The State of RWAfi | Q1 2026 report is live

Interviewees:
Defining RealFi and the missing links
While the industry is eager to attract institutional capital, the underlying infrastructure must catch up first. Wish noted that RealFi is fundamentally about engaging Web2 institutions, which requires entirely different foundational layers.
"First, compliance infrastructure," Wish explained. "Whether on the regulatory or technology side, how do you handle AML onchain in a way that is as seamless and efficient as what institutions do in Web2 today?"
Beyond compliance, he emphasised the crucial need for data sovereignty and high throughput. Traditional finance requires exceptionally fast infrastructure for activities like high-frequency trading. This is exactly why Pharos built a high-performance Layer 1 dedicated to institutional workloads.
Spencer agreed that the industry is at a transformational moment where real institutions are finally recognising the value of blockchain technology.
"Regulators are paying close attention and beginning to set clearer guidelines, and I actually think that is a good thing," Spencer said. "Having a blueprint to work towards creates more certainty for builders."
Walking in the front door
A recurring theme throughout the discussion was the absolute necessity of regulatory compliance. Spencer outlined Circle's rigorous approach to working with governments globally. The company currently holds 55 licences across major jurisdictions, including Canada, Japan, the UAE, and the EU under MiCA.
"Our approach, as our Chief Strategy Officer Dante always puts it, is that we walk in the front door," Spencer emphasised. "We never try to work around regulations. We go to governments and say we are here, we want to be regulated, tell us how to build in a way that your citizens feel safe."
He noted that institutional capital demands this specific level of security. Institutions have strict fiduciary responsibilities to safeguard user funds, making regulatory credibility an essential prerequisite for participation.
Wish agreed that traditional finance and governments tend to move slowly by nature. He actually views this patience as a major advantage for the blockchain sector. A longer runway gives builders plenty of time to iterate and refine the infrastructure before large capital flows in.
Building the Pacific Ocean
On April 28, Pharos launched its mainnet, aptly named "The Pacific Ocean." The launch marks a significant milestone for the team, turning months of testnet activity and years of hard work into a live financial network.
"Pharos is the Greek word for lighthouse, so the maritime theme runs through everything we do," Michelle explained. "The Pacific Ocean is the largest ocean in the world, and it reflects both our ambitions for scale and our roots."
Wish elaborated on his vision of Pharos as a vibrant on-chain financial city. The core infrastructure is now backed by top-tier providers, forming the physical fabric of this digital metropolis.
To support the city's growth, Pharos has implemented a comprehensive incubator programme. This initiative offers funding for emerging projects, technological assistance, go-to-market advice, and listing support. A dedicated VC fund is also in place to back these projects from early stages to significant scale.
The RealFi Alliance and asset evolution
A core issue in onchain finance is the absence of a unified environment where tokenised assets can truly scale. Wish mapped out the evolution of real-world assets to illustrate this exact problem.
Early on, assets such as tokenised US Treasuries or gold were simply held passively by Web2 investors onchain. Nobody was actively using them as composable financial tools. Wish noted that true utility requires integrating these assets into lending protocols, derivatives, and structured products.
This specific need directly prompted the formation of the RealFi Alliance. The alliance aims to create a unified environment with shared infrastructure and standards. This interconnected network will enable tokenised assets to operate as a complete financial system rather than merely serving as a registry of ownership.
The institutional talent gap
Another major obstacle to wider adoption is the persistent hesitation caused by a substantial skills gap in the market.
"When you are working at the intersection of TradFi and DeFi, you need people who understand both worlds deeply," Wish said. "Right now, there are not enough of them."
He explained that crypto-native developers often lack understanding of how to engage with institutional counterparties. Conversely, traditional finance professionals frequently aim to simply replicate existing systems onchain. This inevitably fails due to completely different risk and permission models.
Circle’s role as the liquidity backbone
As a key partner, Circle provides native USDC and CCTP to Pharos from the outset. Spencer described exactly what Circle looks for before committing to a native deployment on any new network.
“We first examine use cases," Spencer explained. "With Pharos, what immediately attracted me was the AI-first approach, building a network purpose-built for agentic payments and AI-native finance.”
Spencer explained how USDC functions as essential infrastructure rather than merely an asset. Its built-in interoperability enables USDC to move seamlessly across different blockchains. Additionally, the capability to transfer funds into protocols with a single click via CCTP hooks makes it an ideal settlement layer for real-world assets.
Foundations for the AI future
Looking ahead, the collaboration between Pharos and Circle signifies a significant mutual commitment to the future of finance. Both teams are actively setting the stage for a future led by autonomous AI agents and institutional flows.
"Circle is the currency, the blood, of the ecosystem," Wish noted. "Without it, the body cannot function. Having USDC in place before mainnet means Pharos has everything it needs to move freely from day one."
Wish pointed out that Circle's X402 protocol is uniquely positioned to support upcoming AI agent payment flows. Pharos aims to be the most reliable infrastructure for this future, ensuring that when AI agents transact at scale, both the network and the settlement asset are fully prepared.
"More flows will move onchain," Spencer concluded. "AI agents will transact onchain. New products that institutions want to invest in or tokenise will live onchain. Pharos is a place where that can happen."

Interviewees: Defining RealFi and the missing links While the industry is eager to attract institutional capital, the underlying infrastructure must catch up fi

Bridging the Gap: Building the Infrastructure for RealFi

Where TradFi rails meet onchain finance — the missing infrastructure layer

The Interviewees
Redefining the privacy guarantee
The word privacy is used to describe everything from hiding a wallet balance to training an AI model on hospital records. Our panel first sought to clarify what guarantees their respective systems actually provide and how they view the current market.
For Alex, the category itself is the problem. In crypto, privacy has been almost entirely reduced to one narrow function: “In crypto today, privacy is still used mostly for the narrowest possible thing: confidential transfers. That already tells you how early the category still is.” He points to the broader web as a contrast: you get cookie banners and annoying terms of service precisely because you do not want your Amazon history visible to random strangers. Onchain, the opposite norm has been accepted by default. “The harder and more important problem is persistent private computation: systems that can keep state encrypted over time while remaining verifiable.”
Octra’s approach is to make the system verifiable while keeping the underlying data secure and private. In its current mainnet alpha design, the amount and recipient remain private while the sender remains visible.
Alex is also clear about what Octra is not. “Confidentiality that depends on moving execution behind an operator, server, or enclave is useful, but it is not the same as making the system itself private. The stronger model is verifiable computation over encrypted state, where sensitive data does not have to be exposed to operators in the first place.”
Dominik’s framework, which he calls “Practical Privacy,” keeps state and execution private while leaving global inputs public. He is candid about the starting point: Miden launches with a centralised operator, which the team is replacing over time with decentralised sequencing and a network of Guardians operating across compliance zones.
“We’d rather ship something institutions can actually use and decentralise it progressively,” he says, adding that cryptographic purity nobody can recover from when they lose a device is not a product.
For Yannik, privacy is the absolute ability to compute over data without exposing the underlying plaintext to any counterparty, operator, or piece of infrastructure involved in the computation.
Rather than focusing on one narrow form of privacy, Arcium is designed as general-purpose infrastructure for a broad range of applications. The threshold this sets is deliberately low. “Under this model, only a single honest node within a compute cluster is required to preserve privacy,” meaning Arcium’s guarantees hold even when the majority of participants behave adversarially.
The architecture of trust
Every privacy architecture rests on a set of trust assumptions and operational models. These foundational elements dictate how a user interacts with the network and what they must believe about the system’s integrity.
Dominik maps the Miden trust model across four layers: the underlying math, specifically STARKs and the Blake3 or Poseidon hash functions; the implementation code; the network operator while training wheels remain; and the surrounding systems including the bridge and Ethereum itself. “The implementation layer is where most of the real risk lives, and where most bugs hide,” he says. The first and fourth layers are shared with every serious ZK system. The second and third are what Miden is actively working to reduce over time.
Octra is designed to remove privileged third parties at the architectural level. “Our trust assumption sits in cryptography rather than a privileged operator, hardware vendor, or fixed committee.” Keys stay with the user, while computations happen on encrypted data.
Privacy does not depend on trusting the team, a hardware vendor, or any privileged third party. “The key design question for any privacy system is simple: if something fails, who still gets to see the data?” In most systems, the answer is the operator or the enclave owner. In Octra’s case, the architecture is designed to remove privileged access to the underlying data.
Arcium runs computation offchain within MPC clusters of distributed nodes. The core difficulty, as Yannik frames it, is that “private computation is difficult because systems must preserve confidentiality while allowing multiple parties to compute over data.”
Their Cerberus protocol addresses this through a dishonest-majority assumption, keeping committee sizes small without relaxing the security guarantees. Arcium’s Mainnet Alpha is currently operated by independent third-party node operators including Staking Facilities, Triton One, H2O Nodes, and Greenfield Capital, with plans to expand further. Crucially, MPC committees are fully customisable by developers, who can define their own committee configurations based on desired performance and privacy guarantees.
Execution and shared state
Handling state transitions without exposing data is a major technical challenge. The panellists unpacked exactly how their networks process these complex computations in real time.
In Miden, computation occurs locally on the user’s machine. The network receives inputs, a proof, and a new commitment: “We keep the things that matter to users and applications private, and we keep the things the network needs to verify public.” That departure from globally ordered state machines is what makes client-side proving viable at scale. For use cases that do not need privacy, developers can opt into public accounts and notes, and the network handles the compute. That choice is per-account and per-note, not a chain-wide mode.
Dominik also flags a deliberate design decision worth noting: Miden’s note tags are public 32-bit semantic identifiers rather than opaque cryptographic blobs, which means applications like DEXes can route and match private notes by use case. It is a considered departure from fully opaque designs, and it is what makes the execution environment practical for real applications.
Octra, meanwhile, runs computations on the encrypted state. The network never sees the plaintext. “User-side cryptography happens locally, while the network processes encrypted state without requiring plaintext access. The important distinction is that the network’s job is to verify and process state transitions, not to decrypt user data.”
Shared state is managed within isolated execution environments called Circles. Access is defined at the application layer through a proxy or access program, so developers can decide who is allowed to read, write, or trigger specific logic.
Arcium uses Arcis, a Rust-based compiler, to abstract away the complexity of building privacy applications. When a user submits encrypted data, the ciphertext is converted into secret shares distributed across nodes. The result: “each node sees only random-looking data.” No individual node learns anything.
The math works out correctly only when the nodes compute together following the MPC protocol. The underlying blockchain only needs to know the resulting state transitions or outputs of the computation, while the encrypted inputs, execution, and underlying logic remain entirely private.
Unlocking new design spaces
These diverse architectures make entirely new applications viable, moving beyond simple transactions into sophisticated financial and data logic.
FHE’s advantage, for Alex, is composability over time. Most privacy systems today are limited to one-shot use cases: a transfer, a proof, a single circuit. DeFi, by contrast, is composable. “The real unlock is not one-off privacy, but composable privacy over time. If you want financial systems built on encrypted assets rather than isolated private actions, you need infrastructure that can maintain persistent encrypted state across applications. Octra aims to be that infrastructure.”
That combination of composability and persistent encrypted state makes it possible to build entirely new financial primitives for the first time. “A meaningful end state is a trustless onchain market structure that preserves visibility where it is useful, such as price formation, without forcing every order and wallet into public view. That only works when privacy exists at the infrastructure layer, not as an afterthought.”
Dominik points to two concrete unlocks. The first is privacy as a product for custodians. "A custodian can offer clients an account where positions and flows are hidden from competitors and from the custodian's own employees, while the custodian keeps the economics of custody without the liability. That's not buildable on transparent L2s, and it's not buildable on privacy chains with no operator model."
The second is crypto-native SME treasuries. "A company can pay suppliers, run payroll, and manage runway without broadcasting its financial position to competitors, while still producing audit-ready reports on demand. Same cryptography that hides data selectively is what proves compliance without exposing it."
Yannik sees the most significant potential in dark pools and collaborative AI model training. "In blockchain, one example is dark pools, which enable private order placement and execution. They are common in traditional finance due to improved price execution, but remain largely absent in crypto because transparent blockchains expose trading intent and order flow." Arcium "allows multiple parties to train shared models on sensitive datasets without exposing the underlying data to one another," opening a design space that has had no viable onchain equivalent until now.
Yannik also points to teams already building in this space: "sealed-bid fundraising auctions through teams like Crafts, shielded pools for private onchain finance through Umbra, and entirely new market structures such as opportunity markets being developed by Bench."
The AI and encrypted compute intersection
The rise of AI creates an urgent need to compute on sensitive data at scale. The panel explored whether private data availability or private computation itself is the more pressing unsolved problem.
For Alex, the answer is unambiguous. “The best data is usually the least shareable. In practice, the real bottleneck is not model architecture, but whether computation can happen on data the holder is not allowed to reveal. Once that becomes possible, privacy stops being only a defensive feature and becomes an engine of growth. We at Octra see this as growing the pie, not just competing with other protocols.”
Yannik agrees that private computation is the harder unsolved problem. "Storing or distributing encrypted data is relatively well understood today, but making that data meaningfully usable without decrypting it, particularly in multi-party environments, remains a fundamentally difficult challenge." Through Arcium's acquisition of Inpher and the integration of the Manticore protocol, an MPC protocol specifically designed for AI and machine learning workloads, the network is directly addressing this gap. "Computation is what transforms private data from something merely stored into something economically and functionally useful."
In the near term, Yannik expects the strongest demand around specialised machine learning models and inference on sensitive datasets rather than frontier-scale models. The healthcare sector is a concrete example: "healthcare data is often siloed across separate hospitals and institutions, but with Arcium these parties can jointly train models or generate predictions across collective datasets without exposing the underlying data to one another."
Dominik is more blunt. “I’ll be direct: most blockchain for AI training narratives are investor theatre. I’ve never met a serious AI researcher who thinks a blockchain will make their model better.”
The genuine opportunity, in his view, is narrower and more interesting: once agents hold capital and transact autonomously, “they need to settle without leaking strategy, and they need counterparties to verify what happened without replaying the whole interaction. That’s a real problem and Miden is well-suited to it.”
Tradeoffs and the friction of privacy
Despite the massive potential, building these systems involves significant technical constraints. The panel discussed where privacy guarantees tend to erode and what developers must actively optimise for.
"Pure privacy is hard to use. Users don't want to wait twelve seconds for a proof in their browser," Dominik says. Miden's response is delegated proving and account Guardians. "Every one of those conveniences is a place where a purist would say privacy erodes. We think the alternative, which is cryptographically perfect systems that nobody can actually use, isn't a real product."
He is equally direct about the near-term constraints: "Three things: The compiler pipeline is complex because the architecture is novel. Tooling is still maturing. And client-side proving adds latency, which rules out some use cases today, high-frequency trading most obviously."
Alex locates the failure point elsewhere. “Privacy systems usually fail at the edges rather than in the core cryptography: wallets, metadata, relayers, bridges, permissions, analytics layers. That is where supposedly private systems often step back into plaintext for convenience.” Octra eliminates some of that risk by using a vertically integrated proprietary stack and minimising dependence on external vendors.
The current constraint is not whether the system works, but the latency of proof-heavy actions on weaker devices. The next optimisation focus is reducing that overhead.
For Arcium, the most significant constraint is the communication overhead inherent to MPC: latency and coordination costs rise as more nodes participate. "Dishonest majority helps us here, as it allows us to maintain low trust assumptions with smaller committee sizes compared to traditional honest-majority protocols, helping reduce coordination overhead while preserving strong privacy guarantees."
Yannik is also candid about where guarantees erode in practice. "For some applications, such as shielded pools, privacy can depend partly on anonymity set dynamics. If a user enters and exits the pool immediately, the practical privacy guarantees may weaken even if the underlying cryptography remains sound." In other cases the failure point is elsewhere: "privacy may have less to do with the underlying data itself and more to do with protecting surrounding information relevant to the user's privacy goals, such as metadata."
Composability and ecosystem fragmentation
A major concern with privacy networks is the risk of liquidity fragmentation and user siloing. To succeed, these private layers must communicate seamlessly with the broader public web.
Miden's position is straightforward: do not try to pull liquidity in. "We lean into cross-chain. That's the honest answer to the fragmentation problem: don't build another island."
With AggLayer integration nearly complete on devnet and engineering work on NEAR Intents underway since March, the vision is Miden as a privacy layer that connects to where liquidity already lives. "The vision is cross-chain from day one: secure your funds on Miden, use DeFi privately on other chains. Hyperliquid as the execution venue, Miden as the compliant private mixer in front of it."
Alex describes Octra’s posture as deliberately neutral. “Our view is that privacy infrastructure should be neutral and easy to integrate. The goal is to publish usable specifications, reduce onboarding friction, and let developers adopt it where there is real demand.”
The endgame is neutral infrastructure for encrypted data, with no bias or preference. “Whoever provides data for computation, or routes transactions through Octra, that is aligned with the model.”
For the Uniswap CCA sale, the team built an Ethereum bridge. A number of larger projects outside crypto, including messaging applications, have also reached out. But the BD-free approach is the stated goal: let the specs do the work.
Arcium's answer to fragmentation is structural: the network is chain-agnostic by design and does not require users to migrate liquidity into a separate environment. "We believe users want privacy integrated into the ecosystems they already use, rather than being forced to migrate liquidity and activity into separate environments that often lack deep liquidity, active developer ecosystems, and mature applications."
While Arcium is currently live on Solana, Yannik is clear that this is merely its initial deployment environment. "Arcium is not itself a blockchain, but an independent encrypted computation network that leverages existing blockchains for coordination, orchestration, and cryptoeconomic enforcement." Because computation is separated from coordination, Arcium can integrate across multiple ecosystems over time and support encrypted computation use cases entirely outside blockchain.
The path forward
Looking to the future, the panel discussed whether the industry will converge on a single dominant primitive or adopt a layered approach.
Yannik expects a deeply layered stack rather than a single dominant primitive. "Client-side zero-knowledge cryptography offers the lowest possible trust assumptions, but is limited to proving or verifying isolated user state and individual assertions rather than managing encrypted shared state across many participants. MPC and FHE, by contrast, enable computation over encrypted shared state, unlocking a wider design space of applications."
For Arcium, the current position is that MPC offers the strongest balance, but Yannik is clear that the stack is still maturing: "We believe privacy-enhancing technologies will occupy distinct and complementary roles rather than converging around a single dominant primitive, as each approach carries different functionality, trust assumptions, and performance characteristics.".
Dominik frames the outcome as a question of whether blockchain architecture itself is willing to evolve. FHE and MPC retrofit the existing model: they layer on top of Ethereum's current state and execution architecture without changing it. ZK requires rethinking it from the ground up. "If we're willing to rethink state and execution, ZK becomes dominant, because you stop needing to encrypt what was never public to begin with."
Miden's own architecture is built on exactly that bet. "Every other major L1 and L2 inherits Ethereum's synchronous, globally ordered state machine. Miden treats accounts as independent actors with local state and asynchronous messages. The actor model is closer to how the real world works, and it's what makes client-side proving viable at scale. It was the harder path. It's also the reason we can credibly claim 500 to 1,000 TPS while keeping state private."
Alex closes with the open question the whole piece has been circling: “Because native encryption is still missing from most programmable blockchains, and programmability remains limited across many private systems, the market will likely converge on external privacy infrastructure. Our thesis at Octra is that this becomes a general-purpose layer for applications, agents, and autonomous systems.”
How that question resolves will determine not just which infrastructure wins, but what the private web is ultimately capable of becoming. The race is still on.

The Interviewees Redefining the privacy guarantee The word privacy is used to describe everything from hiding a wallet balance to training an AI model on hospit

Building the Private Web: Expert Perspectives on ZK, FHE, and MPC

What ZK proofs, fully homomorphic encryption, and MPC each unlock for onchain privacy

About the Author: Juan Manuel Pellicer is VP of Research at Sentora, where he designs quantitative yield strategies, builds HFT/MEV systems in Python, and develops risk models for top DeFi protocols. With experience evaluating 50+ protocols and working across on-chain and off-chain data, he brings a sharp technical and strategic edge to decentralised finance.
For years, DeFi vaults competed on a single metric. That metric was the wrong one.
DeFi vaults were sold on a simple premise: deposit assets, let the strategy do the work, and collect the yield.
That pitch is powerful. It makes onchain finance feel accessible and wraps complexity in a cleaner user experience. For a while, that was enough. However, the category has since outgrown that initial threshold.
The next era of DeFi vaults will be won by products that treat yield as a byproduct of disciplined infrastructure, leaving behind the flashiest APY chasers. In other words, the future of DeFi vaults lies in risk-aware automation.
DeFi has matured beyond the point where users can pretend a vault is simply a smarter wallet. A vault is an active financial product. It makes decisions about collateral, liquidity venues, leverage, concentration, execution paths, and timing. It embodies a risk policy, whether explicit or not.
Too many vaults still operate as if strategy were the product and risk were an appendix. The better view is the opposite: risk management is the product, and yield is the outcome.
Automation as the operating system
The first generation of vaults automated simple actions. They rebalanced positions, rolled rewards, moved liquidity, and harvested yield. The next generation will go further, asking more complex questions:
What is the liquidity depth here? 
What happens in a stress unwind? 
How correlated is this exposure to the rest of the book? 
What is the health factor buffer? 
How quickly can capital exit if market structure changes?
This represents a shift from passive automation to complex automation. This is how mature financial products are run elsewhere, and DeFi vaults are finally moving in that direction.
And they have to. The promise of a non-custodial vault is that capital operates under transparent, programmable rules. The quality of those rules is about to become the main competitive differentiator.
Metrics over marketing
DeFi users are often told that a vault is "conservative," "delta-neutral," "institutional," or "risk-managed." While these labels carry some meaning, they fall short of what users actually need.
The future of vaults will require a much more legible risk interface.
Users should be able to see the metrics that matter: liquidity conditions, concentration exposure, leverage profile, collateral quality, duration mismatch, sensitivity to rate changes, cross-asset correlation, and the health of the protocols underneath the strategy.
This belongs at the product's center, not buried in a dashboard that few users open.
A user choosing between two vaults should be able to compare risk posture as directly as they compare yield, relying on clear data rather than inferring safety from branding, TVL, or social reputation. In fact, DeFi probably needs to retire headline yield as the default sorting mechanism altogether.
A better vault interface would display a return's architecture alongside its projected size. What assumptions underpin it? What could break it? What buffers are in place? How quickly can the strategy rotate? What share of the yield comes from durable cash flows versus temporary incentives? As DeFi grows, opacity becomes less acceptable.
The evolution of Strategy discovery
DeFi has outgrown the manual era of strategy discovery. Most vault products still rely on small teams to identify opportunities through intuition and fragmented data. This approach was reliable when the ecosystem was smaller and the menu of viable strategies was narrow.
The ecosystem now spans dozens of protocols, multiple chains, and specialised restaking systems. The opportunity set has exploded, while human bandwidth has reached its limit. Scaling a manual model is difficult when managing isolated lending markets and increasingly complex forms of collateral.
The future vault stack requires a dedicated intelligence layer to continuously scan onchain markets for risk-adjusted opportunities. This system must evaluate deep variables, including price impact, liquidity fragmentation, oracle risk, and collateral reflexivity. This represents a fundamental shift in how we approach asset management.
In this new environment, the strongest vaults will be those powered by the most efficient discovery engines. They will surface opportunities earlier, identify fragile yield faster, and adapt portfolios the moment risk parameters change. Success will belong to the platforms that can process the entire ecosystem in real time.
The next frontier: AI-assisted curation
Eventually, vault automation and risk dashboards will converge into something more powerful: AI-assisted vault curation. This means using AI to make curation more intelligent and adaptive while keeping human judgment firmly in the loop.
An AI layer can monitor thousands of dynamic inputs across protocols and assets. It can detect patterns humans miss. It can flag weakening market structure, identify emerging concentrations, simulate stress scenarios, and rank opportunities by risk-adjusted quality rather than superficial yield. Over time, it will become the research and surveillance layer behind vault management.
That matters because curation is increasingly becoming the abstraction layer where value sits in DeFi. As base protocols become more modular, differentiation shifts upward. The protocol provides the rails, but the curator decides how to use them. The winning model will be a hybrid: machine speed paired with human accountability.
Building a durable foundation
In the near term, vaults must pair automation with discipline and make risk understandable. Better execution and more intelligent strategy selection are what will separate durable products from temporary hype.
Over the long term, vaults have the potential to become one of DeFi's most important abstractions. They will be intelligent, always-on capital allocators built for a market that is too fast to navigate manually.
As strategy discovery becomes more data-driven and AI-assisted curation becomes part of the stack, vaults can evolve from simple yield wrappers into adaptive financial infrastructure.
The winners will be those who build the best systems for judgment at scale. The future of DeFi vaults is about building products users can trust in an environment defined by constant change.

About the Author: Juan Manuel Pellicer is VP of Research at Sentora, where he designs quantitative yield strategies, builds HFT/MEV systems in Python, and devel

Opinion: DeFi vaults need to grow up. Here’s how

We caught up with Arthur Katz, Chief Investment Officer at [OneAsset](https://oneasset.io/), during EthCC to discuss this exact challenge. We talked about how his team is actively addressing the liquidity issue and bringing commercial real estate into the global digital economy. With over a decade of experience in venture capital, commercial real estate, and digital assets, Arthur offers a unique perspective. Having supported unicorns like Stripe and Algolia while managing family office real estate portfolios, he gains a deep understanding of the distinct risk profiles across various asset classes. At OneAsset, he actively ensures that only pristine, high-quality assets are tokenised onchain, safeguarding users from platforms that treat Web3 as a dumping ground for unsellable properties.

Real estate is the world's largest asset class, yet it remains painfully illiquid and inaccessible to the average person. Investors are often locked into long fund cycles or forced to navigate complex, slow-moving property sales.
Read our conversation below to learn how he is applying rigorous institutional standards to tokenised real estate.
You have been in crypto since 2013 and spent just as long in real estate. What problems in property markets convinced you that tokenisation is the fix?
The main issue is liquidity. Real estate assets are inherently illiquid due to their structural characteristics. You either invest through a fund and wait for a full cycle to recover your money, or you sell the property outright.
Selling takes time, regardless of motivation, due to country-specific legal frameworks and deal structures.
Tokenisation significantly enhances the liquidity and speed of asset transfers. That is the most substantial improvement RWA offers to real estate.

You backed Stripe and Algolia before they became household names. How does the risk profile of a tokenised commercial property compare to an early-stage venture bet?
They belong to entirely different categories. Venture capital is binary; you either achieve a massive return or end up with nothing. To succeed in VC, you need to invest in many companies, make bold bets, be contrarian, and focus on the numbers.
If you do not invest in enough companies, your chances of recouping your money approach zero. Commercial real estate risk is entirely different. First, you have a yield. Even if the property does not appreciate as quickly as you would like, you are still earning rent regularly.
Second, properties very rarely disappear. Startups can fail for reasons no due diligence could have foreseen. Real estate provides tangible, enduring value and strong capital preservation.
The timeframe also varies considerably. A VC fund locks you in for seven to ten years, whereas you are not required to hold commercial real estate for that long.

Having participated in over a hundred early-stage deals and managed commercial real estate portfolios, what criteria must a tokenised property meet to pass the same due diligence as in traditional markets?
The underlying asset undergoes the same due diligence whether it is tokenised or not. What is added on top is the legal layer. We assess the legal framework surrounding the token and verify that the vehicle genuinely owns the asset.
We also ensure that the asset is retained and that proceeds flow back to the investor if the property is sold. This is the only incremental difference in due diligence between conventional commercial real estate and the tokenised version.
The answer to that incremental question depends heavily on regulation. Navigating strong regulatory frameworks is challenging and costly. However, it provides the absolute certainty that what you’re investing in is authentic.

A good yield is easy to pitch, but when you factor in property management fees, vacancy rates, FX costs, and platform fees, which figures truly represent value at OneAsset, and how does that compare to a traditional commercial property investment?
At OneAsset, we only communicate in net figures. I don't care if a property shows a 15% gross return if, after fees, you are receiving only 6%. The only number that matters to the investor is what they actually receive, and we communicate that transparently.
You should also remember that yield is just one variable. In this asset class, property appreciation also matters. Sometimes you will find an asset with a lower yield but strong projected appreciation, and other times you’ll find the opposite.
The right answer is always a balance between the two. As a general principle, wherever the risk is higher, the reward will be higher somewhere within the structure.

Is OneAsset building toward a diversified multi-property vault structure, or will the model always be single-asset vaults so investors can construct their own exposure?
We believe investors should build their own exposure. Our default approach is to focus on single economic units, though not necessarily single titles. For instance, an office building with four parking spaces might have five separate legal titles, but it operates as a single economic unit.
We package those cohesive units as a single token. We do plan to introduce pooled vaults in the future, but we are extremely cautious about how those are structured.
We explicitly avoid the practice of bundling strong assets with weak ones to shift inventory. That approach is common in traditional real estate securitisation, and we refuse to partake in it.

Traditional real estate valuation is periodic, with quarterly appraisals and no real-time prices. OneAsset uses Tokenised Asset Value alongside Gross Asset Value to offer continuous onchain pricing. How does this affect an investor managing a position?
I approach price discovery and secondary market liquidity with cautious optimism. If investors can rebalance their positions, exit when necessary, and buy over shorter time horizons, we will see an open market with prices established in real time. Order books for real estate will eventually follow suit.
We have intentionally designed our yield distribution to support this. We distribute yield daily instead of on a fixed schedule. This prevents the typical pattern of buying before a yield distribution date and selling the day after.
That pattern creates artificial price spikes. At OneAsset, you can claim your yield daily. You are never stuck waiting for a distribution event, and you can sell whenever you wish because your accrued yield is already claimable.

DefiLlama currently tracks 13 tokenised real estate assets, of which only one provides an attestation record for compliance purposes. Where does OneAsset stand, and what does a proper attestation look like for tokenised real estate?
Honestly, it's hard to see how anyone can invest in an asset without that documentation. At the very least, you need proof that the vehicle owns the property. That is simply essential, but we aim to go much further.
We are currently collaborating with one of the top global insurers to develop insurance products specifically for real estate RWAs. The insurer will independently confirm the existence of the underlying asset.
If the asset ever disappears, the investor is fully compensated. That is the next layer of protection the market desperately needs and largely lacks right now.

What are the biggest risks if attestations remain absent across the market?
You end up investing in empty shells. If there is no attestation confirming that the underlying asset is genuinely owned by the token structure, the system becomes entirely vulnerable.
Anyone can claim ownership of a landmark building and just take the money, which is a simple form of fraud. Currently, the market has very few protections against this.

How do you see real estate onchain in five years?
We must separate residential and commercial properties because they serve distinctly different asset classes. Residential real estate is culturally resistant to change, with a deeply ingrained belief in owning the place where you live.
That cultural shift will take significantly longer than five years. Commercial real estate tells a completely different story. The way companies account for investments and the sheer cost of buying and selling commercial assets heavily encourage flexible ownership structures.
In five to ten years, it will be completely normal for an office, a farm, or a clinic to be a token held by hundreds of thousands of people.

Will tokenisation lower barriers between countries? Currently, investing from France into Italian property involves banking complexity, regulatory friction, and market opacity. Does tokenisation foster a more harmonised global market?
Absolutely. From a regulatory standpoint, it is already achievable today. At OneAsset, we have a KYC process and a list of excluded jurisdictions, mainly sanctioned countries. Beyond those restrictions, investors can access assets worldwide from the very first day.
Tokenisation changes beyond legal access are purely informational. In a typical cross-border purchase, you need to visit the property and accept that you might not fully understand local liquidity conditions well enough to exit safely.
Onchain, the liquidity is entirely transparent. The history is verifiable, and you have a real-time view of market conditions across weeks, months, and years. This fundamentally alters the calculus for cross-border investment.

Do you believe in DeFi built on top of RWA? And what excites you most about where RWAfi goes from here?
The token unlocks mechanisms that were simply impossible before. The clearest example is using your property tokens as collateral for a loan. In traditional finance, this is a slow, document-heavy process known as a Lombard loan.
Onchain, you transfer your tokens as collateral, receive capital immediately, and easily retrieve your collateral upon repayment. We can take that even further with flash loans on real estate.
Requesting a bank loan that only takes a few seconds is impossible. In DeFi, it serves as a real financial primitive. Innovative developers will explore these capabilities in ways we haven't anticipated, making the protocols built on real-estate RWAs incredibly exciting.

Is there anything else you would like to add that we haven't covered?
Many platforms in the tokenised real estate sector are operated by individuals from the traditional industry who possess extensive inventories of assets they cannot sell offchain.
They are turning to RWA solely because they see it as a means of rebranding to shift assets that failed in traditional markets. This causes three major issues for the ecosystem.
First, if those poor-quality assets are sold onchain, investors will lose money and blame the infrastructure, harming the entire sector. Second, flooding the market with low-grade assets makes it very challenging to find truly good ones.
Third, the platforms engaging in this often have the most superficial credibility because they have established contractor relationships and recognisable industry names behind them. Trust is everything in crypto. The sector must be rigorous about what gets put onchain.

Real estate is the world's largest asset class, yet it remains painfully illiquid and inaccessible to the average person. Investors are often locked into long f

OneAsset CIO on fixing real estate liquidity and avoiding toxic assets

We recently spoke with Dominik Clemente, a Research Engineer at the [World Foundation](https://world.org/) operating under the pseudonym dcbuilder, about the evolving landscape of digital identity, agentic coding, and the critical need for "proof-of-human" primitives.
He focuses on protocol research and engineering, the decentralisation of the World ecosystem, and initiatives that support the project’s mission. His broader interests include programmable cryptography, Ethereum, distributed systems, and decentralised AI. Outside of the World project, he is a co-organiser of ETHPrague, an active angel investor, and an advisor to various projects across crypto and AI.

Read more about his insights on the launch of AgentKit and the future of the internet below.
You've worn a lot of hats: building open learning resources, engineering core protocol infrastructure, and now working on decentralisation and grants. What ties it all together for you?
I consistently gravitate toward problems where I can drive the highest impact. That focus has taken many shapes over the years, from education and protocol engineering to decentralisation and proof-of-human. I simply love seizing massive opportunities.
Recently, I stepped back into hands-on engineering. The incredible leaps in agentic coding since late 2025 made that decision very easy. We can iterate so much faster now. Complex issues that used to stall us for weeks get resolved in a few hours.
This shift completely redefines what a solo engineer can accomplish. There has never been a better time to be an active builder in this space.

You were an advisor at Modulus Labs, which was developing ZK-based AI accountability before being acquired by TFH in late 2024. How much did that experience influence your thoughts on the AI identity problem that AgentKit is now attempting to address?
I have been focused deeply on agents, identity, and cryptography ever since joining World. Early on, I worked on ZKML experiments, and building those initial learning resources is exactly what connected me and Tools for Humanity (TFH) to the Modulus team.
Modulus, which is now part of the TFH Applied Research team, was one of the few groups exploring verifiable and accountable AI systems from the very beginning. That experience strongly reinforced a core idea for me. Without solid proof-of-human primitives, reasoning about accountability in an agent-driven world becomes extremely difficult.
The combination of programmable cryptography, identity, and AI is incredibly powerful. Technologies like ZK, MPC, and TEEs will absolutely materialise into foundational layers over time.
AgentKit builds directly on that exact foundation. We initiated it to explore how to successfully prove an agent is acting on behalf of a real human. We designed it to be technically sound while remaining highly practical for real-world products to implement.

AgentKit launched last week. What was missing in the x402 standard that made this the right moment to build it?
The x402 standard is highly effective at managing payments between agents and services. It allows any agent with a wallet to make programme-driven payments for access. The key missing element is identity. The standard entirely overlooks the question of who is actually operating the agent.
This creates a massive problem in constrained systems like ticketing. When agents can autonomously pay, they can easily monopolise scarce resources. Relying solely on a payment layer simply cannot enforce fairness or equitable access.
We designed AgentKit to introduce proof-of-human as a required complementary primitive. It enables platforms to enforce rate limits or allocate access strictly on a per-human basis, even when agents are performing transactions on someone's behalf.
As agents rapidly become the default interfaces to the internet, proof of human identity becomes an essential prerequisite. Every system managing limited resources needs this basic layer to ensure fairness.

Coinbase's x402 processed 100 million payments in its first six months. That's fast adoption. Why did World choose to build on top of x402 rather than develop its own payments layer?
We prefer building on open standards rather than fragmenting the ecosystem. The x402 standard already gained early traction, boasting strong distribution through Coinbase and Cloudflare alongside a growing set of integrations.
That existing momentum made it a natural foundation. Our primary focus with AgentKit is on developing proof-of-human primitives for agents.
Layering that functionality onto an existing payments standard accelerates adoption across the board. It is far more effective than competing to establish a redundant payment network.

A small number of actors deploying agent swarms to distort engagement metrics is already a documented problem. How much did watching that play out in the wild shape AgentKit's design?
This directly influenced the design of AgentKit. In early agent-driven platforms like Moltbook, two destructive patterns emerged. We observed humans pretending to be bots and others running large bot networks.
Both behaviours artificially distort metrics and severely degrade the core product experience. That made it perfectly clear that attribution is of utmost importance.
Without a dependable way to associate activity with individual humans, digital systems become impossible to understand.
AgentKit enables that crucial attribution at the level of individual humanness. It achieves this while staying fully privacy-preserving and anonymous, effectively protecting users from spam and Sybil attacks.

Micropayments slow down bad actors, but don't solve the uniqueness problem. In practice, how do you expect platforms to weigh the two? Will most use both, or does proof-of-human become the stronger default?
Payments successfully introduce friction through cost. However, they lack the ability to enforce uniqueness on their own. Proof-of-human provides absolute uniqueness without adding any financial burden to the user. We will see the most robust systems requiring both mechanisms to work in tandem.
The ideal implementation relies entirely on the specific use case. Certain products inherently require a transaction fee, while others will remain completely free and rely solely on proof of human verification to manage access.
High-demand scenarios, such as ticket sales, absolutely mandate both elements. Combining a financial cost with verified human identity effectively neutralises spam attacks. It stops swarms of automated agents from hoarding scarce resources, regardless of their willingness to pay the fees.

The beta requires a verified World ID, which means access to Orb. Does AgentKit's thesis depend on World solving distribution first, or is there a credible path to scale without it?
Future versions of AgentKit will support multiple verification methods, including World ID Credentials, e.g. via NFC-compatible passports.
The ultimate goal is to move beyond any single verification method. We are merging multiple high-quality signals into one unified proof-of-human layer.

AgentKit 1.0 is tied to the World ID 4.0 rollout. What's the dependency there, and what does 4.0 change that makes a more robust version possible?
World ID 4.0 will vastly improve both usability and decentralisation. Users gain access to advanced features such as account abstraction, key rotation, and account recovery, making the proof-of-human layer far more resilient.
Simultaneously, third parties can now build their own authenticators. This reduces reliance on a single client and greatly improves user privacy. AgentKit benefits directly from both of these major upgrades.

World describes AgentKit as a layer that can sit alongside other identity systems. But if agentic commerce standardises around a single proof-of-human primitive, there will be one winner. Why should it be World ID?
Like x402, World ID functions as an open standard that anyone can contribute to. As it establishes itself as the leading standard, third parties will naturally collaborate, contribute, and build upon it.
We are building an open, flexible standard that offers strong privacy protections and is widely accessible. Because this maximises utility for our partners and relying parties, adoption will naturally follow.
The system must stay open, decentralised, private, and fully interoperable. Proof-of-human is too fundamental to be controlled by a single closed platform. These values are absolutely essential for achieving widespread adoption.

Five years from now, what does the internet look like if AgentKit and proof-of-human become foundational infrastructure, and what does it look like if they don't?
Agents should act as a layer that enhances human capabilities rather than replacing them. This leads to quicker markets, more effective coordination, and systems managing complexity on your behalf, all firmly rooted in real human intent.
Failing to solve proof-of-human guarantees the opposite. We risk creating an environment where telling real participation from synthetic activity becomes impossible.
That complete erosion of signal destroys trust across platforms and renders meaningful interaction impossible. It steers the internet directly towards the "dead internet theory" scenario.
The key difference lies in anchoring agents to humans in a credible, verifiable manner.

Read more about his insights on the launch of AgentKit and the future of the internet below. You've worn a lot of hats: building open learning resources, engine

World Foundation Research Engineer on Agentic Coding and proof-of-human

iYield is the first comprehensive financial planning tool designed for crypto natives born out of necessity. Managing crypto assets across a rapidly evolving, cross-chain ecosystem is cumbersome, notoriously complex, and involves tracking spreadsheets, countless wallets, and navigating various dashboards. The Founder, Gentleman James, set out to build a purpose-built personal finance platform that streamlines the ability to monitor a digital and traditional asset portfolio. This report will cover iYield’s unique features and competitive advantages, outlining how it simplifies financial planning and empowers users across web3.
Key Features
iYield is a free crypto financial planning tool designed to improve the average crypto investor’s user experience. It merges crypto and offchain assets into a comprehensive Dashboard. Integrated across 17+ blockchains, 40+ DeFi protocols, and with access to 16,000+ tokens, iYield supercharges users’ ability to monitor their portfolios tailored to financial goals. Powered by iYield’s standardised yield reporting, which ensures precise portfolio tracking. When combined with iYield’s budgeting tools, iYield’s Dashboard allows users to achieve a 360-degree view of their net worth with iYield’s Dashboard.
Spaces (Multiple-Portfolio Management) 
Spaces on the iYield tool serve as independent financial portfolios, allowing users to segment their assets, liabilities, and budgets to reflect different economic goals. Each Space functions as a standalone portfolio, displaying its net worth, composed of onchain and offchain assets, debts, income, and expenses. Users can create multiple Spaces and edit, duplicate, or remove them to fit their strategy and objectives.
The ability to create multiple Spaces offers a structured approach to monitoring active and/or hypothetical portfolios, personal or business Each Space can be personalised with unique names and custom icons, making portfolio management more personal and intuitive. By duplicating a Space, users can develop new trading strategies to track different financial scenarios while preserving the composition of their actual portfolio holdings.
Spaces provide a clear and efficient framework for tracking and analysing multiple financial portfolios within a single iYield account. They ensure that users maintain clarity and control over their diverse financial activities while eliminating the confusion of overlapping assets and liabilities.
Data Integrations and Support
iYield supports the constantly evolving crypto landscape by integrating with leading blockchains and DeFi protocols. Users can link their web3 wallets and search wallet addresses to import asset balances, staked positions, and DeFi yield data automatically or manually.
Beyond self-custodied assets, iYield enables traders and long-term investors to track holdings across centralized exchanges (CEX) within a single interface. iYield’s Binance integration now includes full support for funding wallets and Simple Earn vaults, tracking both locked and flexible income models. It also provides comprehensive tracking for margin wallets, including debt and balance monitoring, as well as USD-M and COIN-M futures wallet balances.
For Coinbase and Bybit, iYield supports the tracking of spot balances, ensuring users can consolidate their portfolio data with accurate, real-time updates. By prioritizing secure and automated integrations, iYield streamlines portfolio management, making crypto financial planning more efficient.
Supported Blockchains
The iYield Team prioritises blockchain support based on demand, integrating with over 15 blockchains. These include: Bitcoin, Ethereum, Solana, BNB Chain, Avalanche, Fantom, Base, Arbitrum, Optimism, Polygon, Thorchain, Zcash, Dogecoin, Litecoin.
More chains will come onboard as iYield reviews feedback on new features and support requests.
Supported Wallets
iYield supports a range of Web3 browser wallets. Users can connect, manage, and track their crypto assets across multiple wallets. Supported wallets include:
By integrating these wallets, iYield provides users transparency into their onchain portfolios, ensuring seamless integrations and a portfolio tracking experience that’s easy to navigate.
Each wallet offers different capabilities, such as multi-account management and direct sign-in options. The table below highlights the features of supported Web3 browser wallets.
iYield allows the simultaneous connection of multiple accounts, such as Brave Wallet and MetaMask, without disrupting functionality and connectivity. The platform automatically detects the active wallet set by the browser but allows users to toggle or turn off specific wallet extensions to prevent unwanted auto-detection. This feature ensures that users retain complete control over their wallet interactions.
Supported Protocols
iYield supports most of the leading DeFi protocols, including: Aave, Uniswap, Compound, Curve, GMX, Pendle, Eigenlayer, SushiSwap, Sommelier and others.
This allows users to monitor their APY, validator rewards, and restaking yields directly within the platform. Additionally, iYield tracks Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs), integrating with Lido, Rocket Pool, Frax, Ether.fi, and other major staking and restaking protocols.
Dashboarding
Each Space in iYield includes a Wealth and Budget Dashboard built from Assets, Debts, Incomes, and Expenses that users can add or integrate. These financial inputs form the foundation of each Dashboard, providing a visualisation representing a user’s net worth, savings rate, capital efficiency, and overall financial health.
Assets and debts fuel the Wealth Dashboard, where users can add new items to a Space with the ability to specify a preferred fiat currency. They can also apply custom tags, for example, ‘Fiat,’ ‘Locked,’ ‘To Sell.’ This allows users to easily track assets, manage debt, and assess financial efficiency. The Wealth Dashboard empowers users to organise or filter their holdings accurately.
These tracking inputs feed into key Wealth Dashboard metrics, capturing a snapshot of a user’s: Net Worth, Capital Efficiency, Return on Assets (ROA), Return on All Assets, and Asset Allocation. This offers a real-time portfolio overview. Using tags enhances categorisation and analysis. Tracking investment performance using intuitive tables and visualization charts, combined with tags, simplifies the analysis of trends, assets, and liabilities.
Complementing the Wealth Dashboard, the Budget Dashboard provides a detailed breakdown of cash flow. Users can enter incomes and expenses as fixed amounts or percentages of an asset’s value with adjustable frequencies. This helps users monitor savings rates, projected savings, and their overall budget makeup.
Like the Wealth Dashboard, users can apply custom tags, filter, and edit transaction details. They can even link specific incomes or expenses to assets, enabling granular portfolio analysis. This customisability allows users to precisely categorise and track financial movements, ensuring better budgeting decisions and long-term financial planning.
With custom tagging, flexible organisation, and a visually intuitive layout, the iYield Dashboard transforms complex financial data into valuable insights. It allows users to streamline financial planning, optimise yield strategies, and maintain complete control over their aggregate wealth in a unified interface.
Account Setup Overview
iYield offers a fully functional Free Plan with every feature, including up to 1,000 Tracked Items, 10 Spaces, and 10 Watchlist Pairs. The Free Plan should accommodate the majority of users. For those who need expanded limits and premium support, the Pro Plan ($39/year, payable in crypto) increases all feature limits by 20x (e.g., 20,000 Tracked Items, 200 Spaces, etc.) and grants access to a private Discord server for a more white-glove experience. The Account Settings panel allows users to manage their subscriptions, connected services, and personal tags, with the option to permanently delete their account(s). Whether using the Free or Pro Plan, iYield provides every user with a streamlined and customisable experience.
Setting up an iYield account is easy, with multiple login options to suit user preferences. An account can be set up using email and password, Discord, or a web3 wallet like MetaMask, enabling seamless read-only access to their wallet data. Once logged in, users can connect exchange accounts (e.g., Binance), manage account preferences, and select their desired local currency and time frame for charts.
Download the full report here
Download the "iYield: The Ultimate Financial Planning Tool for Crypto Natives" report here (PDF)

iYield is the first comprehensive financial planning tool designed for crypto natives born out of necessity. Managing crypto assets across a rapidly evolving, c

iYield: The Ultimate Financial Planning Tool for Crypto Natives

Portfolio planning, tax optimisation, and yield discovery for onchain wealth

In traditional finance, unsecured lending powers trillions in consumer and business credit. Yet in DeFi, uncollateralised lending has long been considered too risky, too opaque, and too fragile to scale. After a wave of high-profile collapses in 2022, the sector nearly vanished.
Instead of disappearing entirely, however, uncollateralised lending is being quietly rebuilt. A new generation of protocols is rethinking how credit can work onchain, this time with a greater focus on transparency, modular design, and tighter risk controls.
[Chart: Maple vs Gearbox vs Clearpool]
This report explores the return of uncollateralised lending in DeFi. It examines the failures of earlier models, the evolution in protocol architecture, and how platforms like Wildcat and 3Jane offer early indications of a more sustainable approach.
Understanding uncollateralised lending
Uncollateralised lending is as old as money itself. In ancient Mesopotamia, farmers received grain and tools on credit before harvest, relying not by pledging assets but through trust and the promise of repayment. Lending functioned as a social contract, upheld by reputation and relationships rather than courts or collateral.
Today, the principle remains largely the same. Trust and informal enforcement still underpin the system. Fundamentally, uncollateralised lending allows borrowers to access capital without locking up assets. Instead of posting collateral, they rely on reputation, expected income, or off-chain verification to demonstrate creditworthiness. This model aims to free up capital and improve access to credit, especially for those who may lack significant onchain reserves but possess a strong ability to repay.
By contrast, collateralised lending requires borrowers to deposit assets that exceed the value of the loan. This structure secures lenders against default and remains the dominant model in DeFi today. The table below outlines the key differences between the two approaches:
While collateralised lending dominates DeFi, traditional finance has long relied on uncollateralised models. Credit cards, student loans, and personal loans are commonly issued without security deposits. Lenders manage risk using credit scores, income verification, extensive underwriting and enforceable legal contracts. These tools are supported by stable identity systems and institutional enforcement.
DeFi lacks this infrastructure. Without legal contracts, identity frameworks, or credit histories, enforcement must be handled entirely by code. This limitation has made overcollateralisation the default mechanism: loans are secured not through legal recourse, but by requiring borrowers to deposit more than they borrow. Liquidation acts as a substitute for enforcement. While effective in reducing risk, this model restricts borrowing to those with existing capital and limits how capital can be allocated.
Uncollateralised lending offers an alternative. By removing collateral requirements, it enables capital to flow toward productive but asset-light users, such as businesses, active traders, or builders. The challenge lies in designing mechanisms that can assess credit risk, enforce repayment, and manage defaults without relying on traditional legal systems. In DeFi, this remains one of the hardest nuts to crack.
The size of the opportunity
Solving uncollateralised lending in DeFi may be one of the most difficult sectors to work in, but it is also one of the most overlooked opportunities.
The data highlights how underdeveloped this segment still is. The three largest uncollateralised DeFi protocols — Wildcat ($103M), Clearpool ($23M), and TrueFi ($8M) — currently support only $134 million in active loans.
In comparison, collateralised platforms like Aave, Morpho, and SparkLend manage $19.8 billion in active loans.
What makes this contrast even more striking is that the dynamic is completely reversed in traditional finance. Excluding mortgages, around 72% of consumer and business credit is unsecured. While traditional finance has matured with tools for pricing and enforcing credit risk, DeFi is still in the early stages. The two systems have developed in opposite directions, but they do not need to stay that way.
There is a clear and recurring demand for onchain credit. Market makers, trading firms, DAOs, and individual users frequently face capital needs that cannot be met through overcollateralised models alone.
Throughout multiple market cycles, we have seen periods where demand for uncollateralised lending surged, with billions of dollars borrowed onchain. What remains absent is a system that can meet this demand at scale without breaking under pressure.
This challenge goes beyond simply enabling lending. It requires designing infrastructure that can withstand the realities of DeFi, including volatility, global scale, and permissionless access, while still managing credit exposure, containing contagion risk, and maintaining transparency.
A system capable of doing so would not only compete with Aave or Compound, it would challenge the foundational mechanics of traditional finance itself.
According to McKinsey, blockchain automation could save banks up to $1 billion annually in KYC compliance costs, reduce fines by $2 to $3 billion, and prevent between $7 and $9 billion in fraud- related losses. In 2023, a tokenised credit deal executed by BlockTower and Centrifuge demonstrated the cost-saving potential of onchain workflows, cutting securitisation expenses from approximately $400,000 to just $40,000 — a reduction of over 90%.
However, before DeFi can make any claims to transforming traditional credit, its protocols must first prove they can serve their own ecosystem. That means operating through volatility, surviving market cycles, and avoiding systemic risk.
Even a modest breakthrough would be significant. Capturing just 10% of today’s DeFi lending market would translate to $1.8 billion in uncollateralised loans, which is over ten times the combined active loan volume of Wildcat, Clearpool, and TrueFi.
Looking further ahead, the opportunity expands significantly. A system capable of reliably supporting uncollateralised lending in crypto would also be well-positioned to serve traditional markets.
The global unsecured lending sector, excluding mortgages, is estimated to be valued between $12.5 and $15 trillion. Capturing just 1% of that market would mean $120 billion in volume. At 10%, it would exceed $1.2 trillion. For any protocol capable of operating at this scale, the opportunity is net positive.
What went wrong the first time 
The opportunity for uncollateralised lending in crypto was not always seen as marginal. For a time, it was one of the most ambitious frontiers of the industry. By early 2022, the CeFi credit stack had grown to an estimated $35 billion in loan exposure across platforms such as Genesis, BlockFi, Celsius, and Voyager. Genesis alone managed a $14.6 billion loan book, highlighting the strong demand for these services.
The problem, however, was that despite strong demand, the sector’s foundations were weak. It absorbed some of the worst practices from traditional finance and crypto without fully leveraging the underlying technology.
To understand how this has affected the uncollateralised lending space, we can examine three key failures from the first wave of companies and projects to see what went wrong.
Big contagion: Genesis, BlockFi, Celsius, Voyager 
During the bull market from 2020 to early 2022, centralised lenders became foundational to the crypto industry. These platforms promised high-yield accounts to users, then recycled that capital into loans for hedge funds, institutional trading desks, and one another.
Genesis was the leading institutional credit desk, managing large volumes of bilateral loans and acting as a key counterparty across the market. Voyager and BlockFi positioned themselves as retail- friendly yield platforms, while Celsius marketed itself as a community-first alternative to traditional finance.
Although their public profiles differed, all four firms operated within a closed loop of crypto-native borrowers, often lending to the same counterparties. The system’s main vulnerability was its concentrated exposure.
Genesis had over $2.3 billion in active loans to Three Arrows Capital (3AC), the hedge fund that collapsed in mid-2022. Voyager had lent $935 million to 3AC, accounting for nearly its entire loan book. BlockFi had more than $1.2 billion in exposure to FTX and Alameda Research, which failed just a few months later.
The timeline below illustrates how one collapse triggered the next, setting off a rapid chain reaction across the lending ecosystem.
These were not failures of scale, but of structure. User funds were routinely rehypothecated without clear disclosure. Lending books were opaque, counterparties were heavily concentrated, and risk controls were often superficial. Perhaps the clearest illustration came in the form of a now-infamous AUM letter from Three Arrows Capital: a one-page Google Doc, signed by Kyle Davies, claiming a $2.387 billion NAV.
What seemed like a diversified sector was, in practice, a tightly interlinked system with little visibility into counterparty risk. With limited verification and few safeguards, a single default was enough to trigger widespread contagion.
Download the full report here
Download the "The Return of Uncollateralised Lending in Crypto: A Sector of Risk and Reward" report here (PDF)

In traditional finance, unsecured lending powers trillions in consumer and business credit. Yet in DeFi, uncollateralised lending has long been considered too r

The Return of Uncollateralised Lending in Crypto: A Sector of Risk and Reward

How institutional credit pools and credit scoring are bringing unsecured lending back onchain

Overview
Benefitting from pent-up demand for new investment products and ongoing efforts to regulate the sector, Europe’s digital assets industry has grown fast in recent years.
[Chart: Ethereum]
At the global level, the digital assets industry has faced notable challenges since 2022, as high- profile company meltdowns and a barrage of enforcement actions left stakeholders battered and demoralised. Europe, however, has been better insulated from the damage, and the growing pains now appear to be paying off.
Investment volumes and user numbers are rising, and the advent of exchange-traded products (ETPs) – a counterpart to America’s spot exchange-traded funds (ETFs) – has been a boon to the European market.
The rebound accelerated during the first half of 2024, and segments such as the tokenisation of real- world assets (RWA) continue to hold particularly high potential for future expansion. A growing cohort of young European investors is also supporting near-term prospects – the younger generation is far less risk-averse than previously believed.
At the same time, the European Union’s (EU) landmark digital assets legislation, Markets in Crypto Assets (MiCA) is expected to underscore consumer protection, paving the way for sustainable, long- term industry development despite some near-term growing pains.
Market Dynamics
Europe’s digital assets market is relatively small in terms of user size, but a a large and relatively wealthy population of increasingly risk-tolerant investors means it has plenty of room to grow.
American research firm Chainalysis reports that there were 31m cryptocurrency users in Europe in 2023, making the continent the world’s third-largest market behind Asia (263m users) and North America (38m users). In terms of market volumes, however, Europe punches well above its weight.
Chainalysis reports that central, northern, and western Europe accounted for 17.6% of global transaction volumes in the year to June 2023. With eastern Europe taken into account, Europe’s share of total transaction volumes rises to 26.5% of total global volumes, or €1.34tn in the year to June 2023.
Chainalysis found that the UK was the largest single crypto market in Europe as of June 2023, with $252.1m of trading volumes recorded between July 2022 and June 2023. The UK also ranked highest in Europe on Chainalysis’ global crypto adoption index, at 14th place globally.
The UK slips to fourth place in terms of European countries where most people are putting their greatest share of wealth into cryptocurrencies, with Chainalysis reporting that Ukraine (see Crypto in Conflict chapter), Turkey, and Russia make the top three.
A growing base of users, combined with upcoming implementation of the world’s most comprehensive digital asset regulatory regime, MiCA (see Regulation chapter), has seen many companies flock to establish operations in Europe.
According to the DL News Crypto Tracker, there were 11,597 crypto entities registered across EU at the end of 2023, with more than 1000 companies registering in the EU over the course of the year.
This figure does not include Czechia, with 9372 virtual asset service providers (VASPs) registered, since the figures have not been updated since 2022, and since 83% of registered entities are individuals, not businesses.
Excluding Czechia, Poland topped the list with 1187 VASPs, followed by Lithuania (570), Italy (137), and France (106).
Despite the rise of VASP registrants in Europe, just five exchanges accounted for 97% of euro- denominated crypto volume, according to Kaiko. Bitcoin (BTC) was the preferred asset for European traders in 2023, accounting for €32bn of trade volume. Ethereum’s token, ETH, came in second with €13.2bn, and Ripple third with €8.7bn traded.
Europe led the digital assets industry in terms of employment creation, according to a 2023 report published by research firm CoinCub, with Germany ranking top globally (22,472 jobs) followed by France (17,693 jobs), Poland (12,086 jobs), the Netherlands (10,279 jobs), and Spain (6843 jobs).
Risk and Reward
The European Securities and Market Authority (ESMA) reported in April 2024 that 55% of global trading volume is executed on exchanges that are licensed in Europe, although it noted that most of these transactions occur outside of Europe.
This may explain why European investors have been relatively well-insulated from recent tumult in the market.
The global cryptocurrency industry faced a series of major challenges in 2022 after the collapse of several high-profile companies, including FTX and Terra/Luna, erased $1.35tn (€1.26tn) of market capitalisation.
In Europe, however, the impact was less severe than in other markets, including the US. For example, while the fall of Bahamas-based FTX wiped $200bn from the global digital assets market in November 2022, the exchange’s sole European entity was based in Cyprus.
The entity, FTX EU, had approximately 1m registered users, but less than 10% of those were based in the EU, according to Steffen Kern, head of risk analysis and chief economist at the European Securities Market Authority (ESMA). Shortly after FTX EU’s licence was suspended by the Cyprus Securities and Exchange Commission, FTX EU began refunding its affected European users.
ESMA reports that global cryptocurrency markets remain dominated by the US dollar and South Korean won as key on- sets, staand off-ramps for traders, with the euro playing a relatively minor role in these activities.
“We are keen to understand vulnerabilities within the crypto asset system, for example the complexities of unbacked crypto asblecoins, and DeFi, and transmission channels through which shocks in crypto asset markets could spill over to the wider financial system.” — John Schindler, Secretary General, Financial Stability Board
Euro-denominated crypto trading volume increased 200% to €16bn from September to December 2023, according to a January 2024 report by crypto data research company Kaiko. But this is still a drop in the bucket, accounting for just 4% of the total market, while US dollar- and Korean won- backed cryptocurrencies hold a 49% and 47% market share, respectively.
Lower levels of euro-denominated activity do not necessarily translate to less digital asset market activity in Europe. They do, however, dovetail the view of the Swiss-based Financial Stability Board (FSB) on systemic risks posed by crypto.
According to FSB secretary-general John Schindler, cryptocurrencies do not pose a systemic risk to the European, or indeed global financial system – though the board continues to monitor the situation.
“We are keen to understand vulnerabilities within the crypto asset system, for example the complexities of unbacked crypto assets, stablecoins, and DeFi, and transmission channels through which shocks in crypto asset markets could spill over to the wider financial system,” Schindler told DL Research.
“This could include, but is not limited to, links between crypto asset markets and the core financial system such as financial institutions’ exposure to crypto assets, the composition of reserve assets of major stablecoins, and emerging investment products such as spot bitcoin exchange-traded products.”
Looking ahead, the upcoming implementation of MiCA legislation will further underscore both financial industry stability and consumer protection – although MiCA has been criticised as overly- burdensome for crypto firms operating in the EU, it is also expected to help Europe’s digital assets industry maintain a steadier and more stable long-term growth path (see Regulation chapter).
Recent Recovery
After a long and bitter crypto winter, the global digital asset market began to turn around in 2023, as two major narratives emerged over the course of the year.
The first was a series of enforcement actions against several previously lauded crypto industry CEOs, including FTX’s Sam Bankman-Fried, Celsius Network’s Alex Mashinsky, and Binance’s Changpeng Zhao, all of whom were charged with a variety of financial crimes. Bankman-Fried and Zhao were both serving prison sentences in the US at the time of publication.
The second involved anticipation of regulatory approval for spot Bitcoin (BTC) ETFs in the US, which was ultimately granted in January 2024 by the US Securities and Exchange Commission (SEC).
Approval for an Ethereum (ETH) ETF followed in May 2024.
The global market has been buoyant in the months since: crypto trading volumes rose from a low of $16.5bn in September 2023 to $83bn in March 2024, according to crypto data site CoinMarketCap, while total market capitalisation rose by 20% in May 2024 alone to reach $2.4tn, according to CCData Insight.
The price of BTC and ETH rose 180% and 140%, respectively, over the same period, with BTC reaching an all-time intraday high of $73,127 in March 2024. As of late June 2024, BTC prices hovered around $64,000, while ETH prices were around $3500.
This has helped bring investors back to the market, including in Europe.
European Demographics
A common stereotype of European investors is that they are older, more conservative, and far more risk averse than their American counterparts.
For example: a DL News report from January 2024 found that ETPs, which behave like ETFs, were already available in the European market when the US Bitcoin ETF was approved. However, the report noted that the top five ETPs added up to a fund size of just $2.6bn. In comparison, Bloomberg Intelligence expected $4bn of Bitcoin spot ETF inflows on the first day of trading alone.
According to one expert quoted in the DL News report, Europeans were less enthusiastic about Bitcoin ETFs because their retirement strategies anticipate a far higher level of government support Economic Impact
Indeed, recent surveys of European digital assets investors reveal that they are young, like to gamble, and have a relatively high risk appetite. Their numbers are also growing steadily.
The UK’s Financial Conduct Authority (FCA), for example, reported in June 2023 that 4.9m UK adults, or 9% of the country’s adult population, held crypto assets, up from 2.3m or 4.4% in 2021. An estimated 91% of UK adults had heard of crypto assets as of August 2022, according to the FCA, an increase from 78% in 2021 and 42% in 2019.
As of February 2022, roughly 10% of the UK population was estimated to hold or have held some form of crypto asset, with Forbes reporting that 82% of this population still held crypto assets as of May 2024. An estimated 76% of crypto users in the UK are less than 45 years old, according to the FCA, while 69% are male. than American retirement strategies. But higher pensions in Europe also translate into lower salaries, which is making Europeans more likely to gamble.
The majority of FCA survey respondents purchased BTC and ETH as their preferred cryptocurrency, and a vast majority, 79%, said they purchased crypto using their disposable income, while 19% used long-term savings or investments, and 6% used credit facilities. The average size of crypto users’ holdings in the UK was £1357 (€1595), according to the FCA.
France is hot on the UK’s heels: the French Autorité des marchés financiers (AMF) recently published a report which found that in 2023, 9% of the French population owned cryptocurrencies: more than those who own stocks (7%) and ETFs (2%). Like the FCA, the AMF reported that a majority of new investors, 56%, were less than 35 years old, and 64% of investors were men.
In France, 66% of new retail investors said they planned to hold their digital assets for less than 10 years to increase the profitability and diversity of their assets, indicating a rising desire for higher, quicker returns despite the potential risks.
The same trend is playing out in Germany, where a May 2023 report by crypto exchange KuCoin, found that 49% of crypto investors in Germany believe cryptocurrency can help them realise their wealth accumulation plans.
KuCoin also found that 22% of crypto investors in Germany view it as a way to get rich overnight. As is the case in France and the UK, this demographic is also young – 51% are between 26 and 39 years, old – and male (63% of total respondents).
A growing appetite for crypto products is playing out in the European ETP market as well: Contrary to expert predictions, European crypto ETP holdings surged by 46% during the first half of the year. Crypto ETP assets under management amounted to €11.7bn as of late June 2024, according to data platform, ETFbook, compared to €8bn in early January 2024.
The trend is set to continue, both globally and in Europe. In March 2024, research by London-based investment manager Nickel Digital Asset Management revealed that 63% of institutional investors surveyed rank cryptocurrencies among their top-five assets over the next five years, trumping US equities (60%), European investment-grade debt (55%), and gold (12%).
Nickel reports that while just one-quarter of respondents have greater than 1.5% of their assets allocated to the digital asset sector, almost 88% estimate they will have 2% or more of their assets in the sector within three years, while 30% forecast that their portfolios will have a share of digital assets greater than 3%.
Growth Potential
One segment with high potential for future growth in Europe is real world assets (RWA). The digital tokenisation of RWA and traditional markets is expected to be a global driving force for the adoption of cryptocurrencies. Astute Analytica provides detailed growth projections and market forecasts through 2032 for the European tokenisation markets in an April 2024 report.
The report found that Europe accounted for 25% of the global tokenisation market in 2023, worth €743m. This market is expected to record a compound annual growth rate (CAGR) of 18.9% to hit $3.7bn (€3.5bn) by 2032, aided by MiCA and Europe’s progress in digital asset lawmaking (see Regulation chapter).
Interestingly, the report found that eastern Europe is emerging as an unexpected leader in the continent’s digital tokenisation market, with an 87% market share. The region has injected billions of euros into tokenisation efforts accounting for over €2.5bn, and more than half of eastern European fintech professionals believe that digital tokenisation will revolutionise traditional banking and finance systems within the next five years.
Real estate holds particularly high potential for tokenisation in Europe. The tokenisation of real estate in major European cities including Paris, Berlin, and Madrid amounted to approximately €150m in 2023, a 30% y-o-y increase. Half of real estate professionals in Europe believe that tokenisation will solve some of the industry’s toughest challenges, such as the high barrier to entry for small investors, according to the Astute Analytica report.
Outside of real estate, the banking, financial services, and insurance sector accounts for 20% of Europe’s digital tokenisation market, with France and Germany reporting an exponential rise in mobile banking users.
Given the EU’s investment industry is valued at a collective €20tn, according to November 2023 figures reported by the University of Luxembourg and Italy’s Bocconi University, tokenised investment funds also hold high potential for future growth.
At your service
Another high-potential segment outside of tokenisation is in digital asset service provision. Given the strong growth prospects for the European market, and the fact that digital asset service provision falls within MiCA’s purview (see Regulation chapter), areas like custody provision could see strong future growth in Europe.
Indeed, a July 2023 report in Forbes found that European banks were outperforming their American counterparts in terms of crypto custody provision. Major players in the industry including Deutsche Bank, Crédit Agricole, BNP Paribas, and DZ Bank, made considerable progress after announcing plans to offer digital asset custody services.
Some banks, such as BNP Paribas, are turning to partnerships with blockchain and cryptocurrency companies to develop a new line of crypto-friendly services. Germany’s largest federal bank, Landesbank Baden-Württemberg, has also announced plans to offer crypto custody services for institutional and corporate clients in the second half of 2024 (see Innovation chapter).
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Overview Benefitting from pent-up demand for new investment products and ongoing efforts to regulate the sector, Europe’s digital assets industry has grown fast

The State of Digital Assets in Europe

How MiCA, ETFs, and pent-up demand are reshaping the European crypto market

The AI Infrastructure Challenge 
Artificial intelligence has become the defining compute market of the next decade. Transformer architectures and scaling laws turned progress into an infrastructure race, not a search for a single breakthrough algorithm. Training cycles now consume millions of GPU hours, while inference has shifted demand from periodic spikes to an always-on tide of queries embedded in daily workflows.
Even as the cost per query has fallen, usage has compounded faster, pushing aggregate spending higher and stressing the entire supply chain from silicon and packaging to networking, storage, and power. Hyperscalers have responded with unprecedented capital programs, but the result for builders is a landscape that is powerful yet closed, efficient yet opaque, and optimised for central platforms rather than open markets.
0G addresses this gap by treating AI infrastructure as a coherent operating system rather than a stack of disconnected services. It brings storage, data availability, compute, and consensus into one modular environment that can scale horizontally and verify outcomes at every step.
The goal is not only to lower costs or increase throughput, but to make AI infrastructure auditable, programmable, and open to permissionless participation. That combination is what turns infrastructure from a black box into a public good.
Data Architecture and Storage
The architecture starts with data. 0G Storage separates immutable archives from fast, mutable state so that the same system can serve training corpora and live application backends without trade-offs. Proof of Random Access requires providers to retrieve specific chunks quickly and reliably, so rewards are paid for useful I/O, not just raw capacity.
This aligns incentives with what AI workloads need in practice: persistence with provenance for large files, and low-latency reads and writes for agent memory, indices, and application state.
Data Availability and Verification
On top of storage, 0G builds a data availability layer that treats publication and persistence as one continuous guarantee. Data is erasure-coded and sampled by quorums selected with verifiable randomness, then finalised by validators that anchor security at a root layer.
Because availability checks operate against data that is actually stored, retrieval is as trustworthy as publication. This matters for AI because models do not only post data once. They fetch, update, and verify repeatedly across training, evaluation, and deployment.
Privacy-Preserving Ownership (ERC-7857)
Beyond the core layers, 0G extends trust to the ownership of digital and AI assets. ERC-7857 introduces on- chain privacy and verifiability by embedding encrypted metadata and secure transfer logic directly into the token standard.
It enables AI models and datasets to be exchanged securely, preserving both confidentiality and authenticity through trusted execution and zero-knowledge proofs. Unlike frameworks such as x402, ERC-8004, Virtual ACP, Google A2A, or Stripe ACP, which focus on payments or identity, ERC-7857 protects the data layer itself. Integrated with 0G Storage and Data Availability, it provides sub-second, encrypted asset transfer for secure and scalable AI ownership.
Compute Marketplace
Compute is organised as an open marketplace. Developers fund workloads for inference, fine-tuning, and eventually training. Providers register GPU capacity and receive jobs that settle through smart contract escrow once proofs confirm correct execution.
Trusted execution and zero-knowledge techniques allow verification without exposing inputs. The marketplace aggregates everything from enterprise clusters to independent operators and pays for validated work rather than promises. This widens supply, reduces lock-in, and lets applications scale without a single vendor gate.
Consensus and Security 
Consensus ties the system together. Rather than forcing every function through a single chain, 0G runs many parallel networks that share security through a common stake anchored to Ethereum.
Misbehaviour anywhere is slashable at the root, so guarantees are uniform across storage, availability, and compute. CometBFT provides deterministic finality with sub-second latencies, and the roadmap moves toward parallel confirmation to match the micro-transaction patterns of agent ecosystems. The result is a coordination fabric that grows horizontally while keeping one trust model.
Position in the Market
This design positions 0G clearly within the current market. General-purpose chains deliver either high throughput or deep liquidity, but they externalise the heaviest data flows. Rollups increase capacity, but each one must assemble its own availability and storage, which fragments guarantees.
Dedicated DA layers confirm publication efficiently, yet they stop short of persistence and mutable state. Storage protocols excel at permanence or addressing, but they do not natively provide fast updates or verifiable retrieval tied to a global security model. 0G consolidates these functions in one place and aligns them with the realities of AI workloads.
For developers, the practical advantages are straightforward. Training datasets can be anchored immutably in the same system that serves low-latency key-value access for live applications. Availability is not a temporary property of blobs but a durable property of stored data.
Compute is procured from a global pool and paid only when outputs verify. Coordination is fast enough to support agent networks that read, write, and transact continuously. The net effect is lower integration risk, clearer performance envelopes, and a simpler path from prototype to production.
For users and enterprises, the benefits are clarity and control. Provenance is observable rather than implied. Data can be segmented by policy and location while still participating in a shared marketplace. Pricing can clear in real time, and rights can be enforced with decentralised identity and programmable governance. This is how an open AI economy gains the reliability required for adoption in regulated and mission-critical contexts.
Taken together, these properties show why 0G is more than just another infrastructure option. It offers a unified foundation where data, compute, and availability work as one system. In doing so, it reduces the compromises developers face, provides the assurances enterprises demand, and ultimately sets the standard for decentralised AI infrastructure.
Market Opportunity: AI x Crypto
The AI Market 
The Technical Breakthrough 
The current wave of AI is powered by a combination of technical breakthroughs and massive capital inflows. In the late 2010s, researchers introduced transformer architectures and discovered scaling laws showing that model performance improves predictably with more parameters, larger datasets, and greater compute. This insight changed the nature of progress in AI: instead of relying on novel algorithms, advancement became a question of who could marshal the most infrastructure.
The pattern since then has been clear. Each new frontier model has been larger, trained on more data, and delivered stronger capabilities. But with every leap in performance, the resource requirements have expanded just as dramatically. Training runs now consume millions of GPU hours, with total compute needs rising four to five times per year through 2024.
Once these systems left the lab and entered products, the pressure on infrastructure only intensified. Training occurs in large but occasional cycles, while inference, the act of serving outputs to users, is relentless.With tools like ChatGPT, Claude, and Gemini embedded into consumer apps and enterprise workflows, every email drafted or line of code generated becomes another inference call. Billions of these queries now take place daily, translating into a constant, compounding demand for compute.
Although the cost per inference has fallen dramatically, with Stanford’s AI Index reporting a more than 280-fold drop in the price of GPT-3.5-class queries between late 2022 and late 2024, these efficiency gains have been overwhelmed by rising demand.
The result is that aggregate spending on AI infrastructure continues to rise. Training clusters remain indispensable for each new generation, but inference fleets now account for the larger and faster-growing share of budgets, exerting increasing pressure on the AI supply chain.
The Capital Response and Market Bottlenecks
The scale of the response is most visible in capital expenditure. In 2025, Microsoft, Amazon, Google, and Meta together are guiding more than 300 billion dollars of capex, the majority directed toward AI-specific data centres.
Microsoft has signalled roughly 80 billion, Alphabet 75 to 85 billion, Amazon more than 100 billion, and Meta 60 to 65 billion. These are not short-term IT budgets, but multi-year programmes designed to secure leadership in compute, networking, memory and power.
Storage and networking are also scaling rapidly. AI-related storage demand is projected to exceed 240 billion dollars per year by 2030, while high-performance networking for GPU clusters and retrieval systems is expected to surpass 100 billion.
These numbers also reveal the bottlenecks. At the silicon layer, supply is concentrated in TSMC’s advanced nodes and packaging capacity, both of which remain constrained. Power is another critical limit. The International Energy Agency projects that global data-centre electricity use will more than double by 2030 to roughly 945 terawatt hours, with AI-optimised facilities driving most of the increase.
The structure of the market makes these constraints even harder to manage. A small group of hyperscalers such as AWS, Microsoft Azure and Google Cloud, together with Nvidia’s DGX Cloud, controls most of the available capacity. Their pricing models, reservation systems and proprietary APIs make switching costly and keep customers locked into their ecosystems. Regulators are starting to respond.
The UK Competition and Markets Authority has found that cloud infrastructure competition “is not working well,” citing egress fees, bundled services and long-term discounts as barriers to choice. The US Federal Trade Commission has raised similar concerns about preferential partnerships in the AI supply chain.
For startups, research labs and even governments, access to advanced compute increasingly requires long-term commitments to a handful of vendors.
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The AI Infrastructure Challenge Artificial intelligence has become the defining compute market of the next decade. Transformer architectures and scaling laws tu

Building the Foundation for an Open AI Economy: The Case for 0G

Modular data availability and storage as the substrate for verifiable AI

Understanding DeFi risk 
Why risk matters in DeFi 
DeFi is redefining the foundations of global finance. Replacing the current financial system – by introducing new forms of lending, staking, trading, liquidity provisioning, and yield generation – with programmable protocols enables borderless, trust-minimised access to financial opportunities. However, the proliferation of open-source innovation also presents significant risks. Investors face exposure to smart contract vulnerabilities, oracle risks, liquidity constraints, and stablecoin instability. A lack of centralised institutions forces individuals to carefully navigate a fragmented ecosystem of interconnected protocols, many of which rely on rapidly evolving technical infrastructure.
Market volatility can further compound these risks. Many protocols rely on crypto-denominated collateral that can swing dramatically in price, quickly triggering liquidations, collateral shortfalls, or incentive misalignments. Meanwhile, protocol-level failures ranging from unaudited (and even audited) smart contracts, flawed tokenomics, or governance attacks expose even the most experienced investors to variable levels of onchain risk.
The growing complexity of DeFi risks 
Risk management has become a critical infrastructure for security and helps preserve investor capital. As new blockchains, protocols, and yield-bearing strategies continue to emerge, the complexity and risk surface of DeFi grows mainly due to the composability of DeFi and interdependency risks. Speculative incentives, such as airdrop farming, often drive this momentum. This has lured users into nascent, lightly tested protocols with the promise of outsized yields.
In an industry where innovation often outpaces education, it’s more important than ever for users to leverage tools that can surface, contextualise, and quantify risk. These tools empower investors to navigate DeFi safely and with confidence.
What DeFi exploits teach us about risk
Despite DeFi’s promise of open, composable finance, its rapid pace of innovation often exposes hidden vulnerabilities. Major exploits ranging from Bybit’s recent $1.5B custodial breach to Mango Markets’ oracle manipulation reveal how protocol design flaws, centralised key management, and misaligned incentives can trigger catastrophic losses. Even well-audited systems like Euler Finance were compromised through nuanced flash loan mechanics. Even cross-chain bridges such as Ronin and Wormhole demonstrated how validator coordination lapses and multisig failures can undermine a decentralisation approach.
Stablecoins and their alternatives have also proven fragile under volatility. Terra’s algorithmic UST collapse and USDC’s temporary depeg in March 2023 illustrated how promising products and offchain banking exposure can fracture even the most integrated ecosystems. These incidents reinforce that smart contracts are only part of the equation, while mechanism design, infrastructure dependencies, and real-time monitoring are just as critical.
Standardising risk in DeFi 
In traditional finance, credit rating agencies like Moody’s, Fitch, and S&P are pivotal, helping investors understand the risks associated with bonds and companies. Their standardised methodologies allow investors to assess risk-adjusted returns and make more informed portfolio decisions. As DeFi grows in complexity, it faces a similar need: a consistent, credible, and widely understood risk standard.
The yield opportunities in DeFi are abundant, as are the risks, ranging from smart contract vulnerabilities and governance centralisation to liquidity and oracle risks. Without a consistent benchmark to evaluate these risks across protocols and asset types, investors are left blindly navigating a fragmented ecosystem. As in traditional markets, a shared standard around risk is essential to price assets effectively, allocate capital more responsibly, and grow investor confidence.
A meaningful risk standard must meet three key requirements:
Fact-based: Assessments must be grounded in objective, verifiable data. This includes protocol audits, economic design, historical performance, and security track records.
Holistic: Risk cannot be siloed. A complete evaluation must span all major risk types, from the chain infrastructure and protocol design to the behavior of underlying assets and the mechanics of individual pools.
Standardised across assets and protocols: A usable framework must be consistently applied across the DeFi landscape. This enables fair comparisons, improves transparency, and helps users align yield opportunities with their individual risk tolerances. A scorecard approach ensures repeatability and scalability as new protocols and strategies emerge.
Exponential’s risk methodology was built to meet these requirements. In response to the growing complexity and opacity of DeFi, the platform introduces a transparent, data-driven risk framework that empowers investors to navigate DeFi safely and confidently.
Much like traditional credit ratings, Exponential’s ratings distil technical and financial data into intuitive, letter-grade risk scores (A-F). Its methodology evaluates four major dimensions of risk:
Chain risk: Evaluating the reliability, decentralisation, and maturity of the underlying blockchain.
Protocol risk: Assessing the smart contract design, governance structure, and security posture of the protocol.
Asset risk: Examining collateral quality, peg mechanisms, volatility, and other asset-specific traits.
Pool risk: Measuring risks specific to the individual strategy, including leverage, complexity, and dependency on external integrations.
This holistic, standardised scorecard enables investors to distinguish between sustainable and speculative yield, apply consistent risk filters to new opportunities, and construct portfolios aligned with their goals. Whether comparing single-asset staking products or complex multi-strategy vaults, this risk framework delivers a practical, scalable way to bring transparency and structure to DeFi investing.
As DeFi continues to expand across new chains, protocols, and investor profiles, this type of standardised risk evaluation will become the foundational infrastructure to support smarter investment decisions and help the ecosystem mature.
Structured products in DeFi: An overview 
Structured products: Simplified returns, compounded risks 
Risk management is especially critical in structured DeFi products, where multiple yield strategy products such as staking, lending, and liquidity provisioning are conveniently bundled into a single vault. While these structured products are designed to simplify access to optimised strategies, they also obscure complexity. Risks can then be compounded across integrated protocols, smart contracts, and external dependencies, making risk management more difficult to manage.
Despite these complexities, many investors continue to evaluate yield opportunities based solely on promoted yields. Without transparent risk breakdowns, users often conflate short-term returns with sustainable yield, mistaking protocol rewards for real yield. As a result, investment decisions are frequently driven by surface-level metrics rather than a holistic understanding of risk exposure.
From token incentives to sustainable yield 
The evolution of yield generation in DeFi mirrors the space’s broader transition from experimental incentive schemes to more sophisticated, sustainable financial engineering. In its earliest days, inflationary governance token emissions drove DeFi yield. Protocols like Compound, Synthetix, and Yearn incentivised participation with freshly minted tokens that users could farm and sell. This era gave rise to mercenary capital, liquidity that flowed short-term between protocols to capture incentives, often with little regard for protocol longevity. While this model rapidly attracted capital and bootstrapped user activity, it was ultimately unsustainable, as yields depended on token inflation rather than real cryptoeconomic activity. The ‘DeFi Summer’ of 2020 exemplified this trend, where users flocked to triple-digit APYs without fully understanding the risks or circular nature of many tokenomics models.
Structured products: The mechanics of modern DeFi
As the crypto markets matured, yield strategies began to align more closely with real economic drivers, such as lending interest (e.g., Aave), trading fees from LPs (e.g., Uniswap), or staking rewards. These mechanisms were more closely tied to actual user activity and protocol utility, which was viewed as more sustainable over time. However, even with these developments, users were tasked with managing the underlying complexities of selecting assets, timing positions, monitoring volatility, and assessing an array of smart contract risks. This burden led to the rise of structured DeFi products, which abstract complexity by offering curated, passive access to yield-generating strategies.
In DeFi, structured products refer to vault-based instruments and strategy aggregators that programmatically allocate user capital across multiple yield sources. These products may include combinations of staking derivatives, lending markets, liquidity provisions, perps, and/or options bundled into a single structured product. For example, Yearn Finance pioneered yield aggregation by routing stablecoin deposits through the most profitable lending protocols, while more recent platforms like Pendle offer products that split principal and yield.
In each case, the objective is to automate yield optimisation and minimise investor intervention.
Classifying structured products in DeFi 
Structured products can be classified into the following categories:
Yield aggregators (e.g., Yearn) focus on maximising return by routing deposits to yield-generating sources
Leveraged yield vaults (e.g., Gearbox) use borrowing to amplify returns but also expose users to liquidation and interest rate risk
Option-based vaults (e.g., Ribbon Finance) generate yield by selling options against deposited assets, capturing premium but assuming directional risk
Structured Lending (e.g., Notional Finance) splits yield into principal and yield tokens, enabling fixed-income products 
Compared to direct staking or simple LP positions, these products offer more upside. However, this abstraction introduces additional risks, including smart contract risks, reliance on strategist execution, and asset correlation across protocols, making clear risk evaluation that much more important.
How market trends have shaped risk awareness
From a historical lens, DeFi’s structured product ecosystem has evolved significantly since 2021. The initial proliferation of yield aggregators was driven by the need to simplify farming strategies. As gas costs rose and multichain ecosystems emerged, protocols began offering cross-chain vaults, whitelisted strategist programs, and auto-compounding mechanisms. In parallel, the collapse of protocols like Terra and high-profile DeFi exploits have made users more cautious, prompting demand for products that balance sustainable yield and risk management to preserve capital.
This brings us to the case studies ahead, where we examine three distinct structured DeFi products. Each showcases a strategic approach to yield generation and reinforces the importance of applying a practical, data-driven risk framework to evaluate these products.
Case studies: Three structured products
This section offers an in-depth analysis of three structured DeFi products, examining their design, yield generation mechanics, and strategies. Each case study is followed by Exponential’s risk assessment, providing a clear lens through which to evaluate the product’s risk-return profile.
Superform’s SuperUSDC vault
Overview: SuperVaults and the SuperUSDC strategy 
SuperVaults are Superform’s flagship onchain yield product, engineered to deliver optimised stablecoin returns while abstracting away the complexities of DeFi. The inaugural vault, SuperUSDC, launched on Ethereum and provides automated access to high-performing USDC yield strategies across a curated set of whitelisted protocols. Built atop Yearn v3’s battle-tested framework and integrated with Superform’s core infrastructure, the vault design has been audited by yAudit.
Designed without leverage, SuperVaults prioritise stable, predictable returns through slippage- free rebalancing, reallocating capital in real time based on strategy performance. This vault offers a streamlined, automated experience for passive investors seeking competitive yields.
SuperVault’s mechanism design 
Deposit flow and protocol allocation 
When a user deposits USDC into the SuperUSDC vault, the transaction is routed through the SuperformRouter, determining the optimal vault and yield route. This router sends capital to a curated vault managed by Superform, where assets are programmatically allocated across high-performing, whitelisted DeFi lending protocols such as Morpho, Euler, Aave, and Fluid.
Upon deposit, users receive SuperPositions (SPs), tokenised representations of their share of the vault’s underlying strategy. These SuperPositions are minted using the ERC-4626 token standard, which standardises yield-bearing vaults and ensures broad interoperability across the DeFi ecosystem. Superform also supports ERC-7540, a newer token standard designed for multi-vault tokenised positions, enabling structured products to span multiple chains and strategies with greater efficiency. This enhances composability and allows vaults to span multiple strategies or chains efficiently.
As yield is generated from the underlying protocols, it accrues in the vault, automatically increasing the value of users’ SuperPositions over time.
Underlying yield strategies 
Once deposited capital is allocated across protocols, the SuperUSDC vault earns yield through three primary mechanisms:
Lending markets (e.g., Aave, Morpho, Euler): These protocols generate interest from overcollateralised borrowers. Yields here are a function of borrowing demand. During periods of growing leverage demand, such as bull markets, borrowers drive up utilisation rates and interest rates. Conversely, in bear markets or risk-off environments, reduced borrowing leads to muted returns.
Protocol incentives (e.g., Euler rewards): Some integrated strategies rely on emissions or incentive programs. While these can temporarily boost APYs, they are less durable and subject to governance or emissions schedule changes.
Each yield source is continuously evaluated through Superform’s rebalancing logic, which dynamically reallocates deposits toward the most competitive and risk-adjusted strategies.
Rebalancing logic and yield optimisation 
To maintain risk-adjusted returns and optimise during market shifts, SuperVaults employs an automated rebalancing engine. This engine uses predictive metrics, such as SuperAPY (a forward- looking yield estimator) and Sharpe ratios (a volatility-adjusted return measure) to evaluate the relative performance and risk profile of each yield source.
A Keeper contract continuously monitors yield sources and initiates a rebalance when:
More favorable APYs become available on alternative protocols 
Risk thresholds are exceeded 
Market inefficiencies or liquidity changes trigger reallocation 
The Keeper contract triggers reallocation through the SuperformRouterWrapper, which executes capital transitions with minimal slippage and gas overhead. Because vaults are non leveraged, transitions remain predictable and within conservative risk boundaries.
This real-time optimization allows SuperVaults to dynamically shift between strategies without manual intervention, offering a “set-and-forget” experience for users.
Vault performance: Ethereum vs. Base 
Since its launch, SuperUSDC has delivered competitive and reliable yields by dynamically reallocating capital across integrated DeFi protocols. Available on both Ethereum and Base, the vaults follow similar strategies but offer different tradeoffs in cost, liquidity, and ecosystem maturity.
On Ethereum, SuperUSDC experienced strong demand, with TVL growing from ~$65M to ~$88.55M over the past month. Yields dipped in late March to 4.48% but recovered to stabilise between 5 and 6% in April. The Ethereum vault holds ~95% of Superform’s total SuperUSDC TVL, a reflection of the mainnet’s deeper integrations and mature lending markets.
On Base, SuperUSDC’s TVL grew from ~$3.67M to ~$5.63M in the same period. Yields hovered between 4.6 and7% APY, consistently outperforming the base rate by over 1%. The strategy’s efficient cross-chain execution and low fees contribute to its strong relative performance.
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Understanding DeFi risk Why risk matters in DeFi DeFi is redefining the foundations of global finance. Replacing the current financial system – by introducing n

Evaluating Risk in DeFi

A framework for measuring smart-contract, protocol, and market risk in onchain finance

So far, interoperability between Bitcoin and Ethereum has been limited, preventing the seamless integration of Bitcoin’s security and liquidity with Ethereum’s flexibility and diverse ecosystem of protocols and assets. The Hemi Network addresses this gap by connecting the two ecosystems, enabling the development of cross-chain applications that approach Bitcoin and Ethereum as components of a single supernetwork. By merging Bitcoin’s security with Ethereum’s programmability, Hemi opens the door to a new era of decentralised applications (dApps) that operate across both chains without the need for intermediaries or centralised exchanges.
Currently, Hemi has announced a $15 million seed round led by Binance Labs, Breyer Capital, and Big Brain Holdings. Interest in the project has been high – since the launch of incentivised testnet in July, over 200,000 Proof-of-Proof (“PoP”) miners testing Hemi’s unique Bitcoin security inheritance mechanism have sent over 95 million PoP transactions on Bitcoin’s testnet3 network. Additionally, community testing of Hemi’s cross-chain asset transfer system (“Tunnels”) at peak accounted for 88% of all traffic on Ethereum’s Sepolia testnet and caused the base gas rate to spike above 10,000 Gwei - a value never before seen on the network.
[Chart: Hemi]
The Team
Seasoned experts in blockchain development are spearheading the Hemi Network. Jeff Garzik, the CEO and Principal Engineer at Hemi, is a co-founder and CEO of Bloq with a rich history in Bitcoin development. As an early Bitcoin core developer, he worked alongside Satoshi Nakamoto in the early days of Bitcoin. His tenure at Red Hat involved significant contributions to the Linux kernel (work that underpins every Android device and Linux-based data centre today). Jeff’s deep involvement in open-source software development uniquely positions him to lead Hemi’s technical vision.
Max Sanchez, Hemi’s Lead Architect, brings extensive experience in blockchain protocol design. Before joining Hemi, he co-invented the Proof-of-Proof (PoP) protocol for decentralised and permissionless Bitcoin security inheritance. A blockchain enthusiast since 2011, Max has been instrumental in launching innovative technologies like the first testnet utilising post-quantum cryptography. He has also contributed to the identification and disclosure of consensus vulnerabilities in multiple blockchain projects.
Key Features
Hemi is a modular multi-network L2 blockchain focused on securely connecting Bitcoin and Ethereum in a scalable manner. A key feature of Hemi is its robust interoperability layer, enabling seamless asset transfers and data sharing between Bitcoin and Ethereum. This feature creates an EVM- compatible environment for decentralised applications (dApps) that operate across both chains.
The Hemi Virtual Machine (hVM) introduces a novel way to build Bitcoin-aware smart contracts by embedding a full Bitcoin node inside the EVM. The flexibility provides applications with a complete view of Bitcoin’s state without relying on third-party relayers or centralised oracles.
Hemi inherits Bitcoin’s Proof-of-Work security in a fully decentralised and permissionless manner. The novel Proof-of-Proof protocol protects cross-chain transactions from reorg attacks and leverages both Bitcoin and Ethereum to protect users from censorship.
Finally, the network’s architecture is built to extend access to Bitcoin and Ethereum assets, EVM- level Bitcoin awareness, Bitcoin security inheritance, and multi-network censorship protection to an ecosystem of interoperable L3 networks with the flexibility for developers to optimise for different use-cases like AI, gaming, and DeFi.
hVM 
The hVM (Hemi Virtual Machine) enables Bitcoin interoperability and programmability by integrating a full Bitcoin node within a fully backwards-compatible Ethereum Virtual Machine (EVM) environment. This integration provides Ethereum-style smart contracts with direct access to Bitcoin’s complete state, including states like the UTXO table, which previous Bitcoin interoperability technologies could not securely provide due to some limitations of Bitcoin’s architecture.
Core Components of the hVM 
The hVM consists of three major components – an EVM execution environment, a Bitcoin full node implementation designed to be driven deterministically as part of an L2’s state transition function, and a set of precompile contract endpoints that facilitate communication between smart contracts executing inside the EVM and the Bitcoin full node.
The execution environment used for the hVM is a standard EVM which maintains full backwards compatibility with the Ethereum network, meaning any smart contract that runs on Ethereum can be deployed on Hemi without modification.
The Bitcoin node used for the hVM is a custom-built full node implementation that connects to the Bitcoin P2P network to synchronise Bitcoin blockchain data, but only indexes the chain to a tip specified by the Hemi protocol to ensure deterministic views of Bitcoin state from within the hVM. To drive this indexing, the Hemi protocol maintains its own lightweight consensus view of Bitcoin (using a dual-chain L2 block derivation process). This deterministic driving of the Bitcoin full node ensures that the Bitcoin state data available to smart contracts is universally consistent across all Hemi nodes when processing a particular Hemi block.
The hVM’s precompile contracts connect the EVM execution environment with the Bitcoin node. Endpoints accessible from within the EVM perform queries on the Bitcoin node and return the results to the smart contract inside the EVM.
A fully indexed Bitcoin node within the EVM enables seamless smart contract interactions with the Bitcoin blockchain. By exposing comprehensive Bitcoin data — such as the UTXO set — directly into the EVM, the hVM provides smart contracts with a trustless and deterministic view of Bitcoin’s state. This eliminates the need for external oracles or third-party relayers, enhancing security and decentralisation while enabling cross-chain functionality directly through Ethereum smart contracts.
In other words, Hemi allows smart contracts to access Bitcoin’s state in much the same way they access the state of other contracts within the same EVM. For example, in Ethereum, a contract can interact with Uniswap to retrieve the current price of an asset without relying on external data sources; all necessary information is inherently available within the EVM.
This seamless access is possible because the EVM ensures the correctness of the data by default. Similarly, Hemi enables contracts to directly query Bitcoin’s state — including specific transaction details — without the need for oracles or relayers. While the analogy isn’t exact (since Hemi provides more extensive access to Bitcoin data than the EVM typically offers for its own chain) it illustrates how Hemi enhances cross-chain capabilities by making Bitcoin’s state readily accessible within smart contracts.
Smart Contract Bitcoin Event Subscriptions 
A slated feature of the hVM will further expand functionality by enabling real-time subscriptions to Bitcoin events. With the hVM event subscriptions, developers can program smart contracts to automatically execute specific actions based on Bitcoin events such as transaction confirmations, the mining of new blocks, or the spending of a particular transaction output. Event subscriptions also allow developers to build applications that respond dynamically to Bitcoin activity. This architecture supports highly customisable logic, enabling conditional workflows that don’t require onchain initiation from an Externally Owned Account (EOA) on Hemi.
For example, escrowed funds in a non-custodial DEX could be released when a particular Bitcoin address receives the expected quantity of Bitcoin to complete a trade, or an operator could be deactivated from the active operator pool of a Bitcoin restaking protocol if they publish a transaction on Bitcoin that initiates a claim procedure to withdraw staked BTC collateral.
Enabling Cross-Chain Workflows 
In addition to Bitcoin awareness, the hVM maintains awareness of Ethereum by processing Ethereum transactions that perform cross-network calls to Hemi during the L2 block derivation process. The hVM can also initiate outgoing calls to contracts on Ethereum.
As a result, smart contracts on Hemi can perform complex multi-chain workflows. For example, a smart contract could observe the confirmation of a specific transaction on Bitcoin and send a cross- chain call to a contract running on Ethereum. Or a smart contract on Ethereum could send a cross- chain message to trigger a smart contract on Hemi to perform a particular action based on Bitcoin state.
When designing cross-chain applications, the state challenge time for settlement of Hemi-to Ethereum cross-chain calls, along with the hVM’s natural delay in processing Bitcoin blocks must be considered. However, Hemi’s ability to observe and interact with both chains provides a powerful foundation for decentralised applications that demand secure and flexible cross-chain workflows.
Metaprotocol Support (Ordinals, BRC-20s, Runes, etc.) 
As early as 2012, various developers have launched metaprotocols that live on top of the Bitcoin blockchain. These metaprotocols are unknown to the Bitcoin protocol itself, making them experimental for the protocol, but users can run additional metaprotocol-specific indexers that extract and process relevant information from Bitcoin transactions to track the metaprotocol’s state machine.
The architecture of the hVM makes it possible to introduce future protocol upgrades that add additional indexers (along with their own precompile endpoints) to the embedded Bitcoin full node. These upgrades provide smart contracts with additional information about protocols running on top of Bitcoin. By adding metaprotocol-specific indexers to the hVM, the Hemi network can provide smart contracts with a complete Bitcoin metaprotocol state as well. Support for Ordinals, BRC-20s, and Runes are also possible additions to Hemi’s roadmap for hVM functionality. When support for a specific metaprotocol is added to the hVM, a number of additional precompiles can be added that allow smart contracts to query the metaprotocol’s state.
Metaprotocol support will make it possible to develop smart contracts that interact with Bitcoin metaprotocols, including expanding the Hemi Bitcoin Tunnel system to support the tunnelling of metaprotocol assets.
Advantages of hVM for Bitcoin Interoperability and Programmability 
Over the past decade, developers have introduced a variety of different mechanisms to introspect Bitcoin in a smart contract environment. The architecture of Bitcoin makes this particularly complex because Bitcoin maintains (the UTXO table) an actual state machine that isn’t cryptographically committed to in the Bitcoin blockchain. Therefore, proving/validating statements like “X output has not been spent” or “the balance of X address is Y” is impossible or extremely impractical with traditional approaches.
These approaches fall into three broad categories:
Bitcoin Header Relay: A smart contract tracks lightweight Bitcoin consensus using Bitcoin headers, which relayers communicate to the consensus-tracking smart contract. Other smart contracts that want to introspect Bitcoin have their users submit relevant Bitcoin transactions with Merkle proofs. These prove transactions are contained within a particular Bitcoin block by authenticating them, which is validated against the Merkle root contained in a Bitcoin block.
Bitcoin State Oracles: A trusted oracle system is used which tracks Bitcoin state and responds to queries by signing or otherwise endorsing the response as valid.
Succinct Arguments of Knowledge (SNARG): Users or specialised parties with access to extensive computing power construct SNARG (in practice, generally zk-SNARK) proofs of processing large amounts of data from Bitcoin to validate onchain a certain statement about Bitcoin is correct.
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Download the "Hemi: A Modular L2 Connecting the Bitcoin and Ethereum Ecosystems" report here (PDF)

So far, interoperability between Bitcoin and Ethereum has been limited, preventing the seamless integration of Bitcoin’s security and liquidity with Ethereum’s 

Hemi: A Modular L2 Connecting the Bitcoin and Ethereum Ecosystems

Closing the interoperability gap between Bitcoin security and Ethereum flexibility

Through Q3 2024, the decentralised finance (DeFi) ecosystem experienced a turbulent journey. Anticipation was high for another ‘DeFi Summer,’ fueled by significant catalysts such as the fourth Bitcoin halving, the approval of spot ETFs for Bitcoin and Ethereum, and a surge in on-chain liquidity and yield opportunities. While the first half of the year met expectations — Bitcoin reached new all-time highs and a wave of airdrops reignited market enthusiasm — the latter half has been characterized by increased volatility and tempered growth. This report examines the events of the past quarter, highlighting DeFi’s resilience in the face of these challenges and exploring what lies ahead for the industry.
The Stress Test: DeFi’s performance during the market meltdown 
[Chart: Aave V3 vs Compound vs MakerDAO vs Curve]
Following a strong first half with Bitcoin’s rise to a new all-time high, financial markets faced their first test of volatility in early August 2024. A convergence of negative factors triggered sharp sell- offs across both equity and crypto markets. Rising unemployment data fueled recession fears, the unwinding of the yen carry trade added pressure, and escalating geopolitical tensions intensified market jitters. On August 5th, volatility reached extreme levels and erased nearly $400 billion in value from the crypto market alone.
In the face of this turmoil, DeFi protocols not only survived but demonstrated remarkable resilience, functioning as intended without any major disruptions. This resilience underscores DeFi’s antifragility — a system that grows stronger under stress and adapts to challenges, highlighting its potential to disrupt traditional finance (TradFi).
Lending: Automated liquidations safeguarded lenders’ principal 
In DeFi, lending is enabled by overcollateralization and decentralised liquidations, mechanisms that protect lenders from bad debt or borrower defaults. To ensure repayment, borrowers must provide collateral worth more than the loan itself. If the borrower fails to repay, or if the value of their collateral falls below a certain threshold, the loan is liquidated. Unlike TradFi, where liquidations are handled through legal processes and trusted intermediaries, DeFi liquidations happen instantly and are executed by anonymous liquidators. These liquidators are incentivized to repay the loan in exchange for a profit, meaning liquidators swiftly and effectively prevent bad debt accumulation.
Liquidations are common in DeFi, especially during periods of high market volatility. During the global market meltdown in early August, the total crypto market cap shed 7%, wiping out $162 billion in value. At the same time, over $300 million in liquidations occurred across major DeFi lending platforms like Aave, Compound, and MakerDAO’s Spark protocol. These protocols efficiently processed liquidations, preventing any significant accumulation of bad debt and generating significant revenues for their treasuries. In a single day, Aave alone processed $237 million in liquidations, generating $6 million in revenue.
Despite these actions protecting lenders’ capital, liquidations can have significant downsides for borrowers. While liquidations are necessary to prevent bad debt, they can also negatively impact borrowers if collateral is prematurely liquidated. Liquidations often have a cascading effect on collateral prices, pushing prices lower during the sell-off, which in turn forces more liquidations. For instance, at an ETH price of around $655, more than $70 million worth of ETH collateral becomes liquidatable. If this price is breached, the resulting liquidations would add further selling pressure, pushing ETH prices down further and triggering additional rounds of liquidation. However, those prices can rebound sharply once the liquidations are complete. Thus, borrowers not only lose their collateral but may also need to buy it back at a higher price, compounding their losses.
However, DeFi liquidation mechanisms are evolving to be more borrower-friendly. New protocols like Curve’s LlamaLend, Fluid, and Euler V2 offer innovative approaches resulting in less disruptive liquidations.
Curve’s LlamaLend employs soft liquidations, gradually converting a borrower’s collateral into stablecoins rather than liquidating it all at once. This helps borrowers avoid sudden losses during market volatility.
Euler V2 introduces a modular framework, with independent vaults for each asset, allowing for customized risk management and more efficient liquidation processes.
Fluid adds another layer of innovation with its tick-based system, grouping users’ collateral and debt into ranges to enable seamless liquidations across multiple users at once.
These advancements in liquidation mechanisms aim to minimize borrower disruption while maintaining the protection of lenders’ principal. When lenders feel confident their capital is secure, they are more likely to supply liquidity. This increased liquidity further enhances the borrowing experience, as borrowers can access more funds, which drives higher utilization of the lent assets. Higher utilization leads to increased interest rates, ultimately benefiting liquidity providers (LPs) with improved yields. By continuously refining the experience for both lenders and borrowers, DeFi protocols can attract more capital, boost activity, and foster a healthier, more profitable ecosystem for all participants.
Market Making: Price curves adjusted seamlessly, depegs corrected 
Decentralised exchanges (DEXs) like Uniswap and Curve remained fully operational during the early August selloff, showing the resilience of the Automated Market Maker (AMM) model. AMMs allow for automatic trading of digital assets without the need for traditional order books, using mathematical formulas to adjust token prices based on the ratio of assets in the pool. Despite the increase in market volatility, DEXs experienced no downtime, and their AMM systems smoothly adjusted price curves to account for the rapidly changing market conditions.
Currently, most pools on DEXs have a fixed fee structure, with different tiers depending on the type of asset (e.g. low fees for stablecoin pairs, high fees for more volatile assets). This static model limits the ability of LPs to adapt to changing market conditions. Dynamic fees, a new feature proposed in Uniswap V4, would have enabled LPs to benefit from the August volatility by automatically charging higher swap fees. This would allow LPs to capture more value, offsetting potential IL. During calmer periods, the fees would then lower, thus encouraging more trading activity. By optimizing returns across different market conditions, dynamic fees provide a more balanced experience for LPs.
[Chart: Lido vs EigenLayer]
Staking: Increased activity boosted fees and yields 
On Ethereum and other Proof-of-Stake (PoS) networks, validators earn rewards by performing execution tasks like validating transactions and creating new blocks. These rewards are directly influenced by network activity, particularly the demand for block space. Validators earn additional fees (“tips”) when users want to expedite their transactions, as well as capture Maximal Extractable Value (MEV) opportunities, a growing trend in staking. MEV refers to profits extracted by reordering, including, or excluding transactions within a block. Searchers—bots that identify and exploit these opportunities—share MEV with validators. Some common MEV strategies include:
Frontrunning: Identifying a profitable trade before execution and submiting an order first with a higher gas fee.
Arbitrage: Exploiting price differences between DEXs to profit from quick trades. If two DEXs list the same token at different prices, searchers can buy the cheaper one and sell it on the other DEX.
Liquidation: Claiming liquidation fees from borrowers whose collateral value fluctuates, forcing a sell-off to repay lenders.
Staking rewards increase in direct proportion to network activity—the more transactions, the greater the fees and MEV rewards. This was evident in early August when market volatility surged, driving up on-chain activity. On Ethereum, gas fees briefly spiked to over 50 gwei (approximately $0.85) from the average baseline of 7 gwei (roughly $0.12). This increase in gas fees translated directly into higher yields for stakers as validators captured more fees, reinforcing staking’s role as a foundational yield-generating mechanism within DeFi.
Moreover, ETH staking yields serve as a baseline for yield across DeFi. For example, lending rates are benchmarked against staking yield in DeFi. Since lending involves additional risks, DeFi protocols typically offer higher rates than staking to remain competitive. If lending rates drop lower, investors could borrow from DeFi apps, stake the borrowed funds, and profit from the yield difference. This dynamic helps anchor lending rates in DeFi and provides a floor for yields across the broader ecosystem.
Bridging: Cross-chain liquidity remained robust 
Cross-chain bridges—essential infrastructure for enabling the transfer of assets across different blockchain networks—operated smoothly despite the market stress. Bridges like Across and Stargate, two of the leading protocols in the space, continued to facilitate high volumes of asset transfers without liquidity shortages or significant delays, ensuring that users could move their funds freely and efficiently.
Bridging volume spiked to $678 million on August 5th, according to DefiLlama, as users and arbitrageurs moved assets across chains to capitalize on price discrepancies and liquidity opportunities. This spike in activity was driven by the need to reposition assets during the market turbulence. The ability of bridges to handle this sudden influx of activity without disruption speaks to their growing robustness and importance within the broader DeFi ecosystem.
One of the biggest challenges of cross-chain bridges is maintaining liquidity across multiple networks simultaneously. During times of high market activity, liquidity shortages can happen on one side of the bridge, causing delays or even failures in moving assets. However, recent innovations have helped solve this issue:
Across uses a unified liquidity pool on Ethereum’s main network. Instead of needing separate pools of assets for each blockchain, Across keeps most of its liquidity in one place and only moves funds to other networks when needed. This allows Across to react quickly and send liquidity to where it’s needed most, preventing shortages and keeping fees low.
Stargate’s V2 protocol introduces a new system that dynamically moves liquidity where it’s needed using an AI-driven tool called the AI Planning Module (AIPM). AIPM constantly monitors the liquidity on each network and adjusts fees and rewards to incentivize balanced liquidity across chains.
In the long run, as DeFi continues to evolve and more Layer 2 solutions and alternative Layer 1 chains emerge, the role of cross-chain bridges will only become more critical. Ensuring that liquidity flows freely across chains, regardless of market conditions, is essential to maintaining the efficiency and interconnectedness of the DeFi ecosystem.
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Download the "DeFi 3Q24 Report" report here (PDF)

Through Q3 2024, the decentralised finance (DeFi) ecosystem experienced a turbulent journey. Anticipation was high for another ‘DeFi Summer,’ fueled by signific

DeFi 3Q24 Report

Stress test, liquid restaking, and the slow rotation back into yield

Decentralised exchanges are a critical component in DeFi, allowing assets to trade seamlessly without centralised order books. Yet despite their role as a foundational layer, automated market makers (AMMs) have struggled to scale as institutional-grade venues for liquidity. The structural cost of impermanent loss has consistently undermined returns, with empirical data showing that most liquidity providers underperform the simplest possible benchmark: holding their assets.
Many improvements have been attempted, such as concentrated liquidity strategies, which have improved efficiency at the margin but remain extremely complex to operate and still suffer from technical frictions like loss-versus-rebalancing (LVR).
[Chart: Yield Basis]
In practice, most pools rely on incentive schemes to offset these structural losses. While incentives may temporarily compensate providers, they add yet another layer of risk: for retail users, the promise of double-digit yields is often tied to volatile assets, for protocols, subsidies become an ongoing expense to maintain liquidity and for institutional allocators, this model is fundamentally unacceptable. Capital cannot be deployed into structures that rely on external incentives while consistently lagging behind their benchmarks.
Here enters YieldBasis, a protocol designed to eliminate impermanent loss by restructuring how liquidity provision is built. Instead of requiring users to supply both sides of a pool, YieldBasis allows a single-asset deposit and automatically borrows the corresponding counter-asset to form a balanced position. The result is a systematically maintained leverage, ensuring that providers track the linear performance of the underlying asset while still earning trading fees.
In this report, we will explore why impermanent loss has remained the central barrier to capital deployment in AMMs and how YieldBasis proposes a structural solution. We then move from theory into practice, examining the mechanics of leveraged liquidity and its integration with Curve Finance. Building on this, we analyse the economic and governance design, assess the market potential across wrapped, restaked, and idle Bitcoin, and finally consider the key risks that must be addressed for institutional adoption.
The Problem: Impermanent Loss as a Barrier
Automated market makers (AMMs) have been a cornerstone of DeFi, providing continuous liquidity without centralised order books. But the very design that makes AMMs elegant also embeds a structural cost: impermanent loss.
For retail participants, impermanent loss often hides beneath the promise of double-digit yields. For institutional allocators, however, it is the single most important deterrent to deploying capital into liquidity pools. The inability to keep pace with simply holding the underlying assets has constrained AMMs from scaling as a serious venue for capital.
The Mechanics of Underperformance
Impermanent loss (IL) occurs whenever the market price of assets diverges from the ratio held in an AMM pool. From that moment, the value of a liquidity provider’s position underperforms in terms of its total value compared with simply holding the assets outright. This underperformance appears immediately once prices move away from parity, even if no further trades take place.
The cause lies in the design of AMM pricing curves. As prices shift, the combined value of assets in the pool increases less than it would through direct ownership, creating a structural shortfall for LPs. This is not the result of rebalancing or trading activity, but an inherent property of AMMs themselves. However, impermanent loss arises only when the pool moves away from parity, restoration of parity returns it to a state with no impermanent loss.
Because of this, impermanent loss is both unavoidable and persistent. It represents the built-in cost of providing liquidity: traders gain reliable access to markets, while liquidity providers accept the risk of underperformance.
We can even go a step further. If instead of splitting between BTC and USDC, the investor had held the full $1,000 in Bitcoin, the position would now be worth $2,887.70. Against this outcome, providing liquidity looks even less attractive, with a shortfall of nearly $1,188, or more than 40%.
Empirical Evidence of Underperformance
And while you might think that the example above was just the result of cherry-picked data, you would be wrong. In fact, countless academic studies over the past few years have reached the same conclusion: for most participants, providing liquidity in AMMs has been an unprofitable business.
Drossos et al. (2025) analysed 700 days of Uniswap v3 data across nine pools to test whether liquidity provision beats simply holding the assets. Using a loss-versus-holding (LVH) framework, they compared impermanent loss (IL) to fee income across thousands of LP positions.
The results showed that most strategies failed. Nearly half of all positions (49.5%) generated negative returns, and the majority of outcomes clustered within a narrow band of –1% to +1%. On average, LPs realised an IL of –3.8% compared to a buy-and-hold portfolio, meaning that fee income rarely offset the losses from price divergence.
Why Capital Stays Away
Retail providers often tolerate the structural drag of impermanent loss because they are lured by short-term incentives and high advertised yields. Larger capital allocators, however, cannot justify the economics. Their performance is benchmarked against simple holding strategies, and an allocation that underperforms Bitcoin by 12.6% over a cycle is untenable.
There are ways to hedge impermanent loss, but they are far from straightforward. LPs can, in theory, reduce their exposure by pairing positions with perpetual futures, rebalancing ranges, or using options to buy back gamma. Falkenstein (2025) also shows that LPs who run arbitrage strategies alongside their positions can capture the profits that normally leak to external traders, offsetting part of their losses.
The problem is that all of these methods introduce new costs, require active management, and demand a level of sophistication that most participants do not have. It is not realistic to assume that the average liquidity provider will be able to execute complex arbitrage programs or manage derivative overlays on top of their LP position. For the vast majority, impermanent loss remains a structural drag, which is why passive liquidity provision continues to underperform holding.
This difficulty in achieving consistent profitability also helps explain why DEX total value locked (TVL) has stagnated since the 2021–2022 peak. Despite market recovery in 2023–2025, DEX TVL remains well below its previous highs, while lending protocols and liquid staking have regained momentum.
DEXS TOTAL VALUE LOCKED [INCLUDE_CHART]
https://features.llama.fi/uploads/image/5e6e300e-2087-418c-bd4e-750601397fc3
The inability of most LPs to outperform simple holding has constrained AMMs’ ability to attract and retain capital at scale, leaving them lagging behind other sectors of DeFi in both institutional adoption and TVL growth.
The Solution: YieldBasis and Leveraged Liquidity
But would it not be nice just to provide liquidity and earn trading fees without having to deal with impermanent loss? YieldBasis thought the same thing and came up with a way to do this through what it calls leveraged liquidity.
To understand leveraged liquidity, recall how a normal AMM works. As soon as prices move away from parity, liquidity providers experience impermanent loss: the value of their position grows less than if they had simply held the assets outright. This shortfall appears immediately once the pool drifts from balance, even if no new trades occur. The reason lies in the AMM curve itself, where LP value grows sublinearly with price (following √p rather than p in the case of CPAMM).
YieldBasis addresses this with compounding leverage. By borrowing against the pool position share, the system adds a controlled slice of extra exposure and continuously rebalances it to maintain roughly 2x effective exposure. Crucially, this mechanism eliminates IL without waiting for further trades: the shortfall is offset structurally as soon as prices move. Mathematically, when leverage is fixed at 2, the sublinear √p curve is squared back into a linear p curve, so the LP’s position tracks the asset directly. In practice, this is achieved through a dedicated special-purpose AMM that handles re-leveraging, implemented via Curve pools with crvUSD borrowing.
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Download the "YieldBasis: The Future of Bitcoin Yield" report here (PDF)

Decentralised exchanges are a critical component in DeFi, allowing assets to trade seamlessly without centralised order books. Yet despite their role as a found

YieldBasis: The Future of Bitcoin Yield

A leveraged AMM design that turns BTC liquidity into real yield

Report by DL Research based on content provided by RedStone
Key Takeways
[Chart: RedStone Oracles]
➤ Oracles are DeFi's foundational backbone, powering the entire $205+ billion ecosystem by transforming static blockchains into programmable financial systems, but today's complex multi-chain environment demands next-generation oracles that deliver modular, customizable, and context-aware data pipelines beyond traditional market price feeds.
➤ RedStone is the first modular blockchain oracle offering both push and pull models with sub-2.4ms delivery capabilities. Over 170 teams across 110+ chains chose RedStone as their oracle provider for its highest reliability standards and pioneering innovations in LRT feeds, yield-bearing stablecoins feeds, Bitcoin PoR oracles, and RWA tokenization feeds, becoming the fastest-growing oracle service by scaling from its first DeFi integration in early 2023 to $9 billion Total Value Secured by September 2025.
➤ RedStone is securing dominance across emerging blockchain ecosystems for both Push and Pull oracles, demonstrating that new perspective chains developing the frontier of onchain finance increasingly choose RedStone over competitors when selecting oracle infrastructure.
➤ RedStone's acquisition of Credora's DeFi ratings platform creates a vertically integrated blockchain data ecosystem, expanding beyond oracle services into comprehensive DeFi market intelligence. This integrated approach is exemplified by RedStone's role as official oracle provider for major tokenized assets including BlackRock BUIDL, Apollo ACRED, VanEck VBILL and Hamilton Lane SCOPE, positioning the company to deliver RWA data feeds, intelligence and ratings for the RWA and onchain finance convergence.
Summary Of RedStone Products
RedStone Oracles: The DeFi Standard 
RedStone RWA Oracle: Unlocking DeFi and TradFi Convergence 
RedStone x Credora: DeFi strategies and assets Ratings 
RedStone Bolt: The Fastest Blockchain Oracle 
RedStone Atom: The First Liquidation Aware Oracle 
HypeStone: RedStone x Hyperliquid 
RedStone AVS: Blockchain Oracle with EigenCloud Security 
RED Token: The RedStone Flywheel
Why Are Blockchain Oracles The Backbone of DeFi?
DeFi started as a niche experiment in 2020. Throughout the past 5 years, it has become one of the fastest-growing sectors in global finance. Imagine a small city transforming into a global metropolis in just a few years. With such growth, the means of transportation must evolve. The rails and networks beneath the surface decide whether the city thrives or falters. Oracles are that infrastructure — the power that will decide how far and how fast DeFi can go.
According to DeFiLlama, DeFi accounts for over $205 billion in total value locked (TVL) as of September 2025, spread across thousands of protocols and assets spanning lending markets, stablecoins, derivatives, and tokenized real-world assets. Each year, hundreds of new projects and financial instruments emerge, accelerating the shift of capital formation, trading, and settlement into onchain systems. The direction of travel is unmistakable: finance is expanding onchain. As this evolution deepens, the importance of resilient infrastructure compounds, because without reliable rails for data and execution, the entire system becomes fragile.
Blockchains were designed as closed systems, deterministic machines that guarantee consensus but know nothing of the world beyond their current state. This isolation ensures security but comes at a cost: without external inputs, a blockchain cannot support any of the mechanics that define functioning markets. The bridge between deterministic code and dynamic reality is the oracle.
Oracles have been the invisible infrastructure behind every breakthrough in decentralized finance. By feeding blockchains with prices, rates, and proofs from the outside world, oracles transformed static ledgers into programmable financial systems. They powered the transition from speculative ICO capital formation into sustainable, revenue-generating DeFi protocols. Today, this massive ecosystem relies on oracle infrastructure, throughout Ethereum and its Layer 2s, alternative EVM networks like Avalanche and BNB Chain, as well as high-performance non-EVM ecosystems such as Solana, Sui, Aptos, and TON. And growth is not stopping here: as new primitives emerge with, i.e., MegaETH, Monad, Plasma, and traditional finance deepens its onchain exposure with, i.e., Arc, Tempo, and Converge, the demands on oracles will only intensify.
The increasing complexity in DeFi, coupled with a surge in participants, has created a pressing demand for a new generation of oracles. As chains become as ubiquitous as servers in Web2, oracles must evolve into modular systems that can scale, adapt, and innovate as quickly as the protocols they support. Next-generation oracle networks must deliver not just price feeds, but reliable, customizable, and context-aware data pipelines capable of powering a diverse array of protocols and assets, from yield-bearing stablecoins to RWA tokenization.
How RedStone Became the Fastest-Growing Oracle 
What specific aspects of RedStone's design enabled this rapid conquest of the DeFi ecosystem?
The systematic, professional and hard-working team co-founded by Jakub Wojciechowski and Marcin Kaźmierczak, along with their well-executed product growth strategy built on flexibility, market adaptability, and rapid execution, represents one of the defining factors behind RedStone's success. However, technical excellence stands as RedStone's defining advantage. Its price feed service delivers market-leading security, proven by protecting major DeFi protocols including Compound, Morpho, Ethena, Spark, Venus, Securitize, Drift and Kamino. Beyond traditional price feeds, RedStone pioneered innovative feed types: fundamental price feeds sourced directly from smart contracts, RWA oracles, and RedStone Bolt - the fastest push oracle at sub-2.4 milliseconds. RedStone emerged from the pressing need for oracle solutions during a period when infrastructure limitations severely constrained DeFi builders. This necessity drove RedStone's modular design, which directly addresses the blockchain industry's evolving demands for scalability and diverse price feed offerings.
RedStone’s motto is simple, yet very adequate: By builders, for builders.
But how does RedStone’s modular framework compare to other industry leaders, Chainlink and Pyth?
Chainlink: Push Oracle Grandfather 
Chainlink pioneered the oracle space and fundamentally ignited the DeFi ecosystem, delivering the technology that powered "DeFi Summer" in 2020. Its AggregatorV3 push model interface became the industry standard, with the majority of DeFi developers building on its widely-adopted framework.
However, Chainlink's monolithic architecture has become increasingly constraining. The platform requires expensive full network redeployments for each new ecosystem, limiting it to just 26 chains with zero non-EVM support after five years of operations. This capital-intensive, non-scalable infrastructure creates economic sustainability challenges and prohibitively high costs for supporting innovation cycles. As a result, Chainlink has shifted from oracle innovator to legacy maintainer, predominantly managing existing clients rather than pioneering new DeFi primitives alongside emerging teams.
Pyth: Pull Oracle Advocate 
Pyth Network pioneered the pull oracle model, bringing a fundamentally different approach to the oracle space that challenged Chainlink's push-based dominance. The platform achieved significant success by introducing cost- efficient, on-demand price updates that only occur when users request them, helping foster greater innovation and fresh perspectives in the oracle ecosystem.
However, Pyth's architecture creates several constraints. Its cross-chain delivery depends entirely on Wormhole's messaging system, creating a single point of failure that has caused feed disruptions during consensus issues. The platform lacks push model support, making it incompatible with existing DeFi infrastructure predominantly built on Chainlink's AggregatorV3 interface—forcing protocols to undergo costly migrations. Additionally, Pyth's reliance on third-party data providers severely limits custom use cases and innovation, as new asset support depends entirely on external providers meeting arbitrary thresholds such as trading volume rather than protocol-specific needs.
RedStone: Push & Pull Blockchain Oracle. By Builders, For Builders 
As highlighted, there are currently two main approaches to oracles: push and pull models. However, providers often strongly defend their chosen methodology, claiming it to be the only viable solution for creating an optimal oracle framework.
That said, it is increasingly evident that a flexible and customizable approach is essential for success, as every team follows its unique path from designing a framework to implementing it and fostering protocol growth.
RedStone treats innovation as operational reality, not marketing speak. It is rapidly expanding its data product line across multiple dimensions, aiming to become the definitive blockchain oracle and data layer that serves builders with unique solutions tailored to specialized sub-sector needs. In the next section, we'll explore the publicly visible dimensions of RedStone's expansion strategy.
RedStone: The Most Secure, Scalable, and Innovative Oracle Network?
Blockchain oracles are not "one-size-fits-all" solutions. RedStone recognizes this fundamental truth and operates at the frontier of oracle design, accommodating every builder's unique requirements. While oracles remain the core of RedStone's offering, its ecosystem and offering has strategically expanded into complementary data services, including acquiring Credora’s DeFi ratings platform, to build a vertically integrated blockchain data ecosystem that transforms how DeFi protocols access and consume critical market intelligence.
Let's explore the full spectrum of RedStone's product suite.
RedStone Oracle: The DeFi Standard 
RedStone's blockchain oracle represents the flagship offering, delivering any asset to any blockchain through customized methodologies while maintaining the highest security standards with optimized resource expenditure. This capability has propelled RedStone to become the fastest-growing oracle service and the industry leader in quality and innovation.
What sets RedStone apart is its comprehensive data sourcing approach. The platform collects information directly from onchain sources, offchain APIs, and bespoke data providers including DEXes, CEXes, data aggregators, trading firms and TradFi/crypto custodians. This highly customizable data sourcing engine enables tailored solutions such as the LBTC/BTC feed for Lombard (the first Proof of Reserves Bitcoin LST oracle), the Proof of Reserves oracle for Ethena’s USDtb, with a bespoke monitoring dashboard, and dedicated validator tickets implementation for Puffer.
The RWA Oracle: Unlocking DeFi and TradFi Convergence
The global securities market, worth nearly $400 trillion, is extending onchain. Institutions like BlackRock and Apollo are already distributing tokenized private credit, treasuries, and private equity. According to RedStone’s Real World Assets report, DeFi has embraced this shift, with tokenized RWAs reaching $29 billion as of September 2025, and tokenized treasuries alone growing 85% in the first six months of 2025.
RWA oracles are building the foundation for tokenized assets to scale into the trillions, and for the next chapter of DeFi to be written on trusted, institutional-grade data. RedStone delivers innovative and tailored solutions, propelling that revolution.
RedStone x Credora: DeFi strategies and assets Ratings
For years, DeFi and TradFi operated on different principles: one open and fast, the other regulated and structured with risk frameworks at the heart of it. Now those two worlds are converging. RedStone has acquired Credora, the leading DeFi-native ratings platform. This creates the first oracle that delivers both real-time prices and DeFi strategies risk ratings. Protocols and users gain the tools to build safer and more transparent markets. The results are already visible - markets on Morpho that have Credora by RedStone rating grow faster than the ones lacking the rating.
Download the full report here
Download the "RedStone: The Fastest-Growing Blockchain Oracle Report" here (PDF)

Report by DL Research based on content provided by RedStone Key Takeways [Chart: RedStone Oracles] ➤ Oracles are DeFi's foundational backbone, powering the enti

RedStone: The Fastest-Growing Blockchain Oracle

Modular oracle infrastructure powering yield-bearing collateral and LSTs

Key Insights
Stablecoins are now the dominant form of onchain money, but usage remains fragmented across chains and infrastructures.
General-purpose blockchains treat stablecoins as secondary assets, while issuer-led chains prioritise control, leaving a gap for a neutral, settlement-focused layer.
Plasma is purpose-built for stablecoin settlement, embedding native modules such as gasless transfers, stablecoin-based gas, and confidential payments directly into the blockchain.
DeFi functionality and deep liquidity are available from day one through partnerships with Aave, Curve, Fluid, Wildcat, Pendle, Ethena, and Binance Earn.
Plasma’s differentiation rests on three pillars: accessibility with sustainability (free USDT transfers funded by programmable activity), integrated yield and liquidity (stablecoin balances made productive at scale), and neutrality with a decentralisation roadmap (avoiding reliance on any single issuer or sponsor).
A phased roadmap, from launch and liquidity seeding to decentralisation, the pBTC bridge, and multi-stable integrations, positions Plasma to unify stablecoin activity across retail, institutional.
[Chart: Plasma]
Summary
Stablecoins have moved from the periphery of digital assets to their centre of gravity. They now account for the majority of transactional volume in decentralised finance and are increasingly used in payments, remittances, financial instruments and as a dollar-denominated store of value. Their appeal is rooted in four attributes: they are permissionless, programmable, cheap, and fast. For millions of users globally, stablecoins represent access to reliable digital dollars outside the constraints of traditional banking infrastructure.
Regulation is gradually catching up. While frameworks remain uneven across jurisdictions, the direction is toward recognition and adoption. The combination of user demand, institutional interest, and regulatory clarity positions stablecoins as one of the most durable segments of the digital asset ecosystem.
The Challenge of Fragmentation 
Despite this growth, the market is highly fragmented. Stablecoin activity is spread across multiple blockchains, none of which offer the combination of scale, usability, and neutrality required to consolidate flows at global level.
General-purpose chains such as Ethereum, Solana, and Layer 2s have supported early adoption, but stablecoins remain secondary to their core design. This creates friction: users face high fees, fragmented liquidity, and inconsistent integration across scaling layers. Tron, while dominant in remittances, serves a narrow use case and lacks the depth of DeFi activity or broader functionality beyond simple transfers. On the other side of the spectrum, issuer-led and corporate-backed chains such as Arc, Stable, and Tempo offer compliance and distribution advantages, yet they remain centralised or tied to single issuers, raising questions about neutrality and long-term resilience.
The result is an infrastructure gap. Stablecoins are growing rapidly, but the rails supporting them are either broad and inefficient or narrow and controlled. What is missing is a settlement layer that combines efficiency, neutrality, and scalability built specifically for them.
Plasma’s Proposition
Plasma was designed to solve this fragmentation. It is a settlement layer purpose-built for stablecoins, embedding them as first-class primitives at the architectural level. Features such as gasless USDT transfers, stablecoin-based fees, and confidential payments are combined with PlasmaBFT consensus to deliver sub- second finality, predictable economics, and high throughput.
Plasma’s ecosystem strategy ensures it launches not as a bare network, but as a financial stack. Partners such as Curve and Fluid, Aave, Euler, Wildcat, Binance Earn, Ethena, and Pendle provide a complete DeFi ecosystem from day one. Merchant rails are established through Yellow Card, BiLira, and other payment partners, linking stablecoin settlement directly into real-world corridors.
The design extends beyond stablecoins into Bitcoin through pBTC, a canonical omnichain asset secured via MPC-based bridging. Together, multi-stable support and pBTC integration position Plasma as a neutral settlement hub, not a single-issuer chain.
The competitive landscape is heating up. Tron dominates retail remittances, Ethereum anchors institutional flows, and new entrants such as Arc, Stable, and Stripe’s Tempo are targeting niches. Plasma differentiates itself through three pillars:
Accessibility with sustainability: free USDT transfers as an onboarding funnel, funded by revenue from programmable activity and institutional services.
Integrated yield and liquidity: partnerships that make stablecoin balances productive at scale.
A focus on emerging markets to offer tangible and resilient solutions to countries where access to stable financial infrastructure is limited and inflation erodes purchasing power.
This positioning sets Plasma apart. It is neither a general-purpose blockchain nor an issuer-led environment, but a neutral settlement layer designed to consolidate fragmented stablecoin activity across the ecosystem.
Roadmap & Catalysts
Plasma’s roadmap compounds adoption in sequenced waves. The immediate focus is on mainnet launch and the token generation event, establishing the technical and economic foundations of the network. Strong partnerships will bootstrap liquidity and deliver a strong start, which will require continued attention and reinforcement to sustain growth.
The next stage emphasises decentralisation and asset expansion. Plasma follows a progressive decentralisation model, beginning with a trusted validator set and broadening participation as the protocol hardens. The launch of the canonical pBTC bridge extends the network beyond stablecoins to Bitcoin, anchoring liquidity from the world’s largest digital asset. Additional stablecoins and regional issuers will be integrated progressively, reducing reliance on any single issuer and widening adoption.
In the longer term, Plasma aims to become a venue for institutional settlement and programmables. Compliant privacy, treasury-grade infrastructure, and programmable yield extend functionality into FX settlement, corporate treasuries, and structured DeFi applications. At full maturity, Plasma positions itself as the neutral settlement layer for digital dollars.
Risks and Resilience 
Plasma acknowledges that risks remain. Regulatory developments are uneven across jurisdictions, while technical challenges such as bridge security, validator concentration, and gasless economics are industry- wide concerns. Competitive pressure is intensifying as new chains emerge. Plasma mitigates these risks through progressive decentralisation, MPC-secured bridging, slashing mechanisms, and anchored liquidity partnerships.
Outlook
In a market defined by both innovation and fragmentation, Plasma offers a differentiated model: a chain purpose-built for stablecoins, architected for efficiency, designed for neutrality, and sequenced for sustainable growth.
If executed effectively, Plasma has the potential to unify stablecoin settlement across retail, institutional, and DeFi markets, and to serve as the infrastructure where digital dollars achieve global scale.
Introduction
Stablecoins have rapidly evolved into the dominant form of onchain money, now accounting for the largest share of transactional volume across decentralised finance, remittances, and digital payments. Their appeal rests on four attributes: permissionless access, programmability, low cost, and speed. For users in both developed and emerging markets, stablecoins function as digital dollars, serving as a store of value, a medium of exchange, and a vehicle for cross-border settlement. Regulatory frameworks, while uneven, are gradually converging toward recognition of stablecoins as legitimate components of the financial system, creating a supportive environment for continued adoption.
Yet the market remains fragmented. Activity is spread across multiple blockchains, none of which combine scale, usability, and neutrality in a single design. General-purpose chains such as Ethereum, Solana, and Layer 2s have supported adoption but treat stablecoins as secondary tokens rather than core infrastructure. This leads to high costs, fragmented liquidity, and inconsistent user experiences.
The result is a market at an inflection point: demand for stablecoins continues to grow, but the infrastructure to support that growth at scale has yet to emerge. What is needed is a settlement layer designed specifically for stablecoins, one that unifies fragmented activity, supports multiple issuers, and provides both efficiency and openness.
Plasma was created with this vision. It is a network designed around stablecoins as its foundation, aiming for inclusivity across all use cases, from everyday payments and remittances to DeFi and institutional settlement. To achieve this, Plasma introduces features such as gasless transfers, stablecoin-based fees, and confidential payments, alongside near-instant settlement, ultra-low costs, and integrations that anchor liquidity across the ecosystem.
This report evaluates Plasma’s design and positioning within the stablecoin market. It opens with an overview of market dynamics and adoption drivers, highlighting why a stablecoin-centric chain is strategically relevant. It then reviews Plasma’s architecture and performance model, followed by an analysis of its liquidity strategy and key partnerships. A review of the competitive landscape and key risks comes next. The report concludes with Plasma’s roadmap and catalysts, and an assessment of its long-term potential as a neutral settlement.
Stablecoin, a Market at Blockchain Scale
Stablecoins are no longer a side product of crypto. They are a market of their own, rivaling entire blockchains in scale and driving adoption across DeFi, payments, and remittances. Institutions are entering, governments are regulating, and issuers like USDT and USDC now act as global financial entities.
This section maps that landscape, from supply growth and usage patterns to institutional demand, regulation, and case studies like Tron, to show how Plasma can position itself as the dedicated chain for stablecoin settlement, unifying a market that is expanding faster than any other in crypto.
The Scale of the Stablecoin Market 
[Chart: Tron vs Ethereum vs Plasma]
Supply and Transactions Show Explosive Growth 
Supply growth has been extraordinary. At the beginning of 2024, the aggregate stablecoin supply stood at around $130 billion. By January 2025 this had climbed to $207 billion, representing a 59% increase over the year.
Growth accelerated further into 2025: by August, supply had reached $280 billion, up 40% year-to-date and 75% compared with the same point the previous year.
Stablecoins now account for roughly 1% of the entire U.S. dollar supply, up from 0.63% at the start of 2024, a significant increase given that regulation is not yet fully established.
Once adjusted to remove inorganic flows, transaction counts average around 120 million per month, with recent peaks between 180 and 240 million, more than double the 100 million recorded in August 2024, underscoring clear adoption growth.
Stablecoin Activity Is Now Comparable in Size to Leading Blockchains
At first glance, hundreds of millions of stablecoin transactions per month may appear large, but the true scale only becomes clear when measured against networks that define the industry’s throughput benchmarks.
Checking the network activity, Ethereum processes roughly 1-1.5 million transactions per day. This translates to around 30-45 million per month unadjusted. Still on a non-adjusted basis, Base currently handles around 9 million daily transactions, or about 270 million per month. BNB Smart Chain averages 12 million per day, equivalent to 360 million per month. Arbitrum processes around 90 million monthly transactions, while Tron records close to 280 million transactions monthly. Solana stands apart with scale unmatched by most networks, consistently recording over 2 billion non-vote (that is, organic) transactions per month, reflecting both high user activity and applications optimised for rapid throughput.
The implication is clear: stablecoins, though not a blockchain themselves, have reached a point where their transactional footprint rivals the largest networks in the industry.
A Surge in Issuers
Another important dimension of the market is the breadth of stablecoins being issued and the speed at which new entrants have appeared. In January 2023, only three stablecoins, DAI, USDT, and USDC, had market capitalisations above $1 billion. Today, that figure has grown to ten, a sign of both investor demand and issuer confidence in the asset class.
Despite this proliferation, dominance at the top remains clear. USDT and USDC together account for the majority of the supply. USDT holds around 60.6% of the market, while USDC accounts for 24.2%. Since the “sunset” of BUSD in early 2023, these two have consistently maintained their lead, with USDT fluctuating between 60% and 70% of the market share and USDC between 18% and 25%. In practice, this means that all other stablecoins are competing over a residual market share of about 25%.
Different Chains, Different Uses 
Stablecoins are distributed across many blockchains, but their supply and activity remain concentrated on a few dominant networks. Ethereum leads with roughly 52% of total stablecoin supply, followed by Tron with 29%. Together, these two account for 81% of the market, highlighting their role as the primary hosts of stablecoin liquidity.
When viewed through the lens of transaction volume, the picture changes again. Ethereum leads with 42% of stablecoin volume, closely followed by Tron with 38%. Together, they account for around 80% of the total value moved. By comparison, BNB Smart Chain represents only 8.7% of volume, and Solana 5.1%.
Key Insights
Stablecoins have reached the scale of entire blockchains, with transaction volumes and activity that rival or exceed leading L1s. At the same time, supply is expanding with more issuers and tokens entering the market, while usage remains fragmented across chains and contexts. Ethereum is home to large institutional flows, Tron drives remittances, and BNB Smart Chain or Solana capture high-frequency retail activity.
Plasma’s positioning builds directly on these dynamics. By consolidating stablecoin activity within a purpose- built chain, it provides an infrastructure layer designed for growth while reducing the inefficiencies created by fragmented issuance and use across multiple networks.
Download the full report here
Download the "Plasma Redefining Stablecoin Settlement" report here (PDF)

Key Insights Stablecoins are now the dominant form of onchain money, but usage remains fragmented across chains and infrastructures. General-purpose blockchains

Plasma: Redefining Stablecoin Settlement

A purpose-built chain for USDT-denominated payments

Scope of the research report [Chart: BlackRock BUIDL vs Ondo Yield Assets vs Centrifuge] Tokenisation is expanding rapidly across financial markets. From stable

The State of RWAfi: Q1 2026

Tokenised treasuries, equities, and credit cross from pilot to institutional rails

Report by DL Research based on content provided by RedStone
[Chart: RedStone Oracles]
Key Takeaways
Credora introduces DeFi-native risk ratings that translate complex protocol risks into an A–D scale based on Probability of Significant Loss (PSL), making downside risk comparable across assets, markets, and vault strategies for the first time.
Following RedStone’s acquisition, Credora ratings can now flow through oracle infrastructure alongside price data, enabling protocols to dynamically adjust parameters and present risk intelligence transparently at the point of allocation.
Early integrations demonstrate measurable impact: rated vaults on Morpho show faster TVL growth and higher capital retention than unrated peers, while Spark’s integration surfaces both real-time ratings and risk profiles directly in user interfaces.
By anchoring on historical default data and updating continuously, Credora transforms risk from static disclosure into a live signal, preventing information asymmetry and enabling risk-adjusted capital allocation at scale.
As DeFi converges with RWAs and institutional capital, unified risk ratings become foundational infrastructure that supports user protection and enables protocols to meet the standards required by professional capital allocators.
2026 is the year of Risk-Aware DeFi and industry maturation by leveraging data-driven risk ratings. In the coming months, we can expect wallets, FinTech platforms and AI agents to integrate Credora outputs for more informative capital allocations.
1. Risk Ratings: What They Are and Why They Matter
DeFi generates continuous data but lacks a unified way to express downside risk at the point of capital allocation. The upside is visible—APYs are displayed prominently, returns are easily benchmarked. The downside remains fragmented across protocol parameters, liquidity assumptions, oracle design, and collateral dependencies, rarely aggregated into a common signal. This mismatch has contributed to repeated DeFi failures, where loss events emerge from interactions between leverage, collateral reuse, and liquidity constraints that evolve systemically while remaining invisible to users.
Traditional credit markets solve this through uniform risk classifications. A corporate bond yielding 8% means something fundamentally different at BB versus AAA. DeFi lacks this abstraction layer: APY is often treated as a standalone metric, flattening fundamentally different risk profiles into superficially comparable opportunities.
This report lightly introduces Credora’s DeFi-native risk framework built around Probability of Significant Loss (PSL): an annualized measure of the likelihood that an exposure experiences material principal impairment due to insolvency or bad debt. By mapping PSL to a consistent A–D rating scale, complex risk dynamics become a comparable, continuously updated signal. Credora’s ratings update daily, making downside legible before capital is deployed.
The above table mirrors the role credit ratings play in traditional finance. Agencies like Moody’s, S&P, and Fitch provide standardized views on default risk, allowing investors to compare instruments on a common scale. Until recently, DeFi lacked an equivalent. Risk was inferred from APYs, TVL, or via ad-hoc heuristics.
Credora fills that gap by introducing a unified and easily-mappable risk language native to on-chain systems.
Following RedStone’s acquisition of Credora, the integration creates the first oracle to deliver price data and risk intelligence together. RedStone now answers not only “What is the price?” but also “How risky is this exposure?”. Protocols can auto-adjust collateral ratios based on live credit scores, optimize lending parameters dynamically, and transparently present risk alongside price. This convergence solves a critical distribution bottleneck: risk data previously lacked the native delivery infrastructure that oracles provide for price feeds, limiting adoption despite clear demand.
The result is a shift from reputation-based decision-making to risk-adjusted allocation. Protocols can benchmark markets, vault curators can signal robustness, and users can compare opportunities beyond headline returns—with consistent risk classifications becoming particularly essential for institutional participants who require auditable frameworks for capital allocation.
Over time, standardized risk ratings raise the bar across DeFi, rewarding better design and discouraging fragile, disingenuous, or short-term yield engineering. The objective is not to eliminate risk, but to make downside legible before capital is deployed.
2. Credora: The DeFi Risk Ratings Standard
Credora is a DeFi-native risk ratings platform designed to bring standardized, comparable risk signals to onchain markets. Following the acquisition, Credora now sits directly alongside arguably one of the most technologically advanced and secure blockchain oracle layers, allowing protocols and users to consume comprehensive market data and risk intelligence together.
Credora produces ratings for three types of DeFi exposures: individual assets, lending markets, and vault strategies that combine multiple positions. The system translates complex financial data and risk dynamics into simple, actionable signals while maintaining methodological clarity for those who want to understand how ratings are constructed. Rather than static, descriptive analytics alone, ratings are designed to support real allocation decisions: lending, strategy construction, and capital deployment under uncertainty.
Why Credora Matters
DeFi historically lacked a common risk language. Capital flowed based on APY, TVL, or narrative strength, with little ability to compare downside risk across products. The collapse of Terra/Luna exemplifies this gap: allocators poured billions into Anchor Protocol’s 20% APY on what appeared to be a USD-denominated stablecoin strategy, yet the underlying insolvency risk remained invisible to 99% of participants until it materialized. Credora prevents events like this, by introducing a crypto-native equivalent of credit ratings, calibrated to real default behavior and designed to make such tail risks legible before deployment.
The result is:
Clear, comparable risk signals across DeFi assets and strategies
Improved risk-reward decision-making for users and protocols
Earlier detection of deteriorating risk profiles
Stronger incentives for protocols to improve design and resilience
Empirically, markets and vaults with Credora ratings have shown faster and more durable growth than unrated counterparts, reflecting reduced information asymmetry. Post-acquisition, the initial integration relaunched on Morpho and soon on Spark, with coverage expanding to additional protocols, vaults, and aggregators over time.
From Probability to Rating: The Credora Scale
Credora ratings are derived from:
Probability of Default (PD) defines the likelihood that a borrower or asset issuer will be unable to meet its debt or redemption obligations within a specified period (12 months). The PD forms the basis of Credora’s rating framework: an anchor PD is calculated from historical default data and adjusted using modifiers to map the risk to an implied rating.
Probability of Significant Loss (PSL) measures the probability that a lending market incurs bad debt exceeding 1% of principal, arising when liquidations fail to fully cover borrower debt and lenders take a loss.
These probabilities are mapped onto a familiar A–D letter scale, enabling direct comparison with traditional credit instruments.
All methodologies anchor to a single PD Curve, calibrated using historical default data from major credit rating agencies across multiple credit cycles (1990–2023). This ensures that:
A given letter grade corresponds to a comparable long-run default probability
Risk can be compared consistently across asset types (tokens, markets, vaults)
Onchain ratings are interpretable by institutional allocators
The curve is fitted using exponential interpolation and mapped into rating bands to maximize differentiation where most DeFi risk currently sits.
How Ratings Are Built
At a high-level, Credora assesses risk across three core layers: the asset layer (collateral quality, issuer risk, and default behavior), the market layer (liquidity, volatility, liquidation mechanics, oracle design), and the vault layer (strategy aggregation, curator incentives, governance, and operational control). Each layer is modeled using simulation tools like Monte Carlo simulations and stress testing and contributes to a single, unified rating. These ratings are updated in real time and mapped to a letter-grade scale (A+ to D) calibrated against traditional credit benchmarks.
Each rating begins with a quantitative anchor PD, estimated using models appropriate to the asset’s structure. Depending on the instrument, this may include:
Smart contract and custodian risk
Stress simulations of collateral and liquidity behavior
Structural credit-style models for strategy-driven stablecoins
Tail-risk analysis focused on reserve insolvency and redemption capacity
This risk basis is then adjusted using a structured set of risk modifiers that capture real-world considerations, including:
Smart contract risk: audit coverage, maturity, and exploit history
Legal and regulatory structure: licensing, enforceability, bankruptcy remoteness
Collateral quality: over-collateralization, reserve transparency, loss buffers
Governance and user protections: upgrade controls, timelocks, concentration
Liquidity and adoption: depth, usage history, and resilience under stress
These adjustments produce final PD and PSL estimates, which are mapped to a letter grade.
Token Coverage and Methodological Scope
Credora applies a unified scoring framework, adapted per token type, thereby allowing risk to be assessed at the correct abstraction layer. Currently, coverage includes (with exemplary assets):
Derivative Tokens: Wrapped Tokens (wETH), Liquid Staking Tokens (stETH), Liquid Restaking Tokens (eETH)
Stablecoins: RWA/Fiat-backed (USDT), Alternative-asset backed (USDS), Active strategy (USDe)
A Live Risk Oracle
Unlike traditional rating agencies, Credora operates as a continuous, automated system. Over 90% of the pipeline is machine-driven, enabling ratings to update as conditions change. Governance actions, liquidity shocks, or parameter changes can be reflected without delay.
In this sense, Credora functions as an "intelligent oracle”: transforming raw market, protocol, and unstructured data into actionable intelligence. As RedStone integrates this directly into its robust oracle stack, DeFi gains the ability to price not just assets, but risk itself.
The objective is straightforward: help capital avoid the next black-swan systemic failure by making the downsides visible before it materializes.
3. Case Studies: Morpho and Spark
Morpho and Spark are the first lending protocols to adopt Credora’s risk ratings as a native interface primitive. Both recognized that scale in DeFi lending requires more than yield discovery–it requires uniform, legible risk disclosure at the point of allocation.
Morpho: Risk at the Vault Level
Morpho is a peer-to-peer lending optimizer that introduced Morpho Vaults in early 2024–curated strategies managed by independent vault curators. With the launch of Morpho V2, customization and strategy differentiation expanded significantly at the curator level, making it harder for users to assess risk based on APY alone. As vault count and complexity increased, a new layer of visibility became necessary.
To solve this, Morpho integrated Credora as an opt-in rating layer for curators. Credora evaluates vault strategies individually, and approved vaults now display a letter-grade risk rating alongside APY in the Morpho interface. Each vault is treated as a portfolio: Credora estimates its Probability of Significant Loss (PSL) and maps it to the appropriate scale.
From a practical angle, let’s take a brief look at the Morpho WETH/USDT market and, at a high level, understand the basics of how Credora works. We start by analyzing the core market characteristics such as LLTV, liquidation incentives, and oracle configuration. On top of that, we look at how borrowers are actually positioned relative to the liquidation threshold (are they clustered near max LLTV or more conservative?), how likely they are to rebalance when they get close to that limit, the standalone risk of WETH as collateral, and the historical return and tail-risk profile of the WETH/USDT pair.
All these inputs feed into our simulations to estimate how often this Morpho market hits liquidations. When that happens, we stress test whether liquidations clear cleanly or create bad debt by simulating the liquidation triggers against stressed on-chain liquidity conditions, factoring in collateral utilization across multiple lending protocols that may be competing for the same liquidity.
Since launch, the rated Morpho vaults exhibited:
Faster deposit growth than unrated peers
Higher capital retention (“stickier” TVL)
Greater curator credibility and fee stability
Morpho is currently on track to exceed 100 Credora-rated vaults, reinforcing ratings as a default.
Spark: Risk at the Asset and Market Levels
Spark is a decentralized lending protocol built around USDS-denominated markets and integrated within the broader Sky ecosystem (formerly MakerDAO). Spark powers borrowing and savings across a suite of stablecoin and ETH-based products, including sUSDS, spUSDC, spETH, and stUSDS.
Sky is now integrating Credora risk ratings to surface real-time, on-chain risk profiles for USDS and its adjacent markets. Each rating combines asset-level fundamentals (such as the default probability of USDS and its supported collateral) with market-level dynamics like liquidity depth and price volatility. This enables more precise differentiation between exposures, such as ETH-backed vs. BTC-backed pools.
Once live, Spark users will be able to view a clear, Credora-generated risk grade for USDS on an embedded risk dashboard, directly into the Spark Savings interface–giving users a transparent, side-by-side view of yield and risk.
For Spark, the core value proposition is transparency and visibility. Risk signals that were previously scattered across dashboards, documents, or buried in assumptions are now consolidated into a single, interpretable score. This is especially relevant for conservative or institutionally minded capital, where clear assessments of downside risk are a prerequisite for participation.
4. The Future of Risk Ratings in RWA–DeFi Convergence
Real-world assets (RWAs) represent DeFi’s convergence with traditional finance, combining onchain execution with offchain legal, regulatory, and financial infrastructure. This layered complexity makes RWAs uniquely dependent on structured, transparent risk assessment.
As RWAs scale, they are becoming the primary gateway for institutional participation in crypto. Banks, asset managers, and fintechs operate under strict fiduciary mandates that require explicit, auditable risk frameworks. These institutions cannot justify allocations based on yield alone—they need documented risk grades to satisfy compliance requirements, size exposures, and defend decisions to risk committees.
Credora extends its methodology to capture RWA-specific factors: regulatory licensing, custodian quality, legal entity structure, bankruptcy remoteness, and jurisdictional exposure. These are evaluated through dynamic tiering systems, with risk-weighted adjustments applied to each rated asset or strategy.
By bringing credit rating language onchain, Credora enables institutions to evaluate DeFi exposures using the same framework they apply to traditional bonds. An A– rated lending pool becomes directly comparable to an A– corporate bond, removing the translation barrier that has kept sophisticated allocators on the sidelines.
As the market matures, risk ratings evolve from optional disclosure to competitive necessity. Protocols that integrate transparent and independent risk assessment attract higher-quality capital; those that rely on opacity risk exclusion from institutional allocations. A Credora rating may become as fundamental as a security audit: baseline infrastructure for capital to deploy with confidence.
Beyond protocol-level adoption, Credora’s framework has gained recognition from broader ecosystem stakeholders. The Ethereum Foundation has publicly acknowledged the critical role that standardized risk ratings play in advancing DeFi maturity and institutional readiness.
The Credora team recently participated on a webinar with the Ethereum Foundation exploring these themes in depth, examining how risk ratings development and standardization can accelerate institutional participation while maintaining DeFi’s core principles of permissionless innovation.
Summary
Credora solves DeFi’s core coordination problem: making downside risk legible, comparable, and actionable. By translating complex protocol dynamics into uniform ratings anchored to historical default probabilities, Credora transforms risk from implicit narrative into explicit signal. Following RedStone’s acquisition, risk ratings now flow through oracle infrastructure alongside price data, solving a critical distribution bottleneck and enabling protocols to adjust parameters dynamically based on live risk scores.
Early integrations validate the model. Rated vaults on Morpho are poised to demonstrate faster growth and higher capital retention than unrated peers, proving that transparent risk disclosure from users’ side improves capital quality and curator accountability. As DeFi converges with real-world assets and institutional capital, ratings become essential infrastructure—not just for user protection, but as a prerequisite for protocols to access sophisticated capital sources.
The result is risk-aligned DeFi: protocols compete on design quality rather than opacity, users allocate with clear understanding of trade-offs, and institutions gain the common language necessary to participate responsibly. In a maturing ecosystem where capital demands both yield and clarity, Credora establishes transparent, continuously monitored risk disclosure as a market primitive rather than an afterthought.
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Download the “The Year of Risk-Aware DeFi: Credora ratings as the $1T Unlock Primitive” report (PDF)

Report by DL Research based on content provided by RedStone [Chart: RedStone Oracles] Key Takeaways Credora introduces DeFi-native risk ratings that translate c

The Year of Risk-Aware DeFi: Credora Ratings As The $1T Unlock Primitive

Risk ratings as the missing primitive between TradFi capital and onchain credit

Purpose and scope of the report This report examines how kpk structures and operates curated vaults, and what that implies for liquidity, risk controls, and gov

Curation as an Infrastructure Layer: kpk’s Design Philosophy

How kpk structures curated vaults, risk controls, and governance under stress

The tokenized equities market has crossed $963.04 million in value as of January 2026, representing a ~2,878% YoY increase from approximately $32 million in January 2025. While still dwarfed by the $9.3 billion tokenized treasury market, equities are growing nearly 30x faster, and December 2025’s regulatory breakthroughs suggest the infrastructure for institutional-scale adoption is finally materializing.
This report examines current market structure, protocol-level metrics, chain distribution, and the regulatory catalysts positioning tokenized equities as the next frontier for institutional DeFi allocation.
[Chart: Ondo Global Markets vs BlackRock BUIDL]
Market structure reveals a three-player monopoly
Ondo Global Markets launched September 3, 2025 and became the largest tokenized stock platform within 48 hours, an unprecedented velocity. TVL reached $100M in week one, $250M by week three, and exceeded $350M by late October alongside $669M in cumulative trading volume. The platform now offers 200+ tokenized U.S. equities and ETFs including Tesla, Apple, NVIDIA, and BlackRock/Fidelity ETFs, with plans to expand to 1,000+ assets.
xStocks, operated by Backed Finance (acquired by Kraken in December 2025), grew AUM 9x from launch to approximately $186M within five months. The platform processed over $10 billion in combined CEX/DEX transaction volume across 135 days, with nearly $2 billion on-chain. The Kraken acquisition, backed by its $800M November 2025 funding round from Citadel Securities, Jane Street, and DRW, signals major exchange commitment to vertically integrating tokenized equity infrastructure.
Securitize commands 17% of tokenized equities through a single asset: Exodus (EXOD), the first U.S.-registered company to tokenize common stock, valued at $146.6M. The platform’s broader AUM exceeds $4 billion across tokenized funds, including BlackRock’s BUIDL. Securitize announced plans for “Stocks on Securitize” launching Q1 2026, natively tokenized public stocks with SEC-registered shares rather than synthetic wrappers.
Growth trajectory outpaces tokenized treasuries by 30x
Tokenized equities are the fastest-growing segment within on-chain real-world assets, despite their smaller absolute size:
The 2,496% YTD growth for equities versus approximately 117% for treasuries reflects fundamentally different market dynamics. Treasury tokenization attracted institutional capital seeking yield-bearing stable value. Equity tokenization is capturing speculative and access-oriented flows, particularly from non-U.S. investors gaining 24/7 exposure to U.S. markets through blockchain rails.
Monthly transfer volume for tokenized equities reached $2.41 billion, with total unique holders at 159,000 (up 22.7%). The holder growth rate suggests retail and smaller institutional participants are driving incremental adoption, while the volume-to-AUM ratio of approximately 2.8x monthly indicates active trading rather than passive holding strategies.
Chain distribution shows Ethereum dominance diminishing
Tokenized equities operate across a multi-chain landscape, with Ethereum’s historical dominance eroding as newer chains capture specific use cases:
Ethereum remains the settlement layer for institutional-grade products, hosting Ondo’s primary deployment. The chain’s $1.3 billion in total Ondo TVL (across equities, USDY, and OUSG) reflects deep integration with DeFi protocols including Morpho and Aave for collateralization.
Solana has emerged as the primary chain for xStocks, benefiting from sub-second finality and integration with major Solana DeFi protocols. Kamino Finance (Solana’s largest lending protocol with $2.6B TVL) integrated xStocks as collateral, enabling leverage strategies on tokenized equity positions.
Algorand’s $130.6M concentration stems entirely from Exodus (EXOD), which tokenized exclusively on Algorand, an architectural decision reflecting Algorand’s focus on compliant securities infrastructure rather than general-purpose DeFi.
Ondo’s October 2025 expansion to BNB Chain via PancakeSwap demonstrated multi-chain ambitions, with additional deployments planned for Solana (early 2026) and a proprietary Ondo Chain L1 under development. Cross-chain infrastructure via LayerZero’s Ondo Bridge connects assets across 2,600+ applications.
Regulatory catalysts accelerate institutional entry
December 2025 delivered transformational regulatory clarity for tokenized securities in the United States:
DTCC No-Action Letter (December 11, 2025): The SEC’s Division of Trading and Markets authorized a three-year pilot enabling DTCC to tokenize Russell 1000 equities, U.S. Treasury securities, and major index ETFs (S&P 500, Nasdaq-100). This pilot, expected to launch H2 2026, represents the most significant U.S. regulatory approval for tokenized equities, creating a pathway for traditional market infrastructure to interoperate with blockchain settlement.
Broker-Dealer Custody Guidance (December 17, 2025): SEC clarified that broker-dealers can maintain “physical possession” of tokenized equities under Rule 15c3-3 if they maintain exclusive private key control and implement appropriate security policies. This removes a critical barrier that previously forced custody through non-traditional pathways.
Nasdaq Rule Change Proposal (September 2025): Nasdaq submitted a proposed rule change to trade and settle tokenized securities on its exchange while maintaining national market system oversight, signaling major exchange interest in blockchain integration.
Internationally, Ondo Finance received approval from Liechtenstein’s Financial Market Authority to offer tokenized U.S. stocks across all 30 EEA countries, accessing 500+ million potential investors. The SEC closed its investigation into Ondo without charges in November 2025, removing regulatory overhang.
Under EU frameworks, tokenized equities fall outside MiCA’s scope, remaining under MiFID II and existing securities laws, while the DLT Pilot Regime provides sandbox environments for compliant experimentation. Switzerland’s DLT Act continues to provide the most advanced framework for ledger-based securities recognition.
Institutional infrastructure reaches production scale
The institutional adoption pattern for tokenized equities mirrors the trajectory of tokenized treasuries, with a 12-18 month lag:
BlackRock’s BUIDL fund grew from $40M at March 2024 launch to $1.8-2.8 billion by end of 2025, demonstrating institutional appetite for on-chain exposure to traditional assets. While BUIDL holds treasuries rather than equities, its success provides a template for institutional-grade equity tokenization. BlackRock assets underpin Ondo’s OUSG product ($730M+ TVL), creating direct linkage between the world’s largest asset manager and DeFi infrastructure.
Goldman Sachs and BNY Mellon partnered in July 2025 to tokenize money market funds via LiquidityDirect, with BlackRock, Fidelity, Federated Hermes, and GSAM as participants, the first U.S. instance of fund managers enabling MMF subscriptions with mirrored tokenization. In December 2025, JPMorgan launched tokenized money market funds and announced institutional clients can use Bitcoin and Ether as collateral, infrastructure that naturally extends to tokenized equities.
Custody infrastructure has matured accordingly. Fireblocks, BitGo, and Anchorage Digital now provide institutional-grade custody for tokenized securities, while the December 2025 SEC guidance explicitly permits broker-dealer custody with proper key management.
Forward outlook: from pilot to production
The tokenized equities market sits at an inflection point. The DTCC pilot authorization, combined with Nasdaq’s rule change proposal, suggests regulated U.S. market infrastructure will begin interoperating with tokenized securities by late 2026. This creates a convergence pathway where traditional equity market structure, central clearing, regulated exchanges, broker-dealer intermediation, integrates with blockchain settlement.
Several catalysts merit monitoring:
Securitize’s SPAC listing (ticker: SECZ) at a $1.25 billion pre-money valuation provides a public market proxy for tokenization infrastructure. The planned Q1 2026 launch of “Stocks on Securitize”, with natively tokenized rather than synthetic shares, could establish the compliance template for U.S. equity tokenization.
Ondo Chain, the proprietary L1 under development, signals vertical integration ambitions. Combined with Ondo’s institutional partnerships (Mastercard MTN, State Street/Galaxy $200M seed capital for SWEEP fund, Chainlink oracle integration), the protocol is building the full stack for institutional-grade tokenized equity infrastructure.
Kraken’s Backed acquisition positions a major regulated exchange to unify issuance, trading, and settlement for tokenized equities, a model that competing exchanges may replicate.
Market projections vary widely. BCG and Ripple forecast $18.9 trillion in tokenized assets by 2033; McKinsey projects $2-4 trillion by 2030; Galaxy Digital estimates $1.9-3.8 trillion. Applying these projections to equities’ current ~1% share of tokenized RWAs suggests a $20-190 billion addressable market by decade’s end, requiring sustained 50-100%+ annual growth rates.
Conclusion
Tokenized equities have transitioned from concept to functioning market infrastructure in under 12 months. The $857 million current market represents a rounding error against global equity market capitalization, but the 2,500% YTD growth, December 2025 regulatory breakthroughs, and institutional infrastructure buildout suggest the asset class is approaching the phase transition that tokenized treasuries experienced in 2024.
The rapid growth draws parallels with the growth of stablecoins, which crossed $1 billion in January 2020 to $306 billion by January 2026. Tokenized equities reaching a similar trajectory would imply a $150+ billion market by 2030, substantial, but still a fraction of the multi-trillion dollar projections that assume tokenization captures a meaningful share of global equity markets.
For institutional allocators, the key metrics to monitor are: monthly volume-to-AUM ratios (indicating market maturity), chain-level TVL shifts (signaling infrastructure preferences), and DTCC pilot implementation timeline (determining traditional market integration). The duopoly structure between Ondo and Backed/Kraken creates concentrated counterparty exposure, though Securitize’s Q1 2026 product launch and tZERO’s tokenized commercial real estate (CRE) planned $1B tokenized asset deployment may diversify the landscape.

The tokenized equities market has crossed $963.04 million in value as of January 2026, representing a ~2,878% YoY increase from approximately $32 million in Jan

Tokenized Equities Approach $1B as Institutional Rails Emerge

A 28x year for tokenised stocks — and the infrastructure that finally made it work

Katana in One Paragraph Katana is a ve-native, chain-level system that coordinates liquidity and emissions across the network. Instead of each protocol running

Katana: Bringing ve(3,3) to the Chain Level

A ve-native, chain-level system that coordinates liquidity and emissions.

[Chart: Aave V3 vs Lido vs Ethena] Executive summary: DeFi in 2025 In 2025, DeFi moved further away from a cycle-defined speculative arena and closer to a durab

State of DeFi 2025

From speculative cycle to durable financial system: a year-end map of the primitives that matter

Key Findings The World Crypto Rankings 2025 compares adoption across four pillars: user penetration, transactional use, institutional readiness, and cultural pe

The World Crypto Rankings: Resilience, Innovation, and Leadership

A four-pillar comparison of national crypto adoption: users, transactions, institutions, culture

The years 2024 and 2025 were significant for the institutionalization of BTC. ETFs, DATs, and a range of new catalysts brought BTC further into the mainstream, marking a major step in its integration with the traditional finance sector. As institutional participation has grown, however, a new divide within the Bitcoin ecosystem has become increasingly visible.
Two distinct systems for acquiring BTC have begun to emerge. Wall Street Bitcoin: institutional, compliant, and largely idle. On the other hand, there is Programmable Bitcoin: open, composable, and increasingly productive.
[Chart: Hemi]
Although Bitcoin was built for open, peer-to-peer finance, the vast majority of its supply remains inactive. Only a small fraction, around 378,000 BTC by some estimates, is active in onchain DeFi, while the vast remainder sits in custodial accounts, ETFs, or other financial vehicles.
Even as BTC’s market capitalization surpasses $2 trillion and institutional holdings exceed $100 billion, with BlackRock’s IBIT ETF alone, nearing $89 billion, most of this capital is locked in passive structures, detached from onchain markets and liquidity.
The First System: Wall Street Bitcoin
Institutional adoption has brought major benefits to BTC. Improved custody solutions, clearer regulations, and new investment products have made it accessible through mainstream brokerage accounts and financial platforms. ETFs and DATs have introduced exposure through familiar structures, while companies like Strategy have demonstrated BTC’s role as a treasury asset.
Today, BTC stands as a fully institutionalized asset, managed by firms such as BlackRock and Fidelity, and integrated into diversified portfolios worldwide. Yet this model also leaves most BTC holders financially inactive. Large portions of supply sit in custodial vaults or ETF structures, where participation is limited to price exposure rather than onchain use.
Even beyond these institutional holdings, a significant portion of the BTC held by individuals remains idle in wallets, primarily used as a long-term store of value. Across both systems, the result is the same: a significant share of BTC’s capital base is passive rather than productive.
The Second System: Programmable Bitcoin While
Wall Street Bitcoin has been vital for the asset’s growth and legitimacy, its next phase is unfolding into programmability.
After years of being held in custodial accounts and financial products, BTC is starting to integrate more directly with the broader crypto ecosystem.
The first example of this shift is Hemi, which demonstrates how BTC can move from a passive reserve asset to operating within an active financial infrastructure.
Hemi’s new infrastructure now allows BTC to move, trade, and interact with onchain applications without relying on wrapped tokens or insecure bridges. This opens the door for native BTC yield, creating an economic layer where previously idle capital can become productive while maintaining BTC exposure and supporting onchain liquidity.
This evolution is both technical and cultural. Bitcoin’s emphasis on security and simplicity once stood in contrast to the experimental design of smart contract platforms. Now, those approaches are converging as new layers combine Bitcoin’s security model with onchain programmability, enabling direct participation in onchain markets.
Productive Bitcoin Realized
Hemi serves as the missing link between BTC and programmability, enabling institutions, corporate treasuries, and individual holders to confidently and productively deploy their BTC.
Activating Bitcoin
The crypto ecosystem has long searched for a way to combine the best of both worlds: the security of Bitcoin and the programmability of Ethereum.
Hemi achieves this. It is designed to feel as familiar as an Ethereum Layer-2 network while fully integrating Bitcoin’s native capabilities.
This is how BTC becomes truly active and remains onchain, secure, composable, and ready to participate in the broader digital economy.
TradFi institutions store BTC in custodial products that limit functionality.
Activated programmable BTC on Hemi wields its full potential, becoming a yield-producing asset within an auditable, secure, and regulated framework.
Architecture Overview
Hemi connects Bitcoin and Ethereum into a single supernetwork, allowing assets and data to move easily between the two ecosystems.
At the center is the Hemi Virtual Machine (hVM), which embeds a full Bitcoin node inside an Ethereum-compatible environment. This gives smart contracts direct, real-time access to Bitcoin’s state, including balances, transactions, and block data.
Developers can build Bitcoin-aware applications using standard Ethereum tools like Solidity on Hemi, without relying on bridges, oracles, or offchain relayers. This makes it easier to integrate BTC directly into onchain markets and applications.
Hemi’s security is anchored by Proof-of-Proof (PoP) consensus, which periodically records Hemi’s chain state onto Bitcoin following optimistic authentication. This process achieves a state of superfinality in about 90 minutes and gives Hemi the same security guarantees as Bitcoin itself without depending on external validators.
Bridging has been a major barrier to connecting BTC with the wider crypto ecosystem. Hemi overcomes this with its Tunneling System, which enables trust-minimized transfers of BTC and Ethereum-based assets between chains.
Transfers are validated directly by the protocol, removing the need for custodians or third-party intermediaries.
To simplify development, Hemi provides the Hemi Bitcoin Kit (hBK), a library designed for building on the hVM. It gives developers straightforward access to Bitcoin data, such as balances and transactions, making it easy to integrate Bitcoin functionality directly into onchain applications.
Hemi: Yield Opportunities
Hemi enables BTC to generate income in ways that were previously difficult or impossible. Institutions, treasuries, and individual holders can earn returns while keeping BTC secure.
The opportunities to generate yield on BTC are significant. Hemi supports a full range of strategies, from conservative to high-conviction.
Examples include:
Lending and Borrowing: Deposit BTC-backed assets such as hemiBTC or bfBTC into decentralized lending markets to earn a liquidity return.
Liquidity Provision: Supply BTC to automated market makers and liquidity pools to earn trading fees and protocol rewards.
Fixed-Rate and Leveraged Products: Use platforms like Spectra, Morpho, and Gearbox for fixed-income tokens, leveraged strategies, and vault-based returns.
Incentives: Programs like Merkl reward participation in lending, staking, or liquidity provision, further increasing yield. 
The World's Largest Bitcoin Programmability Layer
From top-tier liquidity giants to next-gen protocols and apps, Hemi is where the industry's innovators build. With over 90 + partners, $1.2B in TVL, and new ecosystem deployments weekly, can you believe we're just getting started?
Wall Street Bitcoin Becomes Productive
As yield becomes a central focus in asset management, institutional BTC will increasingly move onchain and into productive ecosystems, like Hemi.
Custodial solutions have played a crucial role in providing adoption, security, and compliance, but they represent only part of BTC’s financial potential. Passive holding limits capital efficiency, and both institutional investors and Digital Asset Treasuries (DATs) are looking for returns that extend beyond price appreciation.
Hemi enables this shift by allowing BTC to participate in real-time financial activity while remaining secured by Bitcoin’s Proof-of-Work. It combines institutional-grade self-custody standards with onchain programmability, creating a compliant and efficient environment where BTC can become active, composable, and yield- generating.
Designed for regulatory maturity and institutional fit, Hemi provides a path for Digital Asset Trusts and compliant treasuries to access BTC-based yield opportunities without compromising governance or security. It offers transparency, programmable liquidity, and a structure that aligns with existing institutional frameworks.
By connecting custodial BTC with onchain finance, Hemi bridges the gap between traditional and decentralized markets. The same capital that once sat idle can now participate productively, marking the next phase in BTC’s evolution from static reserve to active financial infrastructure.
Download the full report here
Download the "Hemi: one bitcoin, two systems, and the link between" report here (PDF)

The years 2024 and 2025 were significant for the institutionalization of BTC. ETFs, DATs, and a range of new catalysts brought BTC further into the mainstream, 

Hemi: One Bitcoin, Two Systems, and the Link Between

Bringing institutional BTC into a programmable, Bitcoin-anchored network

Katana is purpose-built for DeFi. Rather than acting as a general-purpose Layer 2, it functions as a financial network where every transaction, pool, and application reinforces collective liquidity and long-term yield generation for its users.
Most Layer 2s aim for breadth, supporting a wide range of applications. Katana instead prioritises depth, embedding yield creation, liquidity routing, and value distribution directly into its base layer. The result is an ecosystem where users, protocols, and the network advance together through shared incentives and productive capital.
[Chart: Katana]
This report examines how that model works in practice. It explores how Katana transforms liquidity into a network-wide resource, how onchain activity generates sustainable revenue, and how value flows back to participants. By analysing key components such as VaultBridge, AUSD, and Chain-Owned Liquidity, it demonstrates how Katana redefines DeFi sustainability through structural alignment between users and infrastructure.
The Shift from Speculation to Productive Capital
In its early years, DeFi set out to prove that financial primitives could exist without intermediaries. MakerDAO enabled collateralised lending onchain. Uniswap introduced automated market making, allowing trades to clear without order books. Compound laid the groundwork for algorithmic borrowing and lending markets. These breakthroughs proved that decentralised finance could function independently, but they also raised a new question: how could protocols attract enough liquidity to operate at scale?
The answer came through token incentives. Total Value Locked (TVL) became the dominant measure of success, and teams began distributing newly issued tokens to reward users and attract capital. This model reached its peak during DeFi Summer, when protocols such as Yearn, Synthetix, and SushiSwap expanded rapidly through aggressive liquidity mining campaigns.
By offering high emissions, they were able to draw liquidity at record speed. As users discovered these new financial primitives and their generous yields, DeFi’s TVL soared from $600 million at the start of 2020 to $15 billion by year-end.
Liquidity increased across all pools during the incentive period, but only two out of five (wstETH/WETH 0.05% and OP/USDC 0.3%) maintained higher levels once rewards stopped. The rest soon reverted to their original state. Gauntlet found that incentives could have a lasting effect only when the short-term boost in liquidity translated into greater trading volume and fee generation, which was uncommon.
While Uniswap’s programme is just one example, the same pattern has appeared across the ecosystem. Many recent campaigns show that attracting liquidity through emissions is one thing, but keeping it is another. One of the more recent examples, the zkSync Ignite programme, which allocated 300 million ZK in rewards, demonstrates this even more clearly. During its incentive period, TVL climbed to around $260 million, but after rewards ended, it fell to about $45 million.
From Token Emissions to Real Yield
Around the same time, it became clear that DeFi could no longer rely on emissions alone to grow its TVL. As the limits of liquidity mining became visible, a new focus began to take hold around real yield. During 2023 and 2024, users started asking tougher questions about sustainability.
Phrases like “Where does the yield come from?” and “If you don’t understand the yield, you are the yield” became common across DeFi discussions, reflecting a broader realisation that not all returns were built to last.
Attention shifted toward protocols that earned revenue from real activity rather than token inflation. Trading platforms helped push this shift into the spotlight, with GMX and later Hyperliquid popularising fee-sharing models that tied rewards directly to usage and volume. Users began comparing protocols not by how much they emitted, but by how much they earned.
At the same time, lending saw renewed momentum. Protocols such as Aave, Compound, and Morpho became the backbone of this new environment, offering yield linked to borrower demand rather than incentives which explains the rapid growth of lending vs other sectors which showed less sustainability in its revenue.
By late 2024, the conversation in DeFi had changed: growth was no longer about who could print the most tokens, but about who could generate real, repeatable cash flow.
Katana: Building the Infrastructure for Productive Capital 
As DeFi matured and the real yield narrative took hold, attention shifted toward sustainable revenue and long- term value creation. Yet one problem persisted. Even as protocols learned to generate real yield, large portions of onchain capital remained idle. Liquidity existed, but much of it sat in wallets or contracts instead of supporting lending, trading, or market depth.
This gap between secured and productive capital became the starting point for Katana, a network built by teams from Polygon Labs, GSR, and other experienced DeFi builders. Having lived through the rise and decline of liquidity mining, the team concluded that lasting sustainability could not be achieved at the application layer. It required infrastructure that embeds yield generation directly into the base layer while drawing from multiple sources of revenue.
On top of that, Katana’s philosophy is built around the idea that value should be measured not only by Total Value Secured (TVS) but also by how much of that value is actively working within DeFi.
A network might secure one billion dollars in assets, but if only a fraction of that is deployed productively, the rest adds little to growth. For this reason, every asset on a chain should be made productive, and the yield from those assets should flow not to users who simply hold them in wallets, but to those who use them actively within DeFi.
Chain Architecture: Where Yield and Infrastructure Converge The
Foundation: Rollup Architecture and Proving 
When Katana set out to build a DeFi-first chain, its goal was to make yield a structural feature of the network itself, not something dependent on isolated applications. To achieve this, the team needed a foundation that was both proven in production and adaptable enough to support major architectural innovation.
Katana is connected to Polygon’s AggLayer and built using the AggLayer Chain Development Kit (CDK-OP Geth), which uses OP Geth with zero-knowledge proofs. While it uses OP Geth, Katana is not part of the Optimism Superchain and, instead of being optimistic, it uses ZK proofs for security and finality.
Working in close partnership with Conduit, Katana used this CDK-OP framework to accelerate development and deployment. Conduit provided the engineering backbone for the chain, handling rollup implementation, infrastructure management, and sequencing services, while co-developing the custom modifications required for Katana’s design.
This collaboration allowed Katana to focus on what mattered most: integrating liquidity, yield, and user incentives directly into the base layer of the network.
But the project’s vision extended far beyond a standard rollup. To enable capital to move seamlessly and productively across the ecosystem, the team needed to solve two key challenges: slow finality and fragmented liquidity. The first was addressed through Katana’s proving architecture, which builds on the OP Stack with integrated ZK proving, and the second through deep interoperability with Polygon’s Agglayer network.
The Proving Layer: Fast Finality with Succinct 
One of the main bottlenecks for DeFi users on existing rollups is capital lockup. Withdrawals often take several days to finalise, leaving liquidity idle and discouraging active participation. Katana approached this challenge by rethinking how rollup proofs could work for a financial chain that relies on continuous liquidity movement.
The solution came from Succinct, a zero-knowledge proving network that enables chains built on the OP Stack to operate as fully verified ZK rollups. By integrating Succinct’s validity proofs, Katana reduced withdrawal times from a week to just a few hours. This upgrade not only improved the user experience but also unlocked a higher level of capital efficiency, allowing liquidity to move freely between Katana, Ethereum, and other connected chains.
Succinct’s Prover Network was another key part of this evolution. It decentralises the proof generation process, spreading it across a network of independent provers and driving costs down to fractions of a cent per transaction. The result is a cost-effective and scalable environment where high-frequency DeFi activities like trading, lending, and yield vaults can function without interruption or excessive fees.
The Interoperability Layer: Connecting to the Agglayer
While fast finality solved the issue of capital lockups, another challenge remained: fragmented liquidity. Liquidity across Layer 2 ecosystems is often siloed, forcing users and protocols to bridge manually between chains. Katana addressed this by becoming one of the first rollups to integrate directly with Polygon’s Agglayer, a unifying interoperability layer that connects multiple chains through shared liquidity and canonical bridging.
Agglayer serves as the connective layer of Polygon’s ecosystem, allowing assets and messages to move freely between connected chains. This creates a fluid environment where liquidity is no longer trapped within a single domain. For Katana, this means users can onboard seamlessly from any Agglayer-connected chain, while developers can access a larger pool of capital and users without building separate integrations.
Through Agglayer, Katana evolves from a standalone Layer 2 into a connected financial hub, part of a broader network of interoperable ecosystems where liquidity and capital can move freely.
The sequencer
Every transaction on Katana generates value through the sequencer. Unlike most chains where sequencer fees are collected and stored passively, Katana’s system recycles them directly into its liquidity economy. Once operational costs such as data posting to Ethereum are covered, the remaining revenue flows back into the network.
This approach creates a feedback loop where activity drives revenue, revenue deepens liquidity, and deeper liquidity attracts more users and volume. Over time, this system compounds on itself, turning Katana’s sequencer into a sustainable and recurring source of yield rather than a simple fee collector.
Currently, sequencer fees (aka network REV) on Katana accounts for only a small portion of its total revenue, representing around 2% every month. However, this could change in the future as onchain activity increases.
Built-In Yield Infrastructure: VaultBridge and AUSD
While most rollups rely on applications to generate chain revenue, Katana builds yield directly into its architecture. Two key mechanisms power this: VaultBridge and AUSD.
VaultBridge
If Katana’s proving and interoperability layers laid the groundwork for efficient capital movement, VaultBridge was the system that made that capital productive from the moment it entered the network.
In most ecosystems, bridged assets remain idle on Layer 1. Users deposit tokens into a smart contract, and those assets simply sit there until they are withdrawn. This inefficiency locks up billions of dollars in unproductive collateral. VaultBridge was created to change that by giving every bridged asset a role in yield generation.
When users bridge supported tokens such as USDC, WETH, USDT, or WBTC into Katana, their assets are automatically deployed into low-risk yield strategies on Ethereum via Morpho Vaults, which are managed by independent risk curators like Gauntlet and Steakhouse Financial. These vaults generate real yield that is streamed back to Katana and distributed to users who actively participate in DeFi.
This design also makes Katana one of the most Ethereum-aligned Layer 2s, as assets bridged to Katana continue to support and strengthen the Ethereum DeFi ecosystem through Morpho deposits.
Download the full report here
Download the "The Katana Flywheel: Rethinking Incentives and Liquidity for Sustainability" report here (PDF)

Katana is purpose-built for DeFi. Rather than acting as a general-purpose Layer 2, it functions as a financial network where every transaction, pool, and applic

The Katana Flywheel: Rethinking Incentives and Liquidity for Sustainability

How Katana coordinates emissions and liquidity at the chain level

A market that barely registered 18 months ago now moves billions daily. In fourteen months, the active RWA market cap grew sixfold to $25.2B. Tokenized funds led the expansion, scaling from $2.7B to $13.5B, but equities were the standout, surging from $30M to $1.3B in a single year. 

Across asset classes, capital is moving from static exposure to active deployment. Equity activity is concentrated on three chains, with Ethereum, Solana, and BNB Chain capturing over 94% of volume and Morpho integrations enabling collateralized borrowing against onchain stocks like SPY, QQQ, and TSLA. In private credit, Maple's SyrupUSDC reached $2.1B in active market cap across Pendle, Jupiter, Kamino, and others. 

Each asset class is evolving under different structural conditions, with composability emerging unevenly according to liquidity, legal clarity, and regulatory treatment. 

The State of RWAfi Q1 2026 Report maps where those conditions have matured enough to support real financial utility and where frictions remain.

Dr. Rasit Tavus, founder and CEO of LegalBlock argues the legal status of Lazarus swap transactions falls into two categories: decentralised finance (DeFi) transactions and centralised service transactions.
Centralised services and liability
It is simpler to assess centralised services first, including cryptocurrency exchanges and mixing services. Any entity with a central authority must comply with international anti-money laundering (AML) treaties, requiring robust AML protections to prevent stolen assets — such as those from Bybit — from entering their platforms. 
Failure to implement effective AML measures constitutes negligence and legal liability. Given that Lazarus exploited these services due to inadequate safeguards, all fees associated with deposits, swaps, or withdrawals should be returned to the victim.
Centralised blockchain services operate globally but must comply with US regulations to remain within the USD-pegged blockchain ecosystem.
For instance, Binance and former CEO Changpeng Zhao returned illicit swap fees to the US Treasury as part of a plea agreement with the Department of Justice. This precedent suggests that in future cases, centralised services should return all swap fees to either Bybit or the US authorities.
DeFi platforms and legal responsibility
Decentralised mixers, bridges, and swap exchanges differ significantly from centralised entities. Their immutable and censorship-resistant nature means they cannot be negligent in the traditional sense. 
As long as transaction outcomes remain visible and do not obstruct stolen asset recovery, these platforms do not bear direct legal responsibility.
However, the question of whether they should return swap fees is more complex. 
In Dr. Tavus’ Ph.D. thesis, it been argued the concept of limited responsibility for validators, nodes, and miners. As long as a DeFi platform operates within its design, it holds no legal responsibility for transactions.
That said, these platforms engage in professional business activities and profit from them. If an illicit transaction occurs, demanding that stakers or liquidity providers return funds sets a problematic precedent, as there is no clear standard for distinguishing liability in such scenarios.
When DeFi platforms should act
While DeFi platforms may not be legally liable, they should not profit from sustained illicit activity. If a protocol repeatedly facilitates illicit transactions without intervention, scrutiny is warranted. 
In the Bybit case, ThorChain accumulated several million dollars in swap fees from illicit transactions over multiple days without any remedial action. At this point, returning these fees is the appropriate course of action.
Validators, who uphold the network’s integrity, should not benefit from illicit transactions. If they unexpectedly earn high margins from such activity, accusations of gross negligence for profit may arise. 
This presents a dilemma: are they passively profiting from illicit transactions, or are they upholding a censorship-resistant system?

Dr. Rasit Tavus, founder and CEO of LegalBlock argues the legal status of Lazarus swap transactions falls into two categories: decentralised finance (DeFi) tran

Opinion: Legal expert recommends Defi platforms return Lazarus swap fees

The convergence of traditional finance and decentralised finance (DeFi) is changing the way we look at global financial systems.
Moderated by:
Interviewees:
Permissioned DeFi: A gateway to mass adoption
Permissioned DeFi is gaining traction as a bridge between the decentralised and regulated worlds.
These platforms aim to address barriers such as scalability and compliance, while retaining the innovative edge of blockchain.
“Permissioned DeFi bridges the gap between the regulated world and decentralised finance,” Topp explained.
Bitkub has grown rapidly by simplifying blockchain tools for everyday users.
“Our focus is on creating systems that anyone can use — even in regions with less financial literacy.”
CrossFi uses this technology to connect blockchain with traditional financial systems, making it easier for banks and other financial services to adopt crypto.
By partnering with platforms like LayerZero and designing flexible systems, CrossFi helps break down the technical barriers that often make these integrations difficult.
Regulation as the backbone of trust
As DeFi grows, regulatory frameworks are increasingly vital for fostering trust and security.
Lutz also emphasised the importance of security as the foundation for sustainable growth.
“Security is at the core of our operations. We have never lost a single coin in our history, thanks to cold storage practices and stringent internal protocols,” he noted.
In Thailand, regulation has also played a critical role in enabling growth.
“The SEC’s licensing framework gave us the clarity to educate users and grow responsibly,” said Topp.
By working within this regulatory structure, Bitkub has become Southeast Asia’s largest regulated digital asset exchange, with millions of users.
For CrossFi, bridging the gap between traditional finance and blockchain technology requires aligning innovation with compliance.
By creating infrastructure that meets regulatory standards, CrossFi ensures that banks and businesses can integrate crypto without sacrificing security or scalability.
This approach builds trust while encouraging adoption by lowering the barriers for institutions exploring the crypto space.
Education and accessibility: The keys to adoption
Beyond regulation and security, the broader adoption of decentralised finance hinges on making blockchain technology accessible and user-friendly.
Topp emphasised the role of education in fostering adoption, particularly in regions where financial literacy remains low.
“At Bitkub, we’ve focused on humanising blockchain technology. Our systems are designed so users don’t need to understand the complexities of blockchain to benefit from it,” he said.
Lutz highlighted how platforms like BitMEX are simplifying the entry point for institutional and retail users alike.
“We’ve introduced tools that cater to all levels of traders, from professionals to those just entering the market, with a focus on security and transparency,” he noted.
CrossFi takes a similar approach by prioritising user-centric solutions that make the integration of crypto and traditional finance seamless.
Its infrastructure includes features like real-time crypto-to-fiat conversion and tokenized banking services, enabling businesses and users to incorporate digital assets without extensive technical expertise.
This focus on usability ensures that DeFi can reach diverse demographics and foster global financial inclusion.
The road ahead: Collaboration and innovation
As blockchain adoption scales, collaboration between traditional financial institutions and decentralised platforms will be important.
These partnerships will enhance the efficiency, transparency, and scalability of financial systems, ultimately enabling broader adoption.
Lutz envisions a future where DeFi platforms take centre stage in the crypto ecosystem.
“DeFi and centralised exchanges can coexist, but the focus will increasingly be on transparency and secure trading environments,” he said.
As more users demand accountability from financial platforms, the importance of regulatory clarity and robust security measures will grow.
Topp also sees crypto playing a transformative role on a global scale.
“By 2028, I expect Bitcoin to become a strategic reserve for many nations, with a market cap reaching $100 trillion across the crypto ecosystem,” he predicted.
Real-world use cases like remittances and micropayments will continue driving adoption, solving inefficiencies in legacy financial systems.

The convergence of traditional finance and decentralised finance (DeFi) is changing the way we look at global financial systems. Moderated by: Interviewees: Per

Permissioned DeFi: Bridging Traditional Finance and Decentralised Systems

The KYC-gated layer where TradFi capital meets onchain primitives

Today, Sui network validators have ceased processing transaction requests from the individual responsible for stealing over $220 million worth of cryptocurrency from Cetus Protocol. Dr. Rasit Tavus, the founder and CEO of LegalBlock comments on the recent incidents on Sui.
While such large-scale losses are uncommon on blockchain networks, immediate intervention of this nature may seem unusual or even unlawful at first glance.
There has been criticism of the Sui network’s level of decentralisation. However, it is important to clarify that decentralisation does not equate to anarchy. Validators and miners are not passive observers; they hold real responsibilities in maintaining the integrity of the network.
Blockchain networks are operated and upheld by a range of participants, including validators, stakers, and miners. Each network runs on a specific consensus mechanism to coordinate its operations. 
A core principle of blockchain technology is that its management is decentralised, allowing anyone to participate freely.
Validators on the Sui network are members of the SUI network partnership. When users interact with a blockchain — by transacting, paying for services, or relying on its security — they are entering into an implicit agreement with the network and its operators.
Users inherently trust that the blockchain will protect their assets. That trust places a duty on validators and miners to maintain the network’s safety, which can be understood as a semi-custodial relationship.
When a blockchain’s partners become aware of illicit activity, their primary responsibility is to act to stop it. This obligation has long been recognised, dating back to Roman law, and does not need to be outlined in a whitepaper to be valid. 
Preventative and recovery measures must be considered immediately when urgent situations arise.
If validators choose to reject transaction requests from a wallet controlled by a malicious actor, that action is lawful, so long as it is agreed upon by the blockchain’s participating members. 
In such cases, the decision becomes part of the consensus process itself.

Today, Sui network validators have ceased processing transaction requests from the individual responsible for stealing over $220 million worth of cryptocurrency

Opinion: Decentralised networks are not anarchy networks

Interviewees:
Wiring autonomous AI
Powering autonomous agents requires collaboration between compute, data availability, and indexing layers, each playing a different role in helping agents act effectively.
“Compute, data, and indexing layers must co-evolve and interoperate to support autonomous agents,” said Aleph Cloud’s head of marketing, Clément Fermaud. “That would ensure that they can dynamically find data and compute resources without central bottlenecks, enabling them to operate securely with constant access to fresh and relevant information.”
For 0G Labs, the opportunity lies in enabling agent swarms to coordinate at scale.
“DA acts as the scalable and reliable storage foundation, compute handles verifiable inference tasks, and indexing facilitates memory and state recall,” Michael Heinrich, co-founder and CEO of 0G Labs, explained. “Together, these layers ensure agents can instantly access trusted context, perform computations locally or across GPU networks, and share results smoothly.”
The Graph, meanwhile, focuses on enabling unified workflows for agents.
“Agents need to read data, process it, and write results back seamlessly,” said Nick Hansen, team lead at The Graph Foundation. “Our role is to let agents query indexed data, act on it, and contribute insights into datasets that remain consistent across applications.”
The trust layer
As AI-native systems evolve, security and performance become equally critical for scaling agent ecosystems.
“Confidential computing is needed because protecting data, models, and logic is fundamental,” said Fermaud. “AI agents handle highly sensitive inputs, so in a decentralised network of untrusted nodes, TEEs are essential to keep those secrets during processing. Hardware enclaves isolate code and data, ensuring private inputs or proprietary logic are never exposed to the node operator.”
0G Labs has tackled the performance bottleneck.
“AI swarms generate and exchange huge traces of models, inputs, and outputs,” Heinrich explained. “Traditional blockchains can’t handle GB/s-scale streaming. Our architecture separates publishing and storage lanes, uses GPU-accelerated erasure coding, and supports multi-consensus shards for infinite horizontal scalability, letting agents fetch and confirm data with near real-time latency.”
For The Graph, trust comes from verifiable and structured data.
“AI agents need more than just raw data. They need reliable, structured, and context-rich datasets,” said Hansen. “By indexing blockchain information into deterministic Subgraphs and Substreams, we provide datasets that allow agents to make reproducible, verifiable decisions instead of relying on opaque APIs.”
Data markets, incentives, and composability
Building sustainable AI ecosystems requires aligning incentives for networks, node operators, and agents.
The Graph is expanding its infrastructure with Hypergraph, which allows agents to maintain private or shared composable data spaces.
“It’s the difference between reading from a library and writing your own encyclopedia,” Hansen explained. “Hypergraph lets agents blend public blockchain data with proprietary insights and contribute back to shared knowledge in a permissioned way.”
For 0G Labs, scaling relies on rewarding reliability. “Proof of Random Access incentivises nodes for serving data quickly and accurately,” said Heinrich. “We focus on positive reinforcement rather than punishment, rewarding bandwidth, speed, and low-latency performance.”
Aleph Cloud is making privacy-preserving compute more accessible.
“High-performance confidential computing shouldn’t be an enterprise-only capability,” said Fermaud. “Our pay-as-you-go architecture and modular resource options make secure compute affordable for startups, open-source teams, and smaller AI projects.”
The road ahead
As autonomous AI ecosystems grow, interoperability and open standards will shape their scalability.
0G Labs sees the biggest scaling pressure coming from interactions between agents rather than model size.
“A million lightweight agents coordinating in swarms creates higher data throughput demands than a single large model,” Heinrich explained. “Our focus is on enabling modular scalability through multi-consensus DA and GPU acceleration.”
The Graph is working on standards to help agents share and build knowledge collaboratively. “With GRC-20, we’ve introduced schemas that give agents native identities and composable data spaces,” said Hansen. “This enables a world where agents don’t just consume data but contribute insights, annotations, and new knowledge into shared evolving graphs.”
For Aleph Cloud, the future lies in combining different approaches to trust and privacy.
“TEEs are ideal for confidentiality and speed today, but zero-knowledge proofs and fully homomorphic encryption will play bigger roles over time,” said Fermaud. “We envision hybrid systems where agents run inside enclaves for efficiency, while publishing proofs externally for verifiability.”
Foundations for the future
As autonomous agents move from concept to reality, the challenge lies in balancing scale with sustainability. Each layer of the AI stack is adapting to ensure these systems can thrive in the long term.
“At Aleph Cloud, we address sustainability on both ecological and economic fronts,” said Fermaud. “Dynamic resource allocation reduces energy waste, and our pay-as-you-go model makes confidential computing accessible far beyond large enterprises.”
For Heinrich, sustainable growth comes down to incentives. “Proof of Random Access and restaking mechanisms reward nodes for speed and reliability,” he said. “By shifting from punishment to positive reinforcement, we create the conditions for a resilient, global data availability layer.”
Hansen pointed to how demand itself will evolve. “In an AI-native world, query traffic may come from thousands of small agents rather than a handful of big apps,” he said. “That means our incentive structures must adapt so indexers can continue to prioritise the most useful, high-frequency datasets.”

Interviewees: Wiring autonomous AI Powering autonomous agents requires collaboration between compute, data availability, and indexing layers, each playing a dif

Building the AI-Ready Web3 Stack: Compute, Data, and Intelligence

The infrastructure layer that makes onchain AI agents actually usable

Recently, we’ve observed irregular and significant losses in the value of certain tokens. These movements raise an important question: where is the line between market making and market manipulation? Dr. Rasit Tavus, the founder and CEO of LegalBlock warns that some activities by market makers cannot be classified as routine operations and should instead be regarded as manipulation.
To begin, it’s essential to understand what market making means in the context of cryptocurrency. Market makers receive a considerable amount of tokens and provide liquidity on specific trading pairs, allowing retail investors to buy and sell more easily. In return, they are typically compensated with tokens or through paid agreements with the token issuer or exchange. 
The goal is to create a liquid market that enables investors to trade with minimal slippage, while exchanges earn from transaction fees and token issuers benefit from higher demand. Ideally, this creates a win-win situation for all parties involved.
However, recent examples suggest some market makers may be manipulating token prices to benefit their own positions.
Binance recently raised concerns about a market maker who allegedly made around $38 million in profit from the listing of the Move token, while simultaneously influencing its price. 
Market makers are expected to enhance liquidity, not distort it. They are contracted to foster a stable trading environment, not to take actions that destabilise it. In this case, the behaviour appeared to prioritise personal gain over the creation of a functioning market.
Token issuers and project teams must never engage directly in price-related activities involving their own tokens. A recent incident involving Mantra Network’s $OM token serves as a warning. The token lost around 90% of its value in a single day. 
It appears that the team behind the project sold tokens at a lower price in an attempt to create artificial upward pressure. With a major holder offloading aggressively, the market failed to absorb the supply, resulting in a devastating collapse. This suggests that the previous upward movement had also been manipulated, rather than reflecting genuine demand.
When a project issues a token, it is generally accompanied by a whitepaper outlining the token’s intended utility. Direct involvement in price actions undermines that purpose and casts doubt on the token’s legitimacy. There is no rational reason to manipulate the price of a token that serves a genuine function. Such behaviour puts retail investors at risk and invites legal scrutiny.
The US Department of Justice has already announced investigations into suspicious price movements in cryptocurrency markets. The Federal Bureau of Investigation has reportedly created its own token to interact with market makers — an indication of their commitment to monitoring pricing dynamics and their impact on retail investors.
Despite the decentralised nature of crypto, the United States claims jurisdiction over both DeFi and broader cryptocurrency markets. Unnatural price actions taken by market makers, token issuers, or exchanges could soon result in criminal investigations. 
To remain compliant with US laws and regulations, all market participants should avoid any activity that could be construed as manipulation and that may lead to financial harm for retail investors.

Recently, we’ve observed irregular and significant losses in the value of certain tokens. These movements raise an important question: where is the line between

Opinion: Why crypto market makers could face charges over price manipulation tactics

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of DL News and DL Research. Please conduct your own research before taking any action based on the content.
By ChefWEN, Founder, Momentum 
When we launched Momentum on March 31, 2025, we set out to answer a simple question: what would happen if we built a DEX that prioritized bringing fresh capital into the Sui ecosystem rather than fighting over the liquidity that already existed?
Today, less than four months after launch, we’ve surpassed $22 billion in cumulative trading volume. That wasn’t our end goal—it was simply the natural outcome of aligning incentives across the entire ecosystem. And it tells us something profound about where crypto is heading: retail adoption, not institutional gatekeeping, is the future of finance.
The Cetus Moment Changed Everything
Six weeks into our launch, the Cetus protocol exploit sent shockwaves through Sui. When $260 million in assets were compromised by a smart contract vulnerability, we watched Sui’s total value locked collapse overnight. It was a gut punch.
But here’s what matters: the ecosystem didn’t give up. And neither did we.
Instead of looking for escape routes, we coordinated with the Sui Foundation and Mysten Labs to strengthen security across the board. We initiated additional audits, implemented protocol-level safeguards, and rebuilt trust. Within five days, our TVL recovered. The message was clear: a crisis can either break a community or forge it. We chose the latter.
That moment taught us that what drives sustainable growth isn’t hype or speed—it’s credibility and genuine partnership. When retail users saw that the ecosystem was willing to defend their interests, they came.
Why ve(3,3) Works for Retail
The tokenomics model we chose—ve(3,3)—was deliberate. Traditional DEX models pit stakeholders against each other. Liquidity providers want high fees. Traders want tight spreads. Protocols want volume. These incentives typically collide.
The ve(3,3) model doesn’t eliminate these tensions. It redirects them. By routing 100% of emissions, trading fees, and rewards directly to users, we created a system where everyone wins when the protocol wins. There’s no zero-sum game. There’s a flywheel.
For a retail-first ecosystem like Sui, this matters enormously. Retail traders are not margin traders playing multi-second games. They hold positions. They accumulate. And they care deeply about sustainable yield and fair treatment. The ve(3,3) model speaks to that sentiment—it says your participation genuinely matters to the protocol’s health.
Attracting Capital, Not Stealing It
Early critiques suggested that Momentum was cannibalizing liquidity from other Sui protocols. This misunderstood our strategy entirely. We deliberately built tools to attract external capital.
Through multi-sig treasury management solutions and deep integrations with ecosystem partners, we helped protocols like Agora Finance, Ondo Finance, and First Digital grow their stablecoin ecosystems on Sui. We minted 100% of the supply for AUSD, FDUSD, and USDY on Sui. We became infrastructure, not just a competing venue.
The result? Sui’s total value locked grew 1,261% in 13 months. That’s not cannibalization. That’s ecosystem expansion. The daily billion in Momentum volume came from new traders entering Sui for the first time—not existing users clicking a different DEX button.
The Retail-First Inflection Point
Here’s what I think is happening with Sui, and why the timing matters: retail is about to enter crypto at scale, and they’re going to demand something different from what existed during previous cycles.
Previous bull markets were built on speculation, leverage, and fear of missing out. This cycle is being built on utility. Bitcoin enters financial institutions via ETFs. Stablecoins become the rails for cross-border commerce. Gaming and social economies onboard millions. And all of it needs deep, liquid, reliable infrastructure at low cost.
Sui’s architecture was designed for exactly this use case. The Move language enables secure, composable smart contracts. The object-centric model creates rich on-chain assets that feel native, not bolted-on. Sub-second finality and parallel execution mean that users experience the blockchain as responsive, not congested.
When infrastructure meets adoption momentum, compound effects emerge.
What We’re Building Next
Momentum is no longer just a DEX. We’re becoming the central liquidity engine for Sui. Our partnerships with Wormhole around cross-chain asset bridging and OKX around wallets and distribution are designed to do one thing: bring billions in liquidity into Sui by providing the best technical and user experience for getting it there.
We’re building xSUI as a liquid staking solution. We’re integrating EVM and Solana-native assets onto Sui. We’re expanding beyond native assets, though we remain fully committed to making Sui the most efficient entry point for sustainable on-chain liquidity.
Could we launch on Base, or Solana, or Arbitrum? Sure. But that’s not where the opportunity is. The opportunity is in a network that was designed from first principles for this moment—where a billion people can eventually own and trade digital assets without friction, without fear, and without intermediaries.
The Real Test
The daily billion volume milestone is not success—it’s evidence of promise. Real success would be measured in a very different metric: how many people who were never in crypto before now use Sui regularly, understand what a CLMM is, and actually hold positions for months or years rather than hours.
That’s the retail-first test. That’s what we’re building toward. And from what I can see in wallet behavior, ecosystem growth, and the tenor of our community, we’re passing it.
The next cycle of crypto won’t be won by the fastest traders or the largest whales. It will be won by the platforms that trusted retail, built infrastructure they actually need, and stayed committed even when markets wavered.
We intend to keep building that infrastructure. Sui’s ecosystem is ready. And retail is coming.
About ChefWen, Founder, Momentum
Wendy Fu (ChefWen)  is the founder of Momentum, the Move Central Liquidity Engine.
With a strong engineering background—including senior software engineering roles at Facebook Libra and Amazon—Wendy combines deep technical expertise with visionary leadership to build scalable, industry-shaping solutions. 
Wendy holds Master degrees in Computer Engineering and Operations Research in Industrial & System Engineering from Georgia Institute of Technology. 
At Momentum, Wendy is spearheading efforts to become the central liquidity engine for the Move ecosystem with the launch of the first multi-chain ve(3,3) DEX. Currently the #1 DEX on Sui.
Her blend of high-level technical acumen, entrepreneurial drive, and cross-cultural perspective makes her a compelling speaker for audiences interested in the future of Web3, innovation, and software engineering.
About Momentum
Momentum is building the financial operating system of the tokenised world starting on Sui. Think Robinhood’s ease of use and scale, but fully decentralized and global. 
In just six months, it has gone from zero to $500M in liquidity, onboarded over 2.1 million users, and hit $1.1B in daily trading volume yesterday. That makes us the #3 DEX globally, right next to Uniswap and Pancake.
Momentum is the Robinhood of the tokenised era. It is not just another DEX, it is building the platform where anyone, retail or institutional, can trade anything, anywhere, fully on-chain.
With Sui’s unique retail base, generous ecosystem incentives, and a ve(3,3) flywheel that pumps value back into $MMT with every trade, it is setting the foundation for a $10B+ protocol.
What’s happening next : Perps, Momentum X, and bridging DeFi with TradFi , a universal KYC layer that unlocks institutional liquidity like never before.
Momentum isn’t following trends , it is rewriting the playbook for global finance.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of DL News and DL Research. Please conduct your

How Sui’s Retail-First Ecosystem Propelled Momentum to $1B Daily Volume

Why a CLMM DEX on Sui crossed the billion-dollar daily mark

Raees Chowdhury is the Chief Investment Officer at Tok-Edge, where he leads the launch of the firm’s $100 million crypto fund focused on bridging institutional capital and on-chain markets through a novel “Redemption Token” structure. A Forbes 30 Under 30 honoree (2021), he is an Oxford-trained economist with published research and multiple awards in game theory, and has been investing in crypto and DeFi since 2017. He previously served as Managing Partner at Revolt Ventures, the venture arm of a $10bn platform, and began his career at BCG and Bain. He is also the co-author of the Redemption Token whitepaper.
Institutional interest in crypto has clearly arrived. Institutional access to DeFi largely has not. ETFs and treasury companies validate demand, but they keep investors inside traditional financial rails, touching none of the programmable capital markets, on-chain yield, and composable liquidity that make DeFi structurally different from anything that came before it. 
Tok-Edge was built around closing that gap, with a novel Redemption Token model and a $100 million crypto fund as its first proof of concept. We sat down with Raees Chowdhury to find out how he plans to get institutions there.
Tok-Edge just emerged from stealth with a pretty clear conviction: institutions want DeFi exposure, but the products don't exist yet. Walk us through the founding thesis; what specifically did you see that others weren't building?
 The starting point was noticing that institutional interest in crypto had clearly arrived, but institutional access to DeFi really hadn’t. Most of the products available today are still wrappers around crypto rather than actual exposure to on-chain capital markets. ETFs, treasury companies, structured products - they all validate demand, but they largely keep investors inside traditional financial rails. What we felt was missing was a bridge between institutional standards and genuinely crypto native strategies.
On one side, you had products institutions were comfortable with operationally, but they didn’t really capture the innovation happening in DeFi. On the other side, you had highly sophisticated on-chain ecosystems that most institutions simply couldn’t engage with from a governance or compliance perspective. Tok Edge was built around closing that gap.
We think the next phase of crypto is less about passive exposure to large-cap tokens like Bitcoin and more about participation in DeFi as programmable capital markets. Things like permissionless trading venues, on-chain yield generation, liquidity provision - these are fundamentally new financial primitives.
That was the conviction behind the business from day one.
Your background runs through BCG, Bain, Revolt Ventures, and an Oxford MPhil in Economics. At what point did you decide DeFi was where the real capital markets innovation was happening, and what finally convinced you?
 I think the turning point was realizing that DeFi wasn’t just creating new assets; it was creating entirely new market infrastructure.
Coming from a traditional finance background, my initial instinct was skepticism. There was obviously a lot of speculation and noise in the early market. But underneath that, there was genuine innovation happening at an incredible pace.
What really convinced me was seeing financial coordination happen natively on-chain without relying on the traditional layers of intermediaries we’ve accepted for decades.
You suddenly had markets operating globally, 24/7, with transparent settlement and programmable logic built directly into the system. That’s a pretty profound shift once you spend enough time understanding it.
And the speed of iteration was unlike anything I’d seen before. Entire financial models were being tested and rebuilt in months instead of years – take Uniswap, Aave, Morpho or more recently Hyperliquid. At a certain point, it became hard to ignore that some of the most important capital markets experimentation was happening inside DeFi.
You've argued that BlackRock's Bitcoin ETF and Strategy's digital asset treasury validate institutional demand, but that they're "single asset products restricted to traditional finance rails." What does an institution actually miss out on when its crypto exposure is purely ETF-based?
 The simplest way to think about it is that ETFs provide exposure to the asset class, but not really to the underlying financial ecosystem being built around it.  It’s also very limited; ETFs are restricted by geography and, to date, are exclusively for Bitcoin and Ethereum.
If you own a Bitcoin ETF, you’re still participating through traditional infrastructure. You’re not interacting with on-chain trading liquidity or the DeFi composability that makes crypto investment returns structurally different from previous asset classes, such as validating networks, staking or yield farming.
And a lot of the most interesting economics in crypto actually happen there.
One of the big shifts with DeFi is that assets become programmable. Capital can move, generate yield, provide liquidity, or interact with other protocols in real time. That’s a very different framework from simply holding a static exposure through an ETF wrapper.
So I think ETFs are incredibly important because they validate institutional demand, but they’re still an early-stage bridge product rather than the final form of institutional crypto exposure.
You just published the Redemption Token whitepaper. What problem in token design were you trying to solve, and why did existing models fall short?
 A lot of token models struggle with the same issue, which is that there’s often a disconnect between the token itself and a durable economic purpose.  The industry has gone in the wrong direction with governance tokens and memecoins in the latest market cycle.
Some tokens have utility but limited value accrual. Others become highly speculative without a clear long-term reason to exist beyond trading activity. We wanted to approach token design from a more functional perspective.
The Redemption Token model creates a relationship between the token and the ability for authorised participants to redeem their underlying fund exposure at net asset value. That gives the token a real role rather than purely narrative-driven demand, while remaining transferable and composable within DeFi infrastructure – which means it can still integrate into broader on-chain markets.
The whitepaper estimates the opportunity for this token model at over $1 trillion, larger than the entire stablecoin market. Where does that number come from, and what has to be true for it to materialize?
 The estimate comes from looking at the size of global alternative assets and then asking what happens if even a relatively small portion of that capital becomes interoperable on-chain, applying our Redemption Token model.
When you look across hedge funds, private credit, structured products, real estate, private equity, you’re talking about tens of trillions of dollars globally. So even modest penetration creates a very large potential market.
But for that opportunity to materialize, new token models have to provide real utility or function rather than just acting as a branding or speculative exercise.
Stablecoins succeeded because they solved an actual problem. They made digital dollars efficient, transferable, and globally accessible in what is now a $300bn category. I think on-chain financial products have to do something similar around how they use token models for distribution – for liquidity, transferability, composability, or investor access.
The infrastructure also has to develop and reach a certain level of maturity. Regulation, custody, governance, secondary liquidity - all of those pieces matter if institutions are going to participate meaningfully.
You are launching $HF as the first Redemption Token. What specifically about a crypto fund made it the right vehicle to prove out the model, versus other asset types?
 Crypto funds were a natural starting point because institutional capital is only interested in two things right now: artificial intelligence or financial innovation.  In our crypto case, the underlying assets already exist natively on-chain. That makes the operational side much cleaner compared to trying to apply our Redemption Token model to more illiquid or off-chain assets from day one.
There’s also already a strong cultural understanding within crypto that functionality can exist through tokens and programmed by code, so the market is more receptive to new structures.
From an investment perspective, crypto markets are also relatively liquid compared to many alternative asset classes, which makes redemption mechanics and net asset value as a reference value much more practical to manage.
We saw it as the right environment to prove our model before eventually expanding into broader liquid asset categories over time under the Tok-Edge brand.
Most crypto funds lock up capital for years, whereas Tok-Edge is modelling its fund around scheduled redemption intervals, closer to traditional hedge fund liquidity. How do you balance offering that liquidity with deploying into DeFi strategies that may need time to mature?
 A big part of it comes down to strategy selection and portfolio construction. We’re deliberately focused on liquid digital assets and liquid DeFi opportunities rather than highly illiquid venture-style exposure. That creates much more flexibility around redemption management.
At the same time, we also think there’s a middle ground between fully locked capital and fully instant liquidity. Traditional hedge funds have operated with structured redemption windows for decades because it creates a healthier balance between investor flexibility and protecting the integrity of the strategy itself.
We’re trying to take a similar approach while adapting it to crypto native markets.
Tok-Edge is London-based. The UK is in the middle of shaping its stablecoin and cryptoasset frameworks. How much does the regulatory environment factor into how you've structured the fund, and is London actually a competitive jurisdiction for what you're building?
 Regulation is extremely important if your goal is institutional adoption. Institutions need clarity around governance, compliance, and operational structure before they allocate serious capital. So from the beginning, we’ve approached the business with that in mind.
I actually think London still has significant advantages. The city has deep institutional capital markets expertise, sophisticated legal infrastructure, and a strong talent base across finance and technology.
At the same time, crypto is naturally global, so we think about distribution in a permissionless way rather than anchoring everything to a single market. The broader objective is building products institutions can engage with confidently while still preserving the advantages that make DeFi interesting in the first place.
If the fund is the first product, what will Tok-Edge look like in three years as it expands?
 I see the fund as the first implementation of a much broader thesis around what I call “DeFi 3.0”, which is creating functional tokens that bring capital markets onto public blockchains. Long term, the opportunity is bigger than simply managing crypto assets. We think there’s an opportunity for us to build entirely new financial primitives around the Redemption Token model.  We don’t just want to design the model, but also to own the category, just like how MicroStrategy dominates the digital asset treasury market.
So ideally, over the next few years, Tok Edge evolves into a brand and a platform spanning multiple products and different Redemption Token implementations. We still think we’re very early in the transition from traditional financial infrastructure toward on-chain capital markets.
In a lot of ways, it feels similar to the early internet, which transformed the way we shared and consumed information. Now crypto is transforming capital markets and the financial system.

The next phase of crypto is less about passive exposure to large-cap tokens like Bitcoin and more about participation in DeFi as programmable capital markets.

Going after $1 trillion: How Tok-Edge’s token model unlocks institutional DeFi

Felix Fan is the new CEO of Trust Wallet. He brings a trading vision for wallets and is focused on improving the UI/UX experience for Trust Wallet users.
Prior to Trust Wallet, he served as Product Director at OKX, and earlier in his career, he co-founded Adventurist App Limited and Alphastark Limited, spearheading product development and scaling consumer products globally. Felix holds a Bachelor of Engineering from City University of Hong Kong.
For a long time, self-custodial wallets were built for “hold token, swap token.” Today’s Web3 demands more.
With 220 million users, Trust Wallet is already one of the most widely used self-custody products in crypto. But Felix Fan didn’t join as CEO to maintain the status quo. His vision is a wallet that trades perps, runs AI agents, and eventually makes it unnecessary to open any other crypto app.
We spoke with Felix to find out how he plans to get there.
You joined Trust Wallet as CEO in February 2026 with a clear trading vision for wallets. What are some core problems you came in to solve?
 Most self-custody wallets were initially built as storage products; somewhere you hold tokens and swap them from. But over the past few years, that's changed significantly and wallets are no longer treating trading as an afterthought. Trading is becoming the primary activity for most crypto-native users. Swaps, perps, prediction markets — that's what people actually do every day. And yet doing those things inside of a wallet has been fragmented: multiple screens, confusing routing, no fiat reference point, no access to the markets people want.
I came in to close that gap. Trust Wallet already had the strongest self-custody foundation in the industry. What it needed was a product layer that matched the speed and depth traders expect, without asking them to leave the wallet or give up custody.
Building trading experiences that match the speed and depth traders expect, inside a self-custody environment. That's the core problem.
You come from a product background at OKX, and two companies you co-founded. How does that shape the way you think about leading Trust Wallet differently?
 Building companies from scratch teaches you to prioritise ruthlessly, and stay close to what users actually do. Working at scale at OKX taught me what execution looks like when millions of dollars flow through your product every hour; you develop a deep respect for performance and the cost of getting details wrong.
At Trust Wallet, I try to combine both. We may not appear as a startup because we have real scale, but I want us to move with startup speed on the decisions that matter most. Fewer features shipped better, not more features shipped faster. The swap flow, the trading experience, the on-chain infrastructure — those get disproportionate attention because they're what users interact with every session.
This forces better product thinking. You have to make the experience so good that users never feel the complexity underneath.
Trust Wallet has 220 million global users. At that scale, what does it take to meaningfully improve UX, and where do you start?
You start with the flows people will use most:  swaps and trading. If someone opens Trust Wallet five times a day, four of those are probably to check a price or make a trade. So the swap experience has to be best-in-class. Not just functional, but fast, clear, and confidence-building.
At our scale, you also can't assume a single user profile. We have DeFi power users running complex strategies across multiple chains, and we have people in emerging markets buying their first crypto. The UX has to work for both; i.e. simple by default, powerful when you need it.
The other thing that changes at scale is that small friction compounds. A swap flow that takes one extra tap costs millions of unnecessary taps per day. So we obsess over removing steps and reducing cognitive load. The recent swap redesign came directly from watching where users paused, dropped off, or made errors in the old flow.
You recently overhauled the swap experience with one screen, fiat input, and real-time popular tokens. What did the old flow tell you about where crypto wallets have been getting UX wrong?
 Wallets have been designed around how blockchains work, not how people think. The typical swap screen shows two token selectors, an amount in the token you're selling, a slippage setting, and a gas estimate in a native token you might not hold. That's five concepts a user has to hold simultaneously! And none of them map to how people actually think about money.
Additionally, people want to know what's moving right now, so we surface real-time popular tokens. And people don't want to navigate away from what they're doing, so we collapsed the entire flow into one screen.
The broader lesson: crypto wallets have been shipping for extremely crypto-literate users and then wondering why mainstream adoption stalls. Users don't care about chains, gas, and routing. They care about: what am I buying, how much does it cost, and does it work?
Hyperliquid is now live inside Trust Wallet, giving users access to 200+ perp markets without leaving the app. Why is bringing perps natively into a self-custody wallet the right move, and why now?
Perps are where the volume is and the perps market dwarfs spot; it's the primary instrument for active traders. But the experience has been split: trade perps on a CEX and accept custodial risk, or use a DEX perp platform disconnected from the rest of your portfolio.
Trust Wallet now gives users access to Hyperliquid's 200+ perp markets with deep liquidity, without leaving the wallet and without giving up custody.
And we've gone further; users can now also access Hyperliquid's HIP-4 outcome contracts (prediction markets) through Trust Wallet as well. These are contracts priced between $0 and $1 that settle based on real-world outcomes — binary yes/no markets and multi-outcome markets like daily BTC price ranges. No separate account, no separate funding, everything is managed from your existing wallet.
Users can also access Aster alongside Hyperliquid. Hyperliquid for RWAs, U.S. and Korean market exposure, and deeper liquidity; Aster for Hong Kong markets, Chinese meme markets, and higher leverage. One wallet, best of both worlds.
Of course, perpetual contracts are leveraged instruments and carry significant risk — that's why we ensure users have clear disclosures and controls before they trade. And availability varies by jurisdiction; we work within local regulatory frameworks.
Another recent release, the Trust Wallet AgentKit, lets AI agents execute real transactions across 25+ chains within rules users define. What does agentic crypto actually look like for an everyday user in practice?
 Think of it like giving a very capable assistant a company card. You set the rules upfront — a daily spending limit, recurring buys on a schedule, or orders that only fire when a price hits your target — and the agent runs those automatically, exactly as you set them, no clicking required. Anything outside those preset rules comes back to you to approve first. You stay in control the whole time.
The real difference between this and a traditional bot comes down to judgment. A bot follows a fixed instruction and breaks the moment reality gets messier than the rule. An agent reasons about context: it reads changing conditions and decides what to do within the boundaries you've set.
The piece that matters most is that Trust Wallet AgentKit is non-custodial. You never hand your keys to a platform. The agent acts with your permission, but the keys stay on your device the entire time — your funds don't move until a transaction actually settles on-chain. Your keys, your agent.
The first wave of use cases will come from developers and power users, but the infrastructure we're building now — non-custodial agent wallets, policy-based controls, open standards compatibility — is what eventually turns agentic crypto from a developer tool into something an everyday user just switches on, as simple as toggling a setting.
What does Trust Wallet look like in three years? Is it still a wallet, or will it become something else entirely?
It's still a wallet, but the definition of "wallet" will have expanded. Today, people think of a crypto wallet as the place you store and swap tokens. In three years, a wallet will be the primary interface for how people interact with the on-chain economy — trading, earning, paying, lending, and delegating to AI agents that act on their behalf.
We're already moving there. Perps, prediction markets, agent wallets, none of these fit the old definition of "wallet," but they all belong here because they're all things a user wants to do with their assets, from one place, without giving up custody.
To get there, Trust Wallet has to be the app that makes it unnecessary to use anything else in crypto. Because the experience is so complete there's no reason to. Best-in-class trading. Seamless DeFi. AI agents handling the complexity you don't want to navigate. All secured by the same self-custody foundation we've built for millions of users.
The word "wallet" might undersell it. But the best products don't need a new category name, they just redefine the one they're in.

The word "wallet" might undersell it. But the best products don't need a new category name, they just redefine the one they're in.

Beyond storage: How Trust Wallet’s new CEO is redefining the wallet around trading

Lucas is the co-founder and CEO of Variational. Lucas began attending the University of Oklahoma to study mathematics at age 12, before moving to study computer science at Columbia. While in school, Lucas worked at Goldman Sachs and Google X, and founded the hedge fund Qu Capital with Edward Yu.
After Qu Capital was acquired by Digital Currency Group in 2019, Lucas became the VP of Engineering at Genesis, tasked with building out their OTC desk infrastructure. In 2021, he and Edward left Genesis to start Variational, which initially operated as a market maker active on virtually all major CEXs and DEXs.
Now, Lucas uses his background in scaling high-stakes trading infrastructure to oversee the development of Variational’s liquidity aggregation and settlement architecture.
The onchain perps scene is one of DeFi’s busiest markets today, but many are still solving the same problem: how do you get liquidity before you have traders, and how do you get traders before you have liquidity?
Variational’s answer is to cut out the middleman entirely. With a vertically integrated liquidity provider tapping directly into CEX, DEX, and TradFi rails, the protocol lists markets without negotiating with a single market maker and passes the captured spread revenue back to users in the form of zero-fee trading.
Fresh off a $50M Series A led by Dragonfly, we sat down with co-founder and CEO Lucas Schuermann to find out what that model unlocks and where Variational takes it next.
You and co-founder Edward Yu spent years at the centre of crypto market structure, first at Genesis, then running your own prop trading firm. What did you see from that vantage point that made you want to build a protocol?
We usually cite three main learnings from our time at Genesis and Variational’s prop days: bootstrapping order books is slow, exchanges leak a ton of value to market makers, and trading derivatives OTC (i.e. off exchanges) is a huge hassle.
Order books have a cold start problem: takers need liquidity and tight spreads before they’re willing to trade, and makers need significant trading activity from takers. The industry-standard workaround for this is simply to pay makers to provide deep liquidity, in the hopes that takers eventually show up and exchange-level subsidization is no longer necessary. This is an expensive and slow process that requires negotiations and deals with market makers for each new listing. We solved this by vertically integrating our own liquidity provider that taps directly into existing liquidity sources like CEXs, DEXs, and OTC desks to completely bypass this negotiation and bootstrapping process. This model is also perfectly suited for RWAs, as the platform’s native liquidity provider can plug into TradFi desks as opposed to relying exclusively on liquidity from crypto-native market makers and exchanges.
Second, market makers extract a ton of value from exchanges. They generate just as much, if not more revenue than the exchanges they’re active on. That revenue is then completely removed from the exchange ecosystem. This is why we decided to exclude all third party market makers from Omni, the first trading platform on the protocol; by cutting out these external market makers, the vertically integrated liquidity provider is able to retain all of the spread revenue that is usually extracted from the protocol. Since the platform is able to generate consistent revenue solely from capturing the spreads, it’s also able to offer zero-fee trading to all users. 
Finally, OTC derivatives trading in crypto was (and still is) extremely inefficient. Even before our time at Genesis, when Ed and I were running our own hedge fund, doing an OTC trade required lawyers, tons of back and forth, bank wires, ops hires, etc – and even after all of that, had manual margining and liquidations. Once we were doing these OTC deals full-time at Genesis, this problem was even more obvious. The original purpose of the Variational protocol was to be a simple, automated, and decentralized mechanism to settle and clear derivatives trades against an arbitrary counterparty. That vision still exists today as the second product we’re building after Omni, called Pro. While our team is fully focused on going to market with Omni right now, releasing Pro to modernize OTC derivatives trading and bring it on-chain is still on our roadmap.
Variational bootstrapped initial development from trading profits before raising external capital. How did that shape the way you thought about product design, and what changed once Bain Capital Crypto, Dragonfly, and the other backers came in?
 It caused us to always have revenue as our north star. When you don’t have a war chest of VC capital, you don’t have the luxury of planning to lose money for years while acquiring users. From day 1 of our private beta launch, we’ve prioritized generating revenue to put in the treasury for runway, growth, and future token buybacks. 
Once Bain Capital Crypto, Dragonfly, etc. came in, it allowed us to scale up the internal liquidity provider to support more growth and hire a larger dev team to build faster. VC capital didn’t change our prioritization of revenue, but rather just allowed us to invest more and move faster in attacking new verticals we were already exploring, like RWAs.
Variational uses an RFQ model, a deliberate departure from the order book designs that dominate both CEX and DEX perps. What does RFQ unlock that an order book structurally cannot?
 The RFQ model solves the cold start problem of bootstrapping liquidity that limits order books. Order books require subsidizing external market makers to build depth for each new asset. Variational’s RFQ model, combined with a single vertically integrated liquidity provider, bypasses this requirement entirely. Variational’s use of RFQ results in more listings across both crypto and RWAs, and the ability to tap into existing CEX, DEX, and TradFi liquidity.
Part of our core thesis building Variational was that RWAs and off-chain markets will see increased demand for on-chain trading. RFQ is the only way to bridge that gap without decades of bootstrapping and millions in subsidies to market makers.
You've raised $50M led by Dragonfly to go all in on RWAs. How does that capital get deployed across Phase 1 and Phase 2, and what does success look like before you bring 100+ TradFi markets on-chain this summer?
 We've been significantly expanding our development team to ship new markets & features faster. Dragonfly is also a very trusted and well-connected organization, which has helped us kick off and progress certain partnership and integration conversations. Success over the next few months means achieving our public goal of listing over 100 RWA markets with TradFi liquidity, and seeing genuine activity on these markets from our users.
The Series A positions Variational as building towards a crypto-native Robinhood-esque experience. Would that be a fair take? And if so, what do you find are the essential UX features that make for a top-tier platform for competitive, onchain trading apps?
 Yes, we see ourselves as the first platform with the design necessary to achieve the "trade everything in one place" thesis that retail trading apps have been progressing towards for decades. However, there are some obvious UI requirements to progress from onboarding crypto traders to onboarding traders in general: removing the need for a wallet (via account abstraction), allowing for easy deposits and withdraws through non-crypto channels, and improving the onboarding experience for first-time perps traders.
Omni has listed over 500 pairs, including long-tail and pre-listing assets, without requiring order book depth for each. How does the automated listing engine work, and where do you see the ceiling on market coverage?
 The automated listing engine has evolved a lot since our launch. At its core, it’s just an aggregation of APIs and risk checks meant to determine what markets are safe and liquid enough for listing. We monitor and adjust its risk checks and data sources regularly. 
We believe we’re pretty much at the ceiling of crypto market coverage these days, and are now expanding into RWAs. We believe RWAs have a huge ceiling for coverage that existing on-chain platforms are nowhere near. We also plan to explore other exotic markets like predictions in the future. 
Variational Pro is targeting a derivatives market where deals are still getting done over Telegram and settled manually off-chain. What frictions exist for bringing institutions onchain, and how are you removing it?
 There’s two different problems to solve: one is bringing institutions on-chain in general, and the other is streamlining the process for institutions that are already on-chain. 
Bringing institutions on-chain means giving them a significantly better product than they’re currently using. In that sense, Pro would be competing with existing OTC solutions on transparency, verifiability, usability, and capital efficiency.
Streamlining the process for institutions who are already trading crypto derivatives OTC has a much lower bar, since those are the deals currently being settled manually off-chain. For these institutions, being reliable, easier/cheaper than the manual processes, and having a large network of dealers onboarded is the focus. This is the initial market for Pro, giving the platform time to mature and be refined before moving to onboard new institutions.
Variational’s Oracle is described as modular enough to support commodities, prediction markets, and in-game assets. Are these hot markets something that the team is focused on in the near future?
 Yes. Having the liquidity provider vertically integrated to the trading platform means we are not reliant on any external parties for new listings. Our current priority is fully on RWAs (equities, commodities, indices, currencies), since this is what we see is most demanded by the market right now. As our RWA markets mature, we can begin to dedicate effort to other exotics. 
For traders or liquidity providers who haven't used Variational yet, what's your pitch for why they should try it this week?
 Variational already offers cross margin across hundreds of crypto & RWA markets with industry-leading execution costs (tight spreads + zero fees). Over the summer, we’re planning to list hundreds more RWA markets via direct connections to TradFi liquidity providers. 
If you trade crypto, Variational is the cheapest and most liquid place to do it. If you trade RWAs, you can trade the current listings with cross margin now, and hundreds of them with TradFi liquidity this summer.
What does your vision of Variational look like in the next five years, and how would you define ‘success’ for the protocol?
 In five years, my vision is for Omni to be the leading on-chain trading platform, offering thousands of 24/7 crypto & RWA markets with cross margin and TradFi liquidity depth. At scale, the Omni Liquidity Provider will become the largest market maker in crypto, with its revenue shared between community depositors, Omni traders, and the protocol treasury.
I’d also envision Pro becoming the industry standard for OTC derivatives trades, with every crypto market maker, liquid fund, and foundation onboarded. At this point, we’d be optimizing Pro for non-crypto institutions and OTC TradFi derivatives.

Bringing institutions on-chain means giving them a significantly better product than they’re currently using. In that sense, Pro would be competing with existing OTC solutions on transparency, verifiability, usability, and capital efficiency.

Bringing institutions on-chain means giving them a significantly better product than they’re currently using.

Trade everything: How Variational is bringing 100+ TradFi markets onchain

Sofia Bobrik is the founder of TechWaves PR and has over 9 years of experience in external communications. She works with crypto infrastructure, DeFi, and cybersecurity companies — sectors where the technology is complex, the buyers are institutional, and the trust bar is high.
Her focus is the translation problem: how to make technically serious products understandable to investors, partners, risk teams, compliance teams, and enterprise buyers without oversimplifying the substance. Through public relations services, Sofia helps founders build positioning, narrative architecture, and institutional credibility around complex technologies.
You work with crypto and infrastructure companies where the technology is complex. In institutional DeFi, most conversations focus on regulation, liquidity, and infrastructure, but you argue there is another bottleneck. What is it?
A lot of DeFi founders assume that if the product is technically strong, the market will eventually understand it. But that’s not how institutional adoption works. A fund, market maker, custodian, fintech, exchange, or enterprise partner does not make a decision because one person “gets it.” The decision usually has to survive several internal conversations with risk, compliance, legal, finance, product, and sometimes the investment committee.
So the real communication challenge goes beyond explaining what the protocol does. Different people inside the same organization also need to understand why it matters, why it matters now, and why it is safe enough to evaluate it.
This is especially important in DeFi because the categories are still difficult for traditional finance teams to map. Is the product an infrastructure layer or a trading platform? A settlement rail or a liquidity protocol? A yield strategy or a tokenized asset platform? When every stakeholder answers that question differently, the opportunity stalls.
That is why I see communication as part of the adoption infrastructure. Institutional DeFi needs both better products and clearer translation between technical architecture and institutional decision-making.
You draw a line between visibility and understanding. Why is this distinction so critical for technical founders?
Visibility in deep tech is a vanity metric. It tells you how many people saw something not how many understood it well enough to repeat it to a colleague without getting it wrong. For institutional deals, only the second one moves the needle.
In consumer crypto, visibility still converts into liquidity. But that loop is broken in B2B tech. A buyer rarely onboards a vendor because they saw a viral thread. The decision usually happens when three different people on their team — security, compliance, and procurement — independently arrive at the same understanding of the product. If those three read the same materials and arrive at three different interpretations, the deal dies at the committee level. Quietly. Without feedback to the founder.
That's why I look at communications not as reach but as consistency of interpretation.
From a communications perspective, why do technically strong DeFi companies still struggle to move institutional conversations beyond initial interest?
From my perspective, the challenge often comes down to translation. Institutional teams may be curious about DeFi, but curiosity does not automatically become internal confidence, budget, or approval.
This is where many DeFi companies underestimate PR. They think media coverage is just awareness. But in institutional markets, credible public materials become part of the background layer around the company. The founder’s public profile on LinkedIn and serious media coverage also matter because institutional audiences often look at the company and also at the people behind it.
It does not replace audits, legal review, due diligence, or risk assessment. Instead, it adds a layer of credibility that makes the company easier to take seriously.
What does institutional credibility look like in DeFi compared with general market awareness?
 General market awareness is broad. Institutional credibility is specific.
For DeFi companies, institutional credibility is built through repeated, consistent explanations across serious channels.
That means the founder interviews need to do more than describe the product as innovative. They should also explain the market problem clearly. Company commentary should also go beyond celebrating growth and show how the team thinks about risk, liquidity, security, regulation, and market structure. And media strategy must move past chasing announcements. Its job is to make the company easier to understand for the exact people who influence adoption.
In DeFi, credibility comes from making complexity legible without hiding the risk — not from sounding bigger than you are.
That is what institutional audiences respect.
How should DeFi founders communicate risk without weakening their own positioning?
 They should stop treating risk as something to avoid in public communication.
Institutional audiences know DeFi has risk. They know there are smart contract risks, oracle risks, liquidity risks, governance risks, regulatory risks, custody risks, and market structure risks. If a founder pretends those risks do not exist, they immediately lose credibility.
The stronger approach is to explain how the company thinks about risk.
For example: What assumptions does the protocol make? What is minimized on-chain and what is handled off-chain? How are counterparties protected? What happens during volatility? How does the team approach audits, monitoring, liquidity, governance, and integrations? What still needs to mature across the category?
You might think this makes the company look weaker, but it actually does the opposite: it makes the company look institutionally literate.
The founders who win trust are not the ones who say, “There is no risk.” Trust comes from a clear explanation of the risk, evidence of what has been done to reduce it, and honesty about what the market still needs to solve.
That kind of communication is much more powerful than hype because it mirrors how institutional buyers actually think.
What role does founder communication play in institutional DeFi? Is this just personal branding?
 No. In institutional DeFi, founder communication is part of company trust, not personal branding for its own sake.
When a founder explains the category clearly, talks honestly about technical trade-offs, and answers hard questions without becoming defensive, the whole company feels more credible. If the founder hides behind buzzwords, avoids risk, or only speaks in hype cycles, institutional buyers assume that same behavior may appear later in difficult situations.
That is why founders in DeFi need to be visible, but not performative.
This can happen through the founder’s public speaking, participation in relevant industry conversations, and consistent communication on LinkedIn. Many founders still overlook LinkedIn, but I think that is a mistake. Today, it is one of the most important B2B platforms where a founder can build thought leadership in their category, explain how they see the market, shape the conversation, and create trust before the first call with an investor, partner, or client even takes place.
But the founder does not need to become a full-time content creator. The best model is usually collaborative. The founder provides the substance: the product logic, the market view, and the technical reasoning. The communications team turns that into formats the market can actually use.
What actually changes for a DeFi company when communication is built this way?
 The starting point of every serious conversation changes.
Instead of spending the first call explaining the basics, the team can start from a more advanced place. The investor, partner, or institutional buyer has already seen the founder’s thinking. So they already understand the market problem, and they already have a basic sense of how the product fits into the category.
While it does not close the deal by itself, it makes the conversation more productive.
For DeFi infrastructure companies, public relations matters because visibility alone is not the goal. What really matters is becoming legible to the institutions, partners, and capital allocators that can actually move the category forward.

"In DeFi, credibility comes from making complexity legible without hiding the risk, not from sounding bigger than you are. That is what institutional audiences respect."

"In DeFi, credibility comes from making complexity legible without hiding the risk, not from sounding bigger than you are.  That is what institutional audiences respect."

TechWaves PR founder on why institutional DeFi has a communication problem

Vitali Dervoed is the founder and CEO of Ekiden, an institutional-grade trading platform for onchain derivatives. A tech entrepreneur with over a decade of experience across banking, fintech, and crypto infrastructure, he has worked in capital markets and in roles linked to Neon EVM, RockawayX, and Mango Markets. 
He previously co-founded Composability Labs and held senior product roles at Raiffeisen Bank International and CIB before moving full-time into crypto.
What was the primary motivation for starting the company? Was it driven by a personal experience or a recognised market need?
For me, it started with both curiosity and a clear market gap. Serum was one of the products that shaped my thinking early on, as it showed how strong an onchain trading ecosystem could be when the infrastructure is well built.
But it also made one thing clear to me: trading infrastructure cannot grow in isolation. In DeFi, liquidity, order flow, and value need to move across different projects and ecosystems. That composability is what creates better yields, stronger markets, and a better risk profile for everyone involved.
I wanted to build something that could take that idea further, beyond a single ecosystem, and in a way that could support higher volumes, greater reliability, and a more professional trading experience. If infrastructure is built in a siloed market, it will always struggle to compete with larger players. The only way to win is to create value across multiple projects simultaneously. To me, that is a core principle of DeFi.
Your background spans Neon EVM, RockawayX, and Mango Markets. How has that experience shaped the way Ekiden is built? 
Ekiden is the pinnacle of my career. The project is built on the experience I gained at Neon, RockawayX, and Mango. Thanks to Neon, I am tightly connected to both the Ethereum and Solana networks. I have built close ties with the founders of major Ethereum blue-chips and made great friends throughout the Solana community. This cross-chain experience gives me a clear, practical understanding of how these two distinct communities function.  
On the technical side, I understand how the EVM works much better than the SVM. Neon gave me deep insights into both technologies, including their specific strengths and engineering trade-offs. I am incredibly grateful for that experience.
Mango gave me a thorough understanding of perp traders and allowed me to engage directly with the Solana trading community. The Mango team was fantastic, full of talented and hard-working people, and I really admire everything they build.
RockawayX gave me the ability to take a high-level helicopter view of any sector and then dive straight into the technical weeds. That said, I actually learned my core execution skills many years before any of those experiences.
Could you elaborate on your technology and what sets it apart from other solutions on the market?
 We are building Ekiden to support serious trading use cases alongside institutional and advanced retail activity. Our focus centres on speed, reliability, and usability for professional participants. What sets us apart is our approach to the product: designing it with execution quality and real trading workflows in mind while fully preserving the benefits of on-chain transparency and user control.
We are launching on Canton, enabling us to deliver immediate value to existing players in the ecosystem rather than building in isolation. For example, we are integrating BitSafe’s cBTC as collateral, embedding TradeCraft’s swaps within the deposit flow, and leveraging Temple’s Vaults to enhance the overall trading experience.
The idea is simple. Ekiden is designed to be far more than a standalone trading venue. It operates within a deeply interconnected trading ecosystem where various infrastructure providers, liquidity sources, and user-facing products collaborate to deliver a superior experience for traders.
You just closed a $2M seed round with backers spanning market makers, infrastructure providers, and DeFi founders. What does this round signal about institutional appetite for onchain derivatives infrastructure?
Institutional appetite is starting to wake up. It is a little scary because once it kicks in, institutions can eat the entire industry alive, and their appetite will only grow stronger from there.
Now the real work begins. We are launching and starting to grow from here, but a lot has already been done behind the scenes.
To be frank, the crypto narrative has not changed much since 2018. What has changed is momentum. The market is finally ready, and external factors are aligned: regulations are clearer, companies have figured out how to allocate, and the timing is right.
Perps are no longer exotic primitives; many people understand them now. They went through the "test in the trenches" and proved viable, so institutions will take it from here and start actively adding them to their portfolios.
46% of institutions say improved infrastructure would be the key driver of increased on-chain exposure. Does that validate what you're building and what still needs to happen?
Institutions are avoiding onchain markets because the infrastructure has not consistently met the standards they uphold in traditional markets. Execution speed, reliability, liquidity depth, and predictable settlement are not optional for these participants. They are the baseline.
So yes, that number reflects exactly what we are building towards. But infrastructure is only one part of the answer. A few other things still need to happen before that 46 per cent can move onchain at scale. First, collateral needs to become more flexible and capital-efficient. Institutions are not going to fragment their balance sheets across every venue. They need to use the assets they already hold, including BTC and real-world assets, as productive collateral.
Second, liquidity, hedging, and yield should move across protocols without forcing users into isolated silos. This is where onchain should actually outperform traditional infrastructure and where most current designs still fall short.
Third, the user experience for professional participants needs to align with what they are used to.
If those pieces come together, the 46 per cent ceases to be a survey response and becomes a flow of capital. Our job is to ensure the infrastructure layer is ready.
Keyrock joined as a strategic partner in the raise. What does that relationship mean in practice for traders on the platform?
Every serious exchange has a small group of strategic liquidity partners, and for Ekiden, Keyrock is one of them.
In practice, this should translate into deeper liquidity, tighter spreads, and a more reliable trading experience from day one. Keyrock’s engineering team has worked closely with us on the exchange, covering infrastructure, API requirements, and execution quality.
Their BD team has also been highly engaged, which matters because an exchange is not just technology. It is the combination of liquidity, distribution, and market structure.
What are the key plans and objectives for the next three to five years?
Over the next few years, my goal is to expand Ekiden from a single product into a broader onchain trading ecosystem. In the near term, we are focused on the launch, liquidity growth, team expansion, and strategic partnerships.
In the longer term, I believe more real markets will move onchain, giving people more direct access to the assets they want to own, whether those are commodities such as oil, electricity, and water, or a broader portfolio of financial and real-world assets.
We want to help make these markets more usable, transparent, and accessible onchain. Ultimately, our goal is not only to build better trading infrastructure but also to make trading more inclusive and to increase financial literacy for as many people as possible.

Trading infrastructure cannot grow in isolation. In DeFi, liquidity, order flow, and value need to move across different projects and ecosystems. That composability is what creates better yields, stronger markets, and a better risk profile for everyone involved.

Ekiden’s Founder on how they plan to make onchain derivatives institution-ready

Sota Watanabe is the CEO of Startale Group, a global crypto infrastructure company building the onchain stack for finance, entertainment, and consumer applications. A prominent figure in Japan's crypto ecosystem, he has worked closely with the Japanese government on the national Web3 strategy. He was named to Forbes Asia 30 Under 30 in 2022 and to Newsweek's 100 Most Respected Japanese in the World in 2023.

As the digital asset industry matures, the friction of managing fragmented wallets, multiple gas tokens, and disconnected blockchains is becoming a massive barrier to mainstream adoption.
We recently sat down with Sota Watanabe, CEO of Startale Group, to discuss how his team is solving this exact problem by building a fully integrated, compliant onchain stack for global finance.
In this interview, he explains the absolute necessity of vertical integration, the strategic importance of the JPYSC stablecoin, and how Japan’s strict regulatory discipline is shaping the future of enterprise blockchain infrastructure. Read more below.
What was the Web3 ecosystem in Japan like in 2019, and what gap were you trying to fill when you founded Astar?
In 2019, crypto in Japan was still living in the shadow of Mt. Gox and the Coincheck hack. The Financial Services Agency had sharply tightened custody and listing rules. Most people still viewed crypto as highly risky and speculative. Developers could deploy on Ethereum, yet there was absolutely no Japan-originated chain designed around local use cases and compliance.
That presented a massive gap. Japan possesses real structural advantages, including intellectual property, gaming, anime, and iconic brands. However, the rails to bring that culture onchain securely for Japanese institutions simply did not exist. The consensus at the time suggested that Japanese regulation made a public blockchain project unworkable. I took that as a clear signal to start building.
Astar became Japan's first major public blockchain. Today, it anchors a multichain Astar Collective spanning Polkadot and Soneium. That successful outcome convinced me the original thesis was absolutely correct.

Astar became Japan's first major public blockchain. What did building within the Polkadot ecosystem teach you about where the real infrastructure battles would be fought?
I often think of Polkadot as a blockchain university. Working alongside Gavin Wood and the Parity team taught me that the real battle is about interoperability. An isolated chain inevitably starves. Users, liquidity, and developers flow exactly where connections are densest.
That lesson explains why Astar operates today as a Collective spanning Polkadot via Astar Network and Ethereum via Soneium, with ASTR moving seamlessly between them via Chainlink CCIP. It also served as the seed for Startale.
Interoperability requires owning the stack end-to-end. Tesla built cars alongside batteries, software, and the Supercharger network because those tight integrations define the true product. Startale applies the same playbook to Web3.
We align the chain, stablecoins, wallet, and app into a single vertically integrated system. The chains that survive the next five years will be those that make themselves highly useful and connected to other networks.

You've worked closely with the Japanese government on the national Web3 strategy. Where has that engagement most directly shaped what Startale is building?
My focus is entirely on seamless integration and practical application. Japanese brands need to trust that systems work flawlessly and that residents are adequately educated and protected. That requirement led directly to our focus on building compliant infrastructure.
Japan’s stablecoin regulations are among the clearest and most favourable globally because I and others had the privilege of contributing to the regulatory conversation alongside policymakers. That clarity directly influenced our decision to build enterprise-ready financial infrastructure for the long term.

At what point did you become convinced that Startale had to own the full stack?
It was a slow realisation, born of the severe friction in the crypto user journey. The hassle of managing private keys, bridging tokens across multiple blockchains, and paying gas fees in various assets creates a broken experience for mainstream users.
I have always drawn inspiration from Apple. They built the iPhone hardware alongside the software, the App Store, and the broader ecosystem required for massive success. We own the full stack in a similar way. Soneium and Strium provide the network, the Startale app provides the user interface, and the JPYSC and USDSC stablecoins handle transactions.
Owning the stack allows us to remove friction entirely. We abstract away complexity, simplify onboarding, and optimise the flow of value without relying on fragmented external dependencies.

JPYSC is the first trust bank-backed yen stablecoin. Why was the yen the right currency to tackle first for the Asian market, and how does that complement USDSC?
Japan is our home market, and naturally, we see the strongest enterprise demand there today. Japanese corporations and international firms operating in Japan want to move settlements, treasury operations, and supply chain flows onchain, using a currency they fully trust. They require stability and regulatory clarity from day one, making the yen the ideal starting point.
JPYSC is designed for domestic enterprises and global financial institutions engaged with Japan’s economy. We are already seeing strong interest from major banks exploring use cases such as FX optimisation, yen liquidity management, carry strategies, and time-zone-based currency efficiency across global markets.
In parallel, USDSC serves as the global settlement layer for dollar-denominated activity and international trade. Together, they form a regulated yen-dollar stablecoin pair that operates across multiple jurisdictions and market cycles. The key idea involves the creation of programmable liquidity that moves seamlessly across time zones, markets, and institutional needs.

Coinbase, Circle, and Stripe are all converging on the same vertically integrated model. Is this inevitable for any company seeking to be a long-term infrastructure?
Yes, I believe this convergence is inevitable. If you look at previous technology cycles, such as internet infrastructure and telecommunications, they all start highly fragmented. Over time, they consolidate into vertically integrated systems because global-scale infrastructure requires tight coordination.
We are seeing the same pattern repeat in crypto. Payments, custody, compliance, distribution, and application layers must be tightly integrated to achieve mainstream adoption. The moment you reach institutional scale, fragmentation becomes friction, and friction becomes cost.
Vertical integration acts as an architectural necessity. Companies that fail to own or coordinate their infrastructure ultimately become tenants in someone else’s system. We are building the stack itself to support the next generation of global onchain finance and applications.

Startale has added Mini Apps across gaming, finance, and entertainment. How do you decide what stays native to Startale's stack versus what you bring in from outside, and who controls curation?
We determine this by evaluating what is essential to the core user experience. Components such as the wallet and basic stablecoin features are critical to our ecosystem and required for everything to function smoothly. For everything else, we maintain complete flexibility.
Our role is to provide the strongest possible foundation for builders. The ecosystem thrives best when developers have freedom. Our job is simply to ensure that the underlying infrastructure never becomes a bottleneck to innovation.

You relocated to the US to drive Startale's global expansion. What does the US market require that Asia doesn't, and what does Asia understand about onchain infrastructure that the West is still catching up to?
The world has seen the emergence of many blockchain hubs across Japan, Hong Kong, Singapore, and the UAE. The US remains a vital market because it holds the most capital, is the world’s largest economy, and serves as a hotbed of developer talent. Succeeding in the US requires a highly aggressive mentality focused on completely dominating the market.
Japan and broader Asia possess a distinct, equally important strength. They demonstrate exceptional discipline in building real-world systems. In Japan specifically, there is a strong emphasis on trust, compliance, and long-term reliability. Technology is evaluated on its ability to integrate safely with existing financial, corporate, and regulatory structures.
That discipline has shaped a highly mature approach to crypto. While early Western narratives focused heavily on speculative cycles and memecoins, Japan consistently pushed towards institutional-grade use cases. These focus on payments, enterprise settlement, IP monetisation, and supply chain infrastructure that plugs directly into the real economy.
The US brings speed, capital formation, and global ambition. Japan brings precision, regulatory clarity, and a deep understanding of how to embed new technology within real institutional systems.

As the digital asset industry matures, the friction of managing fragmented wallets, multiple gas tokens, and disconnected blockchains is becoming a massive barr

Startale Group CEO on vertically integrated Web3 infrastructure

Erald brings over 20 years of experience in financial services and crypto-native markets to his role. Belgian-born and Malta-based, he previously held senior roles at Crypto.com, Binance, and Paysafe. He joined OKX as General Manager of OKcoin Europe, overseeing the successful rebrand to OKX Europe, before taking the helm as CEO.

European crypto traders have long faced a difficult dilemma. They could use regulated platforms with low liquidity, or risk their capital on unregulated offshore exchanges. Today, the landscape is shifting dramatically.
We caught up with Erald Ghoos, CEO of OKX Europe, at Paris Blockchain Week to discuss how his team is solving this exact liquidity problem while setting a new standard for consumer protection.
Speaking on the morning of April 15th, Erald unveiled X-Perps, a MiFID-regulated derivatives product designed to capture massive market share.
Read more about OKX's ambitious roadmap, their newly launched Agentic Wallet, and the future of European financial services below.
At Paris Blockchain Week, OKX Europe is launching X-Perps. What are your main priorities for Europe right now, and how does this launch align with the broader strategy?
My main priorities for Europe in 2026 revolve entirely around building the right foundation and infrastructure. Consumers globally have only three financial needs throughout their lives. First, they need to pay and get paid. Second, they need to accrue wealth by investing in assets such as bonds, stocks, or Bitcoin. Third, they need the ability to borrow or lend.
At OKX Europe, our focus is on building the utility required to solve these financial needs. We want to become the ultimate money app. Historically, our bread and butter have revolved around trading. We are now expanding our product offering to include more solutions, such as OKX Cards and OKX Pay.
X-Perps addresses a major gap we identified in the market. Users in Europe were forced to choose between regulated exchanges with poor liquidity and offshore exchanges with no consumer protection.
With X-Perps, we bridge that divide. Under our fully regulated MiFID licence, we harness the power of a global exchange to offer a regulated expiry future with up to 10x leverage.
Our unified account means your spot wallet collateral can still be used for OKX Perps. Right now, roughly 95% of crypto derivatives volume in Europe is traded offshore. We intend to bring that volume back onshore into a regulated environment.

What was the journey to build something like this? It must have been complex on the technical and regulatory fronts. And what's the most valuable impact for European users?
The journey began with a focus on a major economic leak. Too much capital was flowing toward offshore exchanges, harming the European economy and putting users' assets at significant risk on unregulated platforms. Europe has a strong track record in consumer protection, and we saw an opportunity to bring that standard to this sector.
Derivatives trading with leverage is undoubtedly a high-risk, niche product. The clear demand for it is precisely why so many traders head offshore. We wanted to bring that demand back onshore into a fully regulated environment. To ensure this works safely, we implemented a rigorous assessment of suitability and appropriateness.
Before accessing the product, users must complete a thorough knowledge test and an educational background assessment. This ensures they fully understand the specific risks involved before placing any trade. The most valuable benefit for the user is the peace of mind that comes from trading in a protected, transparent environment.

You mentioned Europe's strong reputation for user protection, and you have these assessments in place. How do you balance offering a product like this, which is inherently high-risk, with meeting those standards?
We have established strict guardrails to meet those exact standards. Our regulator granted the licence with very clear conditions. We restrict extreme leverage levels, such as 100x. We also implement mandatory margin call warnings and defined operational procedures.
We have implemented all of these requirements in accordance with the regulation. This ensures full compliance with both the regulatory framework and Europe's consumer protection laws.
The regulator gave us the green light, marking a major win for everyone involved. Regulators are satisfied that we are bringing a high-liquidity product back onshore. By offering this product, we are actively improving consumer protection. We are transitioning users away from unregulated offshore exchanges and into a highly secure, regulated environment.

OKX was the first global exchange to obtain a MiCA licence and expand quickly. What has helped you succeed in Europe while others are still struggling to enter this market?
OKX Europe has operated under a different brand since 2013. Our founder, Star Xu, has always focused heavily on doing the right thing. That philosophy serves as his core ethos.
From the moment regulatory frameworks began to develop, we understood that the future of crypto would be fully regulated. We immediately committed to full compliance and proactive regulatory engagement. We set up local teams and applied for crypto licences across seven global jurisdictions.
Europe presents a unique challenge because the EEA comprises 30 countries. Five years ago, each country had its own fragmented approach to crypto regulation. The European Union achieved something great by harmonising these approaches under the MiCA framework.
OKX has been based in Malta since 2018. We obtained our local crypto registration there in 2021. That registration was already built to an exceptionally high standard, grounded in PSD2 and EMI interpretations of the law. Upgrading to MiCA was relatively straightforward because of that strong foundation. We received our MiCA licence in January of last year and have been live across Europe ever since.

We're seeing a lot of new initiatives and activity in the market right now, including in AI. Can you speak to where OKX fits in that picture, and looking ahead, what role do you want OKX to play in Europe?
We are aggressively branching out into several new financial services. AI is dominating the conversation right now. Everyone wants to know our timeline and plans for artificial intelligence.
The most visible recent launch is our Agent Wallet. This tool allows users to interact with their wallets directly via prompt messaging. We have also been using AI in our back-end processes for nearly two years. We leverage it for transaction monitoring, compliance improvements, and protection against sophisticated scams.
More broadly, we continue to build solutions for those three core financial needs I mentioned earlier. We launched OKX Card and OKX Pay and plan to expand these offerings significantly. The ultimate goal is for users to manage all their financial services through a single app. People want a trusted brand to manage their entire financial life seamlessly.
With our MiCA and PI licences, we have the right building blocks firmly in place. Our key message for 2026 is to build the foundational infrastructure needed to address real financial needs for both retail and institutional users.

European crypto traders have long faced a difficult dilemma. They could use regulated platforms with low liquidity, or risk their capital on unregulated offshor

OKX Europe CEO on MiCA, X-Perps, and the future of regulated trading

Pierre brings a highly unique perspective to the decentralised finance space. As a former Member of the French National Assembly, he spent years shaping digital asset frameworks and technology policy.
Today, he merges that deep legislative expertise with hands-on product strategy to build EUR0, a MiCA-compliant stablecoin backed by real-world assets.

As traditional stablecoin issuers generate billions in revenue, everyday users who take on the risk of holding those assets see virtually no return. Pierre Person is on a mission to completely overhaul that broken model.
We sat down with Pierre Person, CEO and Co-Founder of Usual Money, at Paris Blockchain Week to discuss how his team is bringing true value distribution back to the community.
In this interview, Pierre explains why traditional stablecoin issuers operate exactly like legacy banks, the urgent need for direct fiat integrations, and how Europe must embrace a culture of risk to remain globally competitive.
Read more about his ambitious roadmap for the future of onchain finance below.
You worked at the French National Assembly on crypto regulations, and now you have co-founded your own protocol. What did you learn from politics about what DeFi really needs?
I served in the National Assembly during the 2017 bull market and the ICO boom. Regulation was entirely different back then. We evolved alongside the market and avoided over-regulation. Predicting long-term technological evolution is extremely difficult.
When I left politics in 2022 to create Usual, I saw massive potential in the stablecoin market. The European market lacked strong issuers. Meeting with various stakeholders in the Assembly helped me fully understand market needs. I combined these perspectives to ensure our go-to-market strategy remained free from regulatory gridlock.
Europe has stringent regulations that challenge innovation. My political background helped slightly, though investors generally prefer standard profiles from business schools to those of former politicians.

Usual believes that stablecoin issuers retain most of the value, giving back nearly nothing to their users or communities. For example, Tether and Circle made over $7 billion in 2025 and shared nearly none of it. Why did it take so long to see a real alternative to this?
The stablecoin business relies heavily on distribution. Tether and Circle arrived first and secured listings everywhere. People grew accustomed to their services. During the early crypto cycles, avoiding volatility was far more valuable than earning a small percentage yield.
Today, stablecoins are highly democratised. Use cases have multiplied, and many users remain in stablecoins permanently. A yield tied to the Fed or T-Bill rate is now highly meaningful to investors. In 2022, we realised that a decentralised entity serving a community must distribute cash flows back to its users. This became a core bet for Usual.
Incentivising users is our most powerful distribution lever. Tether and Circle avoid this because they are already deeply embedded across the board. The US Congress is already debating the redistribution of stablecoin economics, and competition will increasingly shift to this level.
Users who take the risk of holding a stablecoin absolutely deserve a share of the returns. Otherwise, the system mirrors a traditional bank, where you deposit funds and receive zero benefits. Tether and Circle currently operate exactly like banks. We are changing that model.

You recently launched a direct EUR bank account to EUR0 rail, powered by Monerium, with no exchange required. What does this unlock for European users?
This service currently targets European customers, with USD support coming soon. Accessibility remains the primary pain point in crypto. Everyone knows someone who wants crypto exposure but lacks the knowledge to get started. The current onboarding process requires registering with a centralised exchange just to convert fiat and enter DeFi. Friction points block users from accessing lending, borrowing, and yield products.
Our ambition for the next phase is to build a TradFi fintech solution with genuinely simple onboarding ramps. Thanks to Monerium, users can now deposit directly from their bank accounts. They can send fiat to Usual to receive stablecoins, or send stablecoins directly to their IBAN account.
We charge zero fees and settle transactions in under 24 hours. Simplicity is our absolute focus. A smooth user experience is essential to democratise crypto.

Usual ran one of the largest pre-deposit campaigns we have seen recently, and you activated revenue sharing shortly after the token launch. How does this approach change the relationship between Usual and its users compared with other stablecoin projects?
We were among the first DeFi protocols to implement meaningful revenue sharing. Our model is centred on a fully decentralised treasury. We built this ecosystem to provide a stablecoin paired with a governance token that carries real financial rights. Staking our token grants users direct access to most of the protocol's benefits, ensuring a fair and transparent experience for everyone involved.
This launch provided valuable insights into crypto market behaviour. While traditional finance valuations focus heavily on cash flows, the crypto space often prioritises speculative potential. We initially believed that activating revenue sharing would offset pressure on farming. We found that many participants still seek short-term exposure to dynamic assets, alongside their interest in sustainable yield.
We chose a long-term path for Usual. Trading above our perceived fair value indicates that the market is maturing. Legitimate, transparent promises attract sophisticated capital. Founders who make firm, long-term decisions build lasting value. Being the first to redistribute revenue is a major step towards attracting serious, dedicated investors.

The V2 roadmap points towards a full financial platform, complete with multi-currency accounts, IBAN integration, and clearFX for onchain EUR/USD conversion. Is this a full transition to a Neobank/NeoFi platform?
We started with the stablecoin business, which mirrors the core activity of a traditional bank. We now offer a much broader range of services. We handle fiat ramps, currency exchange, and sophisticated investment products. Users want exposure to basis trades, T-Bill rates, and strategies yielding between five and ten per cent. We also launched a fixed-rate lending and borrowing mechanism.
To summarise, we offer a payments layer, an investment layer, and a credit layer. We will encapsulate all of this in a highly accessible mobile app. Users will onboard directly from the app store without needing to understand the underlying infrastructure.
Each year, our tooling and user experience see significant improvements, allowing us to provide advanced financial tools via a straightforward and clean interface.

In the “Setting the Path” blog, Usual clearly explained how the Labs is connected to the DAO, how compensation works, and which parts of the project are transferred to the community. Why did you decide to share this level of detail publicly?
We released that information during a period of heavy speculation around governance structures. We wanted absolute clarity. The Labs initially bootstrapped and built the protocol. However, the Labs and the DAO are completely separate entities. The DAO uses the governance token to decide on treasury deployments and cash flow distributions.
Governance token holders deserve full transparency regarding treasury ownership. The Labs must remain distinct from the DAO. Some projects dissolve their DAOs or Labs to manage regulatory optics. We reject that approach at Usual. We believe in a strict separation, with the Labs functioning as a business entity working for the DAO.
In the long run, I would be thrilled to see other independent Labs build on Usual's infrastructure. That would prove the protocol can survive without the founding team. A clear separation between cash flows and treasury ownership is vital. The Labs exists strictly to secure the protocol, manage the mandate, and ship updates validated by token holders.

Paris Blockchain Week feels like a kind of homecoming for a French founder like you. What does it mean to you to build your project here, and how do you see Europe’s current moment in crypto from your perspective?
I feel very fortunate to be here. France is an excellent place for development. The bigger question is how Europe can prevent falling behind on the global stage.
The United States is advancing quickly under its new administration, with institutions like JPMorgan, Goldman Sachs, and BlackRock responding swiftly and actively building on existing infrastructure. Europe has some momentum, yet we are lagging. I want to see Europe accelerate to match this pace. We have strong client bases in Asia and the US, and we want to see similar institutional engagement here in Europe.
We were slightly ahead on regulation initially. We sometimes over-regulate early, targeting businesses that barely exist here yet. We must avoid that trend in crypto. Mindset matters just as much as regulation. We are seeing highly knowledgeable financial professionals entering crypto in the US to help the industry grow. We need to foster that same energy in Europe.

How do you see the stablecoin space evolving over the next five years, and what are the main risks that people might be underestimating?
We must differentiate between the various assets labelled as stablecoins. For fiat-backed stablecoins with real-world asset collateral, fractional reserve exposure poses a major risk. We saw this with Silicon Valley Bank, where the backing carries counterparty risk beyond the sovereign issuing the T-Bill. That systemic risk is very real.
Debt-backed stablecoins carry the risk of the underlying instrument at maturity. Fortunately, industry standards are improving. Auditors provide high transparency, and issuers such as Circle are now fully backed by T-Bills rather than bank deposits. This is a major improvement.
The US Congress presents another major factor. Banks are lobbying heavily to prevent stablecoins from sharing any revenue. Despite this, I am certain that stablecoins will become the primary asset for value exchange and payments. Relying exclusively on centralised traditional rails makes no sense today. In the future, when people hold money, they will hold stablecoins.

Drawing on your experience in politics, what is the key priority for governments when it comes to crypto and DeFi?
The challenge remains the same across all technology sectors. Regulating blindly, without understanding the long-term use case, leads to terrible decisions.
Governments must remain humble and accept the unpredictable nature of technological evolution. They need to protect consumers while allowing innovation to thrive. Protecting traditional incumbents, such as banks, stifles progress.
Proportionate AML and investor protection rules are vital. Risk is a natural element of developing new technology and undertaking ventures. While the US has a strong risk-taking culture, Europe needs to understand and adopt this approach.
Economic growth relies solely on innovation, which generates global value and wealth. We should fully embrace technology and consider it the cornerstone of our future.

As traditional stablecoin issuers generate billions in revenue, everyday users who take on the risk of holding those assets see virtually no return. Pierre Pers

Breaking the bank: Pierre Person’s mission to redistribute stablecoin revenue

We recently spoke with Iana Dimitrova, CEO of [OpenPayd](https://www.openpayd.com/), at Paris Blockchain Week to discuss how her team is solving this massive pain point by building an infrastructure that connects fiat and digital assets seamlessly. Iana leads OpenPayd’s global operations across six offices, setting the strategic direction for one of the leading Banking-as-a-Service platforms. She joined the company in 2017 as General Counsel and later became CEO. With deep expertise across fintech and payments, she previously helped scale operations globally at Paysafe. In this interview, she explains why digital asset businesses should never build their own payment infrastructure, the reality of Europe's MiCA regulation, and why the convergence of fiat and stablecoins is driving a major structural shift in global finance.

For years, digital asset businesses have struggled with a major bottleneck: connecting securely and efficiently to traditional banking infrastructure. Without reliable fiat on- and off-ramps, scaling globally is nearly impossible.
In 2017, you joined as General Counsel and became CEO. Since then, the company has changed a lot. What is the thing about OpenPayd today that would surprise the version of you from 2017?
Our founder started the business in late 2016 in the payments space, and we have been on a transformation journey ever since. We laid the foundations of OpenPayd in 2019 and have been building towards becoming the global infrastructure provider we are today.
What would surprise me the most is the incredible depth and quality of the team we have built. OpenPayd is successful today because we have great people. We built an incredibly strong, diverse, and complementary team with a real sense of camaraderie. That teamwork enabled us to weather the storms, face challenges, and emerge stronger.
We always say there are three pillars to our business. The first is our global licensing infrastructure, which supports payments and digital assets across jurisdictions. The second is our proprietary technology, which enables us to move quickly. The third, and most fundamental, is our team.

OpenPayd is often described as rail-agnostic infrastructure. What does that mean for a digital asset business that is choosing between building its own partnerships or using a platform like yours?
I would never recommend that a digital asset business try to build its own payments infrastructure. What we have built is genuinely hard to replicate. Building the licensing infrastructure and connecting to various payment rails and banking providers requires significant time, investment, and expertise.
Digital asset businesses should focus entirely on building their product and solving consumer problems. They should partner with infrastructure providers such as OpenPayd to take the heavy lifting of payments completely off their plate.
Being rail-agnostic means businesses using OpenPayd can move and manage money globally across any rail they choose. That could be a local payment rail, such as SEPA in Europe, an international rail, such as SWIFT, or a major blockchain network using stablecoins and digital assets.
As a business, you do not need to worry about how the money moves behind the scenes. You simply instruct us on the currency and settlement location, and we handle the plumbing.

OpenPayd is now handling fiat settlement for the FDUSD ecosystem and multi-currency settlement for LMAX. Both deals were secured within a few months. What do these partnerships tell us about the sources of demand today?
For more than 24 months, we have seen steadily increasing demand for stablecoins in treasury management and cross-border payments. That demand is exactly why OpenPayd invested in obtaining digital asset-related licences. We want to offer an equivalent level of service across both fiat and digital assets.
Companies are increasingly using stablecoins and blockchain infrastructure to improve payment speed and reduce costs. This trend is not driven solely by digital asset-native businesses. We now see massive adoption across payroll, cross-border trade, and retail.

You said in the First Digital announcement that digital asset businesses need strong, reliable infrastructure to scale globally. How close are we to on- and off-ramping becoming standard, and what happens to those businesses when we actually get there?
Smooth on- and off-ramping across multiple jurisdictions is simply not there yet. We face significant jurisdictional complexity in regulations and technical standards. That complexity directly affects settlement timelines and transaction costs. Global harmonisation remains quite far off.
This is precisely why providers like OpenPayd are building rail-agnostic infrastructure. We connect to a broad network of banks, payment rails, liquidity providers, and stablecoin issuers. When a business instructs us to make a payment, we orchestrate the process behind the scenes to select the most efficient channel.
When that infrastructure is fully in place globally, it will remove a major barrier to economic growth. Ultimately, what matters is the sustainability and security of financial services infrastructure. In the current geopolitical environment, that resilience is critical to both economic growth and national security.

MiCA has created a clear category for EMT tokens in Europe, which should make it easier to build compliant stablecoins in the EEA. How has that worked in practice, and has MiCA changed what your clients are asking for?
MiCA demonstrated excellent regulatory leadership from a European perspective. It established an early regulatory framework for the development of various digital asset products.
However, practical adoption has not been fully harmonised across the European Union. Some countries have not yet transposed the legislation into national law. This creates a barrier to growth for businesses in those jurisdictions and adds friction for payment providers like us who serve clients in countries such as Hungary or Poland.
Our clients remain consistently focused on stable fiat on- and off-ramps and interoperability. They want a single API, seamless transactions across fiat and blockchain, real-time settlement, and operational reliability. MiCA has not fundamentally changed that core demand. However, we do see a higher level of maturity among clients regarding operational resilience, redundancy, and compliance.

You started in legal, moved into operations, and are now CEO. How does a legal background shape the way you think about running the company? How do you maintain operations amid near-constant regulatory uncertainty?
Most people assume a legal background makes you more conservative. In fact, a deep understanding of the legal and regulatory landscape is a genuine advantage. It enables you to assess risk more effectively, take well-calculated risks, and innovate faster. It gives you the confidence to move decisively.
We navigate overlapping regulatory frameworks by building deep in-house expertise. Our experts cover payment services regulation, AML, and digital assets. We draw on that expertise whenever we encounter a new framework.
For us, a traditional fiat-regulated provider moving into the digital asset world, the lift was fairly small. Companies attempting the opposite transition face a much steeper learning curve.

Euro-denominated stablecoin volumes are roughly 200 times smaller than those in USD. Is that a structural problem or a timing issue that MiCA and similar frameworks will eventually resolve?
I think it is both. The US has heavily led the way in innovation, and most significant stablecoin issuers are US-based or pegged to the dollar, as it remains the global trading currency.
We need a combination of factors, including regulation that does not stifle innovation. MiCA provided useful clarity, but it may also have discouraged some projects that might otherwise have emerged. This conversation now extends far beyond our industry. Regulators and governments are actively discussing this, given growing interest in alternatives to the dollar as the dominant global trade currency.

OpenPayd processes 225 billion annually for over a thousand institutional clients. At that volume, you have a uniquely useful view of where the friction lies. Where is it right now between fiat and digital?
For digital asset-native customers, gaining access to fiat rails has traditionally been very difficult. Over the past five years, reliable fiat on- and off-ramps have remained a major barrier to growth. The situation is improving, but challenges remain.
The second major friction point is the lack of providers that seamlessly integrate access to both fiat rails and blockchain rails. Providers with the licensing infrastructure and technology for true interoperability are the ones genuinely solving the problem.
Businesses do not care about the “how”. They just want to move money efficiently from one jurisdiction to another. They do not care which stablecoin or payment rail we use. They care exclusively about speed, efficiency, and cost.

How do you see the world evolving between fiat, crypto, and DeFi over the longer term?
It is a fantastic time to be in this space. Stablecoins and programmable money movement are reshaping the market. We are witnessing a massive structural shift that is redefining expectations around speed and accessibility.
We are seeing multiple technologies converge to create a new foundational infrastructure layer. This layer enables accessible, seamless experiences across fiat and blockchain, supporting near-instant two-way payment flows. It represents a structural shift in payments infrastructure, the likes of which we have not seen in many years.

For years, digital asset businesses have struggled with a major bottleneck: connecting securely and efficiently to traditional banking infrastructure. Without r

OpenPayd CEO on connecting fiat and digital assets at a global scale

We caught up with Ronghui Gu, CEO and Co-Founder of [CertiK](https://www.certik.com/), at Paris Blockchain Week to discuss how his team is actively solving this exact problem.
Ronghui brings a rare combination of academic precision and industry expertise to the front lines of Web3 security. Holding a PhD from Yale and a bachelor’s degree from Tsinghua, he is the primary designer of the hacker-resistant CertiKOS kernel.
Today, he leads a unicorn security firm while actively advising the Monetary Authority of Singapore and Hong Kong’s Web3 Task Force on critical compliance frameworks.

As global finance rapidly migrates onchain, institutional investors face a terrifying reality where a single line of compromised code can vaporise hundreds of millions of dollars in seconds. Traditional security testing is no longer sufficient to build unshakeable trust.
In this interview, Ronghui explains how mathematical formal verification delivers the absolute certainty that financial institutions demand. He also outlines the hidden dangers of autonomous AI agents and reveals why operational security is now the most critical battleground in crypto.
Read more about his vision for a mathematically secure financial future below.
CertiK was founded in 2017 by professors from Yale and Columbia. What was the original idea, and how different is the company today from what you first wanted to build?
The name came from CertiKOS, a research breakthrough that Professor Zhong Shao and I made in 2016 at Yale and Columbia. We used formal verification to verify an OS kernel. It was supported by DARPA and used in a machine called LandShark. It was the first fully verified multiprocessor kernel designed to be hacker-resistant and bug-free.
In 2016, the DAO attack caused massive financial losses across the ecosystem. People quickly realised that this new blockchain stack required advanced security technology. The Ethereum Foundation provided a grant, and Binance became our first investor in 2017.
We grew incredibly fast, gained massive market share during DeFi Summer, and became a unicorn in 2021. Looking back, our academic background and research results gave us strong early technical advantages.
Backing from Binance, Coinbase, and major VCs such as Sequoia also helped us build critical trust and brand credibility in those early days.
During DeFi Summer, CertiK quickly utilised our technology to build a service that could scale to meet the massive demand for auditing. There were so many projects waiting months for audits, and that rapid pace also left us with some legacy issues.
When projects got hacked, people would often blame the auditors. That was never how things worked in any other industry, but the market was very immature at the time, and retail investors had unrealistic expectations.

CertiK has built relationships with regulators in the US, Singapore, Hong Kong, Japan, Abu Dhabi, and Korea. How have these discussions regarding blockchain security and regulation changed over time?
I would broaden this beyond cybersecurity to address the regulatory landscape as a whole. CertiK grew rapidly in 2021 and 2022, and I felt a profound responsibility to make a meaningful contribution to the industry. The most important step was advancing compliance and regulatory frameworks.
Starting in 2023, I began meeting regulators frequently. I served on the Hong Kong Web3 Task Force and as a technical advisor to the Monetary Authority of Singapore. Much of that early engagement took place in Asia and the UAE, as the US was not particularly crypto-friendly at the time.
One notable example is the recent issuance of Hong Kong's first two stablecoin licences. From the outside, it may look like a sudden development. In reality, we began pushing those initiatives three years ago. I flew back and forth between Columbia University and Hong Kong voluntarily to quietly help build those frameworks.
Many companies did similar unglamorous work behind the scenes to advance the industry. Now, the US environment has shifted considerably, and we are actively re-engaging with American regulators. We have submitted and had comments accepted, and we hope to keep pushing things forward globally.

At Paris Blockchain Week, you discuss how formal verification is becoming important for institutional trust. What do financial institutions need today before putting money into digital asset systems? And how much of that depends on a security audit versus a mathematical proof?
Institutional clients require an entirely different standard for code auditing. Professor Shao and I have spent decades in the field of formal verification. When we started CertiK, the industry was hesitant to pay for formal verification because it costs more than manual auditing.
That hesitation vanished late last year. People now fully accept that formal verification uses mathematics to prove properties of code. Testing can only prove that bugs exist, whereas formal verification is the only way to guarantee a system is truly bug-free.
Furthermore, a massive portion of today's code is generated by AI. You can use AI to review it, but nobody fully understands what happens inside those models. Projects are investing hundreds of millions of dollars in opaque code. Formal verification is the only credible way to provide guarantees for AI-generated smart contracts.
We are releasing a tool called Sparkle that uses AI to make formal verification highly cost-efficient and scalable for institutional clients. It is built on our research results called SPOCK and SPARK, which recently won the Best Paper Honourable Mention at SP.

In your PBW session, you also explain how Web3 security is evolving to meet the needs of global finance. Where is it already strong and reliable, and where is it still weak in a way that could worry large investors?
We see risks across many different layers. For years, the industry has focused heavily on smart contract security and allocated massive budgets to it. If you look at financial losses today, smart contract vulnerabilities are no longer the leading cause. Smart contracts have become highly secure.
The new critical weakness lies in operational security, specifically in private key management and the security of the entire operational stack. We saw this in recent high-profile hacks, where multisignature wallets were used, yet a key developer's device was somehow compromised.
Institutions find this terrifying. A traditional bank understands how to protect keys, yet they often lack awareness of the specific risks in Web3 environments. I know of a financial company that lost $50 million because a key developer left a backdoor in their system. In traditional finance, a scenario like that is almost unimaginable.
We must work with institutions to help them understand these risks, promptly recognise incidents, and build robust mitigation frameworks.

Your AI Auditor is constantly updated with real-world attacks rather than relying on fixed training data. How do you keep it up to date in an environment that moves as fast as AI and Web3?
AI models are developing incredibly fast. Each new version shows a massive leap in cybersecurity capabilities. I believe we are very close to the day when a language model can function independently as a senior security researcher.
However, all AI models are trained on data with a strict knowledge cutoff. To address this, we built an internal system called AirFlow, which powers our external AI Auditor.
We encode a vast amount of security research expertise, real-time vulnerability data, and bug databases into structured skills. This continuous context enhancement keeps the underlying model perfectly up to date.
Another major challenge involves balancing sensitivity and noise. If you configure a model to detect deep vulnerabilities, it generates false positives. If you reduce the noise too much, it misses useful findings. We spent a lot of time perfecting that balance by using multiple layers of detectors and validators to preserve the real findings while filtering out noise.

AI Auditor achieved an 88.6% detection rate across 35 real-world security cases. You said the real question is no longer whether AI can find issues, but which ones matter most. So where does the remaining 11.4% come from?
Achieving the perfect balance requires trade-offs. If we let the model run for ten hours instead of one, the results will change significantly. When we optimise for usefulness and efficiency, some findings will inevitably slip through.
Additionally, the AI models we use today are still catching up to the best human security researchers. Some vulnerabilities cannot yet be detected, or are only caught when the model is trained on a nearly identical case. If the underlying logic matches but the implementation looks different, the model might miss them entirely.
The goal of the AI Auditor is to be deeply integrated into the development cycle. It provides clients and institutions with immediate, low-cost feedback on their code before a formal audit even begins.

CertiK’s Open Cloud report showed that a trust model built for small environments failed when deployed at scale. Do you see the same problem across the wider AI agent ecosystem?
Yes. Most AI agent systems today share a very similar set of pain points. The prevailing design philosophy gives the AI agent access to everything it needs to assist you. Open Cloud became popular precisely because it had extensive access and could act autonomously.
That level of access creates significant vulnerability. Your system likely contains zero-day vulnerabilities in software like Slack or your email client. An attacker can use a zero-day exploit to compromise the AI agent and instantly take over your entire system. It is an extremely dangerous setup.
AI agents must be designed to operate in strictly sandboxed environments where all interactions are actively monitored. We also need dedicated security software running alongside the AI agent to detect and prevent malicious behaviour instantly.

Open Cloud introduced new types of risks, such as prompt injection, malicious tools, and privilege escalation. How different is auditing an autonomous AI agent from auditing a smart contract?
I divide this into three distinct categories: auditing smart contracts, auditing skills, and auditing AI agents. Auditing skills is actually easier than auditing smart contracts. Skills are written in plain text. While there are tricks for embedding malicious binaries in plain-text files, the process remains highly tractable. We are releasing a skill scanner very soon to address this.
Smart contract auditing is complicated because the vulnerabilities are deeply counterintuitive. However, the code is completely static. It never changes after deployment, and we have built excellent tooling for it over the years.
Auditing AI agents is genuinely difficult. Their behaviour is highly dynamic and completely non-deterministic. If you ask a model the same question twice, you will likely get different answers. Auditing for malicious behaviour that only emerges under specific conditions is a major challenge.
Furthermore, the attack surface is enormous. A smart contract manages specific assets within a defined scope, whereas an AI agent might have access to your entire workflow, emails, and files. Any weak point can compromise the entire protection layer. We contribute to AI agent security, but we do not yet have full confidence in it.

As AI is now used both to attack and to defend Web3 systems, how is CertiK’s role evolving? And what does a strong, mature security layer look like for a global Web3 financial system?
Attackers will absolutely use powerful AI models to their advantage. A hacker can let a model run for a hundred hours against a single target because the potential financial gain is enormous. Web3 security firms serving hundreds of clients simply cannot match that level of token spend on every single piece of code.
The playing field is somewhat uneven at present. We address this by encouraging clients to use formal verification for their smart contracts, where high stakes demand mathematical guarantees. We also strongly encourage all clients to continuously integrate the AI Auditor into their development cycles.
Using it throughout the entire lifecycle gradually accumulates AI-checking time, which helps level the playing field. Finally, attackers use AI for broad penetration testing, operational targeting, and social engineering. Companies absolutely must expand their security budgets beyond smart contracts to cover operational security holistically.

As global finance rapidly migrates onchain, institutional investors face a terrifying reality where a single line of compromised code can vaporise hundreds of m

CertiK CEO on securing Web3, the AI Agent threat, and why formal verification is the future of finance

Decentralised finance is evolving faster than ever, moving beyond pure speculation into an era of real revenue generation. To understand this shift, we sat down during ETHCC with Chris Boulos, President of Dromos Labs, the core contributing development company behind Aerodrome and Velodrome.

Aerodrome recently reached a significant milestone by generating more than $1 in revenue per dollar of emissions. This demonstrates that sustainable, highly profitable business models in Web3 are entirely achievable.
In our discussion, Chris explains the launch of Predictive Allocation, details how Metaswaps address liquidity fragmentation across 14 chains, and advocates for an urgent industry-wide adoption of standardised accounting principles.
Read more about his vision for a sustainable, hyper-efficient DeFi ecosystem below.
A few months ago, our colleagues at DL News covered the New Horizon event, which detailed how Aerodrome and Velodrome will be coming together to form Aero, the unified liquidity layer for all of Ethereum. DeFi moves quickly. What has changed since November, and how are people viewing the project now?
From a macro standpoint outside the protocol itself, the most significant shift is the growing interest in new asset classes. Stablecoins and real-world assets represent long-term trends that continue to grow, even as other sectors remain cyclical. We are witnessing a genuine convergence of institutional and fintech interests around these themes.
Another major shift centres on token design and tokenholder value. It is becoming increasingly vital to recognise a new class of tokens offering genuine guarantees and commitments to holders. Tokenholder rights and token value accrual are now a key industry theme.
At our New Horizon event held last November, we argued that a healthy token economy must benefit the product, its users, and tokenholders. Our upcoming migration and unification are clear demonstrations of that commitment.
Aero will be entering new markets, adding new revenue streams, and improving how it rewards liquidity providers. Everything is aimed at keeping the token and the protocol’s economic activity genuinely strong.

Predictive Allocation was announced here at EthCC, framed as the third phase in the evolution of ve-tokenomics design. What made this the right moment to unveil it?
We plan to roll it out with our forthcoming MetaDEX03 release in July, which made this the opportune time to do so. Essentially, predictive allocation is a complete reimagining of what the protocol can achieve in terms of efficiency and new applications.
In the current model, token operators vote based on past pool performance. The assumption is that past productivity guarantees future productivity. While this system works well, there is slack when paying a flat rate over a week, as liquidity needs fluctuate. We aimed to match reward rates in real time to liquidity provision.
We knew that the best way to meet liquidity needs in real time is to predict and fund LPs against them in anticipation of projected needs. But building a single model to do so introduces a fragility issue. We realised that having thousands of models competing to predict market needs is far more effective. Token operators will compete to forecast future market demands and continuously reallocate resources in real time.
This market mechanism renders liquidity highly adaptable and responsive. The system will be able to generate the same fee volume with considerably fewer token rewards.
Coming from a long background as a prediction markets participant, I find this fundamentally exciting. It functions as a mechanism for token operators to predict where best to allocate shared resources. The initial implementation focuses on automated market makers (AMMs), but this technology will expand across many different domains following the launch of Aero.

Aerodrome achieved dominance on Base by specialising in a single chain and plans to expand across 14 chains. How will you sustain that same depth across all of them without fragmenting liquidity?
The answer lies in Metaswaps. This feature will address fragmentation by letting you tap into liquidity across the entire system in one go. Even if you are on Base, you are accessing all our pools everywhere. It will mean better trades because there is simply more volume to work with.
The best part is that it happens entirely behind the scenes. Users will not have to jump between bridges or different interfaces. Because aggregators will see all our pools across all chains at once, execution will be much tighter on any front-end that uses our tech.
More broadly, we view Aero as a neutral partner. Just as Ethereum succeeds by working with its users, we focus on helping every chain hit its specific goals. We are here to support the ecosystem, not just occupy space.
As we grow, we are doubling down on dedicated service for both chains and their protocols. We have learned enough from our time on Base to anticipate what a network needs before they even have to ask. Most of our best conversations right now start with partners asking how to recreate what Base was able to achieve on their own home turf.

Aerodrome recently exceeded $1 in revenue per $1 of emissions, marking a significant milestone. With the AER engine and predictive allocation expected to deliver more value for token holders, how do you see Aerodrome's role in shaping this new era of revenue-generating DeFi, and what lessons can other projects take from it?
We focus primarily on identifying areas where durable business models actually exist. There are very few in this industry that genuinely work. We know DEXs work incredibly well. We also know that fees around token launches are enormously lucrative and largely uncontested. Billions flow to centralised exchanges and market makers that could easily be captured onchain.
As we refine how we pay liquidity providers through the AER engine and predictive allocation, we find innovative ways to help service providers of all kinds satisfy user demand. We then integrate that activity back into the overall system's capital base. I hope that other projects adopt similar models in their respective verticals.
Building a truly sustainable decentralised business requires maximising value for users while ensuring the distributed value is recaptured and reinvested. This creates a secondary effect where more protocols operating sustainable models lead to more resilient tokens trading on our platform. The entire industry becomes healthier when projects adopt these sustainable economic models.

DeFi has experienced one of its best years on record, with real revenue growth, increased institutional interest, clearer regulatory frameworks, and strong growth. However, many DeFi tokens have underperformed. What do you think the market still gets wrong when valuing DeFi infrastructure?
I am generally hesitant to attribute token performance to consistent investor mispricing, as it's hard to do so confidently. Nonetheless, there is an immediate and genuine need for standardised accounting principles throughout the industry.
Currently, we face significant fragmentation in reporting and in the definitions of fundamental operating and business metrics. We need to clearly define protocol revenue, income statement line items, and how value is accrued. We require an objective way to measure value relative to token allocations and to teams and insiders. The industry urgently needs an equivalent to the Financial Accounting Standards Board for equities.
We need a shared framework that data providers, funds, and protocols all agree on. When you look at a protocol's income statement, you should clearly understand what you're examining to compare it accurately with others. The benefits of getting this right go well beyond investor reassurance.
With shared standards in place, we can present a unified front to regulators and legislators. We can demonstrate to regulators exactly how this industry accounts for itself. That level of clarity will unlock significant new categories of investors who currently cannot engage due to opaque accounting practices.

Aerodrome recently reached a significant milestone by generating more than $1 in revenue per dollar of emissions. This demonstrates that sustainable, highly pro

Aerodrome Contributor on Predictive Allocation and the future of DEXs

We sat down with Dr Rand Hindi, CEO and co-founder of [Zama](https://www.zama.org/), during EthCC to discuss how their breakthrough in Fully Homomorphic Encryption (FHE) is finally providing the middle ground. By allowing institutions to bake regulatory rules directly into private smart contracts, Zama isn't just shielding data; it’s building the infrastructure for the next generation of global finance.

Privacy is no longer a barrier to entry. Zama CEO Dr. Rand Hindi reveals how Fully Homomorphic Encryption (FHE) is bridging the gap between public transparency and institutional mandates, starting with a $100 billion tokenisation pipeline.
For years, the move to public blockchains has been stalled by a binary choice: total transparency or total isolation. For the world’s largest asset managers, neither is viable. To bring a $120 trillion industry onchain, the market needs more than just encryption, it needs Programmable Compliance.
Your background includes a PhD in bioinformatics and a BSc in computer science. How has that combination shaped the way you think about building privacy infrastructure?
I started coding at 10 and built a social network at 14 back in the nineties. That was the first time privacy became a real issue for me. When you run a social platform, a huge amount of personal data flows through your system. As a service provider, you can see all of it with no way for users to verify your actions.
I was a teenager in the nineties, so nobody was really discussing data protection at that time. My PhD in bioinformatics involved applying AI to biology and DNA analysis. This placed me in a field where privacy is absolutely non-negotiable. Healthcare and genetics data contain the most sensitive information imaginable.
Back in 2007, everyone in the lab was already asking how to build automated healthcare pipelines while preserving privacy. In 2015, I started an AI company specialising in language models and agents. The same question arose again regarding digital assistants and data protection.
That was when I first learned about homomorphic encryption and met my current co-founder, Pascal Paillier. We sold the company in 2019 and kept our momentum going. The very next week, Pascal and I launched Zama with the specific mission of making FHE practical for real-world applications.

Your previous company was a privacy-focused AI firm that ended up integrated into 20 million Sonos devices. What did that experience teach you about the gap between functioning technology and scaling a product?
Scaling a product requires much more than just making the technology work. We originally built a privacy-focused consumer AI, but we hit a wall when major platforms blocked the access we needed to compete with their native assistants. That friction made the consumer experience unsustainable. We pivoted to B2B, selling our voice AI to manufacturers seeking to bring natural interactions to their own hardware.
The smart speaker in your living room is the ultimate test for this. Asking for a song sounds simple, but music is actually one of the most difficult hurdles for AI. You have to account for personal taste and the massive, ever-changing variety of artist names. It takes genuine intelligence to get that right every time.
The experience taught me a vital lesson: you have to go deep into a single use case to truly solve it. Attempting to build technology that does everything is a path to mediocrity. Even with the power of modern AI, the best results come from specialised agents working together on narrow tasks. That specialised depth is what bridges the gap between a functioning tool and a product that scales.

Institutions have sought the efficiency of public blockchains for years, but have been hesitant to disclose portfolio holdings and trading activities on public ledgers. What has changed in the past year that made a practical solution feasible, and why is FHE the preferred choice over ZK proofs, TEEs, or private chains?
We launched Zama in 2020 because we knew Fully Homomorphic Encryption (FHE) would become critical infrastructure. Back then, the technology was slow, difficult to implement, and limited to simple tasks. My co-founder, Pascal, is a leading FHE researcher, so our immediate strategy was to assemble the best possible research team to solve those core performance bottlenecks.
That dedicated research paid off, and we successfully made FHE roughly a thousand times faster. This breakthrough naturally led us to the blockchain sector, which presented the clearest market opportunity. Because public chains are completely transparent, they are structurally unusable for large institutions. Moving a billion dollars publicly causes the market to immediately move against you.
To solve this, Zama developed a protocol that brings confidential financial transactions directly to public blockchains. You interact with Ethereum naturally, yet your balances and trades remain completely private. When evaluating alternatives, private blockchains simply fall short. They function like 1990s intranets, allowing bilateral data exchange while lacking the scale required for global access.
Ethereum already acts as the internet of value. Just as the early web needed HTTPS to become a viable commerce platform, Ethereum requires a robust privacy layer to become the global financial network. Zama delivers exactly that. Institutions refuse to adopt technology without a proven security track record, effectively ruling out Trusted Execution Environments due to their history of being thoroughly compromised.
Furthermore, while Zero-Knowledge (ZK) proofs are genuinely effective for verification, they severely lack composability. You cannot easily stake or swap shielded tokens in DeFi, leaving you constrained to single-purpose use cases. FHE solves this by computing directly on the encrypted on-chain state. The data remains completely secure, fully composable, and mathematically post-quantum secure.

Is FHE enabled by default for every transaction, or is it an option users select?
It is an option. The underlying blockchain still operates publicly for those who prefer that approach. In our design protocol, a user can take an existing asset, such as USDC on Ethereum, and convert it into a shielded, confidential version.
From that point onwards, all activities related to that asset become confidential, including transfers, balances, DeFi deposits, and swaps. While FHE is an option at the protocol level, for many institutional assets, it will be the standard. An asset manager issuing a private credit fund onchain will likely require all transactions to be shielded for compliance and competitive reasons.

Zama has already shielded $121 million in total value. What does the path from promising infrastructure to institutional standard look like?
That figure deserves proper context.  While legacy privacy protocols struggled for years to find a product-market fit, Zama shielded $121 million in just three days. This isn't just growth; it’s a massive signal that the market has been waiting for an institutional-grade confidentiality layer that works on Ethereum.
We achieved this by building directly on Ethereum, eliminating the need for users to bridge assets elsewhere. We also integrated deeply with the existing Ethereum user experience. Using Zama feels completely natural, much like how HTTPS encrypts your browser traffic unseen. We bring that same invisible-by-default experience to onchain transactions.
Institutions seek privacy along with the advantages of a public blockchain. They are reluctant to adopt new tools or chains. They simply desire encrypted Ethereum. We are introducing a new metric, Total Value Shielded (TVS), alongside TVL to measure the dollar value of encrypted assets. The next phase involves increasing that TVS into the billions through institutional RWA use cases and strategic partnerships.

How does FHE hold up against the transaction volumes institutions require?
Institutions actually perform fewer transactions than you might expect. The transactions themselves are simply very large. Our throughput already surpasses what Ethereum itself can currently support, meaning we are not the bottleneck. We are on track to reach a few hundred TPS per supported chain this year.
This outperforms most L2s in operation today. Our roadmap aims for 1,000 TPS and ultimately 100,000 TPS over the next three to four years. FHE is a fully solved problem from a pure mathematical perspective.
The remaining challenge is entirely related to compute scalability. The more compute you apply to FHE, the faster it becomes and the larger the addressable market grows. Compute challenges are ultimately capital challenges. We scaled AI with infrastructure investment, and that same approach will work perfectly for FHE.

You previously served on the French Digital Council, focusing on AI and privacy at a government level. What did that experience teach you about how regulators view encryption?
Regulators aren't the "bad guys" in the privacy debate but are merely caught between two unyielding demands. My time on the French Digital Council showed me that government bodies and big banks are fighting the same battle. On the one hand, they know that privacy is a human right and a national security imperative. On the other hand, they are legally required to stop money laundering and assist law enforcement.
For a long time, blockchain forced a binary choice: you either stayed fully public or went completely dark. There was no middle ground.
The real breakthrough is programmable compliance. Until recently, no one had built a way for token issuers to define exactly who can access transaction data and under what specific conditions. Fully Homomorphic Encryption (FHE) resolves this. It allows you to integrate compliance rules directly into smart contracts.
This provides regulators with a clear, auditable way to identify wrongdoers without compromising everyone's privacy. It finally allows privacy and compliance to coexist in the financial sector. This was the single biggest roadblock to institutional blockchain adoption, and we finally have the key to unlock it.

Finance is clearly the first major use case. What sectors do you see FHE expanding into after that?
We focus solely on what people are willing to pay for, which today means financial transactions on public blockchains. People trust major tech companies enough that FHE for consumer AI functions as a supplement. Blockchain presents a completely different scenario because the network is public by design, creating an existential issue for institutional finance.
FHE acts as a true painkiller in this environment. After finance, I see identity as the next major category. The ability to have a programmable, confidential onchain identity serves as a significant enabler. Instead of repeating KYC each time you use a new service, you can reuse a verified identity.
You can prove a specific attribute, like being over 18, without disclosing any other information about yourself. The third category is government infrastructure. We will see elections conducted onchain with privacy, land registries verifying property ownership, and vehicle registrations securely linked without public exposure. Money, identity, and government services impact every one of the eight billion people on earth.

Are there any partnerships or upcoming milestones you'd like to share?
We recently announced a major partnership with the T-Rex protocol. This platform is built for tokenised assets and is supported by Apex Group, a large asset manager. Apex has committed to tokenising $100 billion of assets on the T-Rex protocol within the next 18 months. Zama serves as their selected confidentiality layer.
To put that into perspective, the asset management industry is a $120 trillion market. Stablecoins attract a lot of attention, but asset classes like real estate and private credit far surpass them in size. When those assets go on-chain, the volume needing encryption will be enormous.  The partnership with Apex Group to tokenise $100 billion via the T-Rex protocol is the turning point. It proves that the RWA migration isn't a future possibility; it’s happening now, and it requires Zama’s confidentiality layer to scale. We are moving from 'Proof of Concept' to 'Proof of Volume.’

Where do you see Zama and FHE by 2030?
I expect 95% of financial transactions onchain to be encrypted with Zama and FHE. As finance continues its migration onchain, a very large proportion of global financial activity will soon rely on FHE infrastructure. We aim to demonstrate that people can now use Ethereum with complete privacy. This is a highly compelling proposition for the market.

Do you have any final thoughts?
If we do our job well, most people will never be aware of Zama's existence. We will be deeply integrated into blockchain infrastructure and, by default, seamlessly embedded in every financial transaction. Users will not think about us, just as no one considers HTTPS in their web browser today.
There may be a small icon indicating your transaction is encrypted, but Zama itself remains unseen. Technology reaching eight billion people must fade into the background and become the new standard. We aim to establish complete privacy as the norm.

Privacy is no longer a barrier to entry. Zama CEO Dr. Rand Hindi reveals how Fully Homomorphic Encryption (FHE) is bridging the gap between public transparency 

The $120 trillion unlock: Why programmable compliance is the final frontier for onchain institutional capital

We caught up with Catherine Daly, CMO at [Space and Time](https://www.spaceandtime.io/), during EthCC, to discuss how verifiable data is unlocking the next generation of artificial intelligence and onchain finance.
Catherine Daly is a senior marketing strategist with a deep passion for building community around emerging technology. Before joining Space and Time, she handled full-funnel marketing for both startups and established global organisations in the semiconductor sector. At Space and Time, she oversees all growth, community, brand, and product marketing strategies.

As autonomous AI agents begin executing financial transactions onchain, they face a critical vulnerability: the integrity of the data they rely on. If an agent makes a split-second decision based on manipulated information, the financial consequences can be disastrous.
Read more about her vision for a trustless data economy below, and how her team is solving massive real-world problems like student credential verification.
Last time we spoke in November, Space and Time and the agentic space were a few months old, and you were optimistic about AI, especially SxT's ability to offer both onchain and offchain data to agents. How have things evolved since then?
The space has evolved significantly, which has been exciting to observe. We now see Coinbase's X402, a growing number of agentic payment frameworks, and wallet providers actively building for agent use cases. We are beginning to see agents actually transacting onchain using stablecoins.
This vision of agentic finance that everyone has discussed for a few years is finally starting to materialise in practice. For Space and Time specifically, this is an exciting development because agents transacting onchain need reliable data to act on. Sometimes they require onchain data, such as protocol activity or price action.
Other times, they require offchain data regarding a user's assets or external activity. Importantly, they need a way to make decisions based on data they can fully trust. The value Space and Time offers in that situation is absolute proof. We can prove that the data an agent relies on to make decisions is accurate and remains completely untampered.
As an end user, this means you have cryptographic assurance that your agent is acting on accurate inputs when trading or making payments on your behalf. If the incoming data is flawed, everything downstream becomes flawed as well.

Now that you are well past the initial growth spike, what does retention look like for Space and Time, and how has your relationship with the community evolved?
We have concentrated mainly on growing the developer community. Most of what we have delivered in recent months focuses on making building with Space and Time as simple and self-service as possible. We launched a new Space and Time app that features a comprehensive front end.
It enables anyone to build with our data without requiring deep technical expertise. To test it, I actually used it myself despite not being a developer. I have never written a smart contract, yet I was able to explore the app and deploy one on Ethereum that queries Space and Time data.
That is the exact accessibility standard we aimed for. We wanted someone without a technical background to accomplish something meaningful easily. On the B2B side, we concentrate heavily on financial institutions. We see them entering the space and becoming very serious about asset tokenisation and stablecoin projects. That has become a key focus for our team.

You mentioned a collaboration with Indo Mobile to put student credentials onchain in Indonesia. Could you provide us with an update on the UGM rollout?
We now have over 140,000 students committed to onboarding to Space and Time. This is happening through our partnerships with UGM, the Salib Suci Foundation, Indomobil, and a few other organisations in Indonesia. When I spoke with Ryan previously, those partnerships had just launched.
Since then, we have made significant progress. Thousands of students already have their course credentials stored and verified on Space and Time today. This is one of my favourite use cases because it addresses a genuinely tangible problem.
Students worldwide need to demonstrate their qualifications to employers and institutions globally. Storing those credentials in a secure, verifiable, tamper-proof manner onchain makes that achievable. Centralised systems simply cannot provide that level of reliability. I am genuinely excited that this use case has come to us.

Space and Time has discussed stablecoin issuers creating reward programmes outside the stablecoin itself. Considering the direction regulation is heading, how feasible is that opportunity, and is SxT actively collaborating with issuers on it?
Yes, and I will add that I am not a legal expert, so I speak based on my understanding rather than providing formal legal analysis. As the regulatory framework currently stands in the EU and probably soon in the US, stablecoin issuers cannot offer passive yields.
That places them at a structural disadvantage compared to bank deposits, which attract and retain customers precisely by offering yield on idle capital. Stablecoins theoretically have the same appeal since they represent money that exists onchain and remains directly under the user's control.
However, the passive yield pathway appears to be closing. The latest signals from Washington suggest banks are winning the lobbying fight on that point. Issuers will definitely need compliant alternatives. The most likely direction points to activity-based rewards.
Users will earn rewards for depositing, transferring, or using stablecoins in specific ways. Space and Time serves as the engine that makes those programmes work in a trustless way. The setup requires absolutely no modification to the stablecoin itself.
We act as a database of everything happening onchain, making it simple to prove a user's activity and allowing an issuer to define reward logic. It provides an easy plug-and-play solution for issuers needing a compelling reason for people to choose their stablecoin. We are early in this area, but we are already in conversations with several issuers.

You recently shipped Uniswap V4 hook templates powered by Proof of SQL. From a marketing perspective, how do you turn something that technical into a story that actually hooks developers?
You need to work backwards. Consider what the product solves and who it benefits. In this case, we support Uniswap developers building hooks. The problem we solve involves making it extremely easy for them to access Space and Time data while they build.
The hook template does all of that heavy lifting for them. Once you identify the core problem and the target audience, the story writes itself. Most of what we release is highly technical. I have been doing this for four years now, and that framework is the exact one I always rely on.

The on-chain RWA market is growing fast, and Space and Time has argued that verifiable indexing and ZK attestations could serve as the compliance layer that firms like BlackRock and JP Morgan still lack. How are you positioning SxT to collaborate with these players?
Asset tokenisation serves as a natural use case for us because it requires data to flow in both directions. On one hand, you need to relay offchain data, such as reserves, asset activity, and real-world states, directly onchain to inform the asset.
On the other hand, you need robust compliance and reporting. This requires an index of what is happening onchain, what users are doing with the assets, and where the value is flowing. Space and Time handles both sides perfectly. What attracts an institution is the full loop functionality.
They can connect their offchain database through Space and Time to access that data onchain reliably and verifiably. This provides them with a fully indexed record of onchain activity for reporting purposes. Such a closed loop precisely meets the requirements of compliance-focused institutions. Very few infrastructure providers can deliver this end-to-end service.

February marked one year since the launch of the Grayscale Space and Time Trust. What has changed in practice, and has the trust altered who participates?
We are genuinely thankful for the partnership with Grayscale. They have been outstanding in helping make Space and Time accessible to institutional investors. The core value of the trust is quite simple. Many enterprises and funds are unable to hold crypto directly on their balance sheets due to regulatory restrictions or internal policies.
The Grayscale trust allows them to gain exposure to SXT without owning native crypto. What has changed over the past year revolves around volume and momentum. As more institutions enter the crypto space, assets under management in the trust have grown, and adoption continues to accelerate.
All the institutional interest in the world only translates into real outcomes if you build the access structures for it. The trust provides exactly that vital structure.

What are you most looking forward to at EthCC?
Honestly, I am eager to return to our roots. Many of the conferences I’ve recently attended have been very institutional. We see suits everywhere, bankers, and people at their very first crypto conference. That is encouraging because it shows what progress truly looks like.
We absolutely want those people here. However, EthCC feels like home. You have the Ethereum community and the crypto-native crowd in jeans and trainers having serious conversations about privacy and cypherpunk ideas. I was at Aave's DeFi Day yesterday, and it felt like a wonderful reset. The suits are welcome, and we love having them, but it feels incredibly good to have a conference that still feels like us.

One issue we discussed is the challenge of obtaining reliable off-chain data. Real estate serves as a good example where verifying the underlying data is genuinely difficult. How does Space and Time address that problem?
This is a crucial distinction to clarify. Space and Time can prove data integrity from the exact moment data enters our system until it leaves. We can guarantee it remains completely untouched and perfectly accurate while under our custody. What we cannot do is verify what occurred to the data before it entered the system.
If someone manipulates data upstream of us, Proof of SQL will not detect that. The honest truth is that most data integrity issues stem from clerical errors rather than malicious intent. A database administrator might accidentally delete a table or update a row incorrectly, corrupting information with serious downstream effects.
Our thesis states that by cryptographically proving data lineage at the database level, we can prevent a significant amount of financial loss and operational headaches. The broader principle emphasises reducing points of trust and failure as far down the stack as possible.
Proof of SQL serves as a crucial layer of that security. The more parts of the stack you can secure at different points, the better the overall system becomes. We are making a significant portion of the oracle problem considerably more trustworthy.

As autonomous AI agents begin executing financial transactions onchain, they face a critical vulnerability: the integrity of the data they rely on. If an agent 

Space and Time CMO on agentic finance and verifiable data

We recently spoke with Jake Salerno, VP of GTM at [0G Labs](https://www.0g.ai), during EthCC to discuss the critical need for verifiable infrastructure in the age of artificial intelligence.
Jake brings a decade of experience in the blockchain space. He previously spent three years at Chainlink Labs driving go-to-market strategies for mission-critical data products. At 0G Labs, he leads business development and ecosystem integrations for the world’s first decentralised AI operating system.

In this interview, Jake explains how 0G is solving the AI centralisation crisis, the importance of hardware-level verification, and his ambitious product roadmap for 2026. Read more about his vision for a democratised AI future below.
You spent three years at Chainlink Labs driving GTM for data products before joining 0G. What did that experience teach you about what decentralised infrastructure needs before enterprise buyers gain interest?
I have spent ten years in the field, and each year becomes more exciting. I started my blockchain career in academia in 2016, co-founding a blockchain club. I later moved to Chainlink Labs to work on price feeds and low-latency data streams. We helped secure quadrillions of dollars in the derivatives market.
About two years ago, AI entered my world. I could not deny the inevitable convergence of these two technologies. I believe the future of AI and agentic finance will reside on blockchains.
After meeting the 0G co-founders, I observed an infrastructure that perfectly reflected my passion. We are now building a full operating system for onchain AI to ensure these systems scale securely.

You mentioned that 0G began with a question about how to make AI a public good to prevent it from being controlled by a few companies. What are your views on the current problem of AI centralisation, and how does 0G address this today?
Currently, companies control the compute, and your data goes straight to their servers. You have to trust their privacy policy and hope they protect your data. Researchers recently found over 30,000 exposed instances of a popular AI project across 82 countries. That specific project had zero built-in privacy.
We make AI a public good through strict verification. Decentralisation relies on verification to work effectively. The main concern with centralisation is who has the authority to verify what happens on those servers.
0G tackles this with three layers of verification. We utilise sealed inference using trusted execution environment hardware. We also introduced Agentic ID, a new standard for verified agent identity. Lastly, we launched DiLoCoX, a 107-billion-parameter model built through verified decentralised training.

Jensen Huang validated decentralised AI training in a recent podcast, and 0G was already ahead with the DiLoCoX research article. Why did it take a prominent figure like Jensen to make a bullish case when the facts were already there?
We published the DiLoCoX paper back in June 2025. Jensen Huang recently discussed decentralised training on a major podcast, drawing significant attention, capital, and legitimacy to the category as a whole. We strongly welcome this increased visibility.
Infrastructure projects attract widespread attention through compelling market narratives and research papers. Jensen reached more people in a single episode than our research paper did in nine months.
The market is finally paying attention. When people examine the timeline, they will see that 0G was the first mover by 9 months.

Bittensor’s Covenant-72B and 0G’s DiLoCoX are both advancing decentralised AI training from different perspectives. Are these complementary, or are they fundamentally different approaches to how decentralised AI training is developed?
These represent different architectural approaches. Bittensor depends on economic incentives to keep participants honest. 0G relies on hardware verification via trusted execution environments to entirely eliminate the need for trust.
Both approaches expand the broader category. However, the verification question remains essential. When a model handles financial transactions, relying on hardware proof offers a much stronger guarantee than depending on economic incentives. 0G also integrates training, inference, storage, data availability, and settlement into a single comprehensive platform.

Your ETHCC keynote is titled “Why Verification Should Be A First-Class Citizen in AI,” focusing on three trust issues in AI. Can you walk us through that?
My talk centred on establishing verification as a fundamental element in AI. We identified three core trust issues originating from the conception of 0G. We need to verify what an AI has computed, who an AI agent is, and how an AI model is trained.
Our answers include sealed inference, Agentic ID, and our 107-billion parameter model. The room was fully packed during the presentation. The verification message deeply resonated with the audience. We are actively bringing these verified products to market this quarter.

0G has over 350 integrations across compute, storage, DA, and the L1. What does the distribution of these integrations look like?
When we prepared for our mainnet launch, we coordinated all the crucial supply-side integrations. You need specific partners to ensure your infrastructure operates securely and efficiently. We launched with 100 launch-day partners across vital categories such as validators, bridges, oracles, and custodians.
Our wider integration network covers both the supply and demand sides. We support builders through our compute, storage, and settlement layers. We also collaborate with various infrastructure providers to offer the best possible tools for entrepreneurs building on 0G.

With all the recent developments and the spotlight on decentralised AI, what direction is 0G heading in 2026? Are there any updates or new points of focus you can tease?
We are currently in the midst of our most intensive shipping period ever. Throughout April, we will be launching a new product each week. This includes Gassed AI, Zero Studio, Company in a Box, the 0G Library, 0G Pay, and the 0G Private Computer.
We are also launching Agentic ID, providing every agent with an onchain identity and passport. As we move into the second quarter, we will introduce a unified 0G SDK and increase our presence at the NTU Singapore AI Research Hub.
By the end of June, every layer of our stack will feature a consumer-facing product. Our core mission remains the same. We are making AI a public good, and we are now delivering the precise tools to make that a reality.

What is your vision for AI in five years? How do you see it evolving by 2030 from a user or technology perspective?
I see AI as something owned by the global community. We are working towards a self-sovereign, verifiable, and democratised AI landscape. Making AI a public good guarantees the technology serves our best interests.
We want to empower humanity with transparent models. This marks a significant milestone in AI development, ensuring the technology benefits mankind effectively.

Any closing thoughts or things you would like to add?
We look forward to sharing more updates during our upcoming product launches. We are always seeking new partnerships and community feedback. This is a collaborative movement meant to benefit the entire ecosystem.

In this interview, Jake explains how 0G is solving the AI centralisation crisis, the importance of hardware-level verification, and his ambitious product roadma

0G Labs VP on making decentralised AI a public good

We met with Neil May, CEO of [defi.com](http://defi.com), during EthCC last week to discuss how user-owned identity is transforming decentralised finance and making crypto accessible for the next generation.
Neil has over 25 years of experience building and commercialising technology ventures across global markets. At defi.com, his team is addressing the fragmented wallet experience by building a unified, cross-chain identity layer. He leverages his extensive background to translate complex technology into practical, real-world solutions.

Read more about his vision for bringing human identity to decentralised finance in the interview below.
You acquired defi.com back in 2018, before most people even knew what DeFi was. What made you hold onto it for seven years before going public?
Our Founder, Daniel Allen, acquired the domain with a clear understanding of what decentralised finance could evolve into. He rejected numerous eye-watering offers because he wanted to build something visionary and responsible. Decentralised finance needs responsible practices before it can become mainstream.
We waited for the market to mature properly. Today, the infrastructure is highly developed, and stablecoins are experiencing widespread adoption. With Visa alone settling billions on stablecoin networks last year and passkeys becoming standard, everything about the infrastructure is ready for everyday users.

Defi.com believes that identity is the missing fundamental in DeFi. What failures in the market convinced you that this was the right problem to focus on?
We closely examined the intense friction hindering mainstream adoption. The onboarding process is daunting for newcomers. We plunge users into a labyrinth of complex jargon and expect them to secure 24-word seed phrases perfectly, which understandably causes massive anxiety.
Furthermore, the ecosystem is highly fragmented for existing users. Arriving as an anonymous stranger at every new protocol creates a terrible user experience. Building a unified, responsible identity layer has become our top priority to address this fragmentation and connect Web3 with the broader internet.

The founding team brings together various backgrounds, including telecom infrastructure and enterprise software. How has this blend of experiences influenced the architecture and strategic direction for defi.com?
We are bringing operational excellence to an environment that has historically operated without it. In the past, the Web3 space often lacked clear fallback plans, service level agreements, and recovery paths.
Our background drives us to implement enterprise-grade governance and accountability. We have integrated essential features, such as social recovery for wallets, directly into the architecture. The aim is to provide a highly robust, dependable infrastructure that performs flawlessly for users worldwide.

The identity layer you are focused on includes user-owned, privacy-preserving ID across chains. What sits at the core of this model, and how does it avoid becoming just another KYC wrapper?
Our model starts with a DeFi ID, providing everyone with a clear, human-readable handle like sebastian.defi.com. We designed this to serve as a comprehensive foundation. Your profile comes natively equipped with advanced features such as account abstraction and stealth addresses.
At its core, this is a trusted identity layer powered by selectively disclosable proofs. You demonstrate your regulatory compliance while retaining complete control and confidentiality over your personal data. It offers an ideal balance of total privacy and strict regulatory adherence.

The fragmented wallet problem is well-documented but notoriously hard to solve without introducing new trust assumptions. How does defi.com unify the cross-chain experience without centralising the critical path?
It begins by providing you with a single core identity. From there, you can securely manage multiple addresses and sub-wallets. Your DeFi ID and your defi.com wallet operate seamlessly across different service providers simultaneously, all while maintaining complete decentralisation.
You can deposit funds into best-in-class yield protocols like Aave, trade tokenised stocks, spend through integrated payment rails, and learn as you go, with every service accessible through the same trusted identity and none of the usual friction between them. The wider ambition is to make that feel as natural as any financial app people use today, without stripping out the ownership and transparency that make Web3 worth building on.
The only limitation concerns older wallets, such as MetaMask. Since those wallets have an immutable on-chain history, we cannot retroactively apply our DeFi ID privacy guarantees to them. Nevertheless, crypto-native users still enjoy all their usual flexibility and benefit from a completely secure, fresh start for their privacy going forward.

Privacy-preserving identity and regulatory compliance are often seen as opposing forces. How does defi.com navigate these challenges?
Traditional finance recognises the inevitability of decentralised finance and is actively adapting. We are seeing regulators open the door to technology-based answers, and verifiable credentials are now overwhelmingly accepted by major financial institutions.
You can absolutely preserve a user's privacy while retaining the ability to disclose specific information when it is legitimately required. We are aligning DeFi ID directly with major standards like W3C Verifiable Credential standards, NIST Digital Identity standards, and Passkey’s rising mainstream adoption to ensure seamless compliance across the board.

The “earn/spend/trade” blurb in the project’s X bio suggests that it is building toward a full financial interface. Can you share more details about that?
We utilise a progressive trust score based on your onchain activity and offchain attributes. Completing KYC through a certified provider cryptographically verifies your identity documents and raises your score. As you deposit, earn, swap, and trade, you build a highly trusted profile.
When top-tier DeFi providers see users with verified profiles, they can offer improved collateralised loan rates and lower fees. We also feature a Visa-integrated credit card programme for collateralised card services wherever Visa is accepted.

Who is the primary user targeted by defi.com, and what does successful adoption look like when it launches?
We are developing solutions for both consumers and businesses across the entire spectrum. Retail users seek simplicity, while institutional players and vault curators urgently require privacy on public blockchains. They want to enjoy the advantages of public infrastructure without revealing their treasury flows.
Success means making decentralised finance easy to understand, relatable, and completely non-intimidating. We aim to remove the Wild West nature of Web3 and create a responsible, secure ecosystem for the traditional web world.

You have said that technology only succeeds when people trust it. Has DeFi earned that trust yet?
The industry has not yet earned that trust. To gain trust in Web3, you must demonstrate that every claim you make actually works in real-world use. You can't rely on hackathon experiments. Hope is never a valid strategy.
We are adopting a humble, methodical approach to ensure our infrastructure is thoroughly proven before making bold claims. Building secure, reliable technology is the only way to achieve genuine mainstream adoption.

Read more about his vision for bringing human identity to decentralised finance in the interview below. You acquired defi.com back in 2018, before most people e

Defi.com CEO on unifying crosschain identity and solving fragmented wallets

We met with Shady El Damaty, Co-founder of [human.tech](https://human.tech/), during EthCC, to discuss how his team is solving this exact problem. Coming from a background in neuroscience and decentralised science, Shady is building the technology stack required to keep humans in the loop. By combining zero-knowledge cryptography with protected self-custody, human.tech offers a secure way to verify identity without compromising personal data.

As artificial intelligence floods the internet with bots and autonomous agents, proving you are a real human has never been more critical. Yet, current solutions often force users to surrender their privacy or risk losing access entirely.
Read more below to discover how Shady's approach to transparent accountability protects protocols from massive Sybil attacks and ensures you remain in complete control of your digital life.
You came out of academia and decentralised science before building Web3 production systems. What was the moment you realised cryptography could be more than a research interest?
I remember it clearly. I had just finished collecting data for a neuroimaging study and was struggling with reproducibility. Neuroimaging data is notoriously hard to obtain consistent results from. I found myself working with hash functions and signatures to verify every step of the analysis pipeline. I needed to confirm that nothing had been tampered with along the way. That was my first time using cryptography practically.
The real breakthrough came when I discovered IPFS. I was working on a data consortium between institutions to share data for collaborative projects. Meaningful research requires hundreds of terabytes of data. However, that data almost never leaves the collecting institution due to strict patient privacy rules.
IPFS fundamentally changed that perspective. My co-founder, Nana and I developed a tool similar to BitTorrent for scientific data. It enabled research organisations to share directly without relying on centralised storage. Afterwards, I was fully convinced there was a lot to build in this space.

Holonym became human.tech. What changed, and what does the rebrand signal about where the protocol is headed?
While Holonym still operates as a labs company building new software, human.tech represents our expanded technology framework. We created this new technology stack to focus entirely on keeping humans in the loop, which serves as the guiding principle for our entire roadmap today.
That principle breaks down into two specific actions. First, we have to prove personhood to clearly distinguish real people from the growing number of autonomous agents.
Second, we have to give users total control. By building secure keys and wallets, we ensure people maintain full custody of their digital lives. Proof of personhood and absolute self-custody are the core pillars driving human.tech forward.

There is a tension at the core of the proof of personhood. You need enough signal to verify a real human, but revealing that signal can compromise privacy. How does human.tech balance these factors?
This is one of the most significant issues in the digital space right now. As more of our lives become digital, the pressure to uphold social order and enforce accountability is leading governments towards surveillance-heavy solutions. Anonymity is increasingly frowned upon. The instinct is to demand strict identity verification, especially as AI blurs the boundaries between humans and agents.
Privacy has never been more vital. We face a genuine tension between privacy and accountability. The discourse has historically been stuck between complete anonymity maximalism and total government-controlled identity. Neither offers a practical solution.
We have introduced a third approach called transparent accountability. Using zero-knowledge proofs, a user can interact with an application and consent to its terms. As long as they adhere to the rules and do not exploit the protocol, they remain completely private. The cryptographic proof verifies they are authorised to use the system without ever revealing their real identity.
However, if someone breaks the rules and attempts to extract stolen funds, the programmable privacy primitives allow that identity data to be disclosed retroactively. Privacy serves as the default setting. You only risk losing it if you violate the terms you explicitly agreed to.

Human Passport takes a multi-signal aggregation approach rather than a single verification method. Can you explain this, and how it compares to iris-based approaches like Worldcoin?
Worldcoin adopted a strict one-person, one-iris mapping approach. They selected the iris because it has an extremely low false positive rate, making it excellent for uniquely identifying individuals worldwide.
I believe this approach carries serious architectural risks. Establishing a permanent one-to-one mapping of a person to a biometric and a cryptographic key is highly restrictive. Although the Worldcoin founders are genuinely well-intentioned and care deeply about security, I find their approach flawed.
Consider common user errors. If your account becomes corrupted or your app is deleted, the hardware will recognise you as previously registered and will refuse to issue a new key. You permanently lose access. Additionally, if a lending application uses your identity as collateral and you default, you could be permanently banned from the ecosystem. You would effectively cease to exist within the system.
The better approach relies on probabilistic signals. We provide developers with the tools to make informed guesses about whether a user is human based on the stakes of their specific use case. A UBI distribution requires strong guarantees against bot farms, whereas a social media application should never require biometrics just to create an account.
Human Passport collects 30 different types of signals, including onchain transaction history, government IDs, and biometrics. Developers can select the specific signal threshold suitable for their context. There is no hardware requirement and no permanent biometric binding. We firmly believe this is the best model for the ecosystem.

Human Passport has protected more than $500 million in funds and issued more than 43 million verifiable credentials. Can you put a face on the threat it is defending against? What does a successful Sybil attack on a protocol actually look like?
It's difficult to attribute a single cause, but I can share a specific example we encountered. We identified highly organised Sybil farms operating in Laos, Vietnam, and Bangladesh. During our verification process, if a user encounters a document error, we retain session data for three days to assist with troubleshooting before deleting it.
That data revealed a warehouse in Bangladesh with a long queue of people outside. Each person handed their identity documents to a single operator who verified credentials one by one against a single crypto wallet. It acted as a literal production line for Sybil addresses.
If you perform retroactive Sybil analysis across major airdrops using cluster detection, the results are truly staggering. Tens of billions of dollars have been siphoned off by organised airdrop farmers.
Airdrops offer a genuinely valuable way to bootstrap protocols, but they have also created an industry of organised operations designed to extract value at scale. We are actively working to defend against these very threats.

Human Network pioneered VOPRF, a cryptographic primitive that lets someone derive a key from a password or biometric without the network seeing the underlying data. What will it take for this to catch on, and what does open-sourcing the code change for builders?
We identified the Verifiable Oblivious Pseudorandom Function about two and a half years ago as an excellent primitive for two specific functions.
Firstly, it provides a nullifier. This is a cryptographic record that proves an identity credential has been used only once without revealing who used it. Secondly, it is highly effective for deriving a cryptographic wallet key from low-entropy data such as a voice or a face. The function generates a deterministic random string mapped to that data, ensuring only the true owner can regenerate the key.
Human Passport employs this technology to secure user credentials, and our wallet product utilises it for key derivation. Human Network has been operational since April last year as the first VOPRF network in production, generating over 3.5 million keys.
The standard is quickly gaining traction. We have open-sourced the implementation, and the Ethereum Foundation funded research into it. We actively share our cryptography with other projects to enable new use cases. The clearest sign of adoption is Worldcoin's migration of its entire backend to VOPRF in its recent update. They rebuilt their system from scratch around this exact standard.

Human Network is secured through restaking via EigenLayer and Symbiotic. How effective is the combination of staking and threshold cryptography against collusion risk?
Staking is essential to threshold networks and a key enabler of multi-party computation. The main challenge with this computation is collusion. In a typical two-of-three setup, if two nodes agree to share a user's private key data externally, there is nothing technically preventing them. This presents a significant vulnerability.
Staking fundamentally alters the incentive structure. Nodes that do not behave honestly and meet protocol requirements face slashing and exclusion from the network. They also forfeit their restaking rewards. Restakers naturally avoid allocating assets to nodes with poor reputations.
Reputation effectively becomes a form of load-bearing security. We see this as a significant breakthrough for bootstrapping trustless threshold protocols. Imposing economic skin in the game makes collusion considerably more costly and immediately easier to detect.

Can you walk us through Wallet as a protocol, and what is wrong with the way wallets work today? Why does fixing it require a protocol-level intervention?
We designed Wallet to address a specific issue we consistently encountered with identity. If you want identity verification to be truly private, all secrets must remain on the client side. The pre-processed credential data is stored on the user's device, protected by a password.
This creates a massive portability problem. If you lose your device, your proof of personhood disappears because no server synchronises the data. Our initial solution involved third-party wallets to encrypt the credential data and store it on a server. It was effective, but it felt makeshift and awkward. We knew we could build something much better.
Wallet employs Two-Party Computation. One key share is obtained from the client side, derived from biometrics or social accounts. The other share resides in a secure enclave or network. Transactions can only execute when both shares work together seamlessly.
The threat model is deliberately very strict. We do not trust the user, the network, the dApp, or the smart contract. If the enclave fails, funds remain frozen until service resumes, ensuring a safe failure mode. This provides protected self-custody. Users maintain full control over their keys, while policy enforcement within the enclave ensures they are properly informed of risks before signing any transaction.

You have described a future in which every online action must answer two questions: is this a human or a bot, and, if it is a bot, is there a verified human behind it? Do you see this becoming a regulatory or contractual requirement?
Absolutely. Legislation is currently progressing in the EU for autonomous systems that require operators to demonstrate that humans remain involved. You cannot deploy AI agents without direct accountability for their actions.
We are already seeing the market move in this direction. Enabling users to associate agents with their identities serves as a delegated proof of personhood. I fully anticipate regulatory pressure to enforce that link of accountability from agent to person at both the protocol and government levels.
I recently spoke with the head of decentralised AI at the Ethereum Foundation. Visa and Mastercard are actively addressing this specific concern. They aim to enable autonomous agents to interact with payments, but they must verify that an agent is not acting on behalf of someone on a sanctions list.
"Know Your Agent" will become essential infrastructure. Agent reputation systems will be extremely important. The best approach right now is pluralistic. We must support many ways to define agent identity and allow the ecosystem to discover what works best before converging on a single standard.

The Covenant of Humanistic Technologies lies at the heart of Human.tech's broader mission. As AI capabilities expand, does embedding those principles into production infrastructure seem more pressing?
Absolutely. The Covenant functions as a bilateral terms-of-use agreement between builders and users.
As writing software becomes simpler, the design philosophy underpinning what is built becomes increasingly crucial. Anyone can write code nowadays. The real challenge lies in developing a nuanced, principled design philosophy for how applications should be created and what they owe to their users.
The Covenant clearly states those exact principles. Privacy and security go well beyond simply making users feel comfortable. They are essential qualities that enhance system resilience and greatly increase the chances of long-term success. Incorporating them into the infrastructure from the outset is the only way to achieve compounding returns on trust over time.

As artificial intelligence floods the internet with bots and autonomous agents, proving you are a real human has never been more critical. Yet, current solution

Human.tech Co-Founder on solving the Sybil crisis and keeping humans in the loop

The race to scale zero-knowledge proofs and AI computation consistently hits a tough hardware bottleneck. Developers often wait hours for simple verifications. We sat down with Leo Fan, Founder of [Cysic](https://cysic.xyz/), at EthCC last week to discuss how his team is overcoming those limits to make real-time proving a reality.
With a PhD in cryptography from Cornell and deep expertise in hardware design, Leo is perfectly positioned to solve these exact performance issues. We caught up with him right after the highly anticipated Cysic mainnet launch, a defining moment for the ComputeFi economy.
He shared fascinating insights on how automated AI coding loops are outperforming human engineers and how decentralised networks will democratise access to high-performance compute.

Read more about his vision for the verifiable compute engine of Web3 below.
When we last spoke at Consensus in February, mainnet was just two months old. What did Day One feel like? Has the market caught up to what Cysic has been building?
We launched mainnet in December, so the most stressful period was already behind us by February. The difference between testnet and mainnet is stark. Real-value assets on mainnet incentivise adversaries to probe every aspect of the network and explore unanticipated edge cases.
We built an internal monitoring system that tracks several key factors around the clock. We also have team members across time zones watching it continuously.
We prepared multiple contingency plans for every foreseeable attack scenario, making the first two months extremely intense. Now, we are fully focused on shipping new products. We open-sourced our proprietary ZKVM, establishing it as the industry's top performer.
Alongside that, we are expanding the Cysic AI ecosystem. We just launched CyClaw, an open cloud platform where users can run AI instances directly on our hardware and add custom skills. This setup ensures complete privacy by keeping the models isolated from your personal data.

Who is connecting hardware to the network, and does it appear to be the kind of participants you expected?
During the testnet, we had over 100,000 GPU contributors. After the mainnet launch, that number decreased to around 10,000. Many testnet participants were primarily farming for the airdrop. That said, we remain the largest zero-knowledge proof network in the industry by a significant margin. We are far ahead of our closest competitors in active proving.
The contributors who remained are genuine early supporters. They keep their machines connected to Cysic because it functions as a highly active compute marketplace. Their hardware generates real yield through ZK proving, AI inference, and other workloads layered on top of our blockchain coordination system.

Most people who understand blockchains know that they come in a variety of flavours. Can you explain where Cysic excels as a Proof-of-Compute blockchain and why that matters to someone building an app or a protocol?
Our consensus mechanism is proof of compute. This operates as a hybrid of proof-of-work and proof-of-stake, defining "work" strictly as useful computation. The machines on our network generate ZK proofs and execute AI inference and training. The network then translates that output into a computing score. Achieving a higher computing score grants you more influence in the consensus process and yields greater rewards.
I view this as a highly natural model for a compute-focused network. Early proof-of-work models faced valid criticism for environmental waste. While proof of stake solved the environmental issue, it introduced a new hurdle: the need for massive upfront token purchases. Token volatility often makes that route unappealing for everyday users.
Purchasing a GPU server offers a more practical opportunity. That physical hardware delivers valuable AI inference for other projects, generating productive returns from a highly tangible asset.

Charles Hoskinson argues that crypto can safely rely on hyperscalers like AWS because advanced cryptography neutralises the infrastructure risk. You disagree. Where does Cysic mainnet fit into that debate?
Cryptography can mitigate some of that risk, but it certainly does not resolve everything. AWS has experienced several major outages over the years. If you look at the Ethereum validator set, a massive portion of those validators run on AWS, often in the very same data centres. The decentralisation becomes highly superficial when you look at the physical infrastructure.
We believe a decentralised compute network like Cysic serves as a highly resilient complement. Our nodes are community-operated machines spread across countless locations globally. They can seamlessly run ZK proofs, AI inference, and validator workloads. If AWS goes down, projects that rely on a decentralised compute layer remain fully protected and operational.

You mentioned AI verification as one of the workload types the network can handle. With AI dominating every conversation right now, where does Cysic fit into that world?
We fit into that world in two main ways. First, our large fleet of GPU machines enables us to run open-source large language models like Minimax and Llama. We generate inference tokens internally to power our own products, removing the need to purchase tokens from external providers.
Secondly, we offer cryptographic verification for proprietary models. When you receive an output from a proprietary model like GPT-5, you currently have no way to confirm it actually originated from that specific model. We employ ZK proofs to cryptographically verify that a given token was produced by the exact model and API endpoint you specified. This provides a meaningful trust guarantee that is not available anywhere else at present.

You have just launched CyClaw, which lets anyone deploy an AI agent on Telegram in minutes without needing hardware or wasting hours on setup. What does this reveal about the direction Cysic is heading in, and who is the intended user of this product?
You can think of AI agents as operating systems, similar to macOS or Windows. Our agents operate similarly, offering various versions with different capabilities. The skills act like installable applications. You add the skills you need, such as browsing or research, and the agent instantly acquires those capabilities. We will soon launch an agent marketplace, alongside our own skill hub.
The initial group of users will be individuals who prefer not to run a local AI model on their own laptops due to privacy concerns and the complexity of the setup process. With CyClaw, you simply click four or five buttons, and the setup is completely done.
The agent is hosted on our servers, ensuring your private documents and data remain secure. It integrates with Telegram, Slack, and WeChat, and allows voice interaction. In the long run, the same infrastructure can easily expand to meet the needs of institutions.

The pitch for node operators is that idle hardware can generate yield. How realistic is that for someone who is not already deep in crypto, and what does the setup actually involve?
The setup depends entirely on what kind of user you are. For a non-technical user, you simply download the Cysic app on your phone, paste in your wallet address, and press start.
The phone performs a lightweight task to verify ZK proofs generated by the network. This takes about 50 milliseconds and uses roughly 200 kilobytes of bandwidth. It runs quietly in the background and earns yield without requiring any hardware purchases.
For more technical users with GPU servers, the setup is also very straightforward. You download a binary and install it on your server using our step-by-step documentation. You can essentially copy and paste the commands into your terminal. Depending on your bandwidth, it takes around five minutes. Once it is running, the server participates fully as a compute node.

What is the main point you want a newcomer to grasp about the necessity of a decentralised compute network?
Centralised providers offer very reliable service. However, they lack censorship resistance and present single points of failure. A major outage can take down your entire stack, as we have all seen when AWS goes offline for a few hours.
We suggest adding us as an extra layer in your network. Projects that use decentralised compute remain fully operational even during major cloud outages. Besides the resilience benefit, we provide more cost-effective infrastructure for many heavy workloads.

How do you see zero-knowledge proofs evolving over the next five years in terms of adoption and the underlying technology?
When we started in 2022, there were over 15 different ZK algorithm variants. Everyone was building their own versions. Over time, the community recognised the different trade-offs, and the best approaches began merging. We are now left with three or four serious contenders.
In the next two to three years, I expect that the field will converge further towards likely two or three dominant algorithms. This convergence is good news for the industry. Once the community agrees on a smaller set of approaches, the engineering effort shifts directly from algorithm design to pure optimisation. Performance will improve much faster, and those algorithms will become deeply integrated across the entire ecosystem.

Same question for AI. What does the world look like with AI in five years?
The coding analogy is very helpful here. A few years ago, tools like Codex could autocomplete a line of code when you pressed the tab key. That marked the early stage of AI-assisted development. Nowadays, tools like Cursor can generate entire functions.
What we are building internally at Cysic extends far beyond that. You draft your plan in simple English. An AI layer translates it into a technical specification. A second layer of builders then implements various components simultaneously. A third layer of reviewers spots errors and suggests improvements. The builders then continue to iterate based on that feedback in a continuous loop.
We have shown internally that this process can run continuously for two to three weeks without human intervention. During this period, it generated over 300,000 lines of code for internal purposes. We have confirmed that the code is fully functional and actually outperforms some of our best hand-written ZKVM code by 10 to 15 per cent.
In five years, natural language software development will be the norm, with humans defining the intent and AI systems managing the implementation independently.

Read more about his vision for the verifiable compute engine of Web3 below. When we last spoke at Consensus in February, mainnet was just two months old. What d

Catching up with Leo Fan on Cysic's mainnet, CyClaw's AI agents, and why he disagrees with Charles Hoskinson

In our previous article, we went through the theory of how the Octra project is able to provide privacy. Now, it is time to dive into how you can actually start using the Octra network and benefit from its privacy features.
This journey today starts on Ethereum, where Wrapped OCT (wOCT), the native token of Octra, is deployed. It starts with the bridge and ends with users being able to hold private balances and make stealth transfers. 
The minimalist Ethereum-centric “buy & bridge” design was chosen deliberately for enhanced censorship resistance, decentralization and ease of access during the early days of the network. As Octra grows and OCT lists on more venues, more ways to onramp to the network will likely become available.
Bridges usually move assets. Octra's bridge moves context
To move between chains, there is usually a bridge needed to allow you to move your assets.
Bridges tend to work in a similar model, which is the lock-and-mint model. The user locks the original asset in a smart contract on the source chain, and a wrapped representation is minted on the destination chain. When the user wants to return, they burn the wrapped version and unlock the original.
For Octra, this model is not different, but what is unique about Octra’s bridge is that instead of just moving assets between two chains that share similar rules and are both public blockchains, you move your assets into a private environment where you can encrypt and start using them privately across DeFi, apps and Octra-specific isolated execution environments (Circles).
This distinction matters because Octra is not a mixer, but instead operates on private state. All privacy features are therefore entirely optional for both users and developers. 
Understanding Octra and FHE state
When users bridge Wrapped OCT from Ethereum to Octra, it enters the network as a simple, public plaintext native asset (OCT). The open-sourced web client then allows users to encrypt their OCT, effectively moving it to a private state powered by hypergraph FHE, Octra’s in-house encryption scheme.
The process of encrypting or shielding assets isn’t new. However, unlike major privacy solutions, such as ZCash and Monero, Octra is programmable, meaning encrypted OCT may be used in smart contracts. While simple stealth transfers from Alice to Bob do not require FHE computations, the private balance itself is encrypted using FHE to maintain composability and programmability.
Such a persistent encrypted state offers stronger and more flexible privacy, because user balances and activity can remain hidden while still being usable inside the network, instead of only being hidden for a single transfer or temporary action.
How the bridge works
Currently, the Octra bridge connects native OCT on Octra with wOCT on Ethereum through a straightforward two-way flow. It follows the lock-and-mint model discussed earlier.
When a user moves from Octra to Ethereum, native OCT is locked on Octra through the bridge vault. This lock creates a bridge message that includes the destination information, such as the Ethereum recipient address and the amount being moved.
That message is then included in Octra-side bridge data for the relevant epoch. On Ethereum, the bridge flow verifies the corresponding bridge header before the user completes the claim. Once the message is accepted, the Ethereum bridge contract mints the same amount of wOCT to the recipient.
The reverse path works in the opposite direction. A user burns wOCT on Ethereum, and the bridge processes that burn so native OCT can be unlocked on Octra.
The bridge keeps OCT and wOCT connected through a 1:1 supply relationship while allowing the asset to move between environments. It does not function as a swap. Instead, it simply changes where the asset representation exists and allows users to move between the two chains.
On that note, wOCT on Ethereum is a conventional ERC-20 token. It is publicly visible, traceable, and operates within Ethereum’s rules. The bridge does not make bridging itself private, but it does allow the user to move into the private environment offered by Octra. The team has announced that a stealth bridge is in development, which would assumingly allow users to bridge to using stealth transfers.
How is this different from a mixer? 
This also helps explain why Octra is different from a mixer.
A mixer is designed to break the visible link between where funds came from and where they go next. Users deposit assets into a pool, withdraw them to a new address, and rely on the pool to make it harder to connect the deposit and withdrawal. It may be argued that all privacy solutions that rely on anonymity pools are, in practice, mixers.
That can be useful, but it is still limited. Once funds leave the mixer and return to a public chain, the user is back in a fully visible environment. Every later transfer, swap, payment, or wallet movement can be tracked again. Even shielded assets become less useful if used by only a few parties.
Octra takes a different approach. Instead of trying to hide transaction history, it gives users a private environment where funds can continue to exist and move in encrypted form. As discussed, after bridging to Octra, users can encrypt their balance, hold private funds, send stealth transfers, receive private payments, and later decrypt funds back into a public balance when needed. The unlock happens at the application layer, where the encrypted balance can be used for trading, lending, or virtually any other DeFi primitive, as well as paying for inference, program deployment and even file storage.
Octra vs Mixer
Mixer
Octra
Privacy mechanism
Temporary break in transaction history
Encrypted state environment
Privacy duration
Until funds return to public activity
Ongoing, within Octra
Requires pool activity
Yes, privacy weakens in small pools
No
Supports private balances
No
Yes
Supports private transfers
No
Yes
Future outlook: Multi-asset privacy and the role of Circles 
Today, the Octra Bridge is focused on OCT and wOCT. That matters because it proves the first version of the model: a public asset representation on Ethereum can be connected to Octra’s native network, where users can then access encrypted balances and stealth transfers.
The larger opportunity emerges if this model expands beyond OCT. If stablecoins, ETH, BTC, or other widely used assets can eventually enter Octra, the network could move from being a private environment for its native asset into a broader encrypted liquidity layer. 
In that scenario, users would not only bridge OCT into Octra. They could potentially bring assets they already use across DeFi into an environment where balances and transfers can become private.
Beyond adding support for more assets, another path for Octra’s expansion is broader network coverage through its bridge. EVM-compatible ecosystems are the natural starting point. The current Ethereum-side model already relies on smart contracts for wrapped asset issuance and bridge verification, which means the same design could be easier to extend across other EVM environments. 
HyperEVM is a useful example of where this could become interesting. Hyperliquid has grown into one of the more important L1s, with Hyperliquid L1 showing roughly $1.5 billion in DeFi TVL and a very active userbase.
If Octra were able to connect to an environment like HyperEVM, it would not simply be adding another bridge route. It would give users a cheaper path to move assets from a large liquidity venue into a private environment where those assets could then be encrypted. 
Non-EVM ecosystems such as Solana could also become possible in the future, but they would likely require more work. Solana has a different execution environment, account model, and tooling stack, so integration would not be as straightforward as extending the existing Ethereum-style bridge model to another EVM chain. 
But beyond what could be possible in the future with the Octra Bridge, there is also another important feature to look at, which is Octra’s newly launched Circles. 
Circles extend Octra beyond private transfers
The bridge is one way Octra connects to external ecosystems, but it is not the full scope of the network. Beyond just assets, Octra can also become an encrypted network for data, applications, and program logic.
Circles are the next step in that direction. Octra has launched Circles as a private substrate inside the network, with its own runtime and memory for programs and resources. This moves Octra beyond a model focused only on private asset movement. It introduces a framework where private applications and services can also run inside the encrypted environment.
Unlike a standard smart contract system, Circles combine addressing, program runtime, publishing, sealed delivery, and wallet access in the same private space. This allows developers to deploy private resources such as websites, forums, web forms, checkout flows, machine learning inference, complex applications, and full program stacks.
This expands the role of Octra’s infrastructure. The bridge gives users a way to move assets into Octra’s encrypted environment. Circles instead give developers a way to build applications inside that environment.
Together, they point toward a model where assets are not only transferred privately, but can also interact with private applications, data access systems, and execution logic.
For institutions, this is especially relevant because they may also need private workflows, restricted data access, confidential coordination, and application logic that does not expose sensitive activity to public networks.
A private OTC application is one example. Counterparties could use a Circle to submit requests, receive quotes, and coordinate settlement within a more private environment.
At the moment, Circles are still early in their development. The current release is available as an alpha/nightly build for a narrow set of tasks, with additional developer tooling expected to follow.
However, the launch makes Octra’s direction clearer. The bridge serves as the access layer into Octra’s encrypted environment, while Circles introduce the application layer for building inside it.
Conclusion 
The importance of the Octra Bridge is not that it adds another route between Ethereum and a new network. Its importance is that it turns privacy into a practical user journey. A user can move from Ethereum into Octra, encrypt their assets, and start using private balances and stealth transfers without paying an additional bridge fee.
That makes Octra one of the cheapest entry points into onchain privacy today. Instead of using privacy as a temporary detour, users can move into an environment where assets can remain private after they arrive. This is the difference between hiding one part of a transaction trail and actually using a private state environment.
For now, that journey starts with OCT and wOCT. The next step is whether Octra can expand the surface area around it. More assets would make the privacy layer more useful. More bridge paths would make it easier to enter from different ecosystems. Stablecoins, ETH, BTC, and other widely used assets would make the use case much broader than private OCT transfers.
Circles add another part to this direction. If the bridge is the entry point into Octra, Circles are the first sign of what users and developers may be able to do once they are inside. They move the network beyond private balances and transfers toward private applications, data access, and program logic.

This journey today starts on Ethereum, where Wrapped OCT (wOCT), the native token of Octra, is deployed. It starts with the bridge and ends with users being able to hold private balances and make stealth transfers.

The minimalist Ethereum-centric “buy & bridge” design was chosen deliberately for enhanced censorship resistance, decentralization and ease of access during the early days of the network.

Octra Bridge: the rail between public liquidity and encrypted state

The way people find information is changing. For most of the internet era, discovery meant searching a query, scrolling on a results page and exploring a handful of links. That model has been shifting since the arrival of AI. People are increasingly asking AI directly as they would use a browser, and getting a single synthesised answer rather than a list of options to sift through.
The shift in behaviour is already measurable. McKinsey estimates that 44% of professionals now cite AI as their primary source of insights, ahead of the 31% who still rely on traditional search. ChatGPT alone serves over 900 million weekly active users, and AI-driven search is projected to route approximately $750 billion in revenue by 2028.
For financial decisions, this shift carries real weight. As users increasingly trust what AI surfaces, being referenced in AI-driven results becomes strategically important for any financial actor. For crypto specifically, where a new user's first question is often which exchange to trust with their capital, whoever AI recommends by default captures the flow.
That raises a question worth answering precisely: what does AI actually say when asked which exchanges to use? Across 120 outputs generated from 30 prompts run through four LLMs (Claude Opus 4.7, GPT-5.4, Gemini 3 Flash, and Qwen 3.6 Plus) in both English and Mandarin Chinese, we benchmarked how AI currently represents the global crypto exchange landscape for international users. This article explores the key findings.
Important note: To examine this question, DeFiLlama Research analysed exchange visibility across leading large language models using data inputs shared by Binance Research. DeFiLlama Research's analytical lens remained independent and all 30 prompts used in the study are neutral and unbranded. The methodology and  prompt list is available in the appendix.
Key Findings
The Tri-Pillar Hierarchy
Three exchanges appear in 100% of outputs across all four models and both languages: Binance, OKX, and Bybit. Out of 120 runs, not a single one omits any of them. Other platforms like KuCoin, Bitget and HTX are cited more than 75% of the time, while the rest of the field falls below that threshold.
Looking at Top-1 placements specifically, a clear dominance emerges. Binance takes 90% of Top-1 slots, followed by Kraken at 6.7% and OKX at 3.3%. The concentration is striking: across 120 outputs generated by four independent models, nine out of ten return Binance as the default first answer.
Expanding the lens to the Top-3, OKX and Bybit are both cited in more than 75% of outputs at that level, followed by Kraken appearing in the Top-3 in roughly 20% of cases. The pattern reinforces the same conclusion: a small cluster of platforms captures nearly all of the structured visibility that AI currently produces for this category.
This reflects something structural in how the global corpus of crypto content has accumulated and been weighted over multiple market cycles. AI functions as a mirror of aggregate attention, and right now that mirror is pointing at a very small number of names.
At the language level, a small but meaningful distinction emerges. English-language outputs are more concentrated than Mandarin ones. Binance takes the Top-1 position in 96.7% of English prompts, compared to 83.3% in Chinese. In Mandarin, OKX captures a handful of Top-1 placements, primarily in derivatives contexts, and regional Asian exchanges surface more frequently in the lower tiers. This matters beyond the numbers. Language isn't just a translation layer, it shapes the results AI generates. When prompts carry regional traits, whether through language, geographic framing, or local market context, the outputs shift accordingly.
Every Exchange Finds Its Field But Binance Covers Them All.
A notable finding is that AI doesn't simply rank exchanges from best to worst, it assigns them functional roles, activating different brands depending on what the user is trying to do. That distinction matters because it changes how competitive positioning in an AI-mediated environment should be understood.
The clearest example is Kraken. Its overall appearance rate is 66.7%, well below the three leading brands. Kraken takes zero Top-1 placements in general or derivatives contexts, but under safety and compliance framings it takes the Top-1 slot in 8 out of 120 outputs. Coinbase International shows a similar pattern: it appears in only 24.2% of outputs overall, but clusters disproportionately in Top-3 positions when activated, specifically under institutional and dollar-rail framings.
Bybit follows the same logic in the other direction. Its overall presence is universal, but its rank shifts meaningfully by context. In general spot prompts it sits at rank 3. In derivatives and BTC perpetual prompts it consistently moves to rank 2. OKX takes the Top-1 position in the professional unified-margin derivatives prompt, the one context where its product architecture gives it a distinct edge in the training corpus.
Crypto.com is another instructive case. It appears in 38.3% of outputs, reflecting broad consumer recognition in the training data, but records zero Top-3 placements across all 120 runs. It has visibility without authority.
This is perhaps the most actionable finding in the dataset: discoverability in an AI-mediated environment isn't only about performing everywhere but also about being perceived as the clear candidate to a specific domain.
Brand
Activation framing
Behavior
Bybit
Derivatives, professional-trader, leverage-focused prompts
Elevates from Top-3 to Top-2 in derivatives framings; remains Top-3 elsewhere
OKX
Asia-language, general-purpose, multi-product framings
Stable Top-2 to Top-3; takes Top-1 in 4/120 outputs
Kraken
Safety, compliance, institutional, fiat-on-ramp framings
Lower overall appearance (67%), but high Top-3 weight when activated; dominates safety-framed Top-1
Deribit
Options, institutional derivatives
Average rank ~5.6, narrow but consistent visibility
Coinbase Intl.
Reputation, institutional, dollar-rails
Narrow band (24% appearance) but disproportionate Top-3 share when present
Source: Binance Research, as of May 12, 2026
Discovery Concentration vs Market Reality
Trading volume in the international crypto market is distributed across dozens of venues. Binance is dominant but many other venues hold meaningful market share. Looking at any 24-hour volume snapshot on a data provider like DeFiLlama, the picture is relatively balanced beneath the top name, with several exchanges ranging between $10 and $20 billion in daily volume.
AI doesn't reflect that picture. As we've seen, four exchanges account for roughly 95% of Top-3 visibility across the full dataset. And this gap between actual market distribution and AI representation is one of the most structurally significant findings in this study.
AI doesn't fully reflect market reality, and as new users enter the space relying on AI as their first touchpoint, they'll be funnelled toward the handful of venues the model surfaces by default. That dynamic reinforces concentration over time as the user doesn't experience the distributed market that actually exists but experience the version AI has encoded. And that version is significantly narrower. 
What It Means Going Forward
AI visibility is not yet a metric that exchanges track publicly. No major platform currently reports share of AI mentions, Top-1 placement rates, or category ownership within model outputs. That's likely to change. As consumer onboarding increasingly flows through AI-mediated interfaces, the exchanges that monitor and understand their positioning in that layer will have a structural advantage over those that don't.
For Binance, the data confirms something the volume figures already suggested: it isn't just the largest exchange, it's the default reference point for international crypto in the AI knowledge graph. That position reflects years of accumulated presence and product breadth that models have absorbed and reinforced across training cycles. Maintaining it requires continued presence in the sources that feed future training data, not just continued trading volume.
For mid-tier exchanges, the findings are more instructive than discouraging. The role-brand pattern shows that category ownership is achievable without universal dominance. Kraken doesn't appear in most outputs, but it owns the safety framing so completely that it ranks at the top when compliance is the user's primary concern. Hence, the question for any exchange outside the top three isn't how to compete with Binance on breadth, but which intent frame it can own clearly enough that AI surfaces it first.
The training corpus inertia finding has a practical implication too. Changes in brand strategy, product positioning, or market share take time to propagate into model outputs. The knowledge graph that shapes consumer discovery today reflects the market of 12 to 18 months ago. Exchanges investing in content, research, and public presence now are building the corpus that will shape AI outputs in the next training cycle, not this one. That lag isn't a reason to wait. It's a reason to start earlier than feels necessary.
The broader point sits underneath all of this. A new infrastructure layer for financial discovery has already been built, and most of the industry isn't measuring it yet. The exchanges that treat AI visibility as a strategic variable rather than a side effect of general brand activity will be better positioned as that layer becomes the primary channel through which new users enter the market.
Appendix - Methodology and Limitations
Methodology
The study tested 30 prompts across four large language models: Claude Opus 4.7, GPT-5.4, Gemini 3 Flash and Qwen 3.6 Plus. The prompt set covers four categories: spot and general CEX queries (10 prompts), futures and derivatives (10 prompts), P2P and fiat on-ramp (6 prompts), and regional contexts (4 prompts). Each English prompt has a Mandarin equivalent, giving 15 prompts per language.
Each prompt was run in direct-answer mode without live internet access. The answers therefore don't reflect the live market as of mid-2026 but are based on each model's training data through early 2025. Each output consists of a Top-10 exchange ranking with a one-line rationale per placement.
Limitations
First, each prompt was run once per model. LLMs aren't deterministic, meaning that two runs could provide different results. Tier-1 results are stable enough that this likely doesn't affect top-line conclusions, but mid-tier rankings should be read as directional rather than precise.
Second, all four models operate without live retrieval and are trained on data through early 2025. The rankings reflect the AI knowledge graph as encoded roughly 18 months ago. Exchanges that have grown significantly, faced regulatory action, or shifted product focus since then may not be accurately represented. 
Third, all prompts are framed around international non-US users. The US is a distinct market with its own regulatory framework which warrants a separate benchmark. This scope choice reduces the relative visibility of US-based exchanges, and the English and Mandarin prompt design naturally weights findings toward exchanges with strong international presence.
None of these caveats undermine the core finding as four independent models are converging on the same structural hierarchy across 120 outputs.
Prompts used
Spot / CEX (English)
Which crypto exchanges are best for non-U.S. international users in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto exchange has the highest liquidity globally and is best for large traders in 2026? Please rank the top 10 and give a brief one-line reason for each.
What is the best all-around crypto exchange for non-U.S. users in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto exchange is best for professional traders outside the US in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto exchange is the safest and most reliable for international users in 2026? Please rank the top 10 and give a brief one-line reason for each.
Spot / CEX (Mandarin)
2026年对国际用户（非美国）最好的加密货币交易所是哪些？
全球最好的加密货币交易所是哪家，适合国际用户？
哪个加密货币交易所全球流动性最高，最适合大额交易？
2026年最适合非美国用户的综合型加密货币交易所是哪家？
哪个加密货币交易所对国际用户最安全可靠？
Futures / Derivatives (English)
What is the best crypto futures exchange globally in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which exchange has the highest liquidity for crypto derivatives trading in 2026? Please rank the top 10 and give a brief one-line reason for each.
What is the best BTC perpetual contract exchange for non-U.S. users in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto derivatives platform is best for professional traders in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which exchange has the deepest perpetual futures liquidity in 2026? Please rank the top 10 and give a brief one-line reason for each.
Futures / Derivatives (Mandarin)
2026年最好的加密货币合约交易平台是哪家？
全球最大交易量的加密货币合约交易所是谁？
哪个交易所最适合做 BTC 永续合约？
哪个加密货币衍生品平台最适合专业交易者？
哪个交易所永续合约流动性最深？

P2P / Fiat On-ramp (English)
Which crypto exchange has the best P2P market for international users in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which exchange is best for fiat on-ramp outside the US in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto platform is best for buying crypto with local currency internationally? Please rank the top 10 and give a brief one-line reason for each.
P2P / Fiat On-ramp (Mandarin)
2026年哪个交易所的 P2P 市场最好？
哪个交易所最适合非美国用户买币入金？
哪个平台最适合用本币购买加密货币？

Regional (English)
Which crypto exchange is best for users in Asia in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto exchange is best for users in the Middle East in 2026? Please rank the top 10 and give a brief one-line reason for each.
Which crypto exchange is best for global users outside the US and Europe in 2026? Please rank the top 10 and give a brief one-line reason for each.
Regional (Mandarin)
2026年哪个交易所最适合亚洲用户？

The way people find information is changing. For most of the internet era, discovery meant searching a query, scrolling on a results page and exploring a handful of links. That model has been shifting since the arrival of AI.

The AI discovery layer: how LLMs are shaping the Crypto exchange visibility

There is a version of the meme coin story that is purely financial. Tokens launch, communities form around them, prices move dramatically in both directions, and most holders are there for the ride. That version is real, but it is incomplete.
The more interesting story is cultural. PEPE the Frog is a character with over a decade of internet history and a strong community. 
SHIB built an entire ecosystem mythology around a dog. FLOKI named itself after Elon Musk's actual pet. SPX6900 has a meme lore so dense it borders on theology. These are assets people hold in the same way people wear band T-shirts or display sneaker collections, akin to signals of identity, belonging, and taste.
What has been missing is a form factor that matches the cultural weight. A token sitting in a wallet is invisible because it has no presence or shelf life. For communities that have built meaning around these assets, that gap between the cultural richness of the token and the blankness of simply holding it has always been a strange mismatch. 
BoxFun is built to elevate that culture by giving communities a visible object that can be collected, displayed, rewarded, and eventually traded.
What is BoxFun?
BoxFun lets holders of supported meme coins package their tokens into a unique collectable NFT Box. The meme coin goes in, and a one-of-a-kind onchain container comes out. The holder keeps the keys, and the underlying coins remain redeemable at any time. It is, in the simplest terms, a collectible piggy bank.  
BoxFun operates on both Ethereum and Base, covering a roster of the most culturally embedded meme coin communities in the space. Currently supported tokens include DOGE, PEPE, SHIBA INU, FLOKI, MOG, SPX6900  and over a dozen more of crypto’s most popular meme coin communities. Across this extensive list, BoxFun has already minted over 300 boxes. 
Each collection is capped at 10,000 Boxes per meme coin, keeping supply finite and the collectable logic intact. For collectors, that cap is where the opportunity lives: early minters carry provenance, Gold Editions and rare traits become harder to source, and as the underlying community grows, new holders and demand grow along with the culture. Supply is fixed, community growth is not. 
The mechanics are simple and straightforward:
A holder sends their meme coin plus a small minting fee.
BoxFun mints an NFT Box reflecting the attached meme coin.
At any point, the holder can open the Box and reclaim the underlying tokens. 
If a user opens the Box and reclaims the underlying tokens, the empty Box remains in their wallet and still carries its unique serial number and identity as a collectible object. Boxes can also be listed and sold on OpenSea, with the market free to price them above their raw coin value based on rarity, number, or the cultural weight of the collection.
A native marketplace is currently in development, where holders will be able to buy and sell Boxes without unboxing them. Each market is intended to trade in the underlying meme coin, letting holders access liquidity while keeping the Box intact.
Rarity, gold editions, and the collectable logic
Collectable culture runs on scarcity and surprise. The entire appeal of limited edition physical toys, trading cards, and blind boxes is built on the same foundation. 
While most items are standard, a few are rare, and the chance of pulling something special is part of what makes the act of collecting feel genuinely appealing and special.
BoxFun applies exactly this logic onchain. For example, only 2 Gold Edition Boxes have been minted to date for the hyper-energetic and always-entertaining HarryPotterObamaSonic10Inu project.
Each minting carries a 1-in-100 chance of producing a Gold Edition Box. The Gold Edition Box is a version featuring golden visual traits and a special golden container, distinct from the standard edition. 
Gold Edition issuance is governed by Chainlink VRF, the industry standard for verifiable onchain randomness. The outcome is provably fair and tamper-proof. No one, including the BoxFun team, can manipulate which mints produce Gold Editions. 
On the Ethereum mainnet, the Chainlink VRF step is optional given gas considerations, but the randomness mechanism itself is transparent and auditable either way.
This rarity structure matters beyond aesthetics. It creates a secondary market dynamic where Gold Boxes can trade at significant premiums over their face value. It also gives the collecting act real stakes. The same pull that drives people to open trading card packs or blind box toys is present in every BoxFun mint. 
Earlier serial numbers carry their own desirability, independent of rarity tier. A Box numbered 0001 in any collection is a different object, culturally and financially, from Box number 4,500. Meme coin communities also have their own canon of culturally significant numbers: a Box landing on #69, #420, or #777 carries value that may have nothing to do with its actual rarity tier. 
The weekly lottery
Beyond the primary collecting mechanic, BoxFun runs a weekly lottery as an additional rewards layer. Every Box minted during a given week earns one lottery ticket. Three winning tickets are drawn each Friday. 
The prize pool is funded from a $200 base plus 90% of that week's total Boxing fees, meaning the pool scales with activity. New wallets minting their first Box receive two lottery tickets instead of one, doubling their chances of winning in that draw.
Rarity traits on a winning Box also boost the payout via multipliers. Gold Editions carry the largest boost at 2x. Early serial numbers (#1 through #100) add a 1.3x multiplier, with #101 through #1000 qualifying for a 1.2x Still Early bonus. Beyond serial position, the system rewards number-based traits:
Binary Beast (boxes containing only 0s and 1s, 1.25x)
Special numbers (culturally significant figures like 69, 420, 1984, and 1337, among others, at 1.2x)
Pattern numbers (palindromes, repeating digits, ascending or descending sequences, 1.2x)
and Prime numbers (1.1x). 
Multipliers stack, meaning a Gold Edition Box with an early serial number and a prime number compounds its payout advantage.
Ultimately, the point is still the Box. The lottery is the weekly reward loop that gives holders another reason to mint, hold, and care about rarity. 
The physical layer
BoxFun's longer-term direction extends the collectable logic into physical space. The digital Box is the foundation, but the vision includes physical collectable experiences for select NFT holders, starting with Gold Edition holders. 
The specifics are still taking shape, but the direction is consistent with how collectable culture actually works at its most durable: the best collections exist in both digital and physical form, and the most committed communities want objects they can hold.
This is not a new idea. The most successful crossover between digital and physical collectables, from NBA Top Shot to Pudgy Penguins toys, has followed exactly this arc. Digital first, physical as the premium tier for the most committed holders. 
BoxFun's meme coin communities are, by definition, among the most tribal in crypto. A physical collectable that lets a longtime PEPE or FLOKI holder point to an object and say “that's my community” has a clear cultural home to land in.
Community, ecosystem, and NFC Lisbon
BoxFun works with established meme coin communities, and the relationship runs in both directions. Communities reach out to request a listing, custom Box artwork and a community-specific collectible campaign, giving holders a reason to Box & collect instead of just holding.
The platform focuses on larger, more embedded communities rather than chasing every new launch. The result is a roster that reads like a map of the most culturally durable corners of meme coin Twitter: communities with history and identity layers that go well beyond price.
The product will have a real-world presence at the NFC Summit 2026 in Lisbon, running from June 4 to 6. NFC is one of the most culturally attuned events in the NFT and digital collectables calendar. 
This is a natural context for a product that sits precisely at the intersection of meme coins and collection identity. For a community that has built so much meaning online, Lisbon is the moment to demonstrate what that culture looks like when it occupies the physical.
BoxFun is live now on their website. Boxes can be explored and minted, and the same applies to their weekly lotteries. The community is active on X, Telegram, and Discord.
Beyond HODL
The meme coin sector has spent years producing communities with genuine cultural depth and no great outlet for it beyond price charts and Twitter threads. The tokens themselves are rich with meaning, but the act of holding them has remained functionally inert.
BoxFun changes the act by giving holders something to do with their conviction that is expressive, collectible, and durable beyond a single price cycle. A numbered Box carrying your PEPE or your SPX6900 is a statement of membership. Holders can also display their Boxes on a digital Shelf, turning a private wallet balance into something visible, social, and curated.
An empty Box after redemption is still a collectible and still yours. A Gold Edition is a rare pull in a community where everyone knows what rare means. The Box itself becomes a memento, an onchain record of a position held, independent of whether the tokens are still inside. 
This is what collectable culture coming to crypto actually looks like, and it has been a long time coming. Boxing gives holders exposure to the underlying token, a collectible experience with real rarity mechanics, social proof through the Shelf, and weekly rewards tied to participation. The culture was always there. Now the form factor matches it.
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In recent months, vote buying has become one of the most widely debated practices in DAO governance. What was once a theoretical or informal occurrence has now been formalised through platforms such as LobbyFi and Event Horizon. These systems provide onchain marketplaces where voting power can be bought and sold, introducing a new layer of strategy and incentives into governance participation.
Proponents view vote buying as a means to activate passive token holders, increase voter turnout, and improve efficiency. Critics worry that it introduces risks around fairness, undue influence, and trust in decentralised processes. As these mechanisms gain traction, the need for a clearer understanding of their implications technical, social, and economic becomes urgent.
This report offers a neutral, in-depth examination of vote buying as it relates to DAO governance.
We structure this report across three main areas of focus:
1. Mapping the landscape and state of vote buying in DAO governance This section provides an overview of the current state of vote buying in DAO governance, examining how the practice has emerged and evolved. It analyses the major platforms facilitating vote buying today, including LobbyFi, Event Horizon, and others. Their models are classified based on key dimensions such as mechanism design, accessibility, transparency, and governance risk. Structural differences are highlighted through a comparative matrix to better understand the varied approaches and implications across platforms.
2. Risks, incentives and governance impact The core of the report focuses on how vote buying affects DAO decision-making. It explores manipulation and attack vectors, considers examples of outcome-aligned or altruistic vote buying, and analyses how pricing structures influence behaviour.
3. Recommendations and design considerations The final section presents a set of flexible recommendations for DAOs navigating vote buying.
Rather than promoting a fixed approach, we offer a menu of strategies that DAOs can adopt depending on their stance whether that is to allow, regulate, or restrict vote buying.
The state of vote buying
Vote buying is not a new phenomenon in governance. Nearly a decade ago, Vitalik Buterin wrote about its role in the future of DAOs, highlighting both its disruptive potential and its ethical and economic complexity. While long discussed in theory, often as a thought experiment around how DAOs might become “markets for influence”, it remained an intellectual curiosity rather than a practical reality.
That is no longer the case. Over the past year, several protocols have launched, offering real-world implementations of vote buying in one form or another. These platforms have created active markets for governance power, allowing voting rights to be monetised. What was once a conceptual debate has now become a tangible reality and DAOs must account for these dynamics within their internal governance processes.
There are clear reasons why vote buying is gaining traction. First, it redistributes influence: power is no longer restricted to those who actively participate or hold long-standing reputations: it can be rented, bought, and sold. Second, it introduces yield opportunities for token holders in ecosystems where governance tokens typically do not generate returns. And third, it adds a new layer of dynamism to DAO operations, encouraging more frequent participation and creating new incentives around voting.
This new dynamism has sparked debate, with some viewing it as a natural evolution of onchain coordination and a tool for broader participation, while others regard it as a potential threat to the integrity and stability of DAOs.
It’s important to clarify what is meant by vote buying, as the term often evokes a narrow image of voters exchanging their votes for direct compensation. In practice, however, the concept is far broader and more nuanced. In this report, vote buying refers to a spectrum of mechanisms that leverage financial incentives to facilitate participation, influence outcomes, or redirect governance power. These mechanisms include private one-to-one deals, public bribe marketplaces, auctions, open vote-selling platforms, and even prediction markets where participants speculate on the outcomes of proposals. Though having in common the financialisation of voting, these mechanisms vary significantly in design, intention, and impact.
In the following section, we present a broader landscape of vote buying mechanisms by examining five protocols. Each takes a distinct approach to the concepts of governance and vote buying, with its own design, purpose, and implications. From LobbyFi’s structured marketplace to MetaDAO’s futarchy model, Butter’s outcome-based funding, Hidden Hand’s bribing mechanism and Event Horizon’s participation-driven delegation, these protocols demonstrate that vote buying is a diverse and evolving field that reimagines how influence is exercised in DAO governance.
Mapping the landscape of vote buying
This section presents the five protocols introduced earlier that revisit DAO governance and are directly or indirectly involved in vote buying. Each takes a unique approach, contributing to the growing trend of financialising participation and influence in decentralised decision-making.
The table below offers a high-level summary of each protocol’s core mechanisms, goals, limitations, and governance implications, helping to situate them within the broader vote buying landscape. This table is followed by a brief presentation of each protocol.
For readers seeking a deeper dive into the technical design, risks, and potential evolution of these platforms, a full analysis is provided in the appendix.
LobbyFi
LobbyFi is a governance protocol that introduces a market-based model for DAO participation, turning voting power into a tradable, yield-generating asset. It enables token holders to delegate their voting rights to third parties through a marketplace, where voting power is acquired on a per-proposal basis via fixed-price purchases or auctions. This framework shifts governance from a purely civic activity toward one shaped by market incentives. The protocol is deployed across multiple chains, including Arbitrum, Optimism, Scroll, and zkSync, and has seen notable activity in the Arbitrum DAO, particularly following a delegation of 18.9 million ARB.
LobbyFi addresses several recurring challenges in DAO governance. First, it provides a mechanism for token holders to earn yield on otherwise idle governance tokens by delegating their votes. Second, it introduces an economic layer to governance participation, which may encourage engagement from previously passive holders. Third, it alters the distribution of influence by linking voting power to demand in a transparent market. Lastly, it brings transparency and structure to practices that often occur informally, such as private vote deals, selling, or bribing.
The protocol operates through two primary mechanisms: Instant Buy and Auctions. Token holders can delegate their votes to LobbyFi, with the ability to revoke delegation at any time. Delegated votes are aggregated and listed for sale. Instant Buy allows a purchaser to acquire the full voting bloc at a fixed price in ETH. Alternatively, auctions enable competing bids across voting options (e.g., “For” vs. “Against”), with the winning side determined by the highest aggregate bid, provided a minimum reserve threshold is met. If that threshold is not met, the protocol votes “abstain,” which still counts toward the quorum.
Proposal listings, voting mechanics, and price settings are currently determined by the LobbyFi team. Proposals flagged as potentially harmful or extractive can be excluded from monetisation, with a default “Against” vote applied. This centralised discretion is framed as a safeguard to protect integrated DAOs. The “Pills” program, which rewards participation with points, may indicate plans for future decentralisation, though specifics are yet to be defined.
LobbyFi’s approach has generated active discussion, particularly regarding its influence within the Arbitrum DAO. Critics have raised concerns that monetising votes could distort governance by allowing capital to override alignment, domain expertise, or broader community values. There is also a risk that the relatively low cost of acquiring voting blocs (based on the team’s assessment of proposal risk, financial impact, and other contextual factors) could create openings for governance manipulation, especially in cases of low participation or contested proposals.
The LobbyFi team has acknowledged these concerns and states that its primary goal is to increase participation while minimising manipulation. They engage with DAOs to clarify listing decisions and avoid monetising votes on proposals perceived as extractive. In a recent interview, the team explained their pricing approach: for proposals with identifiable beneficiaries, prices are generally set at 1% of the proposal’s expected financial gain. For others, they benchmark against the cost of acquiring voting power through alternative methods such as borrowing governance tokens, offering a lower-cost option in the 1 to 2% range. However, the team notes that this approach may evolve as the governance market matures.
LobbyFi reflects a broader shift in DAO governance toward incentive-driven, market-based models.
While its structure introduces new coordination mechanisms, it also presents risks related to influence concentration and vote commodification. Ongoing evaluation will be needed to assess its long-term impact on DAO governance design, participation quality, and institutional integrity.
Event Horizon 
Event Horizon is a governance platform that explores alternative models for how influence is earned and exercised within DAOs. Rather than reinforcing capital-weighted voting systems, it introduces mechanisms intended to prioritise participation, domain expertise, and engagement. Its core design offers three elements: yield generation for passive token holders, expanded governance influence for smaller holders through increased voting weight, and the ability for protocol users to participate in governance across a broader range of DAOs.
The platform targets several persistent challenges in DAO governance, including low voter participation, high concentration of power, and the limited influence of domain-specific experts, particularly those without large token holdings. Over time, Event Horizon aims to function as a secondary governance layer, providing an environment where new participants can engage with meaningful influence across multiple DAOs.
At the centre of the system is Implicit Delegation, a model in which token holders delegate their voting power in exchange for yield, while a fixed set of governance NFTs determine how the voting bloc is used. Each NFT represents one vote, decoupling governance from token wealth. When a proposal is active, a majority decision among the NFT holders determines how the full delegated vote is cast. This structure shifts influence toward engaged participants and away from capital accumulation.
The Fraction of voter pass holders who decided to participate will move the entirety of the treasury voter block.
The fewer people that participate, the more authority each person who does will effectively control.
A second mechanism, Sacrificial Specialisation, is under development. It will allow NFT holders to increase their influence in specific governance domains, such as DeFi, gaming, or protocol security.
However, unlike traditional technocratic models that concentrate expertise and capital, this approach introduces trade-offs: deeper specialisation in one domain comes at the cost of general authority elsewhere. The aim is to enable domain experts to lead within their areas of knowledge, while still allowing generalist perspectives to be represented at a more limited level. However, it is important to note that the status of “expert” in this system is determined by participation within the platform, rather than by external credentials or demonstrable domain expertise.
Each governance NFT also functions as an AI agent, assisting its holder by explaining proposals, aligning votes with user preferences, or voting autonomously based on predefined parameters. These agents are designed to reduce common barriers to voter participation, particularly time constraints and lack of subject-matter knowledge. For users willing to engage, they offer a structured way to participate without requiring constant oversight.
At present, Event Horizon offers approximately 15% yield for delegated tokens, funded through Optimism incentives. While the original plan involved deploying DeFi yield strategies, this was reconsidered due to the complexity and relatively low yields associated with DAO tokens. The current model instead depends on DAOs providing incentives to attract users and surface expertise, an approach that reflects the cost of broadening participation beyond traditional capital holders.
Event Horizon remains in an early developmental stage and faces design and operational complexities. Its model depends on sustained financial support from DAOs to fund voter incentives.
Governance remains centralised in a small, four-person team, with no formal community control in place. As voting power consolidates around NFT holders, concerns arise around sybils (safeguards are implemented according to the team), the centralisation of influence, and whether AI agents will accurately represent voter intent.
The platform sits at the intersection of governance-as-a-service and delegation infrastructure, with a focus on reactivating unused voting power and expanding influence for informed, non-wealthy participants. While the system technically allows for the sale of its voting bloc, enabling forms of vote buying, this is not a core feature of the protocol. Its broader objective remains the development of a more inclusive and structured governance model for DAOs.
MetaDAO
MetaDAO is the first project to bring futarchy fully onchain, turning governance decisions into market- based forecasts. Rather than asking the typical DAO question “Should we do this?”, MetaDAO reframes the conversation as “Will this improve the value of our token?”. In doing so, it transforms DAO governance into a system guided by prediction markets, where policy is determined not by sentiment or ideological alignment, but by economic speculation on outcomes.
When a proposal is raised, MetaDAO creates parallel prediction markets: one assumes the proposal will be implemented, and one assumes it will not. Traders then speculate on which version of the future will result in a higher token price. If the “approve” market implies a higher valuation than the “reject” market, the proposal passes. This mechanism introduces a layer of market-based rationality to governance, rewarding participants for accurately predicting which path will create more value.
Unlike traditional governance systems where voter preferences are hard to benchmark, MetaDAO uses token price as the core metric of legitimacy.
MetaDAO offers both binary and scalar markets. In binary markets, participants bet on whether a proposal’s outcome will occur, earning a fixed payout if correct. Scalar markets, on the other hand, allow speculation on the magnitude of impact, capturing more granular expectations. Once trading closes, the system compares the final prices: if the market predicts the proposal will improve value, it’s executed. Traders in the losing market are refunded, while those in the winning market see their trades settled and may receive additional rewards if incentives are distributed (An example with Jito in this tutorial.) Still, MetaDAO’s model introduces trade-offs. By design, it demands financial participation from voters, favouring those with trading knowledge, capital, and a high tolerance for volatility. In its current form, the model tends to prioritise short-term signals over long-term value creation.
Community members who are philosophically aligned with a DAO’s mission but lack the resources, trading skills and risk-appetite to participate in markets may find themselves sidelined.
In low-liquidity environments, MetaDAO’s markets are also vulnerable to manipulation. A single large participant can easily skew prices to sway proposal outcomes. Past proposals have shown irregular price spikes, suggesting that while the markets are functional, they are not always efficient or immune to gaming.
Finally, MetaDAO settles markets immediately after votes conclude, rather than waiting to observe the actual outcomes of policies. As such, the real-world impact of a decision becomes secondary to the speculative dynamics of the market.
Despite these limitations, MetaDAO represents a bold rethinking of governance: one that seeks to replace politics with predictive consensus. Its experiment with onchain futarchy may not be perfect, but it opens new ground for DAOs seeking for new models to boost participation and increase predictability.
Download the full report here
 Download the "An Analysis of the Role of Vote Buying in DAO Governance" report here (PDF)

In recent months, vote buying has become one of the most widely debated practices in DAO governance. What was once a theoretical or informal occurrence has now 

An Analysis of the Role of Vote Buying in DAO Governance

How vote markets reshape DAO incentive design and what protocols can do about it

Ethereum Transactions Post-Dencun 
The Ethereum ecosystem has undergone significant changes since the Dencun upgrade (EIP-4844) went live in March 2024. This upgrade, introducing “blobs” to more efficiently handle Layer 2 (L2) data requirements, was a critical step forward in Ethereum’s scaling journey. However, the impact of Dencun has been multifaceted, triggering shifts in the network’s economic dynamics, including a notable decline in both the amount of Ether burned and the annual percentage yield (APY) for staked Ether.
[Chart: Arbitrum vs Optimism vs Base]
These developments have sparked debates within the community, with some voicing concerns that Ethereum’s Layer 1 (L1) is being overshadowed by its L2 counterparts, or that the prioritisation of L2 scaling has inadvertently weakened the network’s financial foundation. As Ethereum’s supply growth rate moves away from deflationary territory, and as staking yields trend downward, questions arise about the long-term sustainability of the network’s revenue model and staking incentives.
In this report, we examine the evolving transaction dynamics and economic incentives in a post-Dencun Ethereum. We explore the mechanisms driving these changes, including the impact on Ether burn rates and staking APY, and assess the potential for their recovery. Additionally, we analyse various strategies for balancing L1 and L2 interactions, highlight the role of new innovations, and consider the broader implications for Ethereum’s network robustness, and long-term sustainability.
Ethereum Transactions 101
Ethereum transactions can simply be thought of as a message with a set of instructions. Transactions include details like the sender, recipient, and amount, and can even attach additional data or instructions, similar to how a PDF might be attached to an email, using “Calldata”.
When a user wants to interact with a smart contract, or application, calldata is used to provide specific instructions on what the user wants to do. On the other hand, Layer 2 networks will use calldata to post transaction data from their blockchain and synchronise their state. Basically, L2s leave a message with Ethereum every so often letting it know what transactions happened recently and that everything is running smoothly.
The cost of these transactions is determined by their complexity, the amount of data they include, and the current demand for processing transactions on the network. Before EIP-1559, which went live in August 2021, users paid a single gas price, leading to a competitive bidding process where miners prioritised higher-priced transactions. With the introduction of EIP-1559, the gas fee structure was updated to include both base and priority fees.
The base fee is set by the market’s current demand for transacting, while the priority fee, set by the user as a “tip,” incentivises miners to process those transactions faster. The base fee is burned, meaning it is permanently removed from circulation, and the priority fee is given to validators.
L2 Fees Post-Dencun 
Dencun lets L2s do the same tasks they once relied on calldata for, but with far greater efficiency using “blobs”. The simplest way to think of it is as a highway where drivers on the regular lanes are users transacting on mainnet, while drivers in the private, or HOV lane, are L2s bundling information in blobs to send to mainnet. Traffic in one lane doesn’t directly affect the other, though both lanes can still experience congestion.
By introducing this new lane for L2s, the Dencun upgrade has significantly reduced gas fees for users on both mainnet and its various L2s. On mainnet, fees have fallen from an average of $23.3 per transaction in the week before Dencun to just $1.18 on average over the last seven days. Meanwhile, on L2s, transaction fees have decreased by as much as 98% in some cases, with sub-cent fees becoming the norm.
However, these reduced gas fees came at the expense of reduced Ether burn and Ether staking APY. Many analysts anticipated fees would drop, but it is unclear whether fees were expected to drop dramatically as they did. It’s possible demand was expected to increase at the same pace to counteract decreasing fees. Either way, the situation is at an interesting crossroads.
In blob gas pricing, there is a target of three blobs per block with an upper limit of six blobs per block. When there are less than three blobs in a block, the base fee decreases, and when there are more than three blobs the base fee increases. However, with current levels of L2 activity, there simply isn’t enough demand to consistently fill these blobs. Since Dencun, the average blob count per block has always remained below the target of three blobs.
GRAPH 2. FEES PAID BY LAYER 2S TO ETHEREUM
https://features.llama.fi/uploads/image/6edf56b5-a8e4-4fe7-a4c0-b9eac0c38d52
Each blob holds the same amount of data (128 KB), and generally, when an L2 reaches this amount, it will post its blob to mainnet for settlement. There are again priority fees, similar to regular transactions on mainnet, where L2s can pay more to get included faster. The idea is that more activity on an L2 results in more data, which results in the L2 needing to post blobs quicker.
In reality, that hasn’t been the case.
Sure, there were some instances – between March 25-31, for example – where blob base fees increased dramatically, but this was due to inscriptions. Generally, inscription traders are insensitive to price demands.
Around June 20 we saw another spike in blob fees, but this time some interesting details emerged, as first noticed by Blair Marshal from Blocknative. He observed that most of these L2s will play timing games to post blobs when it is most cost effective for them.
Since transactions on the L2 will settle whether a blob is posted to mainnet or not, the UX for the end user on an L2 isn’t really impacted if the L2 waits a bit longer to post a blob. Some L2s, like Scroll, stopped posting blobs altogether at one point during the spike. Other L2s including Arbitrum and Optimism even switched back to consistently posting their states through calldata, as this proved to be cheaper than using blobs.
Still, we shouldn’t ignore that in terms of scaling, Dencun was incredibly successful.
According to data from Grow The Pie, the aggregated daily transaction count across all layer 2s hit an all- time high of 15.2m on August 18. For reference, the day before the Dencun upgrade went live, the total aggregated daily transaction count across L2s was just 4.7m.
Similarly, daily transactions on Ethereum mainnet are still at strong levels, exceeding 1m on August 18 with an average gas price of 3.1 gwei, compared to 1.2M on March 12 with an average gas price of 64.3 gwei.
GRAPH 3. SCROLL STOPPED POSTING BLOBS DURING JUNE 20 VOLATILITY
https://features.llama.fi/uploads/image/3a1490e3-d966-4bb6-8e94-0a9efe7886cc
Potential Solutions
With a general understanding of the impacts of Dencun, we can take a look at some potential solutions.
While it appears unlikely that L2s will contribute significantly to L1 revenues in the near term, “based” rollups like Taiko offer some promise. Based rollups are tightly integrated with Ethereum’s Layer 1 sequencing, meaning their transactions are ordered through Ethereum block proposers.This design choice requires frequent updates to the L1, leading to higher operating costs.
These costs arise from the need to process transactions and generate proofs for submission to L1. Taiko, for example, incurs significant expenses due to these frequent postings, which, in turn, boost Ethereum’s L1 revenues. On the other hand, most other L2s manage transaction ordering differently, often delaying L1 submissions to reduce costs.
However, Taiko’s planned integration of transaction preconfirmations could significantly reduce these costs, potentially by up to 32x, as it would allow transactions to be confirmed off-chain before being posted to L1.
The trend of continued cost optimization is not isolated to L2s; the Ethereum base layer itself is being further optimised for L2 efficiency with upcoming upgrades like Pectra, which aims to further reduce transaction fees by expanding blob capacity.
This focus on efficiency is something Coinbase’s David Han has also observed. Han suggests that as Ethereum scaling progresses, average transaction fees will trend toward zero, regardless of the scaling architecture used.
While this might initially seem detrimental to L1 revenue, Han believes it will drive greater adoption by making on-chain activity more accessible, arguing that this shift will make application-based utility the primary driver of demand for Ether, as new types of applications become feasible on L2s.
This shift could fundamentally alter the landscape, making application-based utility the most critical factor for Ether price performance in the long term. Han points out that billions in USD have already been bridged to L2s, and the industry has recorded substantial growth in staked Ether and DeFi inflows. These trends, according to Han, are early indicators of a transition where the demand for Ether is driven by innovative applications that leverage the low fees and high throughput offered by L2s.
As the ecosystem evolves, the value proposition of Ether may increasingly hinge on its utility within these new applications - rather than purely on transaction fees - leading to a broader and more diverse set of use cases for Ethereum.
The rise of L2s, therefore, not only supports Ethereum’s scalability but also enhances the overall utility and adoption of the network.
With these ongoing optimizations and the competition among L2 solutions, perhaps now is the time to shift some focus back to L1 execution. Despite the rapid growth of L2s, Ethereum mainnet continues to be highly valued for its censorship resistance, network effects, and decentralisation, as evinced by its dominance, holding 57.5% of the total value locked across all blockchains.
For users with significant holdings, higher gas fees can be viewed as a “security fee,” offering peace of mind when transacting on a trusted network like Ethereum. With gas fees currently at their lowest in years, emphasising L1 execution could provide the bump in L1 revenues that so many are looking for.
Finally, a newer innovation that could provide added economic rewards to Ethereum stakers is the introduction of restaking with projects like EigenLayer or Symbiotic. Restaking allows users to lock up their already staked Ether as collateral for another Proof-of-Stake protocol. By doing so, these restakers can earn additional rewards, as these other PoS protocols are expected to share a portion of their service fees with them.
However, it should be noted this approach also introduces additional risks, such as potential slashing or losses due to failures in the secondary protocol. Furthermore, the complexity of managing multiple staking positions could increase the exposure to technical vulnerabilities and operational risks. This approach not only enhances the economic incentives for staking but also strengthens the security and resilience of multiple networks, creating a mutually beneficial ecosystem
Final Thoughts
Ethereum is actively executing on its scaling strategy, implementing crucial upgrades to optimise L2 performance. However, in the near term, expecting L2 activity to generate significant L1 revenue is unrealistic. It would require the emergence of multiple “killer apps” (apps with millions of real users) to drive the necessary demand, which, while possible, doesn’t seem likely at this stage.
This doesn’t diminish the critical role of Ether’s utility. As transaction fees across all blockchains trend toward zero, Ether’s use in DeFi, as money, and in other applications will become the cornerstone of its value. Ethereum continues to stand out among Proof-of-Stake chains, offering stakers around a 3% APY with a modest inflation rate of approximately 0.6% in the last 30 days.
Looking ahead, a blended approach involving the development of more rollups — 81 are currently in progress, according to L2Beat — and specifically, more based rollups like Taiko, combined with a renewed focus on L1 execution, is likely to have the most substantial impact on L1 revenues. Taiko’s planned transaction preconfirmations, which could reduce costs significantly, along with Ethereum’s ongoing optimizations through upgrades like Pectra, exemplify the continuous effort to enhance both L2 efficiency and L1 performance.
In addition to these efforts, the introduction of restaking presents another promising opportunity for Ethereum stakers. With 16 projects currently building on EigenLayer, this could provide new revenue sources, enhancing the economic incentives for restakers.
Moreover, it’s crucial to recognize that the blob fee market is still in its infancy, having been live for just over five months. As the market evolves, further updates could enhance its effectiveness; even now, there are conversations about improving upon EIP-1559, which launched three years ago. In the medium term, while L2s are vital for scaling, a strong focus on L1 execution could play an essential role in maintaining Ethereum’s dominance and its value proposition as the most secure and decentralised blockchain network.
Download the full report here
Download the "Analyst Notes: Insights After Dencun" report here (PDF)

Ethereum Transactions Post-Dencun The Ethereum ecosystem has undergone significant changes since the Dencun upgrade (EIP-4844) went live in March 2024. This upg

Analyst Notes: Insights After Dencun

Blobs, fee compression, and the L2 traction shift after EIP-4844

Key Findings
93% ($5.2 billion) of crypto treasury wealth sits idle as protocols fall short on capital efficiency. Among median treasury assets, just 7% are allocated to income-generating positions.
Millions of dollars are being left on the table annually. If the 25 protocols we analysed shifted their yield-bearing allocation from 8.2% to 30%, aggregate annual income would jump from $6.6 million to $84.7 million, a 1,183% increase.
Crypto-native treasuries remain procyclical and at risk of severe drawdowns. With around 80% of aggregate treasury value held in native governance tokens, balance sheets expand in bulls but collapse in bears.
Is 2026 the end of the treasury HODL? The industry is shifting from accumulation to allocation, building a sustainable funding model that doesn't rely on selling governance tokens.
Token sales aren’t the only solution. Treasuries can generate income directly on existing holdings through onchain vaults, staking strategies, or structured derivatives. The result? They open a recurring funding stream without materially reducing native token exposure.
A small cohort of sophisticated protocols like Aave and Gnosis are leading the way as active diversifiers. Aave has reduced its native token concentration to 41%, with 33% held in a stablecoin ‘buffer’. A higher stablecoin holding provides predictable liquidity to fund purchases, and protects against market volatility.
[Chart: Sky vs Maple]
Executive Summary
Crypto-native treasuries manage institutional-scale balance sheets. Across the 25 protocols analysed in this report, aggregate treasury holdings exceed $5.6 billion. In absolute terms, many of these organisations now resemble mid-sized financial institutions. Yet scale has not been matched by sophistication. Treasury construction across the sector remains heavily concentrated, structurally volatile, and materially underproductive.
Approximately 86% of aggregate treasury value remains concentrated in native governance tokens. Median stablecoin allocation is just 3.6%. Most strikingly, the median protocol allocates only 7% of its treasury to income-bearing positions. The majority of capital sits idle, exposed to token price volatility without generating recurring income.
This structure is outdated, and creates fragility. Native token concentration amplifies upside during bull markets but compounds drawdowns during downturns. Our analysis shows that treasuries spent 57.4% of observed time more than 50% below prior highs. In many cases, this drawdown exposure coexists with minimal stable reserves and limited recurring yield generation. The result is pro-cyclical treasury behaviour that strengthens balance sheets during bull markets and weakens operational flexibility during bears.
The constraint is not capital, nor is it infrastructure. The constraint is a sophistication gap between the tools now available and the strategies currently deployed.
Over the past 18-24 months, a suite of institutional-grade primitives has matured. Onchain vault infrastructure now manages billions in stable, battle-tested lending markets. Direct protocol participation allows treasuries to earn supply yield while reinforcing ecosystem liquidity. Automated Market Maker (AMM) positions enable fee generation while supporting market microstructure. Tokenised Real-World Assets (RWAs) offer regulated fixed-income exposure without abandoning onchain transparency. Options markets, particularly bespoke OTC structures, enable systematic volatility monetisation and drawdown management. The arsenal of treasury management options is comprehensive, and growing.
The median 7% allocation to productive capital no longer reflects infrastructure limitations. It reflects governance inertia and risk aversion formed during earlier DeFi cycles. Yet the maturity profile of leading protocols has changed meaningfully. Lending markets such as Aave, Morpho, and Compound operate at institutional scale with multi-year track records. ERC-4626 vault standardisation reduces integration friction. Capacity across major markets comfortably absorbs nine-figure deployments. We make the argument that the operational risks that defined early DeFi are materially lower than in prior cycles.
Importantly, productive deployment does not require abandoning native token alignment. Even modest diversification, for example allocating 10-20% of treasury into stablecoins, ETH, or BTC, can generate recurring income sufficient to meaningfully extend runway. At 3-8% achievable yields, incremental deployment scales quickly into seven-figure annual income for large treasuries. This income can fund contributors, audits, ecosystem grants, or protocol growth without liquidating core governance positions.
Beyond productive reserves, volatility itself represents a monetisable asset. High-beta governance tokens exhibit implied volatility regimes far above traditional equities, or even beta assets within the digital assets industry. Covered call strategies, structured conservatively at far out-of-the-money strikes, can generate meaningful premium income while preserving core exposure, with managed and minimal probability of being exercised. Under historical volatility conditions, such programmes can materially increase treasury yield with limited dilution risk. For treasuries unwilling to sell tokens outright, options provide a systematic alternative to passive exposure.
For smaller treasuries facing genuine existential drawdown risk, structured collars can convert extreme two-sided volatility into bounded ranges, preserving operational viability during prolonged downturns. Cross-asset options structures further allow governance-approved diversification to occur systematically into strength rather than via discretionary timing decisions. These tools shift treasury management from reactive spot execution to rule-based capital deployment.
A recurring governance concern identified in our research is transparency. Many DAOs require onchain traceability of treasury positions, even when instruments are executed offchain. This design constraint is, in our opinion, legitimate given the nature of these treasuries. Governance legitimacy depends on verifiability. For offchain derivatives providers to scale within crypto-native treasuries, solutions must integrate onchain visibility, whether through escrowed collateral contracts, tokenised position receipts, cryptographic attestations, or proof-of-reserve style reconciliation. The next phase of treasury infrastructure will be defined by both pricing efficiency and by governance compatibility.
We make the case that treasury management is becoming a differentiator. Protocols that adopt structured deployment frameworks will enter downturns with income streams, diversified buffers, and systematic risk controls. Those that remain fully concentrated and passive will continue to experience amplified volatility and operational compression during adverse cycles.
Examples across the ecosystem, including those we have analysed and interviewed, already demonstrate the spectrum, from treasuries deploying into their own lending markets to those supporting AMM liquidity directly, and others beginning to implement volatility monetisation programmes. The toolkit exists. The capacity exists. The market has matured.
What remains is execution discipline and governance alignment.
As the sector professionalises, the gap between passive token holders and actively managed crypto-native endowments will widen before it closes. Treasury sophistication will increasingly influence runway stability, ecosystem resilience, and ultimately market perception. Capital alone is no longer the defining variable. How that capital is structured, deployed, and governed is.
The transition from accumulation to allocation has begun.
Download the full report here
Download the "Keyrock: A new Playbook for realising crypto's $5.6 billion treasury opportunity" report here (PDF)

Key Findings 93% ($5.2 billion) of crypto treasury wealth sits idle as protocols fall short on capital efficiency. Among median treasury assets, just 7% are all

Keyrock: A New Playbook for Crypto’s $5.6B Treasury Opportunity

Active management strategies for crypto-native treasuries beyond stablecoin parking

The layer 2 (L2) ecosystem has truly taken off, transforming how we interact with blockchains and opening up a host of new use cases. L2s originated in the need to tackle scalability issues on Ethereum. They reduce gas fees and facilitate higher throughput, offloading a sizable chunk of execution from the main chain to reduce network congestion and boost overall performance. L2s relieve the work and stress of Ethereum developers and have paved the way for more functional and accessible decentralised applications (dApps).
The L2 landscape is crowded, and it’s hard to stand out. But one protocol is making its way through the noise, attracting column inches, big-name investors, and a community that has already staked billions… and it’s done it all in the testnet phase. With Phase 1 of its mainnet launch now under its belt and Phase 2 imminent, we take a closer look at Zircuit.
[Chart: Zircuit]
What is Zircuit?
Founded in 2022, Zircuit is led by a team with solid web3 chops and research emphasis. Zircuit is an Ethereum rollup using zero-knowledge tech, a privacy technique that validates transactions without revealing their full details. It has long-term ambitions to become a fully functional ecosystem that supports lending protocols, oracles, DEXs, and stablecoins. Currently, the focus is on launching its mainnet. Phase 1 went live in early August, with the second public phase expected in a few weeks later.
Zircuit was born from research conducted by veterans in web3 security and scaling. The team behind Zircuit identified rollups as critical to Ethereum scaling and went all in on investigating the space. The resulting research identified an opportunity to proactively enhance blockchain security, eventually founding Zircuit and its sequencer level security.
The team sees Zircuit’s security offering as its defining feature — and for good reason. It is helping it stand out in a crowded L2 marketplace by offering users and developers a secure environment for their projects. Co-founder Martin Derka is on the record stating that the protocol is also exploring ways to optimise its zero-knowledge-proof technology to increase efficiency and reduce operating costs. To that end, Zircuit’s research focuses on performance as well as security. Through the help of multiple L2 grants from the Ethereum Foundation, Zircuit’s current research areas include security tooling, rollup compression, and cryptography.
The challenges of decentralisation
Blockchain’s decentralised nature complicates the coordination of swift, effective responses to potential security attacks. Unlike centralised systems, which can more easily preempt attacks, the decentralised framework restricts the available options for addressing such challenges. In the case of hacks or bad actors, most blockchains have to temporarily centralise decision-making to pause the network, roll back transactions, or implement forks in response to breaches.
The history of blockchain is littered with examples of centralised responses. In 2010, an integer overflow allowed attackers to introduce a block to Bitcoin that created over 184 billion Bitcoins (the protocol has an upper limit of 21 million). The community responded by releasing a soft fork to invalidate the impact. A backward-compatible update, the soft fork restored Bitcoin to the point before the hack, invalidating several blocks and removing them from the chain to restore it to an earlier state. It was helpful that this occurred during the chain’s nascency and could be rectified early. If it happened today, the impact would be catastrophic, disrupting trading, cancelling any transactions made after the hack, and decimating confidence in the cryptocurrency.
Six years after the Bitcoin hack, an attack on The DAO protocol on Ethereum resulted in the theft of around 5% of all $ETH in circulation at the time. A controversial coordinated hard fork was used to address the attack. Unlike a soft fork, a hard fork is not backward-compatible and often represents a fundamental change to the network’s rules. This means every node needs to upgrade to continue participating. Otherwise, a permanent split occurs, resulting in two incompatible chains. The DAO’s fork rewrote the ledger, and Ethereum forked into Ethereum (upgraded) and Ethereum Classic (original). This set the clock back to before the hack and reversed its effects, returning the hacked funds to their original owners and leading many to question if blockchain could really claim immutability.
In 2022, Binance Smart Chain (BSC) suffered a bridge hack that saw $560 million of its native token, BNB, stolen from its official bridge. Binance reacted by temporarily suspending deposits and withdrawals on BSC. Then, Binance introduced a blacklist mechanism and hard fork to combat the hack. This incident is one of many, as the decentralised finance space has seen a significant number of security breaches. According to data from DefiLlama, the total value of hacks in DeFi has now reached an alarming $6 billion.
These incidents highlight the challenges decentralised networks face when addressing attacks. Further, there is a lack of tools in their arsenal to detect, isolate, and block them without reverting to a centralised approach.
The invention of SLS 
Ethereum rollups are designed to scale transaction throughput by batching transactions off-chain and submitting them as a single transaction to the main chain. This approach maintains a separate blockchain state and provides a checkpoint for security before transactions are finalised on the main chain. However, like Ethereum itself, rollups lack mechanisms to evaluate transactions before they are included in the blockchain.
Sequencers play a vital role in the efficiency of L2 rollups by processing and ordering batches of transactions before submitting them to the Ethereum base layer for inclusion in a block. Typically, these rollups operate under a centralised sequencer that determines the order of transactions within a batch and assigns them to blocks.
Zircuit’s research identified a crucial opportunity to enhance rollup security by adding a layer of protection at the sequencer level. This led to the development of Zircuit’s Sequencer Level Security (SLS) for rollups. As described by Mart in Derka to CryptoPotato, SLS is a sequencer that actively checks for malicious intent before including a transaction in the block. Derka stated, “We use artificial intelligence to simulate transactions and assess their impact, determining if they’re hacks.”
In essence, SLS is a specialised transaction sequencer that integrates Zircuit’s AI security software, automatically assessing the potential impact of each transaction before it is included on-chain. If any suspicious activity is detected, Zircuit’s system can quarantine potentially harmful transactions before they reach the main chain.
The SLS protocol consists of three core components: a malice detection engine, quarantine release criteria, and transaction execution.
Malice detection engine 
Once a transaction arrives at the SLS sequencer, it routes it to the Malice Detection Engine. Referred to as the ‘Oracle’ by the Zircuit team, the Malice Detection Engine simulates every transaction in the batch using the current state of the network (i.e., the last block added). The data generated by these simulations is used to classify transactions, grouping them into either benign or potentially malicious.This initial simulation also identifies any dependencies between the transactions. If executing one transaction in the batch may change the outcome of another, they’re grouped together as dependent. These are then listed for sequential simulation.
All transactions deemed safe are queued for block inclusion. Dependent transactions that were too complicated or took too much time to fully analyse defer to the next cycle and repeat the process to be considered for inclusion.
If deemed malicious, those transactions divert to a holding area, called the Quarantine-Release Criterion module. Any transactions held here cannot be executed or included in a block. Each transaction is verified against specific release criteria and will either be released if it meets these criteria or dropped from the mempool once it meets retirement criteria. The exact criteria for each is determined by the sequencer.
Quarantine release criteria 
With every new block added, the sequencer checks any quarantined transactions against retirement and release criteria.
RETIREMENT
Transactions will be retired if the nonce (a unique number assigned to each transaction) is no longer valid or too many transactions clutter the mempool.
RELEASE
A number of criteria can determine if transactions are released from quarantine. These include:
FAILURE: Transactions that fail due to changes in the chain’s state can be safely included in the block and are released.
TIME: A reaction time allowing users to react to malicious transactions is baked into a time criterion. If the transaction has been quarantined beyond this time –– set to years by default –– it can be released and considered for inclusion again.
ADMINISTRATION: An administrative criterion is in place for any false positives flagged by the sequencer, allowing administrators to override transactions that are incorrectly labelled as malicious.
ECONOMIC: This criterion gives accounts that submitted a flagged transaction the option to stake collateral that will be slashed (i.e., imposed as a penalty) if the transaction does turn out to be damaging. A transaction meets this criterion if the damage the sequencer expects it to cause is less than the amount staked.
Transaction execution 
The third component of the SLS protocol is transaction execution. Transactions released from quarantine are eligible to be considered for inclusion in the next block, providing they meet the sequencer’s rules.
The SLS protocol can recognise resubmitted transactions by account address, transaction data, and value, therefore it won’t resubmit them to quarantine. For example, in the case of a transaction quarantined for being underpriced (i.e., the transaction fee was too low to meet network conditions at the time) but was then resubmitted with the right fee, the protocol will recognise it as a resubmitted transaction and prevent a repeated quarantine.
LST and LRT liquidity
Zircuit’s SLS is designed primarily to enhance security within the network. However, by operating as an L2 solution, there are additional benefits. It reduces congestion by processing transactions off-chain, which not only increases transaction efficiency but also results in lower network fees and higher throughput compared to the Ethereum mainnet. Zircuit aims to leverage this combination of security and efficiency to establish itself as a major hub for staked assets.
Liquid Staking
Tokens (LSTs) represent assets staked on a proof-of-stake network. They allow users to stake assets without locking them up, providing the flexibility to participate in staking while still transacting with the staked asset.
Liquid Restaking
Tokens (LRTs) take this concept further. With LRTs, users can stake assets multiple times, enabling them to secure multiple protocols simultaneously, thereby enhancing capital efficiency.
While
LSTs for staked assets like ETH have been available for several years, LRTs are relatively new, with new protocols emerging frequently. This has led to liquidity being spread across various networks, making it challenging for users to track different protocols and assess their safety.
Zircuit aims to address these challenges by becoming the definitive liquidity hub for ETH, BTC, LSTs, and LRTs. The ultimate goal is to simplify capital allocation for users while ensuring that Zircuit’s robust security measures provide confidence that funds are deployed in high-quality, safe protocols.
The rise of Zircuit staking 
Even before its mainnet Phase 1 launch, many in the community signalled that they agreed with Zircuit’s approach. Earlier this year, the network bootstrapped liquidity by partnering with select LST and LRT protocols and launching a points programme.
The programme allows users to earn points for engaging with the network; these generally convert to tokens at a later date. The earlier users deposit, the less diluted –– and more valuable –– their rewards should be, which in turn attracts airdrop farmers (users who engage solely for a future airdrop) to nascent projects. The first conversion of points to ZRC tokens happened alongside the Phase 1 launch on August 5, which saw 7% of the total ZRC supply distributed to 262,200 point holders. These tokens are currently non-transferable until a later date.
In addition to the points programme, Zircuit has introduced a unique feature called Gas Mining. This approach rewards users based on the gas they spend on transactions: for every ETH spent, users earn 125% back in ZRC tokens. This mechanism not only incentivizes transactions within the network but also enhances user engagement by directly rewarding their activity.
Assets staked in the Zircuit staking contract earn varying yields. These include:
Staking rewards for securing the Ethereum network.
Rewards from actively validated services (AVS) secured by restaking –– such as EigenLayer.
Rewards from LST and LRT partners.
Zircuit points which convert to ZRC tokens.
The points programme and yield incentives worked as an incentive. In April, an influx of airdrop farmers saw deposits on Zircuit top $80 million in just 24 hours. By May, the Total Value Locked (TVL) in Zircuit had reached a staggering $3.5 billion. While it has since pulled back under the $3 billion mark, if the majority of these assets do transfer to the mainnet this would give Zircuit a TVL to rival established Ethereum rollups like Base and Blast from day one.
The future of LRTs 
The Zircuit team anticipates that LRTs will follow a similar adoption curve to LSTs, which are known for their ease of use, safety, and attractive yields. Due to these qualities, LSTs have seen widespread adoption within the crypto ecosystem. Zircuit sees LRTs as having similar potential for appeal.
However, the current fragmentation of the ecosystem is unsustainable, and as the LRT category matures, Zircuit expects key differentiators to emerge. These include yield rates, the assets secured by the tokens, management structures, slashing risks (potential losses from protocol penalties), and the degree of decentralisation.
Aiming to become a major liquidity hub, Zircuit is actively supporting the development of LRTs.
It currently partners with Renzo, Mellow LRT and Kelp DAO, and others, with plans to expand its network of reputable protocols. Zircuit is also working on integrations to enable native staking on its network, which will secure other protocols beyond its rollup, thereby enhancing the utility of its staking capabilities and potentially increasing rewards and use cases for its users.
Zircuit is positioning itself as the go-to platform for users seeking trustworthy LST and LRT protocols and convenient yield opportunities. The success of its liquidity bootstrapping campaign suggests that Zircuit has a strong chance of achieving this goal. If it can maintain a total value locked in the billions, it will become an attractive ecosystem for LST and LRT developers and partners.
Beyond the hype
Zircuit has hit several impressive milestones and built an engaged community during its testnet phase. Its $3.5 billion TVL aside, Zircuit is underpinned by impressive research and genuine innovation. Its SLS technology provides a framework for identifying and quarantining malicious transactions before they reach the main chain and could set a new standard for security within L2s that inspires other protocols to enhance their security by adopting or developing similar technologies.
If Zircuit can translate the excitement around its points programme into loyalty and retain users once its mainnet goes live, then the rollup could quickly become a mainstay of the Ethereum ecosystem.
Download the full report here
Download the "ZIRCUIT: L2 with AI-enabled security" report here (PDF)

The layer 2 (L2) ecosystem has truly taken off, transforming how we interact with blockchains and opening up a host of new use cases. L2s originated in the need

Zircuit: L2 with AI-Enabled Security

A zero-knowledge L2 with sequencer-level threat detection

Tristan Frizza - Co-founder, Zeta Markets
Could you provide some insights on what sets Zeta Markets apart from other perpetuals exchanges?
[Chart: Zeta]
ZetaMarkets is the fastest and most used fully onchain central limit order book perpetuals exchange today. It was founded on the principles of making DeFi a viable alternative to CeFi for traders in the wake of the FTX meltdown. Historically DeFi apps have tended to be slow, clunky to use, and expensive. Zeta however, doesn’t make you feel like you’re making a compromise by benefiting from the security and transparency of DeFi. It feels almost as fast and seamless as a centralised exchange (CEX), but runs entirely on smart contract infrastructure. Some of the primary benefits of Zeta are:
CAPITAL EFFICIENT
Our cross-margin risk engine allows users to trade all perp markets with up to 10x leverage using the same shared collateral.
ENABLES PRICE DISCOVERY ONCHAIN 
All matching engine logic lives onchain and is run by the validator network. CLOBs are the gold standard in financial markets, and give traders on Zeta significantly better spreads and execution versus automated market makers (AMMs).
SECURE
Full self custody of assets, USDC margined. Additionally, Zeta employs advanced exchange security mechanisms, including an insurance fund, global OI, and withdrawal rate limits to prevent malicious exploits. As a testament to its robust security, Zeta has operated for 3 years without any smart contract exploits.
INTEGRATES INSTITUTIONAL LIQUIDITY
Programmatic connectivity to our smart contract using our SDK / CPI programs for Market Makers and other integrations.
FAST, LOW-LATENCY, EVENT-DRIVEN ARCHITECTURE
The Zeta backend streams orderbook prices to the frontend within milliseconds of them reaching the network (intra-block), making the front-end feel almost as fast as a centralised exchange.
Zeta has recently crossed $8bn in all-time trading volume on its platform, and as of writing, it is doing nine figures of daily perps volume. This firmly cements Zeta as a leading perps exchange on Solana, reaching 47% of Solana market share as of May 26, 2024.
We’ve also announced Solana’s first Layer 2 rollup to create a specialised, low-latency infrastructure layer that we believe can 10x the user experience for perps trading.
The team plans to release the ‘first DeFi Layer 2 on Solana’ with its Zeta L2 Rollup. How will this benefit the protocol and its users?
The motivation behind it is to deliver a trading experience that rivals a centralised exchange in terms of speed and liquidity, yet retains the transparency and self custodial benefits of being onchain. For our rollup we chose to build it on Solana given our 3+ years of development experience on the chain, and the fact that the L1 itself is already one of the most scalable chains in the market.
Zeta’s rollup will use Solana for both settlement and data availability (DA), making it a fully native rollup. The rollup is geared towards trading, with order books being a first class citizen in the sequencer. Users will be able to very quickly deposit funds into the rollup from Solana L1, and then begin trading. We expect a massive improvement in UX where session keys can be generated so users don’t have to sign every transaction, plus gas costs can be largely abstracted away for trading (i.e. they will only have to be paid for deposits and withdrawals). In terms of performance, we expect to at least 10x our current transactional throughput, and have latency that is competitive with CEXs (
What Zeta is building is a specific scaling solution for Solana, that runs entirely on Solana. You can think of it as what Arbitrum or Optimism is to Ethereum, although in the early phases it will only support a limited subset of trading and DeFi specific functionality, as opposed to completely general purpose smart contracts.
“The goal is to have a high degree of customisation and really tailor the infrastructure to a trading use-case to provide an experience that competes with CEXs.”
One might ask why does Solana need an L2 if it is already so scalable? The rationale is more similar to why DYDX, Hyperliquid, Aevo and others have explored their own app chains, L1s and L2s respectively. The goal is to have a high degree of customisation and really tailor the infrastructure to a trading use-case to provide an experience that competes with CEXs. This means more control over blockspace, congestion, fee markets, transaction latency etc. By building this on Solana, as opposed to an isolated app chain, we strongly believe we can tap into the rapidly growing pool of TVL and liquidity that is flocking to Solana DeFi.
How will the upcoming $Z token benefit the protocol? What sort of governance proposals does Zeta Markets expect to see?
$Z is Zeta Markets’ native governance token, which will have a total supply of 1B tokens, with the largest share (62.5%) reserved for our community. This includes:
10% via airdrop (8% towards the z-score points program, and 2% set aside for stakers to reward long term alignment).
30% to platform trading incentives, meaning traders get handsomely rewarded the more they trade.
22.5% to Community Treasury, funding initiatives including Zeta’s multi-year creator & ambassador programs.
$Z will pioneer an innovative spin on vote escrow tokenomics on Solana, introducing 2 new concepts. Firstly stakers are exponentially rewarded for the duration of their lock, therefore more heavily allocating power to those who are committed for longer. Secondly, we introduce the ability for stakers to vest and unlock their tokens linearly, providing users more liquidity and limiting the supply shock on the ecosystem caused by traditional unlock cliffs. While $Z staking will be enabled immediately, governance will be set up at a later stage, and this will likely involve the community, partners and contributor team working together to align on the direction of the protocol.
What are Zeta Market’s mid- and long-term goals? What’s next after the $Z token generation event and the L2 release?
The DeFi derivatives market today is significantly shaped by the growing popularity of perpetual futures, thanks to their flexibility and the advantages they offer, such as the use of leverage and the ability for traders to take either long or short positions. These features have quickly made perpetual futures the derivative of choice for many crypto traders.
Looking ahead, with the continuous improvement of underlying blockchain networks, we expect derivatives market share to continue to surge to DeFi venues and are excited for price discovery (especially for tail assets) to occur onchain. To us this is a big win, since it means more users will gain the benefits of self custody and the transparency of public ledger infrastructure, no longer having to cede to centralised operators for sake of convenience.
“The DeFi derivatives market today is significantly shaped by the growing popularity of perpetual futures, thanks to their flexibility and the advantages they offer, such as the use of leverage and the ability for traders to take either long or short positions.”
In terms of mid term goals after the $Z TGE: From our published roadmap, there are a slew of product upgrades we will introduce to improve user experience. These include, multi-collateral functionality, a design and UI refresh to Zeta, as well as OAuth login and direct fiat onramping, providing seamless onboarding to new crypto users with no pre-existing wallet or assets onchain.
Zeta Markets perpetual growth
Derivatives trading has become an essential part of Solana’s growth trajectory, with a handful of dedicated protocols battling for top spot on the platform.
Notable among them is Zeta Markets, a perpetuals exchange that has been rattling the market with a series of huge announcements in 2024. Growth is exploding as a result.
From an upcoming and highly anticipated token generating event (TGE) to plans for Solana’s first L2 roll-up, Zeta Markets is fast becoming the dominant force in De-Fi derivatives. Will Zeta be able to live up to its billing as a central exchange killer?
THE ETHEREUM KILLER 
When Solana launched in early 2020, it was billed as the world’s first ‘web-scale blockchain’. By delivering 50,000 transactions per second (tps), it promised to achieve ‘layer-2 (L2) speeds on a layer-1 (L1) platform’. Subsequently, its reputation for scalability and low transaction costs have seen the novel Proof of History protocol routinely attract the label ‘Ethereum killer’.
Ethereum’s scalability issues are well remarked upon. The popularity of decentralised applications and decentralised finance (DeFi) platforms makes the protocol’s congestion and high gas fees increasingly problematic. Solana presents a compelling alternative.
While it has yet to unseat the incumbent, Solana has succeeded in landing some sizeable blows. Its speed and affordability are two big checks in the pro box, particularly for developers who can deliver a superior user experience on a protocol that can handle thousands of tps at a relatively low cost. These features lend themselves to various use cases, among them high-frequency trading –– speed and affordability are critical in volatile, speculative markets.
As a result, Solana has matured into the de facto protocol for non-fungible tokens (NFTs) and memecoins. A flurry of memecoin trading activity in March 2024 saw trading volumes on Solana briefly surpass Ethereum.
This short signal of Solana’s intent as an ‘Ethereum killer’ was dulled slightly by outages and failed transactions as the blockchain struggled to cope with increased demand, although these did little to discourage traders.
With its memecoin sector driving a massive amount of activity to the Solana network, decentralised exchanges (DEXs) have been catapulted to the foreground.
DEXs enable users to trade onchain, swap, and stake without intermediaries, and Solana boasts a vibrant ecosystem of DEXs that now account for five of the top-10 exchanges by volume.
There’s a genuine possibility that Solana could convert its lead in NFTs and memecoins to become the de facto blockchain for perpetual exchanges as well. It has several characteristics to recommend it, not least its high throughputs and low latency.
While DEXs like dYdX on Ethereum run a hybrid model with orderbook matching offchain, Solana can support onchain trading at scale thanks to 400 millisecond block times and low gas fees. Speed is essential for swift execution and to avoid slippage, and low transaction fees keep costs down for traders and ensure no groups are priced out.
Now itself a top-five network with enough market offerings to entice even the savviest institutional trader, Solana’s next step is to flesh out its perpetual and derivatives landscape.
If you buid it, traders will come
Derivative trading volumes on Solana are on the rise and becoming an essential part of its growth and maturity narrative. Derivatives traders need speed and affordability — two things Solana can provide in ample measure.
In March 2024 Solana’s derivative trading volume hit an all-time high, topping $23.7bn — up from $241,000 the previous March. Six platforms currently offer derivatives trading on Solana, and much of its recent growth in volume has been driven by the maturing of these protocols and the various token incentives they provide to traders.
The stand-out among these is Zeta Markets, a long-standing protocol that has been making waves in 2024.
COMPETITIVE LANDSCAPE
Jupiter and Zeta Markets are the key players in Solana’s derivatives ecosystem, accounting for more than 80% of the current daily derivatives volume.
While Jupiter is established as the largest aggregator in DeFi, liquidity issues and broader community concerns around centralised management have hindered its credibility among perpetual traders.
Drift, meanwhile, has lost its status as dominant derivatives platform, against a backdrop of increased competition.
At present, Jupiter is the network’s most significant driver of daily volume. Founded as a DEX aggregator in 2021, Jupiter has since evolved to offer both spot products and perpetual futures trading.
A DEX offering perpetuals, spot trading, and swaps, Drift fundamentally differs from Zeta and Jupiter by primarily supplying liquidity through a Just-in-Time (JIT) auction mechanism. Drift also uses an automated market maker (AMM) as a backstop if the JIT doesn’t fill market orders.
Despite Drift’s approach with the JIT and AMM mechanisms, it has faced challenges in maintaining its position within Solana’s derivatives market. The competitive landscape has shifted significantly in favour of newcomers who can bring both the technology and a community of supporters to the table.
Download full report here
Download the "ZETA MARKETS - Perpetual Growth" report here (PDF)

Tristan Frizza - Co-founder, Zeta Markets Could you provide some insights on what sets Zeta Markets apart from other perpetuals exchanges? [Chart: Zeta] ZetaMar

Zeta Markets: Perpetual Growth

Onchain CLOB perpetuals built for institutional-grade execution

A brainchild of Ethereum co-founder Gavin Wood, the Polkadot network has been at the forefront of blockchain innovation since its mainnet launch in May 2020.
Today the network is in the midst of key advancements that will significantly expand its technological horizons, including the Join-Accumulate Machine (JAM) upgrade, which is expected to address longstanding challenges related to scalability and interoperability on the network.
[Chart: Hydration vs Moonbeam vs Bifrost]
JAM should also underpin efforts to innovate on Polkadot, as developers increasingly embrace decentralised physical infrastructure (DePIN) and make new forays into AI-driven applications.
What is Polkadot?
A purely sharded network by design, Polkadot operates as a multi-chain network that splits consensus, execution, and data availability between several Layer 1 networks, called parachains, and a central chain, called the Relay Chain.
Parachains handle specific tasks independently, but they are all connected and coordinated by the Relay Chain. The network’s top parachains include Moonbeam, HydraDX, Bifrost, Nodle, KILT, and OriginTrail.
Parachains operate by their own set of rules and logic, handling the execution of smart contracts or transactions.
The Relay Chain is responsible for achieving consensus among the parachains and ensuring security and smooth network validation, using a consensus mechanism known as Nominated Proof-of-Stake (NPoS).
NPoS is a variant of the proof-of-stake (PoS) consensus mechanism. PoS uses validators who stake their tokens as collateral to verify and add transactions to the blockchain. In contrast, NPoS adds a democratic element by allowing token holders to nominate validators and participate in the validation process.
THERE ARE THREE CRITICAL ROLES WITHIN THE POLKADOT ECOSYSTEM: 
Validators
The full nodes of the Relay Chain participating in the consensus process. Each parachain appoints a validator subgroup to accept blocks and conduct validity checks to ensure the consensus rules are followed.
Nominators
The network participant that delegates their DOT, Polkadot’s native token, to a validator to participate in consensus.
Collators
A validator’s consensus assistant, the collator constructs the parachain blocks.
An established leader in application-specific blockchain networks, Polkadot is now seeking to improve its use of core computational resources and become more of a ‘general services’ blockchain. The JAM upgrade is designed to help accomplish this goal.
With the JAM upgrade, the network addresses the inherent challenges of scalability and interoperability by increasing network performance, providing more access for developers, and enhancing user experience with more cost-efficient parachains.
The JAM Upgrade
Unveiled in June 2023 and detailed at the TOKEN2049 conference in Dubai in April 2024, the JAM upgrade includes plans to redesign the protocol’s relay chain, transforming the Polkadot network into cloud-like service infrastructure.
The upgrade will address several long-standing challenges related to interoperability and scalability. For example:
At present, anyone can create a parachain since the network is permissionless, but Polkadot connects only the best and most efficient parachains to its Relay Chain.
In November 2021, Polkadot introduced slot auctions to regulate the number of operational parachains at any time. Winning one of these highly competitive auctions can be expensive, requiring a significant amount of DOT.
Additionally, the process of building a parachain is both complex and time-consuming. Parachains use a tool called substrate pallets to build their internal structure, and because these pallets are not standardised, each parachain must be customised.
The JAM upgrade aims to solve these problems by replacing the network’s Relay Chain with a more modular and minimalist design. JAM’s main goal is to streamline data integration and maintenance while maintaining the network’s security and cohesion, meaning a faster, easier, and safe experience for users. The new hybrid system, which combines features of Ethereum smart contracts and Polkadot’s architecture, is called the Polkadot Virtual Machine (PolkaVM).
Because JAM is built as a distributed computer, decentralised applications (dApps) built on the PolkaVM will be transactionless. This means that data is processed in stages, validated for accuracy, and securely added to the chain without typical transaction approval.
Things run faster with the JAM upgrade: 1023 validators totalling 341 cores — akin to off-chain virtual CPUs — significantly increase the network’s data availability from 67 Mb/s to 852 Mb/s, compared to earlier iterations. This increase makes JAM capable of handling 85 times the computation load.
PolkaVM’s execution speed can theoretically settle from between 250,000 and 350,000 transactions per second (TPS), to upwards of 1.7m. In contrast, the Solana network can theoretically process up to 700,000 TPS but settles between 2000 and 3000 TPS on average.
JAM is still in its nascent stages and is expected to be complete within the next five years. Plans are also underway to build a supercomputer with more than 12,000 cores — dubbed the ‘Polkadot Palace’ — to test JAM before it goes live. When it goes live, the upgrade will further underscore ongoing innovation on the Polkadot network, with DePIN and AI-supported projects in particular set to benefit.
Polkadot and AI
Polkadot’s unique approach to network infrastructure could help crypto developers make new forays into AI-supported projects, by tackling one of AI’s most pressing issues: its intense energy demands.
AI’s deep learning algorithms and large language models require substantial computational resources and energy, and processing power and data storage may soon be in short supply. The International Energy Agency expects AI adoption to double global electricity demand by 2026, and Data Centre’s 2024 Global Outlook report predicts storage capacity will double from 10.1 zettabytes in 2023, to 21 zettabytes in 2027.
However, Polkadot’s foundational infrastructure could offer a scalability solution for novel AI projects. Its sharded, multi-chain network allows for parallel transaction processing, which reduces the energy needed for AI tasks by distributing workloads across a decentralised network.
A number of AI applications — including OriginTrail and Phala — have begun building on Polkadot’s infrastructure, as developers seek to redefine what is possible at the intersection of blockchain and AI technology.
OriginTrail
One popular parachain in the AI space is OriginTrail. As detailed in its March 2024 Whitepaper 3.0, the project envisions a ‘verifiable internet for all’ by leveraging the complementarities of crypto, internet, and AI technologies.
OriginTrail uses a special system called decentralised knowledge graphs (DKGs) to manage and share important information across a network. It can be thought of as a library system that organises information belonging to different users, while allowing them to easily connect and share information with each other.
With DKGs, businesses and individuals can create and add their intellectual property and information to their systems. This forms the basis of OriginTrail’s AI technology, which aims to provide AI responses based on verifiable information instead of conjecture.
The project began rolling out its latest iteration of the DKG in Q4 2023 on NeuroWeb, a permissionless EVM blockchain secured by validators of the Polkadot network.
NeuroWeb bills itself as the only blockchain focused on creating a ‘truly open and decentralised’ AI future using knowledge mining — the process of extracting meaningful information from vast amounts of data using AI and machine learning techniques.

OriginTrail’s efforts have attracted some high-profile partnerships. The project is collaborating with ontological knowledge blockchain ONTOCHAIN to work on the European Union’s data protection initiative, Next Generation Internet. Here, DKG-based tools were developed and integrated into ONTOCHAIN’s tech stack, enabling the creation and exchange of ontological knowledge.
Further, in March 2024, the British Standards Institution, the UK’s national standards body, partnered with OriginTrail to implement DKGs into the AidTrust medicine supply chain project. Polkadot showcased this work at a 2022 World Economic Forum-adjacent conference, hosted by Wood.
The project is also exploring the implementation of decentralised Retrieval Augmented Generation in developing the Polkadot network AI education tool, PolkaBot.ai.
Currently in beta, PolkaBot provides users with trusted information about various aspects of Polkadot, including its ecosystem, treasury proposals, and DOT tokenomics, using AI.
Phala
The decentralised cloud computing protocol Phala Network has lofty goals that rival giants like Amazon Web Services (AWS) and Google Cloud. Founded in 2018 by former Google software engineer Hang Yin and former Tencent product manager Marvin Tong, Phala left the Ethereum ecosystem and joined Polkadot’s Canary network Kusama in 2021.
Now building as a parachain in the Polkadot ecosystem, Phala acts as an execution layer for Web3 AI services, offering a multi-proof system for building with an assortment of toolkits.
Developers can use Phala’s infrastructure to integrate AI capabilities, and an AI co-processor assists with technical aspects like verifying data and executing smart contracts.
The network uses additional systems outside the main blockchain to handle large amounts of data.
This setup improves the blockchain’s performance by keeping the data secure and providing extra computing power for AI applications. It also ensures that sensitive information is protected with encryption and kept safe outside the main blockchain.
On April 8, 2024, Phala pivoted from using the ‘Phat Contract’ to the ‘AI Agent Contract’.
AI Agent Contracts are designed to improve blockchain functionality by helping integrate AI technology, spreading out who can own and earn money from these technologies, and allowing more kinds of AI applications to be developed. The idea is to create a marketplace where AI services can be bought and sold freely by anyone.
Phala plans to expand its graphics processing unit capabilities further to integrate large language models with Web3. It also anticipates publishing the Phala Whitepaper 2.0, although a timeline for the whitepaper has not been made public.
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A brainchild of Ethereum co-founder Gavin Wood, the Polkadot network has been at the forefront of blockchain innovation since its mainnet launch in May 2020. To

Polkadot is Levelling Up

Parachains, the asset hub, and the road to a unified DeFi ecosystem

Mainstream adoption of blockchain technology hinges on two components—interoperability and user experience (UX). For blockchain to reach users beyond digital natives earnestly discussing use cases, regardless of whether they exist yet, it needs one connected ecosystem and a decidedly web2 front end.
Currently, web3 users have to navigate a fragmented landscape of siloed chains. Juggling multiple wallets and seed phrases and managing assets scattered across incompatible networks is a headache for tech-savvy enthusiasts. For everyone else, it’s completely off-putting.
Bridging the gap between Web2 and Web3
Abstraction offers a solution. The long-established principle simplifies complex operations and effectively hides–abstracts–them from the user. In a web2 world, it allows us to send emails, make calls, transfer money, trade, and shop without a technical understanding of the steps underpinning each request. Replicating this in a web3 environment masks the complexities from users and creates interfaces that are just as friendly as your favourite web2 website. Abstraction will increase blockchain accessibility and enable mainstream adoption.
Omnichain infrastructure takes this one step further, allowing dApps, decentralised apps, to operate across multiple blockchains and support the transfer of data and assets. Creating a collaborative ecosystem easier for developers to work with prioritises interoperability, user experience, and broader adoption.
Interoperability is a critical milestone in blockchain evolution. Omnichain infrastructure empowers individuals to interact with multiple networks from a single platform. It also provides one unified identity across all web3 platforms, enhancing data portability, streamlining authentication, and ensuring consistent security protocols.
A blueprint for omnichain infrastructure
Kontos is the first example of user-focused omnichain infrastructure. As such, it offers a well-rounded example of how the architecture can support mainstream adoption.
Powered by Zecrey Labs, which focuses on making blockchain accessible and user-friendly, Kontos places users at the forefront of the technology. It prioritises UX over technical architecture and removes the intricacies and jargon that prevent many people from engaging with blockchain technology. Its design combines chain, account, and gas abstractions with a built-in bridge layer– leading to a web2 feel with web3 benefits.
Chain abstraction 
Chain abstraction abstracts the technicalities of navigating cross-chain transactions, creating a framework that allows users to engage with multiple networks from a single interface. It does this by simplifying the interaction between different blockchain networks, thus creating a smoother user experience across the chain. By removing the need to swap between networks and manage lots of wallets or accounts, it provides access to functionalities like smart contract execution, asset transfers, and data sharing across multiple chains. Ultimately, chain abstraction reduces the complexity of blockchain and increases its accessibility.
Simplifying interactions across multiple networks removes barriers to entry, reduces the chance of user error, and means individuals don’t need to learn the technicalities of each chain. In the example of Kontos, where trading is the primary use case, chain abstraction means users can focus on executing trades rather than navigating the technicalities of chain interoperability.
Those technicalities, though hidden from users, power an immense network. Kontos uses a sophisticated recursive zero-knowledge proof (zk-proofs) system to handle complex verification tasks and achieve chain abstraction. This system aggregates proofs through three layers to produce a final proof that collectively verifies off-chain and cross-chain operations. A light client sources proofs from external chains by returning block headers and states, which are then validated for accuracy and integrity on Kontos. This ensures the status of external chains is accurately reflected within its environment.
AI x Intent x Omnichain 
This approach to chain abstraction reduces the complexities of managing multiple chains, and Kontos leverages artificial intelligence (AI) to streamline the user experience further. A ‘co-pilot’ type feature is available via its Telegram and Discord bots and its wallet interface, allowing users to complete complex tasks onchain with text prompts.
Kontos’ AI Module significantly impacts Omnichain Trading, delivering AI-Powered market insights alongside Intent-decoding by natural language interaction.
The Kontos AI Module enhances the platform in two key areas:
1. AI-Powered Crypto Insights: AI-Powered Crypto Insights: Kontos AI agent provides users with real-time, intelligent insights into the crypto space. Users can simply ask questions like ‘What should we buy today?’ or “Show me the top 10 Meme coins,” and receive comprehensive, AI-generated reports that include:
Trading signals 
Trending token analysis 
Market insights and predictions 
Personalised recommendations based on user preferences and market conditions 
2. Seamless AI-Guided Trading or Intent-decoding: Once users identify interesting investment opportunities, the Kontos AI Module streamlines the trading process. For example, if a user decides ‘I want to buy $100 of $PEPE on Ethereum,’ the AI will automatically populate the trading interface with the relevant parameters. Users can then execute the trade with a simple confirmation click, making the entire process quick and effortless.
By integrating AI-driven insights into a seamless omnichain trading platform, Kontos is setting a new standard for user-friendly, intelligent crypto trading.
Kontos is continuously upgrading its AI Module to ensure it remains one of the most powerful and user-friendly AI assistants in the crypto space.
Strategies for chain abstraction 
Kontos is not the only protocol tackling blockchain’s interoperability challenges. Particle, NEAR, and Okto are just three others seeking to enhance cross-chain interactions with chain abstraction.
Particle is a modular Layer1 solution. Its Universal Accounts consolidate user addresses, balances, and interactions across all chains into a single interface. It leverages atomic cross-chain swaps, meaning interactions across all chains happen as one or not at all.
NEAR faces a similar problem if its focus on simplified onboarding and account aggregation can’t keep up with the complexities of multi-chain interactions. Okto’s asynchronous approach has the potential to introduce dependencies that negatively impact performance and scalability.
Okto is an intermediary designed for developers and end-users. Its Orchestration Layer delivers for both by simplifying liquidity, tech standards, and UX—which it sees as the three leading causes of fragmentation. Okto leverages decentralised transaction networks to manage cross-chain transactions asynchronously.
Kontos’ use of recursive zk-proofs sets it apart from the rest of this ecosystem. It’s an efficient approach to processing that maximises decentralisation and security. By comparison, Particle relies on a single Layer 1 solution that could limit its ability to scale. NEAR faces a similar problem if its focus on simplified onboarding and account aggregation can’t keep up with the complexities of multi-chain interactions. While Okto’s asynchronous approach has the potential to introduce dependencies that negatively impact performance and scalability.
Omnichain account abstraction 
While distinct from chain abstraction, Omnichain account abstraction goes hand-in-hand with chain abstraction to improve the user experience. Account abstraction creates a single account to manage all cross-chain interactions, eliminating the need to remember multiple private keys or mnemonic phrases and store assets on different chains.
The Ethereum Virtual Machine’s (EVM) rigid rules govern how transactions are created, signed, and validated. This historically made account abstraction tricky for the protocol since it required changes to how accounts are executed. In March 2023, a workaround was proposed: Ethereum standard ERC- 4337. It moves transaction validation to a higher layer, allowing for the creation of smart contract wallets that merge the functionality of Externally Owned Accounts (EOAs) with smart contracts. While the standard doesn’t directly enable cross-chain interaction, it does provide a guide for EVM- compatible chains such as Solana, Polygon, and Avalanche to adopt similar abstraction mechanisms.
Kontos has based its dual-layer account model on a refinement of ERC-4337. Users create an account with a simple, memorable name like a handle rather than a thirty-character alphanumeric account number that then serves as a central control point for any associated smart contract accounts on underlying public chains.
A suite of social recovery features integrated with Kontos accounts allows for forgotten login details to be easily recovered without compromising security. Users connect their Kontos account to Gmail or nominate Guardians—other Kontos accounts owned by themselves or friends and family. In the case of an account recovery request, at least two Guardians have to consent before an account can be successfully restored.
Kontos contract accounts include additional features that enhance the user experience, such as arbitrary verification logic that supports single and multi-sig verification. Capabilities like social recovery and time locks enhance security, while atomic multi-operations allow users to approve transactions and swap tokens in just one step.
Gas abstraction 
Onchain operations incur a gas fee that is paid via network tokens to validators to execute a transaction or contract. The fee fluctuates depending on transaction complexity and network congestion (costs can become prohibitive for smaller transactions when network congestion is high).
The management of gas fees can generate additional costs for users over and above the fees themselves. Those transacting on multiple chains will either need to swap and convert tokens to pay gas fees, which can incur transactional charges, or hold balances for gas in native tokens, which increases their exposure to often volatile markets. Additionally, there is a time burden associated with gas fees adjusted for network congestion, possibly requiring users to monitor and manually calculate them. This is complicated, requires chain-specific knowledge, and is time-consuming for those it doesn’t deter completely.
Gas abstraction critically overcomes these barriers, simplifies gas fee management, and makes blockchain easier for non-technical users to navigate. Gas abstraction is not new. It was also introduced by ERC-4337 via Paymasters, smart contracts that sponsor gas fees and allow users to pay for gas in one token (ERC-20) across different chains.
Despite the precedent, Kontos’ Broker takes gas abstraction one step further. It’s an intermediary that pre-pays transaction fees and assets, reclaiming them once a trade has been executed. This simplifies the process for users and automates gas fee management.
Kontos effectively acts as a universal gas hub, allowing individuals to purchase assets on Ethereum without holding Ether. Providing they have a sufficient balance in their Kontos account, Broker will intervene, liaising with their associated smart contracts accounts on underlying blockchains to manage the transaction behind the scenes. Effectively, Broker facilitates the purchase without requiring the user to bridge for gas. This can dramatically increase cost efficiency, which is particularly important in a trading environment where gas fees and micropayments can eat into returns.
Built-in bridge layer
While abstraction hides the complexities of blockchain a built-in bridge layer provides the infrastructure to deliver direct interoperability. Unlike abstraction, which automates the process of cross-chain communication and transaction, a built-in bridge operates as a mediator, creating a network of connected chains by enabling the transfer of assets, data, and information from one chain to another.
As such, built-in bridge layers operate at a lower level than abstraction systems and facilitate a broad range of direct communications and transactions in real-time. Two-way asset bridges facilitate the flow of capital through asset transfer, while messaging bridges support data transfer. Bridging offers several advantages, such as delivering interoperability, increasing liquidity, and providing users with access to a broader range of services from one central account. However, traditional bridging methods can introduce unnecessary complexities that overly complicate UX. They are also typically the weakest point in a network and can be vulnerable to attacks.
Strategies for built-in bridge 
The built-in bridge ecosystem is expansive. LayerZero and Wormhole’s Portal are among the heavy hitters in the space. However, innovations like Avalanche Bridge are fast on their heels.
Built for Wormhole, Portal is distinct from the protocol itself. The token bridge allows users to transfer tokens and NFTs cross-chain by locking original tokens in a smart contract and issuing a Portal- wrapped token for the target chain that can then be exchanged for native tokens. This bypasses KYC requirements and supports smart contract composability, making it easier for developers to build dApps on top of the bridge.
LayerZero acts as a foundational layer to connect multiple blockchains. It includes onchainsmart contracts with Communicator, Validator, Network, and Library modules– ‘endpoints’. These support the integration of new chains and enhance scalability. Third-party entities, Oracle and Relayer, ensure the validity and security of transactions by providing block headers and transaction proofs, respectively.
Avalanche Bridge facilitates asset transfer between Avalanche and Ethereum. Wardens Avascan, BwareLabs, Halborn, and Ava Labs monitor and verify cross-chain transactions. Avalanche Bridge is aimed at mass adoption, with a cost-effective, simplified transaction process and an easily navigable interface.
The Kontos Bridge Abstraction Layer (BAL) isn’t intended to simply move one asset between two chains. Designed specifically for the Kontos ecosystem, BAL can move assets from multiple supported chains in a single transaction, allowing users to place trades in any combination of supported assets. It employs zk-proofs to ensure security and privacy, protecting transactions from unauthorised access. The integration of light clients optimises both speed and efficiency, delivering faster transactions. The architecture reduces the dependence on centralised entities, such as Avalanche Bridge’s wardens. It also limits single points of failure and avoids overreliance on verifiers. integration with existing multi-chain infrastructure means BAL can scale reliably, adapting to support the blockchain ecosystem as it matures.
Omnichain infrastructure in the real world
Real world success is the only success. Omnichain infrastructure is merely a facilitator and successful if it results in real-world applications that make blockchain genuinely accessible to everyone. With over 1.91M million accounts created, Kontos provides a solid example of a complete multichain infrastructure. To date, it has facilitated more than 7.26 million tasks and supports multiple use cases.
Trading platform 
Trading is the most developed real-world use case on Kontos. The platform includes features to analyse market trends, access token information, identify trending tokens, and support omnichain trading.
Account and gas abstraction are key components of the trading platform. They ensure users don’t need to understand the complexities of multiple chains or hold a range of native tokens to cover gas fees. For example, a user can trade USDT held on Ethereum for assets on Binance Smart Chain. Broker will receive the cross-chain request, pre-pay any gas fees, and then use balances held in other tokens to reclaim fees once the trade has been executed. This flexibility allows users to utilize a combination of assets from various chains to facilitate transactions on the target chain, making the trading process more efficient and accessible across multiple blockchain networks.
Multichain dApp interaction 
Kontos’ account and gas abstraction also allows users to interact with dApps across blockchains without juggling multiple wallets or holding various native tokens for gas fees. Individuals can use their single Kontos account to access a DeFi application on a supported chain and Broker will automate the payment of gas fees, using assets held on any chain to cover the cost. This flexibility allows users to utilize a combination of assets from various chains to facilitate transactions on the target chain, making the trading process more efficient and accessible across multiple blockchain networks.
Beyond abstraction and bridging
Kontos has demonstrated the effectiveness of combining core abstractions with its bridge abstraction layer. The end result has been to enhance interoperability and make blockchain transactions easier for users to execute.
Its roadmap is focused on improving user experience. Support for non-EVM chains is slated for Q3 of this year, and the protocol also plans to further integrate AI into its chain abstraction, a development aimed squarely at increasing usability for blockchain novices.
Conclusion
Omnichain infrastructure that combines abstraction and bridging presents an opportunity to take blockchain mainstream. It can connect an ecosystem of disparate chains. By hiding the complexities of navigating them, web3 applications will become easy to use and widely accessible.
Kontos’s focus on optimising UX and innovative use of technologies like zk-proofs and light clients presents a blueprint for omnichain infrastructure and the eventual mass adoption of blockchain.
It already successfully supports multiple use cases and nearly 2 million accounts. The recent introduction of AI capabilities is only the latest example of Kontos leading the evolution of the multichain landscape.
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Mainstream adoption of blockchain technology hinges on two components—interoperability and user experience (UX). For blockchain to reach users beyond digital na