on Iran’s top crypto exchange Nobitex and its senior executives link

The U.S. Department of the Treasury has blacklisted Nobitex, Iran’s largest cryptocurrency exchange, alongside three other Iranian digital asset platforms, and imposed sanctions on Nobitex’s chairman and multiple senior executives. U.S. Treasury Secretary Scott Bessent claimed the Iranian government leverages digital asset technologies to bypass international sanctions and cross-border fund transfers.

According to the Treasury Department, Nobitex handled roughly half of Iran’s total crypto transaction volume throughout 2025. This round of sanctions forms part of the Trump administration’s *Economic Fury* initiative, designed to ratchet up sustained economic pressure on Iran and compel the country to return to negotiating talks.

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1. Solana Foundation rolls out dedicated grant program to boost fully on-chain perpetual futures ecosystem link

The Solana Foundation announced support for developing fully on-chain perpetual contracts and other derivative applications on Solana with traffic, technical and financial resources. It stated hybrid architectures using off-chain matching are only transitional and full on-chain operation is the ultimate target. Six supporting principles are released: full on-chain execution of order placement, matching and settlement; genuine price discovery via two-way liquidity of order book or RFQ instead of pool pricing; Solana-first rule with structured revenue feedback to the public chain; incentives for architectural and network optimization innovation; priority for mature teams shifting to full on-chain frameworks; preferential funding for open-source teams with verifiable core logic.

2. Hyperliquid emerges as core weekend perps hub for Wall Street traders, hitting all-time-high perp trading share in May link

According to The Wall Street Journal, Hyperliquid has become a key venue for some Wall Street traders to trade perpetual contracts of crypto and traditional assets on weekends and off-market hours, with products covering BTC, S&P 500, crude oil and contracts linked to unlisted assets such as SpaceX, generating around $800 million in total revenue last year. The WSJ notes Hyperliquid blocks access for US residents, yet traders from restricted jurisdictions circumvent restrictions via VPN, while its robust community ecosystem and diversified asset lineup fuel expansion into prediction markets and options trading.

Data from The Block shows Hyperliquid’s May perpetual trading volume accounted for a record-high 6.63% of global centralized exchange aggregate volume and hit an all-time peak of 14.4% relative to Binance. Its HIP-3 framework underpinned the expansion, driving over $62 billion in monthly trading volume and roughly $3 billion in open interest in May. Even so, the report highlights Hyperliquid’s standalone crypto perpetual trading volume posted a notable year-on-year decline amid broad crypto market downturn.

3. Radiant Capital initiates phased orderly wind-down of all protocol operations link

Radiant Capital announced its DAO has no viable path for sustainable operations and will commence phased shutdown after failing to recover stolen funds, secure fresh financing or resume growth following an October 2024 exploit. Front-end interfaces and on-chain smart contracts remain functional for users to withdraw funds, settle loans and manage positions, yet all development, upgrades and expansion initiatives are halted alongside zeroed lending caps and terminated RDNT reward distributions. The team will focus on safeguarding user assets, pursuing fund recovery and facilitating orderly wind-down. The protocol suffered losses exceeding $50 million in the prior hack.

4. TON’s native token rebrands to Gram; underlying TON blockchain name stays unchanged link

Pavel Durov, founder of Telegram, announced the launch of a rebranding initiative across the TON ecosystem, renaming its native token from TON to Gram. The team noted Gram was the original native token name outlined in TON’s initial whitepaper, with the rename intended to return to the project’s founding vision and mark a new development phase for the ecosystem. The brand transition is set to roll out incrementally over roughly three weeks, with wallets, infrastructure and ecosystem applications updating the token designation sequentially. TON clarified the change only applies to the native token’s brand name, and the underlying blockchain will retain the official title The Open Network (TON) with no alterations.

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5. Hacker launders nearly all $220M unfrozen funds from Kelp DAO bridge exploit, asset tracing window effectively closed link

On-chain tracking data confirms the Kelp DAO cross-chain bridge hacker, identified as North Korean hacking syndicate TraderTraitor, has laundered approximately $220 million in unfrozen stolen assets via privacy protocols including THORChain, Wasabi, Tornado Cash and Umbra. Merely around $1.7 million of funds remains parked in the hacker’s original wallet, practically shutting down the window for itemized tracing and direct recovery of unfrozen capital.

6. Sui confirms three consecutive mainnet outages stem from v1.72 upgrade code bugs link

Sui Foundation revealed three outages hitting the Sui mainnet last Thursday and Friday stemmed from two distinct bugs introduced in the v1.72 upgrade. The first two shutdowns originated from a gas calculation flaw within the address balances function. The emergency patch rolled out on Thursday carried a documented low-probability crash risk, which the team accepted to restore service promptly and triggered another outage on Friday. The third downtime emerged after validators rebooted to apply fixes, tied to a hidden bug governing the network’s stored randomness configuration. Sui confirmed all defects have been patched with no user funds compromised or finalized transactions reversed, alongside a newly built mechanism to forcibly terminate stuck epochs.

7. Polymarket suspects industrial espionage from Kalshi, citing excessive coincidences on parallel product launches link

Polymarket suspects rival Kalshi of corporate espionage and has compiled internal documentation dubbed “copycat” detailing roughly a dozen alleged instances of replicated or pre-emptively launched products, marketing campaigns and UI layouts. Matthew Modabber, Polymarket’s head of market operations, states the occurrences exceed coincidences, citing examples such as a free grocery pop-up event in New York and perpetual contract offerings. Kalshi refutes the accusations as delusional and commits to ongoing product development. Paradigm, an investor in Kalshi, also denies conducting surveillance on Polymarket’s premises.

8. Spark’s total deposits near $4.5B, notching successive all-time highs link

Per Blockworks statistics, total deposits on lending protocol Spark have neared $4.5 billion, hitting successive all-time highs, with over $1 billion in fresh inflows registered since late April’s rsETH incident. USDS now accounts for more than half of all funds parked on the platform.

9. Ondo Perps slated to launch equity perpetual contracts on June 9, 2026 link

Ondo Perps posted on X stating, “Perpetual contracts transformed global trading, and now they are set to enter the stock market,” previewing its official launch slated for June 9, 2026. Early access applications are currently open to a limited pool of eligible traders. The platform facilitates peer-to-peer perpetual contract trading and restricts service to end-users based in jurisdictions including the United States, Canada, the United Kingdom, the European Union and Panama.

10. Symbiotic launches Liquid Lane network enabling instant stablecoin redemptions for tokenized RWAs link

Backed by Paradigm, Pantera Capital and Coinbase Ventures, crypto infrastructure firm Symbiotic has rolled out Liquid Lane to resolve the lengthy redemption cycles plaguing real-world asset products including tokenized funds and private credit.

Symbiotic notes that while many tokenized holdings can be transferred on-chain instantaneously, investors may wait weeks or even up to 180 days to receive fiat cash from issuers via formal redemption channels. Powered by a request-for-quote mechanism, Liquid Lane routes investor exit orders to vetted market makers; the winning bidder pays out USDC to investors upfront and takes possession of the corresponding tokenized assets, with issuers wrapping up underlying settlement off-chain in the background.

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1. Strategy Sells 32 BTC in Its First Disposal in Recent Years link

According to the Form 8-K filed by Strategy with the US SEC, the company sold 32 Bitcoin between May 26 and May 31, 2026, marking its first such disposal in recent years. The total proceeds stood at approximately $2.5 million with an average selling price of around $77,135. Proceeds from the sale are earmarked for preferred stock dividend payouts per the filing. As of May 31, Strategy held 843,706 Bitcoin with an aggregate acquisition cost of roughly $63.87 billion and an average purchase price of about $75,699.

2. BitMine Adds 26,497 ETH; Total Holdings Hit 5,416,901 ETH link

BitMine added 26,497 ETH to its holdings last week, bringing its total ETH balance to 5,416,901, equivalent to roughly 4.49% of Ethereum’s total circulating supply. The firm’s combined holdings of crypto assets, cash and other investments are valued at approximately $11.6 billion, consisting of around $10.85 billion worth of ETH and $446 million in cash. BitMine disclosed that 4,718,677 of its ETH has been staked, accounting for over 87% of its total ETH inventory, with projected annual staking revenue of about $258 million based on prevailing yield rates. Tom Lee argued that ETH’s current market price has not priced in ongoing fundamental improvements across Ethereum, and the company targets owning 5% of Ethereum’s total supply by the end of 2026.

Bitmine Immersion Technologies announced this week the issuance of 3 million shares of Series A perpetual preferred stock carrying an annual coupon rate of 9.50%. Each share bears a par value and initial liquidation preference of $100, with dividends accruing at the 9.50% annual rate and declared dividends scheduled for weekly cash disbursement. Net proceeds from the offering are earmarked for general corporate purposes, which may include further purchases of ETH and alternative digital assets, expansion of staking and validator node infrastructure including MAVAN, working capital replenishment, strategic investments tied to Ethereum ecosystem development and mainstream digital asset adoption, plus common stock repurchases.

3. US Treasury Secretary: US Explores Strategic Bitcoin Reserve Prudently link

US Treasury Secretary Scott Bessent said at a hearing of the Senate Finance Committee that the Treasury Department is moving forward with the establishment of the strategic Bitcoin reserve and digital asset reserve required under President Trump’s executive order at a prudent pace, noting the initiative covers emerging new technology sectors and requires sustainable long-term best practices. Bessent added the US administration is advancing legislation governing digital assets and backs the CLARITY Act to keep digital asset businesses and their regulatory framework domiciled in the United States. The US currently holds approximately 328,400 BTC worth around $21.5 billion.

4. Coinbase Completes America’s First Bitcoin-Backed Mortgage Loan link

Coinbase announced the closing of America’s first Fannie Mae-backed mortgage secured by Bitcoin as underlying collateral. Originated and serviced by Better with technological support from Coinbase, the loan enables borrowers to pledge BTC or USDC held in their Coinbase accounts as collateral for down payment financing without mandatory liquidation of digital holdings. Coinbase stated the product will roll out nationwide this summer to deliver innovative mortgage alternatives for Bitcoin holders.

5. Binance Research: US Equities Drain Capital From Crypto Space link

Binance Research stated in a report that the recent downturn in the crypto market may stem not from internal factors of the crypto sector but capital absorption by US equities. It noted the CBOE Dispersion Index climbed to 42, the third highest reading on record, reflecting extreme concentration of S&P 500 capital in a handful of popular themes. Massive capital inflows into AI, semiconductors, defense, energy and commodities tend to sideline BTC. Per Binance Research, BTC has historically bottomed out within zero to 20 weeks after episodes of extreme US stock capital concentration at a median of roughly two weeks; absent sector-specific crypto crises, such capital diversion is typically temporary.

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6. Binance Launches On-Chain Tokenized US Stocks via bStocks link

Binance unveiled details of its US stock trading service, enabling non-US users to trade over 7,000 US stocks and ETFs with fractional share investment starting from a minimum of $5. The service operates 24 hours a day for five days per week. While stock trades incur zero commissions, a minimum platform fee of $0.35 applies per order, with a 10-basis-point charge levied on trade values exceeding $350. Users can purchase equities using USDT, USDC, BNB and other digital assets; Nest Trading serves as the brokerage and Alpaca handles asset custody and dividend administration. The tokenized stock product bStocks is set to launch in the coming weeks. Meanwhile, the Full Payment Securities Lending (FPSL) service will go live on June 4, allowing users to lend held securities for supplementary earnings.

Binance recently rolled out its US stock and ETF trading service and outlined its revenue-sharing agreement with Alpaca under Clause 11 of its Securities Trading Product Terms. Binance receives 50 percent of payment for order flow (PFOF) collected by Alpaca. Users may lend their fully owned securities to institutional borrowers for short selling and market-making activities. After Alpaca deducts lending proceeds and distributes interest to users, Binance gets 65 percent of Alpaca’s residual surplus revenue. The clause also discloses Binance holds a minority equity stake in Alpaca.

7. Arthur Hayes Fully Exits HYPE & NEAR, Expects Crypto Market Peak Before September link

Arthur Hayes, co-founder of BitMEX, announced he has fully liquidated all his HYPE and NEAR holdings and will elaborate on his rationale in his upcoming article Reality Test due next week. His preliminary reasoning includes climbing energy prices driven by Iran-related conflicts and inventory restocking plans, three major AI firms slated for IPOs between this summer and early Q3, plus Donald Trump’s potential policy pivot to an anti-AI stance to shore up midterm election support. He forecasts market highs to emerge between now and September, prompting his profit-taking.

Per tracking data from OnchainLens, Hayes offloaded 247,334 HYPE tokens valued at roughly $18.02 million, alongside an undisclosed quantity of NEAR.

Previously, Hayes wagered a $100,000 charitable bet with Kyle Samani, co-founder of Multicoin Capital, betting HYPE would outperform all top-ten cryptocurrencies by year-end; Samani accepted the bet and backed SOL instead.

8. CME Goes Live With 24/7 Crypto Futures & Options; Weekend Volume Tops $50M link

CME Group, the world’s largest derivatives exchange, announced the official launch of round-the-clock cryptocurrency futures and options trading, enabling market participants to trade regulated crypto derivatives on weekends and off-hours. Over 7,200 contracts with a notional value of approximately $50 million changed hands during its debut weekend. CME said the launch caters to market demand for all-hours liquidity and risk management tools while bridging the gap between traditional finance and crypto’s nonstop trading model. Bitcoin Volatility Futures have also been enabled for 24/7 trading concurrently.

9. Charles Schwab to Roll Out Crypto Spot, Transfer and Custody Services in 2027 link

US brokerage and custody giant Charles Schwab plans to roll out spot cryptocurrency trading, transfer and custody functions on its advisor custody platform in 2027. Jalina Kerr, Managing Director of Schwab Advisor Services, said the project is progressing on track and scheduled for launch around the middle of next year, though the timeline remains subject to change. Previously, Schwab has opened spot trading for Bitcoin and Ethereum to retail clients this year.

10. Zcash Founder Zooko Publishes Full Details on Critical Orchard Counterfeiting Exploit Bug link

Zooko, founder of Zcash, stated in a post that security researcher Taylor Hornby using Claude discovered a critical counterfeiting vulnerability in Zcash’s Orchard pool on May 29 and reported it to the Zcash Open Development Lab (ZODL). ZODL subsequently coordinated an emergency ecosystem response, with remediation fully completed on June 2. Shielded Labs confirmed the vulnerability is functional and exploitable; an exploit coded by Taylor on a local testnet could produce unlimited untraceable counterfeit ZEC. Orchard’s privacy design rules out purely cryptographic confirmation of pre-fix exploitation, yet the entity puts low odds on prior abuse. Shielded Labs is drafting a network upgrade proposal to launch a new shielded pool and apply turnstile accounting across all Orchard-derived tokens, enabling universal verification of Zcash supply integrity and proof of zero counterfeit ZEC within the original Orchard pool.

Wei Dai, research partner at 1kx, commented on the zero-knowledge circuit flaw in Zcash Orchard that the oversight looks obvious in hindsight yet slipped past rigorous protocol designers, cryptographers and auditors. He warned market conditions may deteriorate further before improvement, and broader formal verification coverage stands as the only sustainable long-term remedy.

After vulnerability detection, Zcash miners and developers froze the Orchard shielded pool, which holds roughly 30 percent of all ZEC, to block potential exploitation pending patch deployment ahead of a hard fork, putting the network into a controlled partial halt that has since been resolved. Multiple block explorers and wallets including Cake Wallet and Zodl Wallet remain out of sync.

The Zcash Foundation later released Zebra versions 4.5.3 and 5.0.0 to patch the severe soundness vulnerability inside the Orchard Action circuit. Zebra 4.5.3 temporarily disabled Orchard actions via an emergency soft fork at mainnet block height 3,363,426. Zebra 5.0.0 activates the NU6.2 hard fork upgrade at block height 3,364,600 and reinstates Orchard using revised fixed circuits. According to the Zcash Foundation, the bug was uncovered before any confirmed exploitation, no unauthorized token minting occurred, user privacy remained intact, and Sapling alongside transparent transactions operated normally throughout the incident. All Zebra node operators are urged to upgrade promptly to version 5.0.0.

Claude, an AI large language model developed by Anthropic, previously assisted a user in parsing, filtering and cross-referencing massive archival documents to recover a dormant Bitcoin wallet containing 5 BTC worth approximately 400,000 US dollars after nearly nine years of inactivity.

Fundraising

• Coinbase has invested in ProShares’ money market ETF. link

• Fintech firm Ramp wrapped up a $750 million Series F financing round, lifting its valuation to $44 billion. link

• WasabiCard secured its Pre-A round, bringing its total fundraising to nearly $10 million. link

• NewLimit, co-founded by Coinbase’s CEO, closed a $435 million Series C funding round. link

Learn more, check out crypto-fundraising.info.

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In this episode of the WuBlockchain Podcast, we speak with William, co-founder of GMTrade, about the project’s evolution from a GMX fork on Solana into an independent protocol, why the team chose Solana, the advantages of its pooled-liquidity trading model, its integration with Chainlink Low-Latency Oracles, the source and sustainability of LP yields, its points system, and plans to expand into non-crypto asset trading.

William said GMTrade aims to leverage Solana’s low fees and high performance, combined with a GMX-style pooled liquidity model, to offer lower trading costs and faster time-to-market for new listings. By adding real-world asset markets such as FX, commodities, indices, and eventually stocks, the team wants to build a decentralized platform where users can trade everything.

Its long-term vision is to become the on-chain version of Robinhood — a single platform where users can trade both crypto and macro assets, while also expanding into more mobile-first trading use cases through a dedicated app.

GMTrade’s Origins, Solana Strategy, and the Advantages of Its Trading Model

Host: Welcome, William. Could you start with a quick intro to yourself and GMTrade?

William: I’m William, co-founder of GMTrade. I got into crypto in 2014. Back in high school, I was mining Bitcoin, and later I helped start a few crypto projects, worked in institutional market making, and kept trading throughout. I started trading perpetuals in 2017, and in 2023 I ranked №9 on GMX’s historical PnL leaderboard. In many ways, GMTrade grew out of that GMX background.

GMTrade is a decentralized perpetuals protocol built on Solana. At the beginning, you could think of it as “GMX on Solana.” But as we kept building, we realized the product, the engineering complexity, and the long-term community potential had all grown beyond just being a fork. So in the end, we decided to move forward as a fully independent project, with its own team, community, and token system.

The project’s development has also been closely tied to our work with Chainlink. As Chainlink rolled out its new low-latency data feeds on Solana, trading real-world assets became much more feasible, and that opened up a much bigger market opportunity for us. For example, the FX market is far larger than crypto, which is one of the key reasons we chose to keep expanding.

Host: What metrics does GM Trade currently care about most?

William: Compared with raw trading volume, we care more about open interest. What really matters is whether users are Williaming to put on larger positions and keep them open longer on GMTrade. At the end of the day, that comes down to whether we can offer rates and execution that are competitive enough.

Host: GMX originally took off on Arbitrum. Why did GMTrade choose Solana?

William: The most direct reason is Solana’s low latency and extremely low fees, which make for a much better trading experience. Beyond that, we also believe Solana currently has a stronger concentration of retail users, and even quite a few institutional users as well. On top of that, Rust gives us real advantages at the infrastructure and development level, which helps us build a stronger product and ecosystem. So for us, Solana’s appeal really comes down to better execution, lower costs, and a larger user base.

Host: On Solana, a lot of users are more familiar with the order book model, but GMTrade uses a pooled liquidity model. What do you see as the edge there?

William: The biggest advantage of the pooled liquidity model is that it lets us launch new markets much faster, without having to solve for high-quality market making and order book depth first. Take gold or FX, for example. If you’re using an order book model, you need to build deep enough bids and asks very quickly, or the trading experience just falls apart.

GMTrade doesn’t rely on a traditional order book, which lets us scale into new markets more efficiently while keeping trading costs much lower. On fees, for instance, some leading comparable platforms on Solana charge around 3 basis points, while we charge just 0.5 basis points, roughly 5x to 9x cheaper. Order book-based platforms usually struggle to match that because they have to keep subsidizing market makers to maintain liquidity, and that’s a major structural cost.

So in our view, the core edge of the pooled model is simple: lower fees, better execution, and faster expansion into new markets.

GMTrade’s Oracle Infrastructure and the Logic Behind LP Yield

Host: GMTrade recently started using Chainlink Data Streams as part of its oracle infrastructure. What specific problems does a low-latency oracle solve for your trading architecture? And why did you choose to work with Chainlink?

William: There honestly aren’t that many oracle providers to choose from, and in my view, Chainlink is one of the strongest teams out there. Our relationship with Chainlink goes back a long way. We already had a long-term working relationship during the GMX days. Later, they told us they were building a new low-latency data feed product and planning to deploy it on Solana. For us, partnering with them was a pretty natural step, and to some extent it also pushed us to build GMTrade on Solana.

I think Chainlink not only has a mature product, but also a very strong engineering team. They’ve put a lot of effort into working closely with us and helping minimize oracle-related issues and risks as much as possible. On top of that, they keep expanding their data coverage, which is another big reason we chose to deepen the partnership.

Host: GMTrade places a lot of emphasis on its standalone GM pool. From an LP’s perspective, where exactly does yield come from today? And given that users are much more cautious about DeFi now, how do you explain the sustainability of that yield?

William: LP yield mainly comes from trading fees on opening and closing positions, borrowing fees, and liquidation fees. But this isn’t a lending pool in the traditional sense. When users deposit USDC into GMTrade, they’re not simply lending it out the way they would on Aave. They’re providing liquidity as the counterparty to traders, which means they also take on trading PnL risk.

That said, over the long run, losing traders usually outnumber profitable ones. Combined with protocol fees and borrowing fees, that creates a relatively stable source of yield. We think this model has already been somewhat validated by how GMX has performed over the past few years.

On sustainability, I’d stress that a lot of DeFi protocols advertise high yields that are really boosted by governance token incentives, so the actual organic yield is often much lower than it looks. GMTrade puts much more emphasis on real yield itself. Beyond that, users can also choose to join additional incentive programs and earn extra rewards on top of the base yield.

Another important point is that this incentive program doesn’t require users to lock up funds. They can opt in or opt out at any time. So strictly speaking, it’s more like an extra reward layer users can choose to add on top of their base yield, rather than a traditional long-term staking setup. Some more sophisticated LPs also hedge trader PnL exposure, turning it into a more risk-managed yield strategy.

GT Points and How GMTrade Measures Real Contribution

Host: A lot of perpetuals protocols see trading volume spike during points campaigns. How does GMTrade tell whether that growth reflects real long-term demand rather than short-term incentive farming? And since GT points come from trading fees, borrowing fees, LP activity, and referrals, how does the team make sure the system measures genuine protocol contribution instead of just wash volume?

William: Once you introduce a points system, some users are obviously going to farm it. That’s completely normal. But on the flip side, if people are Williaming to pay real costs to earn points, that also signals they’re constructive on the project’s future.

GT points aren’t handed out for free. Users earn them by paying real costs into the protocol. That could mean trading fees, borrowing fees, or simply holding positions for longer. Our design is somewhat similar to Bitcoin’s issuance logic: as the total amount of points grows, the cost of earning new points keeps rising. In other words, early participants get in at a lower cost, while earning points becomes progressively more expensive over time.

So the mechanism naturally rewards earlier and more authentic participation, instead of encouraging people to manufacture surface-level volume at minimal cost. If there’s a future token generation event, points William also serve as a key basis for recognizing and rewarding early users.

Of course, what we most want to see is users trading because they actually like the product. But even for points-driven users, the fees they pay still generate real revenue for the protocol, and that revenue can be reinvested into growth, marketing, and user acquisition. So in practice, they’re still creating positive value for the ecosystem.

That said, at this stage, I believe most users on the platform are still genuine users. We haven’t seen anything like large-scale points farming. And even where that behavior does exist, it’s not meaningless activity — it still involves participating in the protocol at real cost.

GMTrade’s Market Expansion and the “Trade Everything” Vision

Host: As we mentioned at the start, GMTrade has already expanded on Solana into FX, commodities, and index markets. Why did the team decide to move into these non-crypto markets at this stage? And you’ve repeatedly mentioned the idea of “Trade Everything” — how does that translate into the product roadmap and long-term vision? Among these new markets, which directions are you evaluating most seriously right now?

William: I think non-crypto markets — especially real-world assets — are one of the most important areas to watch right now. The reason is simple: traditional financial markets are much larger and far more accessible, and FX in particular is vastly bigger than crypto. That means once you bring FX, commodities, and indices on-chain, you have a chance to reach a much broader user base, along with much larger trading volume, open interest, and fee opportunities.

Right now, we’ve already launched a range of commodity markets, including WTI crude oil, gold, silver, and palladium, and we’re now live with close to 90 markets in total. Going forward, we’ll continue working with Chainlink to expand into more assets. That’s something we’ll keep pushing in the short and medium term, while the long-term goal is to eventually support thousands of markets.

For us, the core idea behind “Trade Everything” is to make GMTrade into a decentralized version of Robinhood. No matter what asset a user wants to trade, they should be able to do it here — and not just do it, but do it with better execution and lower fees. Because at the end of the day, traders don’t really care that much about the platform’s name or brand. What they care about is how much profit they actually keep after each trade.

On more specific opportunities, we’re also seriously evaluating prediction markets. But in my view, that’s a much more winner-take-all category, which makes it hard for new entrants to build an edge. By comparison, markets like stocks and indices are not winner-take-all, and there’s still plenty of room for multiple protocols to grow side by side.

Beyond that, I’d also love to see more new products emerge within the GMTrade ecosystem. One is a trading competition interface, where strong traders can earn additional rewards through a higher-fee competitive layer. Another is funded accounts, essentially an on-chain version of prop trading. After passing an evaluation, users could trade with larger amounts of capital and share in the profits. I think decentralized prop trading could become a very promising category.

Overall, I want GMTrade to become a true one-stop trading platform. As more real-world assets, FX, commodities, stocks, and other markets come online, users William be able to trade a much wider range of assets in one place, with a significantly better overall experience.

Mobile Strategy and Trading Use Cases: Letting Users Monitor and Manage Positions Anytime

Host: We’ve seen the team expand beyond a web-only product and announce a dedicated mobile app. What user problem is this app mainly meant to solve? And from a trader’s perspective, is there a meaningful difference between trading perpetuals on mobile versus desktop?

William: A lot of users now spend most of their time online on their phones. That’s especially true in crypto, where people are constantly on Telegram, replying to messages, and keeping up with the market from mobile. So the core idea behind the app is simple: deliver a smoother trading experience on the device users rely on most.

I also think perpetuals trading is often naturally a mobile-first use case. When you’re doing analysis, studying charts, and forming a trade idea, a bigger desktop screen is obviously better. But once you already have a position on, especially when you’re out and about, being able to check the market, close, add to, or take profit from your phone is much more practical.

Functionally, there’s no real difference between mobile and desktop. Anything users can do on desktop, they should also be able to do in the mobile app. The main difference is really just screen size, so charts are a bit more compact. For a lot of traders, the most practical workflow may be to analyze charts in TradingView on mobile first, then open GMTrade to execute the trade.

Even today, users can already access GMTrade on mobile through wallets like Phantom and Solflare, but a dedicated app William still provide a more complete and seamless experience.

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Author | WuBlockchain

According to RootData, Crypto VC disclosed 79 public venture deals in May 2026, up 23.4% month over month (64 in April 2026) and down 13.2% year over year (91 in May 2025). The one-year trend is shown below.

By sector, May’s disclosed deals broke down roughly as follows: CeFi ~17.7%, DeFi ~32.9%, NFT/GameFi ~2.5%, L1/L2 ~3.8%, RWA/DePIN ~3.8%, Tool/Wallet ~6.3%, and AI ~17.7%. Project counts by sector are shown below.

Total Crypto VC funding in May 2026 was approximately $2.92 billion, up 88.1% month over month ($1.55 billion in April 2026) and down 31.3% year over year ($4.26 billion in May 2025). The one-year trend is shown below.

Note: Deals without a disclosed amount are counted in the deal total only, not in the funding total. Because not all rounds are announced in the same month as they close, these figures may be revised later. Top 10 rounds by disclosed funding amount:

Hana Bank is spending approximately $670 million to acquire a stake in Dunamu, operator of South Korea’s largest crypto exchange Upbit, purchasing 2.284 million shares (6.55%) — the largest single investment by a Korean bank in a digital-asset entity. After the deal closes, Hana Bank will become Dunamu’s fourth-largest shareholder. Later the same month, Samsung Securities will buy a 2% stake in Dunamu for about $204 million (~697,000 shares). That implies a Dunamu valuation of roughly ₩15.3 trillion (~$10.2 billion).

Payward, parent of Kraken, is acquiring stablecoin-focused payments firm Reap Technologies in a ~$600 million cash-and-stock deal, at a $20 billion valuation for Payward. The Reap deal follows Payward’s ~$550 million acquisition of U.S. derivatives platform Bitnomial. Kraken co-CEO Arjun Sethi said the company is about 80% ready for an IPO.

Circle, issuer of stablecoin USDC, raised $222 million in a presale of its new blockchain-native token Arc, as it looks to move beyond its core USDC business. The network’s fully diluted valuation is $3 billion. a16z led the round; BlackRock, Apollo Management, ICE, and about a dozen other major financial names also joined.

Prediction market Kalshi raised an additional $200 million from Baillie Gifford and Layer Global, extending the prior $1 billion round led by Coatue Management, with valuation unchanged at $22 billion. Kalshi’s April trading volume exceeded $14 billion, with annualized revenue above $1.5 billion.

Elliptic closed a $120 million Series D. One Peak led; Nasdaq Ventures, Deutsche Bank, and the British Business Bank also participated. Post-money valuation: $670 million.

OKX Ventures and Korea Investment & Securities (KIS) will use a mix of secondary purchases and new issuance to invest $106 million in Korean exchange Coinone, for a combined 19.6% stake.

Exchange Gemini (Gemini Space Station Inc.) received a $100 million strategic investment from Winklevoss Capital, paid in Bitcoin. Gemini is focusing on the U.S. market and prediction markets; in April it also obtained a Derivatives Clearing Organization (DCO) license.

Crypto payments company Fun closed a $72 million Series A, co-led by Multicoin Capital and SignalFire, with Infinity Ventures, Pharsalus Capital, Tinder co-founder Justin Mateen, and others. Capital is heavily concentrated in DeFi, payments and market infrastructure, and prediction markets.

Coincheck, listed on Nasdaq, received a $65 million strategic investment from Japanese telecom KDDI in May 2026. KDDI subscribed to ~28.53 million newly issued shares at ~$2.28 per share, for $65 million total and ~14.9% of Coincheck, and plans a digital-asset wallet joint venture in Japan in summer 2026.

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TL;DR:

Binance enters the US stock market, with Alpaca becoming a key infrastructure provider: Binance is opening US stock and ETF trading services to non-US users and plans to launch bStocks, an on-chain securities product. Within this ecosystem, Alpaca handles core securities infrastructure components such as execution, clearing, and custody, playing a vital role in connecting the crypto market with the US securities market.

From API brokerage to RWA infrastructure: Alpaca transitioned from an algorithmic trading software company to a US self-clearing brokerage. By offering standardized and modular securities trading capabilities through its Brokerage API, it is regarded as the “Stripe of securities trading.” Currently, its services cover hundreds of global partners and millions of end accounts.

Self-clearing capabilities build a core competitive moat: Compared to most brokerages that rely on third-party clearing houses, Alpaca possesses integrated execution, clearing, and custody capabilities. In the fields of tokenized securities and real-world assets (RWAs), this model — which combines regulatory compliance with infrastructure capabilities — is highly rare.

ITN network and ecosystem partnerships reinforce its leading edge: The Instant Tokenization Network (ITN) launched by Alpaca attempts to bridge traditional securities inventory with on-chain issuance processes, while establishing partnerships with RWA projects such as Ondo, Backed, and Dinari. According to data disclosed by the company, it commands approximately a 94% market share in assets under custody related to tokenized US stocks & ETFs.

Regulatory and centralization risks remain behind RWA growth: The tokenized stock market is still in its early stages of development, with most products offering economic interests in the securities rather than direct equity ownership. As the industry scales, issues such as regulatory changes, liquidity constraints, and high infrastructure centralization remain significant challenges for future development.

Alpaca: The Key Infrastructure Provider Behind Binance’s bStocks

On June 1, 2026, Binance officially opened trading services for over 7,000 US stocks and ETFs to non-US users. This move allows global crypto users to participate in traditional capital markets with a lower barrier to entry. With a minimum of just $5, users can use crypto assets such as USDT, USDC, and even BNB to purchase fractional shares of companies listed on NASDAQ or the NYSE. The service operates on a 24/5 trading model, routing orders through Nest Trading Limited (an ADGM-licensed brokerage entity participating in Binance’s US stock business architecture), while Alpaca Securities LLC handles order execution, clearing, custody, dividend distribution, and corporate action processing.

It is worth noting that the service currently launched by Binance is a traditional US stock trading service provided through a licensed brokerage system; whereas the upcoming bStocks is an on-chain securities product based on the BNB Chain, with distinct differences between the two in legal structure and technical implementation.

bStocks will be issued by BTECH Holdings Ltd, a Special Purpose Vehicle (SPV) registered in the Abu Dhabi Global Market (ADGM), achieving on-chain representation of stocks on the BNB Chain. Its economic value maintains a mapped relationship with the corresponding stock and is supported by a licensed architecture. This strategic layout marks Binance’s evolution from a pure crypto asset platform towards a multi-asset and RWA (Real World Assets) direction, providing crypto users with more pathways to connect with traditional finance.

Alpaca’s Background and Development Path

Alpaca’s story began in 2015, co-founded by Japanese founders Yoshi Yokokawa (current CEO) and Hitoshi Harada (CPO/CTO). Initially named AlpacaDB, the company primarily focused on developing algorithmic trading infrastructure and database tools. Around 2017, it began transitioning to the brokerage infrastructure business, gradually building self-clearing brokerage capabilities over the following years to become a FINRA-registered and SIPC-member institution headquartered in San Mateo, California.

The self-clearing model means Alpaca does not need to rely on other brokerages for clearing services; instead, it can independently undertake core functions such as maintaining customer books, clearing, and custody. This is a relatively rare capability in the industry and has become a key foundation for building trust in the RWA space subsequently. Its core product, the Brokerage API, encapsulates complex compliance, risk control, and settlement logic from traditional securities trading into concise REST and WebSocket interfaces, earning it the industry moniker of the “Stripe of securities trading.” This developer-first design significantly lowers the technical barrier for fintech startups, crypto platforms, and institutional investors to access the US securities market.

According to company disclosures, its infrastructure has served hundreds of partners globally and supports the trading activities of millions of end-brokerage accounts.

On January 14, 2026, Alpaca completed a $150 million Series D financing round led by Drive Capital (securing an additional $40 million credit line), bringing the company’s valuation to $1.15 billion. The investor lineup includes Citadel Securities, Kraken, BNP Paribas’ venture arm (Opera Tech Ventures), MUFG, DRW, and other giants in the traditional and crypto finance sectors. This funding round not only provides ample capital support but also reflects the capital market’s long-term optimism about Alpaca in the convergence infrastructure space between traditional finance (TradFi) and crypto finance (Crypto).

Why Does Alpaca Hold a Leading Position in Tokenized US Stocks & ETFs?

As of December 2025, according to Alpaca’s own disclosed data, it commands an approximate 94% market share in assets under custody related to tokenized US stocks & ETFs (with an even higher proportion of 97% in large-cap and mega-cap stocks), and the scale of its tokenized assets under custody exceeds $480 million. Due to the lack of a unified statistical standard in the tokenized equities market, the methodologies adopted by different institutions may vary.

The establishment of this leading position stems from the competitive advantages Alpaca has built across multiple dimensions.

The Scarcity of Self-Clearing Capabilities + Regulatory Compliance

Tokenized assets involve multiple requirements, including SEC regulation, custodial security, Anti-Money Laundering (AML), and investor protection. In the current regulatory environment, many traditional brokerages opt to observe from the sidelines or entirely avoid partnering with RWA projects due to high compliance costs and substantial risk exposure. Alpaca, leveraging its self-clearing broker-dealer qualifications, can independently undertake core functions such as securities execution, clearing, and custody. It provides regulated securities custody and clearing capabilities for RWA projects, offering comprehensive backend infrastructure support for their asset mapping mechanisms.

This full-stack self-clearing capability significantly lowers the operational barriers and potential compliance risks for token issuers, enabling them to focus more on product design and marketing without having to build or integrate complex TradFi backend systems themselves. Amidst an evolving regulatory framework for the tokenized securities market and industry practices that are not yet fully matured, this rare capability has become a crucial foundation for Alpaca to build trust barriers and attract mainstream RWA issuers.

Instant Tokenization Network (ITN) — A Critical Technical Infrastructure

On October 2, 2025, Alpaca launched the Instant Tokenization Network (ITN) at the TOKEN2049 Singapore conference. This network allows authorized participants to perform 24/7 in-kind minting and redemption via a single API, achieving near real-time processing of token minting and redemption at the user experience level, which significantly improves trading efficiency and reduces liquidity fragmentation issues. For issuers, the significance of ITN lies not only in enhancing minting and redemption efficiency but also in bridging compliant securities inventory with on-chain issuance processes through a unified interface, thereby reducing the operational complexity of tokenized securities.

This design effectively bridges the compliance requirements of traditional finance with the programmable nature of blockchain, providing institutions with more flexible inventory management and rebalancing tools. However, it is worth noting that the actual settlement of the underlying stocks must still adhere to the rules and timeline requirements of the traditional securities system (such as the DTCC). ITN primarily achieves efficiency leaps at the token level.

Partner Network and First-Mover Advantage

Through early strategic positioning, Alpaca has accumulated an extensive partner network, including mainstream RWA issuers such as Ondo Finance, Backed Finance (Kraken xStocks), Dinari, and Anchored. Its tokenized assets under custody encompass high-liquidity targets like TSLA, SPY, QQQ, NVDA, and IVV, establishing a strong advantage in asset coverage and liquidity aggregation.

This network effect presents a positive feedback loop: more high-quality projects choose Alpaca → liquidity and available assets are further enriched → attracting more issuers and institutions to participate. As the RWA ecosystem expands, Alpaca’s first-mover advantage is reflected not only in the number of partnerships but also in its gradually forming ecological network and industry influence, further solidifying its standing within the tokenized equities infrastructure ecosystem.

Developer Friendliness and Infrastructure Reliability

Alpaca officially states that its system availability reaches 99.99%. Its Brokerage API supports global multi-asset and multi-market access, and is regarded by many fintech companies and crypto platforms as one of the most convenient solutions for accessing the US securities market. Binance’s current US stock trading service is supported by Alpaca for backend securities infrastructure such as execution, clearing, and custody; as for whether and to what extent the future bStocks product will adopt Alpaca’s related capabilities, public information remains quite limited at present.

This highly available infrastructure and developer friendliness drastically shorten the integration cycles for crypto platforms and fintech companies, lowering technical barriers and maintenance costs. In the crypto industry, which pursues rapid iteration, Alpaca’s reliable infrastructure has become a key factor making large platforms willing to engage in deep collaboration.

Seizing Market Timing

Alpaca’s first-mover advantage is particularly evident in its grasp of market timing. Before the rise of the tokenized securities market, the company had already built its self-clearing brokerage capabilities through years of accumulation and continued to invest in infrastructure construction such as the Brokerage API. With the rapid development of the RWA and tokenized stock markets in 2025, these capabilities, initially built for the securities brokerage business, began to demonstrate broader application value.

When an increasing number of institutions and crypto platforms sought compliant securities custody, clearing, and issuance infrastructure, Alpaca already possessed a relatively mature technical and regulatory foundation. Therefore, it was able to quickly accommodate these needs and expand its partner network. Compared to later entrants in the market, its long-term investment in licenses, technology, and ecosystem accumulation has secured it a relatively advantageous position in the early development stages of the industry.

Current Architecture and Future Outlook

In Binance’s business workflow, after users place an order via the Binance App, the order is routed through Nest Trading to Alpaca Securities for backend processing such as execution, clearing, and custody, ultimately connecting with the US securities clearing system (like DTCC). ITN provides a higher-level API abstraction in scenarios requiring tokenization.

From an industry perspective, the tokenized equities market is still in its early stages, and its size remains small compared to the traditional securities market. Most tokenized stock products only offer economic exposure to the underlying securities rather than direct equity ownership, with voting rights, dividend rights, and complete legal rights depending on the specific issuance structure. The field also faces regulatory policy uncertainties, geographical restrictions across different jurisdictions, liquidity challenges, and potential risks arising from infrastructure centralization.

Despite these limitations, Alpaca’s value as an infrastructure connector between traditional finance (TradFi) and crypto finance (Crypto) is increasingly gaining market recognition. As more crypto platforms, RWA projects, and fintech companies plug into the securities infrastructure services provided by Alpaca, its global ecological network continues to expand. Whether Alpaca can maintain its current competitive edge in an intensifying market environment will depend on its continued investments in technological innovation, compliance adaptation, and ecosystem expansion. Meanwhile, as more traditional financial institutions, brokerages, and emerging RWA infrastructure providers enter the market, the industry’s competitive landscape may also undergo continuous changes.

Risk Warning: The tokenized securities, RWAs, and digital asset products mentioned in this article remain in a stage of rapid development, and regulatory requirements in different jurisdictions may change. Some market share and asset scale data in this text are sourced from public corporate disclosures; results under different statistical methodologies may vary.

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Written by | GaryMa, Wu Blockchain

The WuBlockchain summarizes key developments in the blockchain technology space for May:

Bitcoin

Paradigm researcher Dan Robinson proposed a scheme called PACTs (Provable Address-Control Timestamps). It allows Bitcoin holders to generate proof of their control over an address via a blockchain timestamp mechanism without transferring assets or triggering on-chain activity. This records ownership before future quantum computing gains the capability to crack private keys, and can be used to claim assets in a subsequent quantum-safe version of the Bitcoin network. The scheme aims to provide a preparation path for long-unmoved addresses to counter potential quantum threats.

The Bitcoin Core Project released a high-severity security advisory (CVE-2024–52911), stating that between Bitcoin Core versions 0.14.0 and 29.0, nodes could trigger a memory error when validating specially crafted blocks, leading to a remote crash. The announcement pointed out that the vulnerability stems from cached data being released early during the transaction validation process and subsequently accessed by a background thread. If an attacker can construct a block with sufficient hashing power, it could cause nodes to crash, and there is even a potential risk of remote code execution.

Alex Thorn, Head of Research at Galaxy Digital, stated that the Bitcoin community is gradually reaching a preliminary consensus regarding quantum computing threats. First, the majority view is that Satoshi’s P2PK address assets should not be interfered with, in order to preserve Bitcoin’s core property rights attributes. Meanwhile, because Satoshi’s assets are scattered across approximately 22,000 addresses (50 BTC per address) rather than a single giant “honeypot,” the actual risk of suffering a comprehensive quantum computing attack is lower than expected. Second, the community generally supports developing and testing post-quantum (PQ) cryptography technologies for Bitcoin as a backup plan just in case, provided that the relevant work does not trigger a consensus deadlock or introduce insufficiently tested technical risks.

Ethereum

Glamsterdam Upgrade: Ultimate L1 scaling and MEV fairness. Progress: On the eve of the testnet hard fork, core proposal parameters have been finalized | Activation window: Still anchored for mid-to-late June.

Hegota Upgrade: Censorship resistance, privacy enhancement, and node slimming. Progress: Core features reorganized, framework completely tilted toward “lightweight and censorship resistance” | Expected activation: Late 2026.

Over 100 core Ethereum contributors agreed at the Soldøgn Interop conference to set the Gas Limit floor target to 200 million following the Glamsterdam upgrade. This increase is primarily due to ePBS structural adjustments, Block-level Access List (BAL) optimizations, and EIP-8037 state creation cost repricing. In addition, the conference stably implemented ePBS and completed end-to-end testing on the testnet, while locking in the fixed state byte cost for EIP-8037 and conducting pre-research on features like FOCIL and native account abstraction for the Hegotá upgrade.

In a research article published on May 10, Ethereum co-founder Vitalik Buterin stated that if crypto payments are to achieve mass adoption, they need to transition from “pseudonymity” to “default privacy,” viewing zero-knowledge proof (ZK) payments as the next standard for the global digital economy. Vitalik proposed replacing standard transfers with transactions based on ZK proofs, enabling users to prove payment validity without disclosing their full balance or transaction history. The scheme also involves recursive SNARKs, ZK API usage credits, selective disclosure, and “proof of innocence” mechanisms to support AI agents and users in making private payments while accommodating compliance needs to a certain extent.

The Ethereum Foundation released its Protocol Cluster May 2026 update. Developers advanced testing and preparation for the next upgrade, Glamsterdam, during an interop event in Svalbard, Norway, confirming several key developments. These include establishing a 200 million gas limit floor target, completing multi-client devnet testing for ePBS, finalizing the EIP-8037 state access repricing scheme, and advancing preparation work for FOCIL and native account abstraction (AA) related to the Hegotá upgrade. Concurrently, the Ethereum Foundation Protocol Cluster initiated a leadership transition, with Will Corcoran, Kev Wedderburn, and Fredrik taking over as the new cluster leads. The current focus remains on advancing work related to the Glamsterdam, Hegotá, and Strawmap roadmaps.

According to @hasufl, following the Glamsterdam upgrade, Ethereum’s Gas Limit will be significantly raised from the current 60 million to approximately 200 million. This means L1 execution capacity will achieve a more than 3x increase, with expectations to double further shortly thereafter. Hasufl noted that assuming network demand does not experience an equivalent surge, Ethereum mainnet Gas fees could remain close to zero for the next few years. He explained that this increase benefits from the timely combination of multiple innovations: ePBS provides more time for payloads, BAL allows clients to pre-fetch and execute work in parallel, and Gas repricing ensures the safety of higher limits.

Vitalik Buterin published a post stating that Ethereum is advancing native privacy capabilities through several short-term efforts, including AA + FOCIL, Keyed nonces, and access layer-related improvements. Vitalik noted that AA + FOCIL can provide operations like privacy protocol transactions with stronger in-protocol inclusion guarantees, making them “first-class transactions.” Keyed nonces can offer stronger protocol support for privacy schemes and may serve as an early experiment for Ethereum’s new state expansion strategies. Regarding the access layer, work includes Kohaku, private reads, and other initiatives.

The Ethereum Foundation stated that the Open Intents Framework is designed as a shared infrastructure for cross-chain Intents, providing the ecosystem with a modular open framework to deploy, discover, and execute Intents. Concurrently, LI FI announced the launch of LI FI Intents, a full-stack execution engine for same-chain and cross-chain transfers, which utilizes a professional Solver network to compete for quotes and complete order execution. LI FI documentation shows that its Intent/Solver Marketplace is one of the official foundations of the Open Intents Framework, which the Ethereum Foundation states is entering a phase of scaled adoption.

Facet co-founder Tom Lehman proposed including EIP-8182 in Ethereum’s Hegota upgrade. The proposal intends to introduce native private transfer functionality for ETH and ERC-20 tokens via a protocol-level shielded pool. The scheme adopts a UTXO design with no admin keys, pause mechanisms, or proxy contracts, and allows users to make private transfers directly to existing Ethereum addresses or ENS names. Lehman stated that this move aims to address the issue of insufficient anonymity sets in application-layer privacy solutions, providing a unified privacy pool for wallets and applications.

L2s

Base, the Ethereum Layer 2 network incubated by Coinbase, announced the introduction of zero-knowledge technology provider Succinct’s SP1 zkVM and TEE schemes to enhance the network’s cryptographic security, though it is not transitioning to a full ZK Rollup architecture. Base previously operated based on Optimistic Rollup, allowing users to dispute invalid transactions during a challenge period while assuming transactions are valid by default. Introducing ZK proofs will replace the original multi-day challenge period with cryptographic finality, thereby shortening finality to about 1 day and supporting the flow of funds from Layer 2 back to the Ethereum mainnet under lower trust assumptions.

Layer 2 network Base announced the mainnet launch of the Azul upgrade, introducing a Multiproof mechanism that combines TEE and zero-knowledge proofs (ZK) to enhance network decentralization and shorten withdrawal confirmation times. Base stated that the new client architecture has reduced the number of empty blocks by approximately 99% and supports multiple peak loads of 5,000 TPS. As of the end of May, Base TVL stands at approximately $4.4 billion.

Solana

Solana’s core development team Anza announced that “Alpenglow,” the largest consensus mechanism upgrade in Solana’s history, has officially gone live on the community test cluster. The upgrade is regarded as a major refactoring of the current TowerBFT and Gulf Stream architectures, aiming to significantly reduce network confirmation latency and improve overall performance and stability.

According to disclosures by the Solana Foundation, it has partnered with Google Cloud to launch a payment gateway for AI agents. This allows direct access and payment for APIs via Solana wallets using stablecoins on a per-call basis, without requiring accounts or subscriptions. The system supports integration with Google Cloud services such as Gemini, BigQuery, Vertex AI, and Cloud Run, as well as over 50 third-party APIs, enabling pay-per-use and multi-service selection through a unified API marketplace.

Firedancer, a Solana validator client developed by Jump Crypto, the digital asset arm of high-frequency trading firm Jump Trading, has gone live and begun producing blocks on the Solana mainnet. Ritchie Patel, founding engineer of Firedancer, stated that the client has already packaged tens of millions of transactions in a production environment, but the team will still adopt a gradual rollout and does not want validators to switch on a large scale before safety audits are completely finished. Additionally, Patel noted that the Firedancer architecture draws heavily from traditional finance high-frequency trading systems, and the team recently completed a public security audit competition featuring a $1 million bug bounty pool.

Solana’s core development team Anza stated that Agave 4.0 has been officially recommended for upgrade to mainnet validators. This version focuses on improving network transmission efficiency and block processing capabilities, including reducing Turbine retransmission latency from around 600ms to about 0.8ms after introducing XDP technology, and fully switching to the QUIC transaction transport protocol while removing UDP ingress. Furthermore, the new version optimizes the Replay Stage and adjusts the voting transaction cost model to release more block capacity, paving the way for Solana to advance toward higher throughput and a 100 million CU block target. Officials stated that features such as p-token, Stake Program v5, SBPFv3, and BLS12–381 will also be activated later in this cycle.

BNB Chain

BNB Chain released the “BSC Post-Quantum Cryptography Migration Report,” stating that it has verified the feasibility of post-quantum cryptographic schemes in testing. The scheme replaces transaction signatures with the NIST standard ML-DSA-44 and replaces consensus vote aggregation with pqSTARK, which can maintain compatibility with existing 20-byte addresses, RPCs, SDKs, and wallets. However, testing showed that signature sizes increased from 65 bytes to 2,420 bytes, and under a 2,000 TPS scenario, the block size increased from approximately 130 KB to about 2 MB, while cross-region TPS dropped by about 40%. BNB Chain stated that the network and data layer expansion issues brought about by data bloat remain the primary challenges for production deployment.

BNB Chain launched the “Agent Survival Pack” to drive AI Agents to autonomously pay for model calls and financial service fees on-chain. The initiative integrates six projects: Alt AI, Bankr, Pieverse, WorldClaw, B AI, and AEON, covering infrastructure such as LLM access, Agent wallets, multi-chain payments, stablecoin settlement, and real-world payments. BNB Chain will provide a $5 BNB reward for the first 1,000 wallets of each integrated project, with all transactions and rewards completed on-chain.

Aptos

Aptos stated that it has become the first Layer 1 blockchain to support formal verification for dynamic dispatch, enabling mathematical methods to verify whether the relevant mechanisms operate as designed. Aptos noted that developers can leverage AI to write specifications and use the Move Prover to verify smart contract logic, thereby enhancing the verifiability and security of on-chain programs.

Security Related

According to cybersecurity firm Socket, on May 11, 42 @tanstack/* npm packages (totaling 84 versions) under the open-source tool library TanStack were maliciously compromised by hackers. The affected versions were injected with malicious code designed to steal CI/CD credentials, targeting core environments such as GitHub Actions, AWS, and Kubernetes. Officials advised affected users to rotate relevant credentials immediately. Socket pointed out that this incident is part of an expanding “Mini Shai-Hulud” supply chain attack, and multiple high-profile namespaces, including open-source AI platform Mistral AI and automation software UiPath, have now been confirmed as affected.

SlowMist issued a warning stating that MistEye detected a cross-repository supply chain attack targeting developers. Malicious software packages have been published to npm, PyPI, and Crates.io, involving over 34 malicious packages and 384 related versions, targeting Crypto, DeFi, Solana, Sui/Move, and AI developer communities. Attackers could steal sensitive information such as wallets, SSH keys, and GitHub/AWS Tokens, and achieve persistent control through Git hooks, SSH, systemd, and other methods. SlowMist recommends removing the relevant packages immediately and rotating credentials.

Others

The x402 protocol now supports batch settlement, enabling large volumes of micro-payments as low as under $0.0001 per transaction, making it highly suitable for pay-on-demand instant resources like computation and inference.

Sui blockchain developer Mysten Labs co-founder and Chief Product Officer Adeniyi Abiodun tweeted that Sui will launch confidential transactions this year, with related features involving private payments and scaled payments.

Sui announced the launch of gas-free stablecoin transfer functionality on its mainnet. Officials stated that this is a new protocol-level feature that allows users and businesses to conduct peer-to-peer transfers without paying Gas fees or holding a SUI token balance, meaning supported stablecoin transfer fees on the Sui network are reduced to $0. The feature initially supports stablecoins including USDsui, SuiUSDe, AUSD, FDUSD, USDB, USDC, and USDY, and has received support from Fireblocks.

Delphi Digital released an in-depth research report on Zcash (ZEC), stating that as Bitcoin is gradually absorbed by the traditional financial system and lacks native privacy, Zcash is being repositioned as a complementary asset to Bitcoin in terms of privacy and quantum resistance. The report noted that the proportion of Zcash shielded pool funds relative to circulating supply has risen from about 11% at the beginning of 2025 to approximately 30%, indicating growing demand for privacy use. Meanwhile, Zcash is advancing its anti-quantum roadmap, expecting to achieve protocol-level post-quantum privacy protection through the Tachyon upgrade before the end of 2026, and pushing for quantum-recoverable wallet integration in 2026, with long-term goals to perfect post-quantum soundness.

Privacy blockchain startup AmericanFortress announced the launch of a patent-pending anti-quantum signature scheme, claiming it can protect existing assets on chains like Bitcoin, Ethereum, Solana, and Tron from future quantum computing attacks without requiring large-scale fund migration. The scheme intends to implement a “defensive freeze” on Satoshi Nakamoto-era Pre-BIP32 Bitcoin addresses through a compatible soft fork and zero-knowledge proof mechanisms. This includes the Satoshi wallet holding approximately 1.1 million BTC and about 5 million long-dormant BTC, leaving it to the community to subsequently decide whether to move, burn, or reallocate the relevant assets.

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1、

According to Bitcoin Laws, New Hampshire’s “Blockchain Basics” Act HB639 has advanced, with the state House and Senate reaching an agreement on a compromise version. The bill, which previously passed both chambers in different forms, now features a unified version that will protect rights related to cryptocurrency payments, running nodes, and mining.

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2、

According to Bits Media, the Russian government has expanded the scope of information that miners and mining infrastructure operators must submit to tax authorities. Under the new decree, network addresses (IP addresses) used for mining hardware (ASIC miners) will be added to the national registry for miners and operators. The Russian Ministry of Finance states that this measure will help streamline the regulation of digital asset transactions and investigations into compliance violations, while also allowing power grid operators to monitor infrastructure loads in areas with high densities of mining rigs. Under existing regulations, Russian miners are already required to periodically update information including miner manufacturers, models, serial numbers, algorithms, hashrate, energy consumption, operational modes, mined cryptocurrencies, production outputs, mining pools, and online statistics links.

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3、

According to CriptoNoticias, Venezuelan authorities seized a Bitcoin mining facility in the San Vicente industrial zone of Maracay, Aragua state, on May 18. The site contained approximately 4,000 ASIC miners, primarily MicroBT Whatsminer M30S models, along with industrial cooling systems. Officials stated that the farm was operating “illegally,” consuming about 8 to 10 MW of electricity and affecting the national power grid. The report noted that Venezuela’s energy department had reiterated a comprehensive nationwide ban on Bitcoin mining on May 7.

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4、

According to Bitcoin.com, as Venezuela’s electricity demand hit a 9-year high, the government released a statement reiterating its comprehensive nationwide ban on cryptocurrency mining. Data shows that driven by factors such as high temperatures, the country’s power grid demand surged to 15,579 megawatts (MW) on May 7. Venezuelan authorities made it clear that they will impose legal sanctions on those illegally involved in digital mining, and a supporting oversight plan has been established to strictly enforce the ban.

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5、

According to Livecoins, the São Paulo state property crime investigation department (DEIC) and power company CPFL Piratininga seized approximately 1,400 Bitcoin miners suspected of operating on stolen electricity in Jundiaí and Louveira, Brazil, on May 20. CPFL stated that the equipment was powered by nine three-phase transformers with a total capacity of 8,470 kVA. The initial estimate of the stolen electricity is around 2 GWh, enough to power approximately 2,000 households for a month. The report noted that Brazil does not prohibit Bitcoin mining, and this operation primarily targeted the suspected electricity theft.

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6、

Brazil’s Foreign Trade Chamber (Gecex) published a new regulation in the Official Gazette of the Union (DOU), approving import tax exemptions for specific Bitcoin mining cooling equipment. The policy aims to streamline the entry of high-power liquid cooling systems used in mobile data centers into the Brazilian market, covering equipment with a maximum electrical power of 1,700 kW and a thermal capacity exceeding 1,000 kW. This tax incentive exclusively targets equipment dedicated to the SHA256 algorithm (such as Bitcoin mining) and will remain valid until the end of April 2028.

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7、

According to Bits Media, a Russian State Duma committee has recommended the passage of a bill in its first reading regarding criminal liability for illegal crypto mining. The proposed legislation seeks to add unregistered mining and the unlicensed provision of mining infrastructure to the Criminal Code. Depending on the severity of the offense, entities with illegal revenues exceeding 13 million rubles (approximately $140,000) could face up to five years in prison, and all illegally mined crypto assets will be confiscated. Official data shows that there are currently about 50,000 mining entities in Russia, but fewer than 1,500 are legally registered; the new law aims to force illegal miners into regulatory compliance.

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8、

According to a May 20 report by Decrypt, South Carolina Governor Henry McMaster has signed Senate Bill 163 into law. The legislation prohibits the use of any Central Bank Digital Currency (CBDC) within the state and bars the state government from participating in CBDC testing. Conversely, it permits individuals and businesses to accept digital assets for purchasing lawful goods or services, and to secure their digital assets using self-custodial or hardware wallets.

Furthermore, the bill protects digital asset mining operations that meet industrial zoning, noise, and power grid requirements, while stipulating that miners, node operators, and blockchain software developers do not require money transmitter licenses.

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9、

According to The New Times, the Rwandan parliament approved a draft law governing virtual assets on May 5, aiming to establish a formal licensing and regulatory framework for cryptocurrencies and other digital assets. Under the proposed framework, the Capital Market Authority of Rwanda will serve as the primary regulator, while the National Bank of Rwanda will coordinate supervision regarding financial stability.

Companies operating virtual asset services without a license could face fines of up to approximately $68,000. Individuals operating without a license could face fines ranging from roughly $21,000 to $34,000, imprisonment for three to five years, or both. The law states that illegal payments, crypto ATMs, mining, and mixing services will also face penalties.

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10、

According to Zhejiang Daily, the Anti-Smuggling Bureau of Ningbo Customs recently cracked multiple cases of cryptocurrency miner smuggling, dismantling several criminal syndicates and seizing over 400 mining rigs, including models such as Antminer L9 and IceRiver KS3.

The report noted that the involved groups disassembled the miners and falsely declared them as items like “industrial blockers.” They smuggled the equipment into the country through international express channels via ports in Ningbo and Guangzhou. The rigs were subsequently reassembled and sold domestically or transported for hosted mining operations at farms in regions like Xinjiang and Hunan.

Investigators stated that the syndicates also utilized USDT for cross-border payment settlements to evade financial oversight.

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11、

According to The Block, analysts at investment bank Bernstein state that driven by the rapidly rising demand for AI data centers, Bitcoin mining companies are shifting from traditional mining operations to becoming providers of AI infrastructure power and computing capacity.

Bernstein has assigned an “Outperform” rating to IREN, Riot Platforms, CleanSpark, and Core Scientific, while maintaining a “Market Perform” rating for MARA Holdings. The report notes that currently announced AI infrastructure deals exceed $90 billion, covering approximately 3.7 GW of power capacity. In contrast, Bitcoin mining companies collectively control over 27 GW of planned power capacity, giving them a distinct advantage at a time when the U.S. power grid access is highly constrained and a single gigawatt-scale project can face grid connection queues of up to nearly 50 months.

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12、

According to CoinDesk, the latest U.S. SEC 13F filing submitted by former OpenAI researcher Leopold Aschenbrenner reveals that his disclosed portfolio size has grown to $13.67 billion from $5.5 billion at the end of 2025, with massive bets placed on Bitcoin miners and AI infrastructure firms.

His primary long positions include companies such as IREN, Core Scientific, Riot Platforms, CleanSpark, Bitfarms, Bitdeer, and Hive Digital. Concurrently, he has established approximately $7.46 billion in put option positions on chip stocks, including large bearish positions against Nvidia, Oracle, Broadcom, and the VanEck Semiconductor ETF.

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13、

Crypto mining firm Riot Platforms reported Q1 2026 revenue of $167 million, with its data center business contributing revenue for the first time at $33.2 million. The company produced 1,473 BTC during the quarter, with an average mining cost of approximately $44,600 per Bitcoin. Additionally, AMD exercised an option for an extra 25 MW expansion, increasing Riot’s contracted power capacity to 50 MW. The company states that it is transitioning from mining to data center operations while maintaining a reserve of approximately 15,679 BTC.

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14、

Crypto mining firm MARA reported its preliminary unaudited Q1 2026 financial results, with quarterly revenue at $174.6 million, down 18% year-on-year. The company recorded a net loss of approximately $1.3 billion, primarily driven by fair value adjustments on its Bitcoin assets.

As of the end of the quarter, MARA held 35,303 Bitcoins. Concurrently, MARA states that it is advancing its energy and data infrastructure footprint, including its previously announced acquisition of Long Ridge Energy, while continuing to expand its AI and high-performance computing (HPC) businesses.

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15、

Bitcoin mining firm CleanSpark reported its financial results for the second quarter of fiscal year 2026, ended March 31, 2026: quarterly revenue stood at $136.4 million, down 24.9% YoY. The net loss widened to $378.3 million, compared to a net loss of $138.8 million in the same period last year.

As of the end of the quarter, the company’s total HODL value reached $925.2 million, which includes current and non-current Bitcoin assets, as well as Bitcoin held by counterparties under collateral arrangements. Cash reserves were $260.3 million, with total assets at approximately $2.9 billion and total long-term debt of around $1.8 billion. Concurrently, CleanSpark states that it has secured 585 MW of power capacity approved by ERCOT and is advancing infrastructure and site development for AI and high-performance computing (HPC).

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16、

Bitcoin mining firm Core Scientific (CORZ) released its Q1 2026 financial report, showing total quarterly revenue of $115.2 million, up 45% YoY. Gross profit reached $30.1 million, significantly higher than the $8.2 million reported in the same period last year. Notably, hosting revenue surged to $77.5 million from $8.6 million a year ago, while proprietary mining revenue dropped to $30.1 million, impacted by the company’s strategic transition and declining cryptocurrency prices.

Despite the top-line growth, the company still recorded a net loss of $347.2 million (compared to a net income of $576.3 million in the same period last year). This was primarily driven by $266.5 million in non-cash impairment charges and a $30.8 million loss related to changes in the fair value of warrants. The company’s stock fell 7% in after-hours trading on Wednesday.

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17、

Canaan released its unaudited financial results for the first quarter of 2026, reporting total revenue of $62.7 million, which is in line with previous guidance. The company posted a net loss of $88.7 million and an adjusted EBITDA loss of $76.3 million.

Canaan states that as of March 31, its cryptocurrency reserves had increased to 1,807.60 BTC and 3,951.53 ETH. It produced 257 BTC during the first quarter. The financial report shows that Canaan’s Q1 product sales revenue was $42.9 million, and proprietary mining revenue was $19.1 million. The cost of revenue stood at $85.6 million, resulting in a gross loss of $22.9 million.

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18、

According to Decrypt, Bitcoin mining firm and data center operator TeraWulf reported a Q1 2026 net loss of approximately $427 million, widening from $61.4 million in the same period last year. Quarterly revenue stood at roughly $34 million, with about 60% generated from its AI high-performance computing (HPC) business. This HPC revenue surged 117% QoQ to approximately $21 million, while Bitcoin mining revenue fell 50% QoQ to around $13 million. The company states that its future revenue structure will shift increasingly toward long-term, contract-driven AI computing services to reduce reliance on the volatility of Bitcoin mining.

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19、

Bitcoin mining firm and cloud mining service provider BitFuFu released its unaudited financial results for the first quarter of 2026. Q1 total revenue was $72.66 million, down 6.8% YoY. The net loss stood at $35 million, compared to a net loss of $16.9 million in the same period last year.

The company states that it recorded a fair value loss of $35.6 million on digital assets and related receivables/payables during the quarter. As of March 31, BitFuFu held 1,794 BTC, with combined cash and digital assets totaling $141.5 million.

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20、

According to Decrypt, Keel Infrastructure (formerly Bitfarms) reported its Q1 2026 financial results, with quarterly revenue at approximately $37 million, down 23% YoY. Its net loss widened to $145 million, primarily impacted by changes in the fair value of digital assets and losses related to the termination of its Macquarie credit facility.

Keel states that the company has completed its transition from a Canadian Bitcoin miner to a U.S. AI and high-performance computing (HPC) infrastructure developer, having sold non-core assets such as its mining facility in Paraguay. As of May 8, the company’s liquidity stood at approximately $533 million, comprising $336 million in cash and about $197 million in unencumbered Bitcoin assets. It is currently advancing the development of three data center projects in Pennsylvania and Washington.

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21、

According to Bloomberg, American Bitcoin Corp., a Bitcoin mining company backed by the Trump family, recorded a loss for the second consecutive quarter, with a Q1 2026 net loss of approximately $82 million, widening from $59 million in the previous quarter. Revenue for the same period fell about 20% YoY to $62 million, primarily impacted by a decline in average mining revenue per Bitcoin and a drop in the value of its Bitcoin holdings.

The company states that it added approximately 1,600 BTC to its holdings in the first quarter, increasing its total Bitcoin reserve by about 30%, and continues to accumulate more through treasury purchases. Since making its Nasdaq debut in September 2025, American Bitcoin’s stock price has plummeted nearly 90% from its peak.

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22、

According to Decrypt, Bitcoin mining firm Hut 8 announced the signing of a 15-year, $9.8 billion lease agreement for Phase 1 of its Beacon Point AI data center campus in Nueces County, Texas. The deal covers 352 MW of IT capacity, with an undisclosed highly investment-grade company as the tenant, to support large-scale AI training and inference workloads.

This agreement increases Hut 8’s contracted AI data center capacity to 597 MW, bringing the total base-term contract value to approximately $16.8 billion, with an average annual net operating income of roughly $1.1 billion. AEP Texas has signed an interconnection agreement for the entire 1,000 MW campus, with initial energization expected in Q1 2027 and the delivery of the first data hall anticipated in Q3 of the same year.

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23、

According to The Block, Core Scientific announced it will acquire Oklahoma-based Bitcoin mining firm Polaris DS LLC for $421 million. The transaction is expected to close in the third quarter of 2026, subject to regulatory approvals.

Polaris holds 440 MW of contracted power through Oklahoma Gas & Electric, and its 40-acre campus is currently energized and operational, situated adjacent to Core Scientific’s existing operations in Muskogee. Core Scientific states that the acquisition will enable it to rapidly scale its AI operations and support the retrofitting and expansion of its legacy Bitcoin mining infrastructure into high-density hosting services for AI and compute-intensive workloads.

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24、

Bitcoin mining firm HIVE Digital announced it has acquired approximately 25 acres of land in Toronto for $58 million to construct an industrial-scale AI data center. The project is expected to support a capacity of around 320 MW and over 100,000 GPUs.

HIVE states that this move represents a significant step in its transition from pure-play Bitcoin mining toward AI and high-performance computing (HPC) infrastructure.

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25、

Bitcoin mining firm IREN announced a proposed offering of $2 billion in convertible senior notes due 2033. The proceeds will be used to fund data center expansion, AI and high-performance computing (HPC) infrastructure development, debt repayment, and general corporate purposes.

IREN states that the offering will be made to qualified institutional buyers, and it plans to grant the initial purchasers an option to purchase up to an additional $300 million in notes.

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26、

CleanSpark released its unaudited Bitcoin mining and operations update for April 2026. The company produced 640 BTC in April, with a daily maximum of 22.38 BTC and a daily average of 21.33 BTC, bringing its total production for 2026 to 2,439 BTC.

During the month, CleanSpark sold 53 spot BTC, 550 BTC related to call option exercises, and 145 BTC tied to Delta-neutral basis trades, at an average selling price of $74,807. As of April 30, its total Bitcoin holdings stood at 13,453 BTC, of which 1,565 BTC were held as collateral or receivables related to derivative transactions.

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27、

Bitdeer (BTDR) released its production and operations update for April 2026. Its self-mining hash rate reached 65.5 EH/s, representing a 400% year-on-year increase, while it mined 783 BTC during the month, up 372% YoY.

The company states that its next-generation SEALMINER A4 mining rigs have entered the mass production phase, featuring a power efficiency of 9.45 J/TH. Additionally, negotiations for a hosting lease agreement in Tydal, Norway, have reached an advanced stage. The AI Cloud business achieved an annualized recurring revenue (ARR) of $69 million, marking a 60% quarter-on-quarter increase, with a utilization rate of 92%.

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28、

According to TheMinerMag, BitFuFu released its operational data for April 2026. Bitcoin production for the month was 145 BTC, down approximately 32% from 214 BTC in March. This decline was primarily driven by power outages at its mining facilities in Ethiopia and a reduction in the company’s third-party hash rate purchases.

As of the end of April, BitFuFu’s total managed hash rate dropped 13.5% month-over-month to 22.4 EH/s, while its proprietary hash rate remained unchanged at 3.3 EH/s. The company states that the average cash cost for proprietary mining in April was approximately $59,000 per Bitcoin, and its total Bitcoin holdings increased from 1,794 to 1,812 BTC during the same period.

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29、

Cango released its operational update for April 2026. The company mined a total of 230.04 BTC, all from its proprietary mining operations, with an average cash cost of approximately $68,061 per Bitcoin.

As of the end of April, the company’s total operating hash rate stood at 31.58 EH/s, comprising 20.43 EH/s of proprietary hash rate and 11.15 EH/s of leased hash rate, with total Bitcoin holdings reaching 1,057.46 BTC. Cango states that it is continuously phasing out some of its older S19 mining rigs and gradually deploying S21 series equipment.

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30、

Italian energy company Alps, in partnership with Qurubiqa, is restarting an idle 127 MW gas-fired thermal power plant in Cochabamba Cercado, Bolivia, and repurposing it into a Bitcoin mining project. This project abandons the government natural gas subsidy model heavily relied upon by previous Bolivian mining firms, transitioning instead to a fully USD-denominated commercial operation.

Currently, the facility has energized 27 MW of power, with plans to gradually scale up and fully utilize the plant’s 127 MW installed capacity. However, as Bolivia’s natural gas reserves shrink, ensuring a continuous and economical fuel supply will be a key challenge for the long-term profitability of this mining operation.

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31、

According to Bitcoin.com, seven top global Bitcoin mining organizations — Antpool, F2Pool, Foundry, Spiderpool, Block, MARA Foundation, and DMND — have officially joined the Stratum V2 Working Group, marking an accelerated shift in Bitcoin mining toward the next-generation open-source protocol.

Compared to the current V1 version, where mining pools control transaction packaging, Stratum V2 introduces end-to-end encryption. This not only reduces bandwidth usage (by 60% on the pool side and 70% on the miner side) and the risk of hash rate hijacking, but also allows miners to construct their own block templates. Tests show that through lower latency and optimized fee selection, the V2 protocol can increase miner revenue by up to 7.4%.

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32、

According to The Block, Bitcoin mining firm Bitdeer announced that Chief Financial Officer Jianchun Liu will step down at the end of June to transition to the role of Chief Advisor, with former Corsair Gaming CFO Michael Potter set to succeed him.

Bitdeer states that Jianchun Liu is resigning for personal reasons. Michael Potter previously served as CFO of Corsair Gaming from 2019 to 2025, where he participated in the company’s 2020 IPO. Prior to that, he held senior roles at various technology and semiconductor companies, including Lattice Semiconductor, Honeywell, NeoPhotonics, and STATS ChipPAC.

Bitdeer has recently been expanding its focus from Bitcoin mining into AI and cloud computing infrastructure, with its annualized AI cloud revenue recently approaching $70 million.

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33、

Russian police and the Federal Security Service (FSB) uncovered an underground crypto mining farm near Yegoryevsk in the Moscow region, detaining a 68-year-old local man.

Police state that the man deployed 30 mining rigs on his property in the village of Pochinki, which overloaded the nearby power grid, caused voltage fluctuations in residential homes, and damaged household appliances, resulting in over 4 million rubles in property damage.

Authorities also seized two routers, one laptop, one mobile phone, and eight fans at the scene. The man is currently under house arrest.

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34、

According to the Financial Times, the latest DEF14A filing from Bitcoin mining firm MARA Holdings shows that the company paid approximately $4.3 million in personal security-related expenses for CEO Fred Thiel under its security program. This includes a one-time cost of $430,000 for vehicle armor and $58,000 for home security installation.

Additionally, the company paid about $3.946 million in personal security expenses for CFO Salman Khan, which includes approximately $438,000 for vehicle armor.

The MARA board of directors states that due to the company’s large, publicly disclosed Bitcoin holdings, its executives face ongoing “direct security threats.”

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35、

According to Decrypt, nine Texas residents have filed a lawsuit against Bitcoin mining firm MARA Holdings, alleging that its facility in Granbury has long generated persistent noise, vibrations, and low-frequency sounds that disrupt daily life, impact health, and damage property values. The plaintiffs are seeking over $1 million in damages.

The lawsuit comes as mining companies accelerate their transition toward AI and high-performance computing (HPC), a shift that has seen related data centers face intensifying regulatory and community pressure across various U.S. locations over noise, power, and resource consumption.

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According to Newsfile, Nasdaq-listed pharmaceutical company Shuttle Pharmaceuticals Holdings has signed a definitive merger agreement to acquire Dogecoin mining firm United Dogecoin and integrate it into a wholly-owned subsidiary.

The transaction is backed by $11 million in PIPE (Private Investment in Public Equity) financing and is expected to close on May 4, 2026. United Dogecoin plans to purchase up to 3,000 next-generation ElphaPex mining rigs, which are expected to go online within 60 days. The deployment will deliver a maximum hash rate of 43,200 GH/s, representing approximately 1.5% of the current global Dogecoin mining network.

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1. Korean Financial, Securities & IT Firms Rush to Acquire Crypto Exchange Stakes link

As South Korea advances the institutionalization of the Korean won stablecoin, domestic financial, securities, bank card, IT and foreign institutions are stepping up efforts to acquire equity stakes in local cryptocurrency exchanges. Hana Bank has announced plans to purchase a 6.55% stake in Dunamu, the operator of Upbit, for approximately 665 million US dollars. Samsung Securities, Samsung SDS and Samsung Card intend to jointly acquire a 4% stake in Dunamu, while Hanwha Investment & Securities plans an additional 3.90% stake purchase. Separately, Mirae Asset Consulting has decided to acquire a 92.06% stake in Korbit for around 88.5 million US dollars, and Korea Investment Securities and OKX Ventures each plan to obtain roughly a 20% equity interest in Coinone.

2. South Korea Crypto Trading Volume Slumps to One-Tenth of KOSPI Turnover link

Following the crash of the digital asset market in October 2025 and the Korea Composite Stock Price Index (KOSPI) repeatedly hitting new all-time highs, trading activity in South Korea’s domestic cryptocurrency market dropped to one-tenth of that of the stock market. Data shows that in May this year (as of the 26th), the total cryptocurrency trading volume of South Korea’s five compliant exchanges (Upbit, Bithumb, Coinone, Korbit, Gopax) only accounted for 8% of the concurrent stock trading volume of the KOSPI. In December 2024, when Donald Trump’s election as US President triggered a crypto bull run, this proportion once surged to 323%.

3. China’s State Council Boosts Blockchain for Urban Governance & Digital Housing Transactions link

According to the circular issued by the State Council on printing and distributing the 15th Five-Year Plan for Urban Renewal, authorities will enhance urban governance capacity, advance the comprehensive digital transformation of cities, develop a basic platform for City Information Modeling (CIM), and build an intensive, unified, data-integrated and highly coordinated urban digital infrastructure. Authorities will improve the basic CIM database and standard system, and expand the application scenarios of “CIM+” in urban renewal. Unique codes will be assigned to housing buildings and municipal facilities, and a national basic information database for housing buildings and municipal facilities will be constructed. Blockchain technology will be leveraged to empower housing transactions and property right registration. A three-tier national, provincial and municipal platform system for urban operation, management and services will be refined to realize integrated online management of urban operations.

4. Supreme People’s Court to Deepen Research on Judging Rules for Virtual Currency Cases link

At the press conference themed “Kicking Off the 15th Five-Year Plan” held by the State Council Information Office, Liu Guixiang, Member of the Judicial Committee of the Supreme People’s Court at the Vice Ministerial level and Second-Class Grand Justice, stated that people’s courts will conduct in-depth research on judgment rules for new types of cases involving virtual currencies and cross-border finance, and formulate judicial interpretations on civil compensation related to insider trading and market manipulation as soon as possible, so as to safeguard the steady operation of the capital market and effectively protect the legitimate rights and interests of small and medium-sized investors.

5. HKMA Rolls Out Three New Supervision Rules for Mainland Investors, Retrospective Account Checks Back to Jan 2023 link

According to CLS.cn, in response to reports that some banks in Hong Kong require customers to sign declarations when opening investment accounts, the Hong Kong Monetary Authority (HKMA) issued a response today stating that the relevant regulatory requirements were issued to all authorized institutions on May 22. Documents provided by the HKMA show that registered institutions are required to implement three additional measures when opening and managing investment accounts for mainland investors: first, close investment accounts opened with suspicious or forged documents, and identify customer investment accounts opened with suspicious or forged documents including identity documents from January 2023 or any other period specified by the HKMA; second, close dormant zero-balance investment accounts, referring to investment accounts held by mainland investors that carry no asset balances as of May 22, 2026 and record no customer-initiated activities within the 12 months preceding the reference date; third, obtain written declarations from mainland investors upon opening new investment accounts to confirm that all funds supporting investment activities and relevant settlements stem from legal sources outside mainland China.

Relevant documents indicate that the newly added additional regulatory measures apply solely to investment accounts, including investment sub-accounts within integrated bank accounts, and exclude accounts with non-investment functions such as ordinary savings, current and time deposits, payment services, loans and credit cards. Meanwhile, these extra measures target individual customers and do not extend to corporate or institutional clients.

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6. Central Bank of Russia Proposes 1% Capital Cap on Banks’ Crypto Asset Exposure link

The Central Bank of Russia plans to cap banks’ investment risks related to crypto assets at 1% of a single banking group’s capital. This restriction only applies to a bank’s own crypto asset positions, excluding crypto assets invested in or custodied by bank customers through the bank. For customers’ crypto assets, the Central Bank of Russia intends to categorize them separately under operational risk, which mainly covers risks such as hacker attacks and information security incidents, and plans to impose a 50% risk weight on customer positions. The Central Bank of Russia stated that these requirements are formulated mainly in light of the extreme price volatility of crypto assets and the risk of asset seizure.

7. Abu Dhabi Investment Firm Completes $30M Settlement via DDSC Stablecoin link

International Holding Company (IHC) of Abu Dhabi completed a $30 million transaction on ADI Chain using DDSC, a stablecoin backed by UAE dirhams. This transaction ranks among the largest single stablecoin transactions in the region. DDSC was jointly launched by IHC, First Abu Dhabi Bank and Sirius International Holding, with ADI Foundation supplying blockchain infrastructure support. The project is intended to facilitate compliant digital transactions, cross-border payments and trade settlements.

8. Binance Set to Re-Enter Philippines Market with Local Regulatory Licenses link

Binance has partnered with Philippine local firm BlockShoals Technologies to expand its footprint in the Philippine market. BlockShoals stated it has registered as a Crypto Asset Intermediary in compliance with the crypto asset service provider rules set by the Philippine SEC and will act as Binance’s local service provider. Both parties noted that they have maintained regulatory communications with the Philippine SEC regarding the partnership for over two years and secured an in-principle approval to enter the regulatory sandbox in November 2025.

9. Nine Enterprises Including Hitachi Complete Automated Inter-Corporate DCJPY Transaction Tests link

Hitachi, Ltd. announced that it has completed an inter-enterprise transaction test based on the Japanese yen tokenized deposit DCJPY together with nine companies including Decalete DCP, Fujitsu, Kao Group Customer Marketing and Tsurui Holdings. The test leveraged the Invoice Chain platform co-developed by Hitachi to link inter-enterprise order and delivery data with DCJPY settlement procedures, and automatically generated reconciliation documents for writing off accounts receivable, realizing automation covering order processing, payment settlement, account write-off and accounting procedures.

10. Trend Research Under Yi Lihua Liquidates All UNI & COMP Holdings, Suffering Over $40M Losses link

Trend Research, a secondary investment institution under Yi Lihua, transferred 2.705 million UNI tokens (approximately 8.71 million US dollars) and 114,000 COMP tokens (approximately 2.13 million US dollars) to Binance, which is suspected to be a full liquidation. The institution purchased 5.41 million UNI tokens at an average cost of about 9.5 US dollars and 228,700 COMP tokens at an average cost of about 49.3 US dollars during the market rebound last July. In May this year, it sold UNI at an average price of about 3.3 US dollars and COMP at an average price of about 19.4 US dollars, with an estimated total loss of around 40.29 million US dollars.

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1. Sui Mainnet Suffers Severe Outages for Two Consecutive Days link

Sui officials stated that the mainnet has encountered a malfunction, on-chain activities may be suspended, and the core team is conducting an investigation and will release a post-mortem report on the incident. Previously on May 28, the Sui mainnet suffered a block production outage and transaction suspension due to a failure in the validator layer, which lasted for several hours before recovery. Data from Sui Status shows the Sui mainnet has experienced Major Outage incidents for two consecutive days, stemming from mainnet settlement issues. Block explorers indicate that no new blocks have been produced for over an hour.

Sui announced that the mainnet has resumed operation, and both the current and previous outages stemmed from interaction conflicts between the Address Balances feature and gas billing logic introduced in version 1.72. The temporary fix deployed earlier carried a known issue that could trigger outages with an extremely low probability.

Sui noted that due to problems arising during the epoch transition process, the Sui mainnet has temporarily stopped accepting user transactions. Validator nodes remain operational and continue generating system transactions, yet user transactions cannot be processed by the network for the time being. The Sui Core team is investigating the root cause and will release further updates at a later date.

2. Hyperliquid Launches Official Off-Chain Event Prediction Markets link

Hyperliquid announced that it now supports official prediction markets based on off-chain events. Such markets are published by automated news feed software run daily by validators, who will vote on the deployment and settlement of official prediction markets based on factors including clarity of rules, accuracy of outcomes and the subjective quality of markets.

3. Layer 2 Base Rolls Out Azul Upgrade on Mainnet link

Layer 2 network Base announced the launch of the Azul upgrade on its mainnet, introducing the Multiproof mechanism combining TEE and zero-knowledge proofs (ZK) to boost network decentralization and cut withdrawal confirmation times. Base stated that the new client architecture has reduced empty block volume by approximately 99% and supports peak loads of 5,000 TPS on multiple occasions. As of the end of May, Base’s TVL stood at around $4.4 billion.

4. Arbitrum Foundation Proposes $43.5 Million Funding for 2027 Operations link

The Arbitrum Foundation has submitted a new funding application to the Arbitrum DAO, requesting 16 million US dollars worth of stablecoins, 1,740 ETH and 230 million ARB tokens with a total value of approximately 43.5 million US dollars. The funds will cover the foundation’s operating expenses in 2027, including technical infrastructure, ecosystem development, marketing and governance support. The 230 million ARB tokens account for roughly 3.7% of the total supply, and the Arbitrum DAO generated around 23.49 million US dollars in revenue in 2025. The proposal is currently under governance discussion.

5. Polymarket Rolls Out Trader KYC to Mitigate Regulatory and Sanction Risks link

According to The Information, prediction market Polymarket is pushing traders to complete KYC identity verification to address regulatory, sanctions and potential legal risks. The report states that some users still take part in market transactions related to restricted regions via automated trading bots, creating grey access routes in areas such as Russia, while certain developers divert trading traffic through tools including Telegram.

In response to market reports claiming that prediction market Polymarket is mandating identity verification for traders amid sanctions and legal risks, Josh Stevens, a representative of Polymarket, refuted the claims as false. He explained that Polymarket is launching a new beta product accessible only to selected users, with KYC requirements applying exclusively to this testing phase. The existing Polymarket platform will not impose new KYC rules following this launch, and KYC will not be required to use the product once the beta testing concludes.

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6. Ondo Finance Founder Nathan Allman Passes Away Unexpectedly; Ian De Bode Takes Over as CEO link

RWA project Ondo Finance released an announcement stating that its founder Nathan Allman has passed away unexpectedly. The announcement noted that Nathan Allman’s vision, modesty and execution have shaped Ondo’s development direction, and his philosophy of building a more open and inclusive financial system will be carried forward. Ondo also announced that Ian De Bode, who has served as President and been in charge of strategy and daily operations for more than two years, will take over as CEO.

7. Socket Exposes TrapDoor Supply Chain Attack Targeting npm, PyPI and Crates.io link

Socket’s research team published an article disclosing an active supply chain attack dubbed TrapDoor that steals cryptocurrency. The attack spans npm, PyPI and Crates.io, covering more than 34 malicious packages together with over 384 associated versions and artifacts, targeting developers working on cryptocurrency, DeFi, Solana, Sui, Move and AI projects. Socket stated that these malicious packages are capable of stealing developer private keys, crypto wallet data, SSH keys, cloud credentials, browser data, environment variables, API keys and other sensitive information. They execute malicious code via npm postinstall hooks, remote JavaScript triggered upon PyPI imports, and build.rs files on Crates.io.

8. Yuga Labs Restructures ApeCoin Organization, ApeCo Head Cam Steps Down link

Michael Figge, CEO of Yuga Labs, posted on X that the firm will roll out adjustments to ApeCoin. The overhaul aims to cut coordination costs between Yuga Labs and ApeCo (formerly the Ape Foundation) and reset the organizational framework.

Cam, the lead of ApeCo, will step down. The core technical and business development teams behind ApeChain will collaborate directly with Yuga Labs, while some ApeCo staff will exit the organization. The entire transition process is scheduled to wrap up on June 5.

9. Aave Labs Proposes Standardized Technical Asset Listing Framework link

Aave Labs has released an ARFC proposal proposing the adoption of a standardized technical asset listing framework applicable to new asset listings, continued listings and major parameter expansions on Aave V3, Aave V4 and Horizon. The framework aims to unify the technical requirements for assets listed on Aave, improve the consistency, transparency and reproducibility of asset review and monitoring processes in governance proposals, and establish a baseline for continuous monitoring. The framework covers requirements such as ERC20 compatibility, oracles, access control, minting and burning, pause and blacklist functions, upgradability, yield mechanisms, token architecture, cross-chain bridge risks, audit and security history, external dependencies and composability. Relevant technical findings shall be converted into clear governance and risk management outcomes, including lowering supply caps, borrowing caps and LTV ratios, prohibiting collateral usage, enhancing monitoring, requiring rectification by issuers, conducting regular updated assessments, or recommending delays to listing or expansions.

10. Vitalik Praises Privacy Protocol Interfold, Stating It Realizes His Long-Championed MACI Vision link

Vitalik Buterin, co-founder of Ethereum, wrote that more people ought to learn about the Interfold protocol. He pointed out that the protocol basically fulfills the vision he has advocated for nearly a decade for building based on the Minimal Anti-Collusion Infrastructure (MACI) concept and presents it in a more generalized form. Interfold is a privacy protocol optimized for scenarios such as voting and anonymous auctions. Its mechanism generates threshold encryption keys, allows users to submit ballots on-chain, and leverages zero-knowledge proofs (ZKPs) to verify eligibility.

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1. SEC Chair Atkins: US Will No Longer Push Crypto Founders Overseas link

SEC Chair Paul Atkins posted on X that for far too long, the SEC has been at odds with new technologies and innovation, driving entrepreneurs overseas — but “that era is over.” He stated that under the Trump administration, the SEC will collaborate with the executive branch and Congress to deliver much-needed regulatory clarity for the digital asset market.

2. Donald Trump: CFTC to Keep Exclusive Oversight of Prediction Markets; US Must Protect Crypto Industry link

U.S. President Donald Trump stated that maintaining the CFTC’s exclusive regulatory authority over prediction markets is “critical” and that prediction markets should continue to develop. He noted that under his administration, the United States is establishing “rules” for the industry that will serve as the “gold standard for states”. He also remarked that the crypto industry is a vital sector, and the U.S. must safeguard its development.

3. UK Issues New Russia Sanctions; Bitpapa, Huobi, Exmo Listed link

The UK government released a new round of sanctions against Russia on May 26, adding Bitpapa IC FZC LLC, Huobi Global S.A., Exmo Exchange Limited, Aifory LLC and other entities to the sanctions list on the grounds that they are suspected of providing financial services, funds or economic resources to A7 LIMITED LIABILITY COMPANY. As part of the UK’s efforts to crack down on Russia’s sanctions evasion networks, the sanctions also target crypto trading platforms such as Garantex Europe OU, banks and related enterprises. The new sanctions have prompted multiple cryptocurrency exchanges to roll out risk control measures for funds from HTX business addresses. Some users have had their accounts frozen after receiving withdrawals from HTX, drawing industry attention to sanctions-related risks.

HTX stated that it received no prior notice or relevant evidence regarding the UK’s sanctions. It also clarified that Huobi Global S.A. on the sanctions list is a separate entity from the online HTX exchange. HTX said Huobi Global S.A. will communicate with relevant UK authorities to clarify the grounds for the sanctions and address relevant issues, adding that the sanctions will not affect HTX’s global operations or user funds.

OKX reminded users that those who have previously conducted arbitrage trading between OKX and HTX and continue to transfer funds between the two platforms after the sanctions are imposed may face additional reviews on their OKX accounts. To ensure normal account usage, users are advised to refrain from such activities and contact customer service for inquiries if needed.

Bybit Chinese community issued an important notice on deposits and withdrawals related to HTX. Given the latest regulatory developments involving HTX, transfers to or from HTX-related addresses may trigger additional anti-money laundering, compliance and risk control reviews. Bybit advises users to avoid using HTX-related addresses and ensure all account activities comply with local laws, regulations and platform rules.

4. Argentina’s Anti-Gambling Bill Targets Crypto Exchanges to Block Illegal Betting Funds link

Argentina’s Ministry of Health has submitted a bill to Congress on gambling addiction prevention and online gambling regulation, which for the first time brings virtual asset service providers under its coverage. The draft requires banks, fintech firms, crypto exchanges and wallet providers to refrain from offering services or facilitating transactions for unlicensed online gambling and casino platforms in Argentina, and to strengthen due diligence, transaction monitoring and KYC procedures. The bill also proposes amendments to the criminal law, stipulating that individuals or enterprises providing key financial, technical or digital asset services to illegal gambling platforms shall be sentenced to imprisonment for two to four years. Previously, a court in Buenos Aires, Argentina, ordered a full block on Polymarket, a crypto-based prediction market platform.

5. CME to Launch 24/7 Bitcoin Futures Trading link

CME Group announced its official entry into the around-the-clock crypto market. Starting this Friday, CME Bitcoin futures and options will trade 24/7 on the Globex electronic trading platform, with only a 60-minute system maintenance pause every Sunday between 18:00 and 19:00 UTC+8. This structural shift means the long-standing “CME gap” caused by weekend closures will effectively disappear. Previously, traders often exploited price disconnections between Friday’s close and Sunday’s open for arbitrage and position allocation.

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6. Strategy Deposits 411.48 BTC ($30.3M) into Coinbase Prime link

Michael Saylor’s Strategy has deposited 411.48 BTC, valued at approximately $30.3 million, into Coinbase Prime. Meanwhile, on Polymarket, the probability that Strategy will sell BTC before December 31, 2026, has risen to 84%.

7. BitMine Named in Preliminary Russell 1000 Inclusion List link

BitMine Chairman Thomas Lee tweeted that FTSE Russell has released its preliminary inclusion and exclusion list, with BitMine (BMNR) on the preliminary inclusion list for the large‑cap Russell 1000, as its market cap exceeds the $5.7 billion minimum threshold for large‑cap inclusion. Thomas Lee noted that many actively managed funds only buy Russell 1000 constituents, and it is estimated that 20% to 25% of a single stock’s market cap is typically held by passive index funds or ETFs.

Previously, Ethereum treasury company BitMine announced that as of May 25, 2026, it held 5,390,404 ETH, representing approximately 4.47% of Ethereum’s total supply, having added 111,942 ETH week‑over‑week. The total value of the company’s crypto assets, cash, and “Moonshots” investments is about $12.3 billion, including roughly $444 million in cash, 203 BTC, $200 million in Beast Industries shares, and $95 million in ORBS shares. Additionally, BitMine has currently staked 4,712,917 ETH, valued at approximately $10.1 billion at current prices. Company Chairman Tom Lee stated that ETH’s current pullback below $2,200 is an “attractive opportunity.”

8. Tether, Georgia Plan Lari Stablecoin GEL₮ link

Tether announced plans to launch GEL₮, a stablecoin pegged to the Georgian lari, with support from the Georgian government. It aims to cut transaction costs, enable near real-time settlement, facilitate programmable payments and streamline the circulation of digital financial value. Georgia has been advancing a regulatory framework for digital assets and stablecoins, covering reserve management, redemption rights, issuer supervision and anti-money laundering compliance. The country also seeks substantial compatibility with emerging U.S. stablecoin regulations including the GENIUS Act.

9. Vitalik: EF to Downsize, Focus on Ethereum Censorship Resistance, Privacy & Security link

Vitalik Buterin stated that the Ethereum Foundation (EF) will evolve into a smaller, more long-term oriented and clearly positioned organization in the future. It will no longer act as the hub of the Ethereum ecosystem, but focus on core areas including censorship resistance, openness, privacy and security. Vitalik argued that Ethereum should not merely pursue higher TPS and lower latency, but build differentiated advantages in consensus security, formal verification and reduced reliance on intermediaries. He also revealed that around 90 percent of his net worth remains in ETH, and the remaining on-chain fiat funds worth approximately 40 million US dollars have been fully invested in open-source research and technology projects. In addition, Vitalik noted that current smart contract wallets and privacy protocols rely excessively on third-party relay nodes. For this reason, he is promoting proposals such as FOCIL, EIP-8141 and EIP-7701 to restructure the public transaction mempool and enable peer-to-peer direct on-chain transactions.

10. OpenZeppelin Founder: All DeFi Is Now Insecure link

Manuel Aráoz, co-founder of crypto security firm OpenZeppelin, wrote that due to the extreme asymmetry between attackers and defenders, he now believes all DeFi is insecure. He has personally advised family and friends to exit all DeFi positions, including blue-chip protocols such as Aave, MakerDAO and Compound. Aráoz pointed out that AI coding agents have achieved superhuman capabilities in hunting for vulnerabilities. Smart contract security features a lopsided dynamic: defenders must fix every flaw, while attackers only need to exploit a single loophole to steal funds.

Stani Kulechov, founder of Aave, refuted the claim that DeFi is no longer secure. He said the current DeFi infrastructure has become far more resilient compared with the previous cycle, partly thanks to advances in AI technology. He stated that DeFi has seen improvements in risk engines, lending market structures, formal verification, audits, bug bounties, oracles, automated monitoring and circuit breakers over the years. AI is also being leveraged by security researchers, auditors and white hat hackers to bolster protocol safety. Stani added that many existing risks stem more from Web2 operational security, and numerous teams are stepping up internal controls, infrastructure hardening and the implementation of frameworks like SOC2.

OpenZeppelin issued a statement clarifying that Manuel Aráoz’s remarks do not represent the company’s stance, noting that he left the firm back in 2019. The company also said most recent security incidents in the industry result from operational security issues rather than smart contract vulnerabilities.

Fundraising

• PopDEX announced the completion of a $30 million financing round led by Foresight Ventures. link

• Japanese stablecoin JPYC has secured $32 million in Series B financing. link

• OpenRouter closed a $113 million Series B financing round led by CapitalG, an affiliate of Alphabet. link

• Hypernova, a prop trading platform within the Hyperliquid ecosystem, raised $3 million in pre-seed funding. link

• BNB Plus, a Nasdaq-listed digital asset treasury firm, secured $4.1 million in financing. link

• Cross-chain platform Squid completed a $6 million strategic financing round led by North Island Ventures. link

Learn more, check out crypto-fundraising.info.

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Author | Jian, WuBlockchain

Summary

The JPEX incident is regarded as the largest crypto collapse in Hong Kong’s history. After the Securities and Futures Commission (SFC) issued a public warning in September 2023 about its unlicensed operations and the platform subsequently froze withdrawals, a surge of investor complaints and police arrests followed within days. Two years later, in November 2025, police formally charged 16 individuals and issued Red Notices for 3 core members, bringing total arrests to 80 and involving more than HKD 1.6 billion. The case exposes systemic risks stemming from unlicensed platforms and deceptive promotions, and has accelerated Hong Kong’s transition into a new phase of virtual asset regulation.

This article reviews the full scope of the incident, outlining its background, timeline, and impact, with the aim of offering a cautionary reference for investors.

On September 17, 2023, JPEX abruptly froze withdrawals. The Hong Kong Securities and Futures Commission (SFC) publicly warned that the platform was operating without a license, triggering widespread panic and a surge of police reports from investors. Just two days later, police made the first round of arrests, detaining eight individuals, including KOL Joseph Lam (over 150,000 followers on Instagram). Lam was suspected of luring people into investing in JPEX between July and September 2023 through false claims, including statements that the platform had obtained licenses in multiple jurisdictions and that he possessed exclusive insider information about JPEX, thereby inducing investors to deposit funds.

On September 22, 2023, Joseph Lam held a press conference regarding his alleged involvement in the JPEX cryptocurrency fraud case. Photo credit: HKFP.

Two years later, on November 5, 2025, Hong Kong police formally charged 16 individuals, including Joseph Lam and YouTuber Chan Wing-yee (with over 100,000 followers), with conspiracy to defraud, money laundering, and obstruction of justice. Among them were six core JPEX members, seven OTC operators and KOLs, and three nominees who held accounts on behalf of others.Interpol issued Red Notices for three fugitives — 27-year-old Mo Chun-ting, 30-year-old Cheung Chun-shing, and 28-year-old Kwok Ho-lun — who have been identified as masterminds and have fled overseas.To date, the case has resulted in a total of 80 arrests, involving more than 2,700 victims and losses exceeding HKD 1.6 billion (approximately USD 206 million). Police have frozen HKD 228 million in assets, including cash, gold bars, luxury vehicles, and virtual assets. The incident exposed widespread misconduct in promoting unlicensed platforms and prompted regulators to tighten virtual asset oversight.

The Rise and Illusion of JPEX: High Returns, Fake Licenses, and Aggressive Promotion

Founded in 2020 and headquartered in Dubai, JPEX described itself as a “global cryptocurrency trading platform”. In Hong Kong, it aggressively promoted itself through large-scale advertising campaigns across MTR stations, bus bodies, and shopping mall façades, with some ads even labeling it as a “Japanese cryptocurrency exchange”.The platform claimed to hold financial licenses from the United States, Canada, Australia, and Dubai’s VARA. However, SFC investigations revealed that these “licenses” were limited to foreign exchange services and were not valid for virtual asset trading. Both Japan’s Financial Services Agency and Dubai VARA also clarified that JPEX was not authorized to operate.

JPEX’s main appeal came from its “Earn” products, which promised returns such as 20% APY on BTC, 21% on ETH, and 19% on USDT — extremely attractive yields that drew in large numbers of investors. The platform relied heavily on OTC shops and social media KOLs to create a “low risk, high return” narrative.Early SFC warnings showed that JPEX had already been suspected of making false statements as early as July 2023, yet its promotional activities continued up until the collapse

Regulations and Crisis: The Disorder of Unlicensed Operations Under Hong Kong’s New Regime

In June 2023, Hong Kong introduced the Virtual Asset Trading Platform (VATP) licensing regime, requiring all platforms to obtain approval from the Securities and Futures Commission (SFC) before offering services to retail investors. The framework was designed to balance innovation with risk control, yet JPEX never applied for a license and continued to operate illegally.

Beginning in July 2023, mainland Chinese users started reporting withdrawal difficulties. On Hong Kong’s popular forum LIHKG, complaints from mainland users about failed cash-outs began circulating, with some posts claiming that victims were lured to Hong Kong to “resolve issues in person” and were then ambushed.Police later confirmed an incident: a mainland Chinese man surnamed Yu, after failing to withdraw funds, was invited to a Hong Kong OTC shop to “resolve the issue”. After he entered Hong Kong, he was ambushed and assaulted on July 18 near Cambridge Plaza at the junction of San Wan Road and Cheung Yun Street in Sheung Shui. He suffered abrasions to his forehead and nose.Police subsequently listed four suspects as wanted: one Chinese national who was the head of an investment company, and three other Chinese men aged around 30 to 40, each around 1.7 meters tall, wearing black shirts and black pants, with no further details available.These incidents spread quickly, fueling collapse rumors as early signs of liquidity problems emerged behind the platform’s high-return promises. Internal SFC investigations showed JPEX was suspected of making false statements, yet its promotional campaigns continued until the eve of its downfall.

Mr. Yu, a JPEX user, was assaulted by multiple individuals (photo provided by the interviewee). Photo credit: hk01.com

On September 13, 2023, the Hong Kong Securities and Futures Commission (SFC) issued a public warning concerning JPEX, titled “Warning Statement on Unregulated Virtual Asset Trading Platform”. The statement directly pointed out that JPEX was operating without a license, violating the VATP licensing regime that came into effect on June 1. It highlighted that JPEX had falsely promoted itself through social media influencers and KOLs (such as Instagram sponsored posts) as well as OTC shops, claiming to hold financial licenses from the United States, Canada, Australia, and Dubai’s VARA.SFC investigations showed that these “licenses” were in fact limited to foreign exchange services and were not valid for virtual asset trading.The statement emphasized that JPEX had already been placed on the SFC’s Alert List on July 8, 2022. Its products, such as the Earn service — which promised returns of 21% APY on ETH, 20% on BTC, and 19% on USDT — were suspected of being “deposit/return” arrangements, amounting to potential illegal fundraising. Numerous retail investors had also lodged complaints regarding failed withdrawals or financial losses.The SFC instructed all KOLs and OTC shops to immediately cease promoting JPEX and all related services and products.

Photo credit: Hong Kong Securities and Futures Commission (SFC)

Within hours of the statement’s release, JPEX quickly issued a response on its official website and blog, claiming that the SFC’s actions “have unfairly pressured us to consider withdrawing our licence application in the Hong Kong region and to adjust our future policy development accordingly. The SFC should bear full responsibility for undermining the prospects of cryptocurrency development in Hong Kong”.In a blog post, JPEX asserted that it had publicly announced as early as February 2023 its intention to apply for a cryptocurrency trading licence in Hong Kong, describing the city as a key market. However, it claimed that the SFC’s warning “conflicts with Web3 policy”, and that it was considering withdrawing its Hong Kong licence application and adjusting its regional strategy.This response further heightened investor panic. The number of complaints surged from several hundred before the SFC statement to more than 1,600, and many users rushed to OTC stores seeking assistance. This made the platform’s liquidity crisis fully visible, marking the moment when the incident shifted from regulatory warning to the brink of collapse.

On September 17, 2023, JPEX published an announcement on its official blog stating that its third-party market makers had “maliciously frozen” the platform’s funds, further intensifying the liquidity crisis. The announcement accused Hong Kong regulators of “unfair treatment”, claiming that regulatory pressure and negative news coverage prompted market makers to demand additional information, restrict liquidity, and significantly increase operating costs, which in turn caused operational difficulties.JPEX stressed that the issue did not originate from the platform itself but was the result of external factors. It pledged to restore liquidity and gradually adjust fees. The announcement also confirmed that its Earn services — high-yield products in which users deposited assets to earn returns (such as 20% APY on BTC) — would be fully delisted from trading on September 18, and users would no longer be able to place new orders.This move signaled the shift from an SFC regulatory warning to a public meltdown, intensifying user panic and confirming that the crisis had entered a critical stage.

More notably, JPEX raised the USDT withdrawal fee from the original 10 USDT to 999 USDT (with a maximum withdrawal limit of 1,000 USDT), meaning users were effectively able to withdraw only 1 USDT. This move was widely viewed as a “de facto freeze” of user assets, sparking strong dissatisfaction and heated discussion across social media, with many describing it as “an indirect rug pull”.JPEX claimed that the adjustment was made to “respond to business changes”, but provided no timeline for when normal withdrawal fees would be restored.

Screenshot from a JPEX user showing the USDT withdrawal fee raised to 999 USDT (with a maximum withdrawal limit of 1,000 USDT)

Full Collapse and Police Crackdown: KOL Arrests and Asset Freezes

On September 18, 2023 — five days after the SFC issued its warning — the Commercial Crime Bureau (CCB) of the Hong Kong Police launched a coordinated operation codenamed “Iron Gate”, arresting the first batch of eight individuals. Those arrested included Instagram KOL Joseph Lam (with 150,000 followers, a former Oxford-trained lawyer turned insurance agent), investment YouTuber Chan Wing-yee (with over 100,000 followers, a former TVB actress turned investment content creator), and OTC shop operators such as Felix Chiu (owner of Coingaroo).Police raided 20 locations, seizing cash, computers, and documents. By that day, 1,641 victims had filed police reports, with losses totaling approximately HKD 1.2 billion.According to police, JPEX constructed an image of being “safe and easy to use” through KOLs and OTC shops, while user funds were transferred through multiple wallets for laundering. Police alleged that between July and September, Joseph Lam falsely claimed through Instagram posts, seminars, and livestreams that JPEX was “safe and licensed” (including supposed regulatory approvals from several jurisdictions) and that he possessed “exclusive insider information”, inducing investors to deposit assets and ultimately suffer losses.The arrests marked the escalation of the incident into a full criminal investigation. The SFC praised the police operation and reiterated that KOLs must perform due diligence on the platforms they promote.

In October 2023, the number of arrests in the JPEX investigation conducted by Hong Kong police increased to 28, including 28-year-old KOL Henry Choi Hiu-tung, founder of Hong Coin. Choi was accused of conspiracy to defraud by promoting JPEX’s high-return Earn products through his social media pages “Hong Coin” and “TungClub”, and by collaborating with OTC shops to funnel user funds onto the platform.By October, the number of reported victims had exceeded 2,530. The SFC highlighted serious loopholes in KOL-driven promotions, noting that many influencers, including Choi, failed to conduct due diligence on the platform’s qualifications, yet repeatedly claimed that JPEX was “safe and licensed”, in violation of the SFC’s disclosure requirements.The case also extended to Taiwan, triggering cross-border discussion. Taiwanese police interviewed multiple KOLs and began cooperating with Hong Kong’s SFC to trace the flow of funds.

Latest Development: First Formal Prosecutions and Red Notices in the JPEX Case

On November 5, 2025, the Commercial Crime Bureau (CCB) of the Hong Kong Police formally charged 16 individuals, marking the first official prosecutions in the JPEX case in two years and signaling the start of criminal proceedings.The defendants include six core JPEX members, seven OTC operators and KOLs, as well as public figures such as Joseph Lam and Chan Wing-yee. At a press conference, Chief Superintendent Ernest Wong stated that this was the first round of prosecutions in the JPEX investigation, with charges involving conspiracy to defraud, money laundering, obstruction of justice, and inducing others to invest in virtual assets through fraudulent means or with reckless disregard for the consequences.The prosecution focuses on allegations that the defendants used false advertising and an OTC network to induce more than 2,700 investors to deposit funds, while the platform operated without a licence and was involved in laundering illicit proceeds.

On the same day, the International Criminal Police Organization (Interpol) issued Red Notices for three fugitives who were identified as masterminds and core members of the operation and had already fled overseas: 27-year-old Mok Tsun-ting, 30-year-old Cheung Chon-cheong, and 28-year-old Kwok Ho-lun.Police stated that the three individuals orchestrated fund transfers and money-laundering activities, and that their related assets had already been frozen. The Red Notices call on all Interpol member countries to assist in their arrest.To date, the JPEX case has resulted in 80 arrests, with more than 2,700 victims and total losses amounting to HKD 1.6 billion.

On November 6, 2025, the 16 defendants — including Joseph Lam and Chan Wing-yee — appeared at the Eastern Magistrates’ Courts. Fourteen of them were granted bail, with amounts ranging from HKD 20,000 to HKD 100,000; both Lam and Chan were each granted HKD 300,000 bail. All defendants were required to surrender their travel documents and report to police regularly.This case is one of Hong Kong’s largest fraud cases in recent years in terms of both the number of victims and the scale of losses. Authorities have frozen HKD 228 million in assets, including cash, gold bars, luxury vehicles, and virtual assets.

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Author | Ivan WuBlockchain

(Thanks to @fushaoqingbj for the inspiration)

The birth of Bitcoin did not emerge out of thin air — its core ideas had already begun to take shape in the 1970s. At the time, thought leaders from different disciplines were grappling with the very questions Bitcoin would later attempt to answer: Who should control the issuance of money? How can transactions remain secure in an environment without trust? And how can a decentralized network reach consensus? These questions sparked breakthrough reflections across economics, cryptography, and computer science. This article traces the intellectual roots of Bitcoin in the 1970s through those three domains and explains how Satoshi Nakamoto eventually wove them together into a coherent invention.

The Ceding and Reclaiming of Monetary Sovereignty

The emergence of Bitcoin was not merely a breakthrough in technological history — it was also a response within the history of political and economic thought. Specifically, it answered the growing skepticism and challenges directed at the model of state-controlled sovereign money that had been building since the 1970s. One of the key intellectual origins of this critique can be traced to Friedrich Hayek’s 1976 classic, Denationalisation of Money.

Before the rise of the modern nation-state system, the issuance and credibility of money were not always under state control. In medieval Europe, Song Dynasty China, and early 19th-century America, currencies were frequently issued by private banks, merchant guilds, or local autonomous institutions. These forms of money often coexisted and competed, with their value determined by the assets backing them, the reputation of the issuing entities, or the reach of their transaction networks. It was not until the late 19th century — with the centralization of national finances and the spread of central banking — that the “nationalization” of money gradually became a global consensus. Through legal tender laws, taxation authority, and monopolized currency issuance by central banks, states established comprehensive control over their monetary systems, giving rise to the modern regime of fiat currency.

However, Hayek argued that this monopolization of money by the state was neither inherently justified nor necessarily efficient or reliable. Particularly when governments abused their power to issue currency — leading to inflation and the erosion of monetary value — “state credit” itself could become a source of instability.

This book was written at a pivotal moment in history: in 1971, the collapse of the Bretton Woods system severed the link between the U.S. dollar and gold, marking the first time in history that money became entirely a matter of credit. By the mid-1970s, both Europe and the United States were mired in a deep stagflation crisis — characterized by soaring inflation and high unemployment — casting doubt on the effectiveness of central banks’ monetary policies. It was against this backdrop of widespread disillusionment with state-led macroeconomic management that Hayek proposed a radical idea: abolish the government’s monopoly over currency issuance and allow private institutions to issue competing currencies, letting the market decide which ones were most credible and stable.

In Hayek’s view, the state monopoly on currency issuance amounted to an inefficient and easily abused arrangement of power. Central banks in various countries held the authority to expand the money supply at will, yet lacked long-term accountability for maintaining the currency’s value. As he wrote in the book, “People are forced to use the money issued by the state, even when it is rapidly depreciating — they have no alternative.” Hayek argued for introducing “currency competition” in the same way markets encourage competition among goods: allow multiple private entities — such as banks, commercial institutions, or even technical communities — to issue currencies backed by assets or reputation, and let the market determine which currencies earn public trust and maintain price stability. “Free competition is the best mechanism for stable prices” — this was a consistent refrain in Hayek’s liberal philosophy.

At the time, this proposal was seen as “the ultimate expression of liberalism.” It neither spurred policy reforms nor gained traction in real-world institutions — largely because it lacked a viable mechanism for issuance and verification that could circulate globally, operate independently of central authorities, and still command trust.

It wasn’t until the emergence of Bitcoin in 2009 that this long-gestating vision finally gained a structurally executable form. In his white paper, Satoshi Nakamoto proposed Bitcoin as “a peer-to-peer electronic cash system” capable of transferring value and verifying transactions without any intermediaries. Its issuance is governed by code, with new coins minted as block rewards roughly every ten minutes, and a hard cap set at 21 million coins — completely unlike the discretionary money printing powers of central banks. At the same time, the Bitcoin network is maintained by a globally distributed set of nodes. There is no “central account,” no “clearinghouse” — transaction records are validated and written to the chain collectively by participants. This architecture directly severs the monetary system’s reliance on states, banks, and even legal enforcement.

From the perspective of “monetary sovereignty,” Bitcoin achieves de-nationalization on three distinct levels:

1. Issuance: Bitcoin does not rely on government authorization or endorsement. Its supply is governed by algorithmic rules embedded in code, with no individual or institution having the authority to arbitrarily increase its issuance.

2. Accounting and Settlement: It bypasses central banks and clearinghouses by reaching decentralized consensus through the participation of miners and nodes across the network.

3. Value and Trust: Instead of resting on sovereign credit, Bitcoin derives trust from its open, transparent, and tamper-resistant technical architecture, reinforced by the network effect of global adoption.

This closely mirrors the threefold logic championed by Hayek: private currency issuance, free market competition, and user-driven currency selection. While Hayek originally envisioned physical banknotes or value-backed certificates issued by private banks, the underlying philosophy remains intact. In essence, Bitcoin represents a concrete realization of Hayek’s vision — adapted and implemented through the capabilities of modern information technology.

Of course, Bitcoin has not replaced fiat currency, nor has it become a mainstream medium of settlement. Yet its very existence has already shaken the long-standing belief that money must be the exclusive domain of the state. Just as Hayek once challenged the central banks, Satoshi Nakamoto confronted the inertia of an entrenched institutional order. Every step Bitcoin has taken in practice continues to write a new chapter in Hayek’s proposition — suggesting that perhaps money does not need the state, but only a sufficiently strong consensus and a set of enforceable rules.

A Trustless Technological Order

If Hayek’s challenge was directed at the political foundations of monetary sovereignty, then Bitcoin’s disruption of the traditional monetary order also has a technological origin: in a world rife with distrust, is it possible to construct a system of transactions — entirely through mathematics and protocols — that requires no intermediaries and cannot be forged?

Bitcoin’s answer is rooted in a pivotal technological breakthrough of the 1970s: public-key cryptography. In 1976, Whitfield Diffie and Martin Hellman published the seminal paper New Directions in Cryptography — a work that, at the time, carried the aura of heresy. Cryptography back then was still a domain tightly bound to national security and military secrecy, viewed as a toolset reserved for intelligence agencies and armed forces. The prevailing method was symmetric encryption, where both encryption and decryption relied on the same key. This meant that before any secure communication could begin, both parties had to secretly share a single “key” in advance. The issue, however, was daunting: this model imposed extremely high demands on key distribution and confidentiality. If the key was intercepted, the entire communication chain was compromised; and when communication had to occur with hundreds or thousands of parties, managing those keys became a logistical nightmare.

Diffie and Hellman proposed a radical new idea: what if each party in a communication could hold a pair of keys — one that could be shared openly, and one that must be kept secret? A message encrypted with the public key could only be decrypted by the matching private key; conversely, a signature generated with the private key could be verified by anyone using the corresponding public key. In other words, even if you posted your public key on an open network for the entire world to see, it wouldn’t compromise your security. The truly sensitive part — the private key — remained solely in your hands.

This idea was nothing short of revolutionary at the time. It effectively brought cryptography out of a “necessarily closed world” into a space of open collaboration — security no longer depended on the secrecy of transmission, but on the mathematical complexity of irreversible operations. It was as if you possessed an unbreakable lock (the private key), and anyone could see the shape of the lock’s keyhole (the public key), yet no one could reproduce the key itself.

Although public key cryptography caused a stir in technical circles, the theory did not immediately gain widespread adoption in the real world. On one hand, its mathematical foundations were elegant, but practical computational models for implementation were still immature. On the other hand, “open cryptography” remained a taboo subject, limiting its dissemination. Yet, like many forward-looking ideas, its value was fully realized only decades later. By the 1990s, tools like PGP (Pretty Good Privacy) began applying public key mechanisms, sparking a wave of encrypted personal communications; and in the blockchain era, this theory became a cornerstone of how Bitcoin operates.

In Bitcoin, every wallet address is fundamentally derived from a pair of cryptographic keys. Your privately held private key grants the authority to initiate transactions, proving, “I authorized this transfer”; meanwhile, others on the network only need your public key to verify whether the signature is valid. In this system, banks, arbitrators, and clearinghouses are no longer necessary — anyone can independently confirm the authenticity and validity of a transaction without needing to trust any other party.

One could say that Diffie and Hellman’s paper was written for a future that had yet to arrive. Their vision of an “asymmetric trust structure” was fully embraced and implemented by Satoshi Nakamoto more than three decades later in the creation of Bitcoin. It not only addressed the challenge of establishing secure communication over untrusted networks, but also laid the logical foundation for a decentralized monetary system — one in which trust could be built not through intermediaries, but through cryptographic proof.

Viewed in this light, the paper stands not only as a technical milestone, but as a conceptual reversal: we no longer need to place trust in people — we place it in something that cannot betray us — mathematics. In an age defined by hyper-connectivity and frequent crises of trust, this structural understanding of order at the technical level becomes a crucial lens through which to grasp the spirit of Bitcoin.

Although Satoshi Nakamoto’s white paper does not explicitly cite Diffie and Hellman, their ideas are evident throughout. Every Bitcoin transaction is, at its core, a form of digital signature: a user signs with their private key to prove to the network, “I authorize the transfer of this bitcoin to the recipient.” Other nodes then use the corresponding public key to verify that the signature is valid and untampered. This design ensures that ownership and transfer are guaranteed solely through cryptography, eliminating the need for banks, notaries, courts, or any other external intermediaries.

At the very beginning of the Bitcoin white paper, Satoshi Nakamoto clearly states: “What is needed is an electronic payment system based on cryptographic proof instead of trust.” What Bitcoin introduces is a trustless order — not the elimination of trust, but a fundamental relocation of it: from people to systems. How the system operates is inscribed in code; whether a transaction is legitimate is embedded in its signature; ownership is recorded immutably on the chain. Individuals are asked to trust mathematics and software, not the discretion or endorsement of a central authority.

This marks a radical shift in the structure of belief. In the traditional monetary system, trust is placed in the central bank’s ability to maintain currency stability, and in the reputations of commercial banks to manage assets securely. In the Bitcoin system, trust resides in one’s own ability to safeguard a private key — and in the computational robustness of a decentralized network that resists manipulation.

What’s even more disruptive is that this trustless, peer-to-peer architecture isn’t limited to payments alone — it lays the logical foundation for decentralized financial protocols, on-chain contracts, and trust-minimized data verification systems. It has inspired one of the core mantras of the blockchain world: “Don’t trust, verify.”

This phrase encapsulates the spirit of technical rationalism that has persisted since the 1970s: a belief that systems should be designed in such a way that truth can be established without reliance on authority or goodwill. In the world of cryptocurrencies, this ethos finds its most concrete expression — shifting trust from institutions to code, from centralized power to transparent protocols.

Thus, from Diffie and Hellman to Satoshi Nakamoto, what we witness is a philosophical continuum in technology: how to construct a form of constraint more powerful than human trust in a world that is flawed — and often untrustworthy.

Bitcoin does not attempt to make the world more trustworthy; instead, it offers a system that functions despite the absence of trust. It replaces moral expectations between individuals with a design that continues to operate even under adversarial conditions.

This cold, pragmatic view of system design is precisely the fundamental challenge that the cryptographic revolution poses to traditional forms of social organization: it doesn’t ask us to be better — it makes better systems because we’re not.

From Impossible to Possible: The Quest for Consensus

The so-called “Byzantine Generals Problem” was introduced by computer scientist Leslie Lamport in 1975 as a thought experiment that would later become foundational to distributed computing. It imagines a group of generals surrounding a city, who must coordinate a simultaneous attack to succeed. However, they can only communicate via messengers — messages may be delayed, lost, or even maliciously altered. Worse still, some generals may be traitors, deliberately sending contradictory instructions to sow confusion and sabotage the plan.

This problem did not emerge in a vacuum — it arose at a pivotal historical juncture. The 1970s marked a turning point in the evolution of information technology, as computing began to shift from isolated machines toward interconnected networks, and from centralized architectures to distributed systems. Funded by the U.S. Department of Defense, ARPANET was in the process of linking computers across geographically distant sites, enabling data exchange without a central coordinator for the first time. At the same time, the computer science community began to recognize a looming challenge: as networks grew in scale and diversity, the traditional model — relying on a central server to coordinate and maintain consistency — became increasingly fragile. If the central node failed, the entire system could collapse; if certain nodes were compromised or manipulated, corrupted data might spread rapidly and cause systemic disruption.

Against this backdrop, the field of distributed systems began to take shape. Early explorations in this area focused primarily on crash fault tolerance — the idea that parts of a system might go offline or fail silently, but would not produce incorrect outputs. One widely adopted solution from that era was the Two-Phase Commit (2PC) protocol, proposed in 1974, which aimed to coordinate database transactions across multiple nodes. The goal was to ensure that, even if some participants became unreachable mid-transaction, the system as a whole could still maintain consistency.

However, as network complexity increased, researchers came to a sobering realization: the more severe threat was not failure, but malice. Some nodes might not merely crash — they might act with intent to deceive, transmitting false information, tampering with data, or violating protocol rules in ways that could destabilize the entire network. This insight fundamentally changed the trajectory of distributed systems research, shifting attention from passive faults to active adversaries.

It was within this shifting landscape that Leslie Lamport turned his attention to an even more daunting premise: what if some participants in a system were not merely unreliable, but actively working to disrupt consensus? This question gave rise to the Byzantine Generals Problem. Departing from earlier models that assumed only benign failures, Lamport’s formulation directly confronted the possibility of malicious behavior — nodes that lie, deceive, or act arbitrarily.

This conceptual leap initiated a new line of inquiry: Byzantine Fault Tolerance (BFT). Unlike crash fault tolerance, which seeks stability in the face of silence, BFT seeks coherence in the presence of deception. It represents not just a technical challenge for distributed computing, but a deeper philosophical confrontation with collective decision-making itself: in a network where not all participants can be trusted, how do we distinguish truth from falsehood? How do we sustain cooperation when some actors are working against it? Lamport’s problem reframed the core difficulty of distributed systems — not just to survive failure, but to resist betrayal.

Although Byzantine fault tolerance was still regarded at the time as a largely unworkable “theoretical construct,” with most research confined to academic papers and model simulations, the underlying issue it raised had already become one of the deepest uncertainties in modern network systems. What Bitcoin achieved, for the first time, was a concrete engineering solution to this abstract dilemma.

Without relying on any central coordinator — and even under the assumption that some nodes may act maliciously — Bitcoin manages to maintain network-wide consensus through its Proof-of-Work mechanism. In doing so, it offered a groundbreaking real-world answer to the Byzantine Generals Problem, transforming an enduring thought experiment into operational reality.

Traditional information systems typically rely on a central server or master node to maintain data consistency. In a decentralized design, however, no such “arbiter” exists. Nodes operate independently under varying conditions, and coordination must emerge from predefined protocols or mechanisms.

This is where the Byzantine Generals Problem takes on profound significance: its value lies not in identifying who is right or wrong, but in probing whether a system can self-correct and filter out interference — continuing to function reliably even in the face of uncertainty, fragmentation, or betrayal.

The “Proof of Work” (PoW) mechanism adopted by Bitcoin effectively bypasses complex identity authentication and error-checking procedures by introducing a system of computational cost to filter valid information. In this design, any node can attempt to add a new block, but doing so requires solving a computationally intensive mathematical puzzle. Only by expending substantial computing power can a node earn the right to update the ledger.

The network, in turn, accepts only the version of the blockchain with the highest cumulative work — commonly referred to as the “longest chain” — as the valid record. This mechanism ensures that, even amid conflicting messages or malicious behavior by some nodes, the system can still maintain a consistent and unbroken record of transactions.

In essence, Bitcoin transforms the “chaotic battlefield” described in the Byzantine Generals Problem into an open competition of computational power. Instead of trying to judge which general is loyal, the system relies on carefully designed incentives and technical protocols to ensure that — even amid uncertainty and potential deceit — one path will ultimately emerge as the most convincing and be accepted by the system.

Satoshi Nakamoto’s solution brought this classic problem of the 1970s from theory into reality for the first time. It enabled tens of thousands of anonymous nodes around the world to coordinate on maintaining a unified monetary ledger — without needing a referee, and without needing to trust one another.

Conclusion: From Ideological Spark to Institutional Prototype

Looking at the architecture of Bitcoin, what emerges is not a sudden technical invention, but an institutional experiment deeply rooted in the intellectual currents of the late 20th century. It answers Hayek’s critique of state monopoly over money, inherits the possibilities of “trustless communication” opened up by Diffie and Hellman in cryptography, and solves the coordination challenge posed by Lamport in decentralized systems. Bitcoin did not emerge from a vacuum — it stands atop decades of reflection, experimentation, and foresight that began in the 1970s, weaving together three distinct strands of knowledge into one tangible, functioning system.

Hayek envisioned a monetary order based on free competition; cryptographers built communication bridges that required no trust; distributed systems theorists mapped out the logic of coordination without a central authority — Satoshi Nakamoto brought all of these together in a white paper just nine pages long, and with it, launched a parallel financial network that runs in the real world.

Bitcoin was neither born from economics nor merely an engineering triumph. It is better understood as the continuation of a heretical spark in the history of institutions — one that, after three decades, finally found its ignition point. This is why Bitcoin’s significance has never been limited to “money”; it is a paradigm sample, a proof of concept for a deeper question: In an era where people are untrustworthy, institutions lack transparency, and systems spiral out of control — can we still construct an order that functions without relying on trust?

The answer may still be unfolding, but this exploration is no longer just a utopian thought experiment. Behind the seemingly cold strings of hash values pulses the legacy of a generation of thinkers.

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Original Author | danny (@agintender)

Compiler | WuBlockchain Aki Chen

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The 2025 crypto bull market may already be underway, but its engine is roaring in a very different way from prior cycles. If you are still gauging market heat by staring at spot trading volumes, you’re likely seeing only the tip of the iceberg. The protagonist of this cycle is perpetual futures (“perps”) — a vast, highly leveraged, player-versus-player (PvP) arena driven by intense long–short combat. Liquidity, narratives, and wealth effects there are redefining the entire market in unprecedented ways.

We explain why liquidity has concentrated in derivatives to an unparalleled degree, and — using a numerical example — how short-liquidation cascades act as rocket fuel, the core mechanism that propels asset prices into reflexive, spiral-higher moves.

I. Data in Focus: When the Tail Starts Wagging the Dog

Empirics are the best proof of theory. We begin with data to validate a striking fact: trading in perpetuals has completely eclipsed the spot market.

Volume comparison: According to Q2 2025 data from TokenInsight and other providers, crypto derivatives (predominantly perpetuals) on major exchanges typically post trading volumes 10–15× larger than spot. In other words, when spot turnover is USD 10 billion, the perps market may already be printing USD 100–150 billion.

Open interest (OI): For majors such as BTC and ETH, as well as popular new listings, outstanding OI often exceeds the corresponding assets’ exchange balances on spot venues. This indicates that most participants’ risk exposure and capital are deployed on the derivatives side.

Funding rate: For much of this bull cycle, funding rates have stayed persistently positive and elevated. This attracts basis traders who short perpetuals while buying equivalent spot to harvest the funding carry. That flow further siphons liquidity out of the spot market and locks it into hedged positions.

Conclusion. The data clearly shows a structural shift in where capital, attention, and strategic gameplay are concentrated. Perpetuals are no longer an adjunct to spot; they have become the core battlefield driving short-term price discovery. The market has flipped from “spot pulling derivatives” to “derivatives’ PvP dynamics forcing spot to follow.”

“At this moment, spot has, astonishingly, become the ‘appendage.’”

II. Core Mechanism Unveiled: How the “Short-Liquidation Rocket” Launches

An apparent anomaly in this cycle is that price advances often do not start with spot buy-side flow; they are set off by forced liquidations on the derivatives side. This is the core mechanism of the current, perps-led bull market.

Illustrative case: “RocketCoin” (RKT)

Setup.

1. RKT is a hyped new project with an extremely thin initial free float: only 1 million tokens (one-tenth) are in the market. (Assume total circulating supply is 10 million.)

2. An exchange lists a USDT-margined perpetual on RKT.

3. Current spot price: $10.

4. Owing to the “short the new coin” mindset, the perps market has accumulated sizeable short interest. Assume that between $11 and $15 there are shorts with USD 10 million notional (300000 RKT) queued for liquidation.

Launch sequence

1. Ignition: A whale or the project team spends a modest amount on spot — say $200000 to buy 20000 RKT — forcibly pushing spot from $10 → $11. Given the thin order book (low free float), the cost of lifting price is minimal.

2. Stage-1 separation (first liquidation wave): When $11 is tagged, the first cohort of shorts with stops/liq triggers at that level is force-closed. Assume this tranche totals $1 million notional.

Liquidation mechanics. Covering shorts requires buy orders. The liquidation engine must immediately execute $1 million of market buys in the RKT perpetual.

Market-maker hedging. Liquidity-providing market makers that sell into those perp buys will, to avoid being net short via the contract, promptly buy equivalent RKT on spot to delta-hedge.

Price feedback.That market-maker spot demand further lifts an already thin spot market — for example, from $11 → $12.

3. Stage-2 ignition (cascading liquidations): When spot reaches $12, a new, larger wave of short positions is liquidated. The sequence repeats exactly as before: perp liquidations → market-maker spot hedging → further spot price appreciation.

4. Achieving orbit: This loop iterates into a positive-feedback liquidation spiral. Each layer of short wipe-outs fuels the next leg higher, taking RKT from $11 toward $15 and beyond. In the process, the initial $200000 “ignition” crowds in millions to tens of millions of dollars of forced/passive buy-side flow.

Conclusion. This is the simplified essence of a “perps bull market”: exploit extremely thin spot liquidity as a leverage fulcrum; manufacture the opposing side in the perpetuals market (i.e., build up substantial short interest); and let the forced-liquidation mechanism act as the engine that propels prices in a rally that appears to rise “out of thin air.” The spot up-move is better understood as the result and outward manifestation of this process, not its cause. (In practice, of course, the path is far from this smooth.)

III. Why this version? Timing, Infrastructure, and Crowd Alignment

This phenomenon was less visible in prior cycles because multiple forces are now acting in concert:

1. Timing (issuer strategy): Projects this cycle commonly adopt low float, high FDV (fully diluted valuation) issuance. This creates a near-perfect set of necessary-and-sufficient conditions to engineer the spot book and lever into the high-gear perps market.

2. Infrastructure (market rails): Perpetuals have matured after years of iteration: seamless execution, deep liquidity, and robust APIs plus market-making programs allow the venue to absorb massive capital and sustain complex games.

3. Crowd alignment (consensus & narratives):

“Short-the-new-coin” paradigm. The hyped “consensus” proactively manufactures a large supply of fuel (short interest).

Get-rich mythos. Tales of traders turning triple- and quadruple-digit returns keep high risk-seeking players flowing in — especially the high-leverage feats by whales on Hyperliquid, which give ample room for the “get-rich-(or-get-wrecked)” narrative to flourish.

Mechanistic allure. Funding-rate carry trades, liquidation sniping, and other advanced tactics have turned a simple long–short duel into a multi-actor, multi-dimensional financial game, further locking in liquidity.

Epilogue

Please don’t take this too literally: calling the current cycle a “perps bull market” is a tongue-in-cheek label for a deeper structural shift. While it indeed tells a story of wealth creation, it is far more a complex financial parable about leverage, liquidity, mechanisms, and human nature than straightforward price discovery.

In this version of the market, spot functions primarily as the hedging instrument and the ultimate expression of price, whereas perpetuals are the core vehicle that fuses narratives, capital, and market mechanics, truly setting the market’s pulse. Understanding — and adapting to — the rule set of this game, one that “uses your liquidations as fuel,” is essential to traversing this cycle.

Finance, or if you prefer, strategic gameplay, works this way — PvP always introduces new experiences. May we carry a lasting sense of humility and respect toward the market.

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Author | Ivan WuBlockchain

I. Born for the Crypto Market

Perpetual contracts — also known as perpetual futures or perpetual swaps — are an innovative type of derivatives instrument first introduced by crypto exchange BitMEX around 2016. The idea of “perpetual futures” dates back to 1992, when economist Robert Shiller proposed the concept as a means to create tradable instruments for illiquid assets. However, the concept saw little traction in traditional finance until BitMEX brought it to life. In May 2016, BitMEX launched the Bitcoin perpetual contract (XBTUSD), pioneering a futures product with no expiry date. This structure quickly gained traction, perfectly matching the needs of the crypto market. It soon became a standard product across major digital asset exchanges.

The rise of perpetual contracts is closely tied to the unique structure of the crypto market. Unlike traditional markets, crypto trades 24/7 globally, with no closing hours or holidays. In traditional futures, contract expiry and scheduled closures often interrupt trading, while perpetuals are inherently suited for the continuous nature of crypto — investors can open and close positions at any time without constraints. Moreover, crypto assets lack a unified, authoritative spot price anchor — prices are fragmented across numerous global exchanges and highly susceptible to short-term sentiment swings. Perpetual contracts solve this by using a funding rate mechanism to keep contract prices closely aligned with a reference spot index, preventing long-term divergence due to the absence of settlement. In a market without a central closing price, this mechanism acts as a dynamic stabilizer.

Speculation also runs deep in crypto culture. Investors favor high leverage and volatility — perpetuals meet both demands. With built-in leverage, two-way trading, and no delivery requirement, they lower the barrier to entry and amplify exposure. BitMEX saw trading volumes surge following its perpetual launch, establishing its early dominance in crypto derivatives. Today, perpetual contracts are the backbone of crypto derivatives trading, offered by nearly every major exchange.

II. Gambler Psychology and the Dopamine Trap

The popularity of perpetual contract trading reveals underlying traits common to gambling psychology. One of the key reasons gambling is so addictive lies in how unpredictable outcomes stimulate the brain’s reward circuitry. As early as the mid-20th century, behavioral psychologist B.F. Skinner observed that it’s not the frequent wins that keep people hooked, but rather the uncertainty of outcomes. In other words, gamblers don’t stay at the table because they’re winning — they stay because the next result is unknown: “People don’t gamble because they win, but because the outcome is unpredictable.”

This psychological mechanism is tightly linked to dopamine release. Neuroscience has shown that the brain’s dopamine levels spike most intensely in situations where rewards are uncertain. When rewards are predictable and guaranteed, the dopamine response is far less dramatic. The surprise element of an unpredictable outcome triggers stronger neural excitation, making the experience more emotionally charged. This is why casinos design slot machines to operate on highly randomized reward patterns — keeping players locked in cycles of near misses and occasional wins. Each time a player narrowly avoids losing or lands a small payout, the brain’s reward system is reactivated, creating a continuous stream of dopamine that fuels addictive behavior.

Moreover, the pleasure triggered by uncertainty does not require actual rewards to be sustained. In his behavioral experiments, Skinner discovered that variable ratio reward schedules — where rewards are dispensed only occasionally and unpredictably — are the most effective at reinforcing persistent behavior. For instance, when pigeons were given food after pecking a button — sometimes once, sometimes ten times — the introduction of random intervals led to a noticeable increase in both pecking frequency and intensity. What drove the pigeons’ heightened efforts was the anticipation born of uncertainty.

This same principle underpins human gambling behavior. Slot machines are textbook examples of devices that exploit variable rewards to keep users hooked. Since players never know whether the next spin will hit, the ever-shifting hope of a win becomes the most powerful motivator. Some gamblers will continue playing mechanically for extended periods, captivated not by consistent rewards but by the mere possibility of a jackpot.

Neuroscientific research confirms that the brain’s dopamine circuits are especially sensitive to these fluctuating rewards. When outcomes are hard to predict, neural activity surges; when rewards become expected and routine, dopamine responses diminish. This helps explain why gamblers are often fixated on high-risk, low-probability bets: the uncertainty itself becomes a source of excitement, regardless of the actual odds of success.

III. Variable Rewards and the Allure of High-Frequency Trading

The behavior of trading perpetual crypto futures closely mirrors the psychological mechanisms of gambling discussed above. Investors engage in high-frequency buying and selling, constantly facing highly uncertain outcomes in terms of profits and losses. It is precisely this variable reward structure that fuels trading addiction and the compulsive need to monitor the market in real time.

In perpetual futures markets, prices fluctuate rapidly and intensely, with every trade yielding immediate yet unpredictable feedback. This environment is functionally equivalent to placing bets in a casino — traders commit capital to wager on uncertain price movements, hoping for variable and unforeseeable returns. In fact, researchers have compared intraday trading of stocks and cryptocurrencies to gambling addiction, pointing out striking similarities in their psychological profiles: both involve repeated monetary wagers on unpredictable outcomes, producing a stream of inconsistent rewards that typify gambling disorders.

Each time a trader opens their trading app or refreshes price charts, it’s akin to pulling the lever of a slot machine — perhaps they’ll see portfolio gains spike (a small win), or perhaps they’ll witness a sharp drawdown or even liquidation (a loss). It is this intermittent reinforcement loop that keeps many glued to the screen, executing trades compulsively, in search of the next emotional high brought on by price volatility.

It’s worth noting that the design of modern trading software and market information delivery significantly amplifies this addictive dynamic. Mobile trading platforms constantly push price alerts, profit/loss notifications, and other stimuli that keep users tethered to the market. This mechanism mirrors how social media platforms hook users through intermittent rewards. Rapidly refreshing candlestick charts and fluctuating profit-and-loss figures provide traders with a stream of short-cycle, high-frequency micro-rewards and punishments — essentially a series of quick, consecutive “mini-gambles.”

In such an environment, some investors begin to exhibit classic compulsive behavior: obsessively monitoring the market, unable to look away for fear of missing a profitable move. This hypervigilance is indistinguishable from the trance-like focus of gamblers glued to the roulette wheel. In behavioral finance, this is referred to as the “illusion of control” — an inflated belief that constant monitoring and intervention can master an inherently random system.

In reality, uncertainty is the market’s baseline state. Yet it is precisely this lack of control that psychologically drives traders to keep trying, just like the pigeons in B.F. Skinner’s experiments who endlessly pecked at a lever in the hope of receiving the next food pellet.

IV. The Slot Machine That Never Sleeps: 24/7 Markets and the Perpetual Swap

The perpetual swap exists within the 24/7 framework of the crypto market — a structure that further reinforces the gambling-like nature of trading and its accompanying psychological traps. Traditional equity markets have defined opening and closing hours, giving traders natural pauses for rest and reflection. But crypto markets run around the clock, never closing, allowing investors to open and close positions at any time. It’s as if the casino has been placed in everyone’s pocket — bets can be placed at any hour, and the doors never shut.

This always-on environment closely resembles the instant gratification offered by slot machines: there’s no need to wait for others or for scheduled playtimes — just insert your stake and spin again. Likewise, perpetual swap traders can gain or lose money at any moment, with no “halftime break” enforced by the market. This uninterrupted exposure eliminates behavioral friction that might otherwise encourage restraint.

Psychological studies warn that if traditional financial markets were to adopt 24/7 trading, they could trigger public health risks similar to those seen with online gambling. An environment without breaks can significantly exacerbate compulsive trading behavior, allowing dopamine-fueled speculation to spiral unchecked. For retail traders lacking self-control, this continuous accessibility becomes a constant source of temptation. Without weekends or nighttime closures to impose cool-down periods, they may find themselves trading around the clock — leading to both mental and physical exhaustion.

The combination of high leverage and 24/7 accessibility further replicates the classic slot machine loop of “insert coin — pull lever — instant outcome.” Many crypto trading platforms allow users to apply leverage of several times, even up to 100x, magnifying both the gains and losses from each price movement. This mirrors increasing the bet size on a slot machine — both risk and potential reward scale up together, making it easier for participants to fall into the impulse of “going all in.”

In a market that never sleeps, leveraged trading creates a perpetual high-speed game: prices can surge or plunge within minutes, and account balances can change dramatically in seconds. Traders’ brains are kept in a constant state of arousal. As some experts have pointed out, day trading and crypto derivatives speculation share deep psychological similarities with sports betting and casino gambling. In all cases, participants place frequent bets on volatile, short-term outcomes, receive instant win/loss feedback, and are emotionally reinforced by social validation.

Dopamine-fueled emotional swings define the entire experience — anticipation of profit, euphoria upon winning, frustration and denial after losses — all coalescing into an addictive emotional roller coaster. And with perpetual markets running 24 hours a day, that roller coaster is always ready for another ride, with virtually no moment of forced exit.

From the perspective of casino operations, nonstop activity and high unpredictability are key drivers of profitability. Studies show that modern casinos allocate over 80% of their floor space to slot machines and other electronic gambling devices, as these offer purely random payouts that best keep gamblers engaged for long periods. Likewise, crypto trading platforms leverage similar human vulnerabilities by offering high-frequency trading interfaces, leverage tools, and round-the-clock markets — ensuring users always have both the opportunity and the incentive to place another trade.

In crypto markets, the funding rate mechanism requires long and short position holders to periodically pay or receive fees every eight hours. This introduces a layer of micro rewards and penalties during the course of a trade, akin to “interest” that rewards or punishes a position while the trader awaits price movement. While the mechanism is designed to keep perpetual contract prices anchored to spot indices, psychologically it shortens the reward cycle even further — traders receive a mini profit or loss update every few hours (e.g., longs pay and shorts earn under positive rates, and vice versa). It’s reminiscent of a slot machine that offers minor wins or losses every few spins, continually reinforcing user engagement.

Evidently, the 24/7 structure of perpetual contract markets has “gamified” trading behavior to a certain extent: the loop of instant trading, instant settlement, and instant feedback places users in a psychological state akin to that of video gaming or gambling. During periods of extreme market volatility, this structure further encourages irrational decision-making — since a potential windfall or a chance to recover losses can appear at any moment, traders struggle to restrain themselves from acting. As one research report noted, extending trading hours to a round-the-clock schedule significantly increases compulsive trading tendencies among retail investors. Without natural pauses on weekends or at night, many fall deeper into dopamine-driven speculative behavior from which they cannot easily disengage.

Some behavioral treatment centers have already flagged a rise in cases of “crypto trading addiction”: reports indicate that after 2020, around 10% of clients sought help for compulsive trading — a phenomenon that was nearly nonexistent before. This indirectly confirms the addictive risk posed by 24-hour products like perpetual contracts. When financial markets resemble “casinos that never close,” certain participants begin to exhibit symptoms similar to those of slot machine addicts — ultimately requiring professional intervention to escape the cycle.

V. From Rational Trading to Speculative Addiction: How Retail Investors Slip into the Perpetual Trap

From the perspectives of behavioral finance and cognitive psychology, retail investors’ susceptibility to addiction in perpetual contract trading is not merely driven by the lure of profits. A deeper explanation lies in the complex interplay between the brain’s reward-punishment system and cognitive biases. The fluctuating feedback of gains and losses forms a classic “dopamine reward loop”: each time before opening a position, the brain anticipates the possibility of a windfall. Even if the trade ends in loss, the anticipation itself is enough to activate the brain’s reward mechanisms. This mirrors the logic behind slot machine design — where the sensation of “almost winning” is itself addictive, regardless of the unfavorable actual odds. When markets become highly volatile, this heightened state of arousal is amplified. Trading ceases to be a disciplined execution of strategy and instead morphs into a hormone-driven impulsive act.

At the same time, “loss aversion” drives retail traders to resist cutting their losses. The psychological pain of losing is often far greater than the pleasure of an equivalent gain. Faced with a loss, individuals tend to double down to average down their entry, deny the situation, or simply close the app to avoid facing reality — instead of exiting rationally. This hesitation often turns a small loss into a deep, irreversible hole. Conversely, when in profit, the fear of seeing those gains evaporate leads many to close positions prematurely. In contrast, professional traders are more likely to treat losses as part of the planned cost of doing business, adhering to strict stop-loss discipline. This divergence in “emotional resilience” is what ultimately separates long-term outcomes between the two groups.

A more fundamental issue lies in retail traders’ overestimation of their own control. A few short-term successful trades are often misattributed to skill rather than luck, fostering the illusion that the market can be conquered. This “illusion of control” encourages frequent trading, attempting to substitute effort for systematic discipline — only to deepen the trader’s entanglement with market noise. Psychologically, this behavior creates a sense of agency: traders feel they are “in charge of the outcome” rather than subject to market forces. In contrast, seasoned professionals understand that market uncertainty can never be fully tamed. Instead of resisting it, they rely on risk management tools to adapt.

The community environment amplifies individual perceptions. Screenshots of profits posted by KOLs and tales of overnight riches construct an illusory template for success, while FOMO fuels the fear of missing out on “the next 100x token.” Within these communities, structures of recognition subtly reinforce this mindset: failure is romanticized as a style, and liquidation can even be worn as a badge of honor. This group reinforcement makes it harder for individuals to break free — “betting” is no longer a solitary decision, but a form of social participation. And thus, the addiction loop quietly completes itself.

VI. The Chasm in a Zero-Sum Game: Contrasting Professional Trading and the “Retail Perpetuals Model”

In the world of financial trading, a vast gulf separates professional traders from retail participants engrossed in short-term perpetual contracts. The former operate with validated positive expected value (EV) strategies, grounded in statistical edge and disciplined execution, aiming for consistent profits across a large sample of trades. The latter, by contrast, are often lured by the uncertain reward mechanisms of perpetual swaps, turning trading into an impulsive, gambling-like behavior that fuels a cycle of irrational addiction.

A positive expected value (EV) strategy refers to one in which each trade, over the long run, has a mathematically positive expected return. Such strategies rely on repeatable trading edges rather than luck and emphasize winning through probabilities. Professional traders do not blindly gamble — they identify advantaged trades by analyzing market structure, statistical patterns, and fundamental data, seeking opportunities where the odds and risk-reward ratios are tilted in their favor. As long as the strategy has a statistical edge over a large number of trades, even if individual positions incur losses, the cumulative outcome remains profitable. This mirrors how casinos earn by maintaining a probabilistic edge: professional traders strive to act as the “house,” not the uninformed gambler.

Professional traders commonly adopt positive EV strategies such as, but not limited to, the following:

● Statistical Arbitrage: This involves using quantitative models to identify short-term price discrepancies between correlated assets and executing paired trades to capture profits. Typically, the strategy involves market-neutral positions (going long and short on related assets simultaneously) to isolate gains from overall market movements. Profits are earned as the price spread mean-reverts. This strategy usually offers a high win rate but low per-trade returns, requiring high-frequency trading and rigorous risk management to accumulate small wins into meaningful gains. Risk controls — such as stop-losses — are essential to contain losses when model assumptions break down.

● Trend Following: This strategy seeks to profit from capturing mid- to long-term price trends. Traders follow predetermined rules to enter trades when a clear upward or downward trend emerges, and exit decisively with a stop-loss when trends reverse. Classic trend-following emphasizes discipline and systematic thinking — excluding subjective bias and emotional interference by strictly adhering to model signals. Because strong trends often produce large gains that exceed small stop-loss losses, this strategy typically yields a “small loss + large win” payoff structure, resulting in positive long-term expectancy.

● Market Making: Market makers continuously quote both bid and ask prices, aiming to profit primarily from the bid-ask spread. They serve as liquidity providers for the market, earning consistent spread income regardless of market direction through two-way transactions. By managing inventory and implementing hedging strategies, they minimize net directional exposure and reduce the risk of losses from unilateral price movements. This strategy typically boasts very high win rates and extremely small profits per trade, but benefits from high trade frequency and risk diversification, resulting in a smooth and steadily rising long-term equity curve.

● Delta/Gamma-Neutral Options Arbitrage: This strategy seeks to profit from risk premiums embedded in option pricing. Traders construct delta-neutral portfolios (e.g., selling options while hedging with the underlying asset) to neutralize sensitivity to small price movements in the underlying. The focus is then on earning from the time decay of options (Theta) or from changes in implied volatility. By dynamically rebalancing the portfolio to maintain Delta and Gamma neutrality, traders effectively eliminate directional risk and capture returns similar to collecting option “insurance premiums.” As long as implied volatility is appropriately priced, the strategy holds positive expectancy statistically. With built-in hedging, the strategy tends to have controlled volatility, though it requires sophisticated risk management and continuous monitoring.

Despite the differences among the strategies mentioned above, they all share common foundations: rational planning, rigorous risk control, and a long-term perspective. Professional traders apply a slow-thinking, systematic approach to both strategy formulation and execution. They rely on data analysis, model validation, and accumulated experience to act with clarity and intention. Before each trade, they ask themselves: “What is the probability of success? What is the risk-to-reward ratio? What is my contingency plan if I’m wrong?” This emphasis on probabilities and statistical edge transforms trading into a disciplined business endeavor, rather than a game of chance.

At the same time, risk management is the cornerstone of professional trading strategies. Professional traders typically limit the risk of each individual trade to a small fraction of their account (e.g., 0.5% to 2%), ensuring that even a series of consecutive losses won’t significantly damage their capital base. They use stop-losses and position size limits to guard against emotional decision-making, and strictly adhere to predefined strategies. When losses occur, professionals tend to follow their rules and cut their losses, conducting post-trade reviews to learn from the outcome — instead of doubling down in a gambler’s attempt to “win it back.” It is precisely this discipline and self-restraint that enables positive-EV strategies to avoid emotional rollercoasters. For many seasoned traders, trading is more about executing a well-defined plan than chasing excitement — they pursue steady long-term growth rather than short-term thrills.

VII. Do Bitcoin Whales Dream of Genius Traders?

“Getting rich through trading” has been seen as the most direct and thrilling path. One could enter and exit anonymously, without the constraints of trading hours or the gatekeeping of traditional financial institutions. Coupled with leverage tools, near-instant execution, and the ability to go long or short, the crypto market appeared to offer traders a tailor-made arena for “infinite games.” However, this decentralized freedom — alongside the seductive narrative of rapid wealth — has quietly transformed trading into something akin to gambling. Many newcomers to the market believe they are chasing the frontiers of financial technology, unaware that they’ve already fallen into the psychological trap of addiction-driven speculation.

In truth, the development of Web3 has never been solely about speculation. The on-chain world is not just a casino for “24/7 screen-watchers,” but an experimental ground aiming to reshape mechanisms of trust, models of collaboration, and the ownership of data. Innovations like DeFi, DAOs, RWAs, on-chain identity, and privacy-preserving computation all represent evolving frontiers in this space. Perpetual contract trading is merely one subset — albeit a large one with significant participation — but it is not the essence of blockchain, nor is it a path everyone must take. Choosing not to trade, not to leverage, not to chase highs is also a legitimate form of participation. Whether it’s developers getting paid in ETH, DAO community members contributing to governance proposals, or long-term holders treating Bitcoin as a store of value — they don’t need to be genius traders to find their place in this emerging landscape.

What makes the world of Web3 so complex and captivating is that it’s not a world with standard answers. Speculation and construction coexist; narratives and technologies carry equal weight; whales and ordinary people share the same liquidity pool. Some get rich flipping perpetual contracts, while others walk away for good after a single liquidation. Some teams reshape industries by building protocols, while some individuals earn economic rewards through active community participation. Finding one’s own pace and path is the key to long-term survival.

So the next time we open our trading app and search for opportunity amid the flickering red and green candles, perhaps it’s worth asking: has that silent and anonymous Bitcoin whale ever dreamed of becoming a genius trader, grinding day and night in front of the charts?

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