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ArkStream Capital: 2024 Q4 Quarterly Report
Original Article Title: "ArkStream Capital: 2024 Q4 Quarterly Report"
Original Source: ArkStream Capital
Industry Overview
On December 5th, Bitcoin broke through the $100,000 mark, creating history as anticipated by the market. At this historic moment, the global financial industry turned its attention here. Bitcoin's new high is a milestone in the cryptocurrency field, significantly demonstrating the expanded influence and increased recognition of the cryptocurrency market, while also foreshadowing enormous growth potential in the future. This not only marks the realization of ArkStream Capital's long-standing beliefs and expectations but also symbolizes the validation of faith in the entire cryptocurrency industry. Within the industry, whether it is the primary market with risks and opportunities, the efficient and diversified secondary market, or the vibrant on-chain ecosystem, all were energized by Bitcoin's breakthrough, leading to a strong performance in the market in the fourth quarter.
Bitcoin Price Chart, Source: LSEG Workspace
Bitcoin's successful crossing of the $100,000 milestone has benefited from various factors. The most crucial boost came from the macro environment's interest rate cut expectations and Trump's win in the U.S. presidential election.
The Federal Reserve's two interest rate cuts in this quarter had a profound impact on the market, further stirring up the market. The rate cuts, on one hand, reduced borrowing costs, stimulating investors to seek higher-yielding assets, leading to more funds flowing into the cryptocurrency market. On the other hand, the rate cuts also improved market liquidity, helping to support asset prices. In addition, the stablecoin market benefited from the macro interest rate cuts, reaching a historic high in issuance scale, significantly increasing market liquidity and reigniting market vitality. ArkStream Capital expects that with the implementation of quantitative easing policies in 2025, liquidity will further strengthen, cryptocurrency assets will see significant gains, and the market will further expand.
During the U.S. presidential campaign, Trump clearly expressed support for the development of Bitcoin and the cryptocurrency field, making a series of positive commitments. Specifically, he proposed to establish a national strategic Bitcoin reserve, plans to incorporate Bitcoin into the national financial strategic framework, and ensure the government holds a certain amount of Bitcoin. Furthermore, Trump promised to take proactive measures in regulatory policies and support for startups to promote the healthy development of the crypto sector. After a successful election, Trump took two important actions to support the development of the cryptocurrency field: first, he nominated Paul Atkins, an advisor with deep experience in the cryptocurrency field, to serve as SEC chairman. Secondly, he established a new position of White House Director of Artificial Intelligence and Cryptocurrency Affairs, appointing former PayPal executive and an expert in big data and cryptocurrency, David Sacks, to this role.
World Liberty Financial (WLFI), a project led by the Trump family, is committed to providing users with a more equitable, efficient, and secure financial service by blending innovative financial solutions with blockchain technology, integrating DeFi. WLFI has actively invested in and collaborated in key areas such as lending, RWA, and stablecoins. The partnership between WLFI and Aave offers a mature and reliable lending protocol platform and integrates new types of stablecoin assets like Ethena's sUSDe, expanding the types of collateral assets and enriching funding sources. Additionally, according to Spot On Chain data, since November 2024, WLFI's main wallet address has made significant purchases of mainstream crypto assets such as ETH, cbBTC/wBTC, LINK, AAVE, ENA, and ONDO. This has drawn close market attention to WLFI's asset movements and sparked enthusiasm for investing in WLFI's partner DeFi projects, especially those that bring actual returns from deep collaboration. A notable example is WLFI's collaboration with Ethena in mid-December 2024, where Ethena's yield-bearing stablecoin sUSDe was integrated into WLFI's lending platform's collateral asset system, adding stablecoin deposit sources to WLFI's lending platform. Upon the announcement of the partnership, the ENA token saw a price increase of over 10% in a short period, underscoring the market's recognition of WLFI's influence.
Following Trump's reelection, MicroStrategy significantly increased its investment in Bitcoin. According to recent data, the company added nearly 150,000 bitcoins in Q4 2024, spending close to $13.5 billion with an average cost of approximately $90,000 per bitcoin. In comparison, the total net assets of Bitcoin spot ETFs increased from around $600 billion at the end of Q3 to nearly $1.1 trillion at the end of Q4, with new fund inflows reaching $500 billion, and MicroStrategy's purchases alone accounting for nearly 25% of all Bitcoin spot ETF net inflows. Furthermore, MicroStrategy plans to propose up to $21 billion in equity financing and $21 billion in bond issuance through a special shareholder meeting to continue investing in Bitcoin. MicroStrategy's CEO, Michael Saylor, is also actively pushing for more traditional giants to invest in Bitcoin, such as Microsoft, despite Microsoft shareholders voting against the related proposal. The market is both eager and concerned about MicroStrategy's continued buying behavior, anticipating its collaboration with traditional giants to drive the development of the crypto industry and new highs for Bitcoin, while also fearing potential black swan events leading to market turmoil.
MicroStrategy's BTC Holdings, Source: https://treasuries.bitbo.io/microstrategy/
Within the cryptocurrency market, due to the market's focus once being concentrated on Bitcoin itself and on-chain speculative memes, value investing focused on infrastructure development and application implementation almost fell into a pessimistic low. However, with the November political environment stabilizing, value investing began to see the dawn of recovery. The value of DeFi, infrastructure, emerging public chains, and other sectors is gradually being re-recognized by the market. Patient investors have begun to receive stable returns, and value investing is once again receiving attention. Looking at specific projects, the popularity of projects like Ethena and Usual reflects the market's preference for RWA and stablecoins strengthening. Additionally, protocols like Curve, with their low slippage characteristics in stablecoin swaps, have also performed well. Foundational strong projects that conducted Token Generation Events (TGE) this quarter, such as HypeLiquid and Morpho, as well as projects that focus on product application implementation, such as Virtuals, have shown strong performance at both the data level and in terms of their token prices reaching new highs. These trends indicate a return to value investing, with innovation still being one of the core driving forces of the cryptocurrency industry's development, and attention and funds are shifting to these areas.
However, everything has two sides. Recently, primary market fundraising activities have shown a declining trend in both quantity and amount, which has become disconnected from the secondary market's trends. Moreover, projects that have fundraised in the past two years are now facing a queue to list on top-tier exchanges, while second-tier exchanges continue to suffer from insufficient liquidity. In addition, the recent surge in on-chain speculation and the market's anti-traditional venture capital sentiment during the early Q4 has adversely affected the pricing of projects post-listing, further squeezing the investment return space. In the process of transitioning to the secondary market, primary market projects not only face the challenge of a liquidity window but also encounter fierce competition on the same track and limited exchange resources. These factors have compounded, leading primary market investment and fundraising activities into unprecedented challenges.
Quarterly Primary Market Financing, Source: https://www.rootdata.com/
In the secondary market, to pursue returns surpassing that of Bitcoin, one would typically seek investment opportunities in the altcoin market. However, in the tough market environment of Q2 and Q3, despite Bitcoin maintaining a high price, many fundamentally sound altcoins performed poorly. This indicates that timing is crucial. Even if the fundamentals of the asset are strong, if the entry timing is wrong, one might face unfavorable entry prices or long-term capital costs. Furthermore, the secondary market also needs to address challenges such as position management and risk control, as a slight misstep could lead to fund withdrawals or losses. Therefore, while secondary market trading strategies do not need to consider token listings and liquidity issues, they still have to deal with challenges such as target selection and timing. Overall, the secondary market's strategy has lower determinacy, higher risk-reward ratio, and challenges in scaling up capital.
Altcoin Market Performance, Source: https://www.tradingview.com/symbols/TOTAL3/
Focus Track
DeFi
In 2024, the DeFi sector saw a strong resurgence. As a key force driving industry disruption in the previous cycle, DeFi continued to receive widespread recognition within the industry. Meanwhile, with the rise of BTC and altcoin ETFs, as well as the potential for significant inflows of funds at the U.S. policy level, the growing demand from new users for lending, DEX, and stablecoin trading has provided significant potential for the steady increase in DeFi's Total Value Locked (TVL) and asset size.
The post-election market trend has preliminarily validated this. According to DeFiLlama's data, from November 6 to December 15, the incremental capital brought in by new and existing investors and the increase in lending demand propelled DeFi's TVL from $870 billion to $1.3 trillion, a surge of over 50%.
DeFi TVL, Source: https://defillama.com/
The lending track, as a cornerstone of the DeFi sector, particularly excelled in Q4 of 2024. The TVL of the decentralized lending market has reached $55 billion, surpassing the previous cycle's peak of $51.2 billion. AAVE consistently maintained its market-leading position this quarter, holding over 40% market share and controlling nearly 70% of the DeFi lending market with an active loan volume managed between $7-8 billion. Aave's TVL growth was mainly driven by several factors: first, improvements in the post-U.S. election market sentiment prompted investors to seek higher yields, leading to increased lending demand; second, in a "easy money" market, investor interest in leverage trading enhanced further driving lending activities. Data shows that as a core lending asset, the Ethereum (ETH) supply's Annual Percentage Yield (APY) increased from 1.8% in early September to 2.5% in mid-December, while the supply APYs for stablecoins USDT and USDC rose from 3% and 4% to highs of 15% and 17% respectively, indicating a significant increase in market demand for high-yield assets. Meanwhile, the Loan-to-Value (LTV) ratio increased from $7.5 billion in early September to $16 billion in mid-December, demonstrating a significant expansion in lending volume. Currently, Aave's TVL has reached approximately $21 billion, surpassing the previous cycle's peak of $19 billion by about 11%; the token price stands at $370, still with around 80% room to rise from the previous cycle's high of $665. The expected further decrease in US bank lending rates is likely to drive more funds into the DeFi lending market, boosting Aave's TVL.
As a newcomer project listed in Q4 2024, Morpho has inherited the advantages of top-tier lending protocols in terms of security and credibility. At a time when the market is witnessing a resurgence in lending demand, Morpho quickly attracted a significant amount of liquidity. Morpho Blue is Morpho's lending layer, allowing the creation of independent markets without permission, catering to diverse risk appetites and use case requirements in the market. Designed based on the Morpho Blue protocol, MetaMorpho enables different types of lenders to create vaults in MetaMorpho without permission, customize risk exposure, and allocate deposits inside to one or more Morpho Blue markets.
Morpho Architecture, Source: https://docs.morpho.org/
Designs like Morpho's provide efficient interest solutions for stablecoin and stablecoin-like whale holders, meeting their demand for a secure and high-yield investment. Additionally, Morpho rewards lenders with Morpho tokens as an incentive, boosting the Net Annual Percentage Yield (Net APY) to 110%-120% of the base APY. Morpho integrates rewards from emerging stablecoin protocols such as Usual and ENA, further enhancing the platform's attractiveness and providing users with more diversified revenue opportunities. At its Token Generation Event (TGE), Morpho had a market cap of only $50 million. However, as the market gradually recognized the excellence of its products, investors in the secondary market showed strong confidence in Morpho, driving its market cap to $4.6 billion in Q4. As of now, Morpho's Total Value Locked (TVL) has reached $32 billion. Considering the continued demand for DeFi lending in the market and Morpho's ability to innovate and optimize its product in a fiercely competitive environment, its growth trend is expected to continue in the future. This case of Morpho illustrates that even in a mature DeFi track, protocol layer innovations based on user demand still have significant room for growth.
In terms of trading and liquidity services, decentralized exchanges (DEXes) remain a key pillar of the DeFi ecosystem. Curve's primary value lies in providing ultra-low slippage exchange depth for stable assets, meeting the fast and low-cost swapping needs between various stablecoins. However, Curve's founder previously engaged in leveraged trading using CRV and was liquidated due to a token price drop, causing its market value to slump and its value to be underestimated. According to DefiLlama data, at the beginning of Q4 2024, Curve's TVL was only $20 billion, growing to $25 billion by the end of the quarter, with a relatively limited increase. However, the stablecoin market remained active during this quarter, with Tether alone issuing an additional $3 billion USDT from October 30 to November 14, while the inclusion of emerging stablecoins such as sUSDe, USDe, USD 0, and popular Real-World Asset (RWA) stablecoin protocols significantly increased the trading volume. This is reflected in transaction fees and revenue, with Curve's monthly fee income at around $1.5 million, still showing significant growth potential compared to the historical high of $11.5 million in January 2022, but with some improvement from the earlier period. Its token price has risen from a low point of $0.23 in September-October 2024 to around $1, representing a 330% increase, but still has room for growth compared to the previous peak of $6.4.
Hyperliquid is an innovative decentralized platform focused on efficient perpetual contract trading, utilizing an order book trading mechanism. It offers perpetual contracts and spot trading, achieving a low-latency, high-throughput trading environment on Layer 1 chain. The platform consists of the consensus layer HyperBFT and the execution layer RustVM. HyperBFT is a consensus algorithm based on a modified LibraBFT that can support up to 2 million TPS. Through continuous optimization, Hyperliquid can now provide a seamless trading experience comparable to centralized exchanges. Its HIP-1 mechanism allows for the deployment of native tokens and an on-chain spot order book, reducing risk and latency; the HIP-2 mechanism (Permanent Liquidity Commitment) differs from the traditional AMM model by dynamically adjusting liquidity based on market conditions. Furthermore, with no KYC requirement and low fees, Hyperliquid is an ideal choice for arbitrageurs. Compared to GMX, which relies on Chainlink oracles, Hyperliquid eliminates concerns about oracle data manipulation or issues. Unlike dYdX, which also uses an order book, Hyperliquid is not constrained by performance limitations, avoiding network congestion and slippage due to transaction confirmation times. Additionally, Hyperliquid enhances community confidence and engagement through the airdrop of the HYPE token to incentivize participation in its ongoing development.
Through the HIP-1 and HIP-2 mechanisms, Hyperliquid maintains a significant Open Interest (OI) in contracts, with key trading pairs including ETH-USD, BTC-USD, SOL-USD, and more. Currently, in the perpetual contract DEX space, Hyperliquid's trading volume accounts for over 50%, establishing it as the clear market leader. According to data from Coinalyze and CVI.Finance, its Open Interest is approximately 10% of Binance's. In December 2024, Hyperliquid generated around $30 million in USDC revenue, with an annualized revenue exceeding $3.6 billion, trailing only Ethereum, Solana, and Polkadot. The price of the HYPE token has surged from its debut at $3 to over $30, nearly a 10x increase within a month, further solidifying its position as a market leader. While Hyperliquid's market capitalization is still below that of other L1 and L2 platforms, its annualized revenue-to-circulating market cap ratio is significantly ahead.
Hyperliquid Revenue, Source: https://defillama.com/protocol/hyperliquid?tvl=false&fees=true&groupBy=daily
Overall, the recovery of the DeFi sector in Q4 2024 was mainly driven by products offering real yields, with product usability and security being key competitive advantages. For example, Aave and Morpho attracted a large number of users in the lending space by providing reliable and efficient services. Curve continued to play a significant role in stablecoin exchanges, meeting the market's demand for fast and low-cost transactions. Additionally, emerging decentralized exchanges like Hyperliquid quickly rose in derivative trading, further enriching the DeFi ecosystem. Web3 wallets from major exchanges also continued to attract users into the DeFi ecosystem, driving growth in the space. In general, DeFi steadily expanded in lending, DEX, and stablecoin interactions, and its future large-scale outbreak will benefit from policy support and ongoing innovation.
RWA and Stablecoins
RWA covers a wide range of asset classes, including stablecoins, private credit, US Treasuries, commodities, and stocks. Among these assets, stablecoins, due to their uniqueness and importance, can be seen as a separate track. For non-stablecoin RWA, due to the complexity of asset standardization and incomplete regulatory frameworks, the scale is relatively small, so we will focus on the stablecoin field.
In the cryptocurrency market, since 2018, USD-pegged stablecoins have played a critical role. They not only serve as the base currency for trading but also act as shadow USD assets, active in various scenarios such as transfer payments. As of December 1, 2024, the total market capitalization of stablecoins has increased to $1.93 trillion, a 48% year-on-year growth. Taking the on-chain daily average transfer volume as an example, the current daily transfer volume remains in the high range of $250 billion to $300 billion, and even in market downturn periods, this data has not fallen below $100 billion. In terms of trading volume, referring to CoinMarketCap's industry data, the monthly trading volume in November reached $6 trillion, indicating that stablecoins account for 30% of the industry's trading volume in centralized exchanges. This ratio does not yet include on-chain stablecoin trading volume, meaning the actual share may be even higher. In addition to circulation, trading volume, and transfer volume as the three core indicators, stablecoins have also introduced stable income assets such as US Treasuries as underlying assets, providing stable and sustainable returns, bringing positive externalities to the industry, further promoting the interconnection and integration of Web3 and the real world.
Stablecoin Daily Trading Volume, Source: https://studio.glassnode.com/charts/usd-transfer-volume
In the stablecoin market, as market demand grows, various types of stablecoins have gradually emerged, including fiat-backed stablecoins, decentralized collateralized stablecoins, algorithmic stablecoins, and more. Among them, fiat-backed stablecoins have taken the majority of the market share and the market size continues to grow. However, due to the emerging trading demands in the market, decentralized stablecoins have been exploring new paths.
Among them, Ethena has emerged as a standout, with Ethena's issuance of USDe, a synthetic dollar, occupying a place in the DeFi field with its innovative financial solution. The distinguishing feature of USDe is its use of an advanced Delta hedging strategy to maintain its peg to the dollar, setting it apart from traditional stablecoins. In just over a year, the issuance scale of USDe has steadily grown, successfully withstanding the downturn in the market in Q2 and Q3, and it has now risen to third place, behind only USDT and USDC, re-entering a phase of rapid growth.
Stablecoin Data, Source: https://app.rwa.xyz/stablecoins
In addition, leveraging BlackRock, the world's largest asset management company, Ethena has issued a new institutional-grade stablecoin, USDtb. As a product independent of USDe, USDtb provides users with a new option with distinct risk characteristics. Its presence allows USDe to more effectively address market challenges, especially during negative interest rate periods. Ethena can close USDe's hedging position and reallocate assets to USDtb to mitigate associated risks, strengthening the overall system's stability and risk resilience.
USDtb Data, Source: https://usdtb.money/transparency
Apart from Ethena, USD 0 issued by Usual is also noteworthy. This stablecoin introduces RWA as underlying support, deeply integrating the stability of traditional financial instruments with DeFi's transparency, efficiency, and composability. USD 0, with its permissionless, compliant framework, directly channels real returns from RWA to the community users, showcasing the competitiveness of the new type of stablecoin in the market. The emergence of these innovative stablecoins not only enriches market diversity but also provides users with more choices and investment opportunities.
ArkStream Capital believes that stablecoins play a crucial role in the crypto industry by navigating through market bull and bear cycles. The momentum of stablecoins will not stop, and various data indicators of stablecoins in both the payment and trading sectors will continue to grow. Decentralized stablecoins significantly outperform traditional stablecoins in terms of transparency, decentralization, and yield, making them worthy of long-term attention and investment. Currently, Ethena has shown its dominance, while Usual is actively trying to expand its market share. In the future, decentralized stablecoins will not only grow along with the entire sector but also have enormous potential to capture more market share from the traditional centralized stablecoin market.
AI Agent
In Q4 2024, the AI Agent sector in the crypto industry experienced unprecedented attention and rapid growth. AI Agents have evolved from being mere auxiliaries to traditional AI models to becoming the core driving force of the community ecosystem, shedding their singular "tool attribute" positioning. During this quarter, whether it be ai16z and ELIZA on the Solana chain or VIRTUAL and AIXBT on the Base chain, their market capitalization has multiplied several times due to the market's enthusiasm. Meanwhile, traditional AI Agents in the industry have shown relatively subdued performance. In the transition from old to new, the positioning of AI Agents has changed. Previously, AI Agents in the crypto market were mainly used to assist in the update and iteration of existing products, such as FET and OLAS, focusing more on the combination of blockchain and AI model training or building practical application scenarios such as workflow assistance and emotional companionship (similar to the original intention of humans creating robots to assist in daily life). However, the current development model has shifted from being "product-oriented" to "community-oriented," focusing more on the growth of the AI Agent itself and the construction of the ecosystem (similar to creating a fully robotic autonomous community).
AI Agent Market Cap and Share, Source: https://www.cookie.fun/
In the current "community-oriented" development model, ai16z and Virtuals are undoubtedly the two most prominent representative projects. According to the latest data from Cookie.fun, the overall market capitalization of AI Agents has reached nearly $16.7 billion, with a growth rate of nearly 37% in the final week of Q4 2024. The combined market capitalization of ai16z and Virtuals accounts for nearly 50% of the AI Agent market share. ai16z is essentially a decentralized DAO that uses AI for investment management. Its core component is the open-source AI Agent framework ElizaOS, which is used to create, deploy, and manage AI Agents. Under this framework, there are two core applications: ai16z and degenai. ai16z is a governance token, and holders can participate in voting on investment proposals and fund distribution. degenai is a self-trading AI Agent chatbot that acts as an AI trader in ai16z, allowing users to interact with degenai and influence its trading decisions.
Similar to the ElizaOS framework, the Virtuals Protocol is committed to advancing the AI agent field. Its predecessor, the gaming guild Path DAO, underwent a strategic transformation in 2023 and rebranded as the Virtuals Protocol. By launching the fun.virtuals platform, the Virtuals Protocol enables users to easily build and deploy their own AI agents and supports one-click deployment functionality. Virtuals provides a full AI agent creation and token issuance platform similar to the "Apple system," forming a closed-loop ecosystem. a16z emphasizes open-source frameworks and decentralized governance, both of which have their own unique features in technical architecture, tokenomics, and market strategy to meet the needs of different users.
At the forefront of the wave, we have to mention the memes of the GOAT and ACT AI agents. Although they themselves have no practical utility, they were the first to break the traditional AI agent's single technological positioning, combining it with meme culture, quickly attracting the attention of users and capital. Subsequently, the market's pursuit of AI agents shifted from pure memes to infrastructure projects dominated by future narratives. Virtuals introduced its unique IAO (Initial Agent Offering) model, combining "AI agent functionality + Token + Meme," propelling it to new heights. In the Virtuals ecosystem, these AI agents not only have tools like virtual personalities and value analysis but also play a role as memes. In the cryptocurrency industry, AI agents are no longer just service providers but have become core players in the ecosystem, serving as the primary drivers of user interaction and community ecosystem development.
Currently, the AI agent market is mainly divided into two major types of projects: one is the "technical support layer," focusing on providing underlying technology and infrastructure support for AI agents; the other is the "scenario implementation layer," dedicated to applying AI agents to specific business scenarios to realize their practical application value.
In the rapid development and evolution of AI agents, their development trajectory is similar to the early hype of the blockchain industry. For example, distribution platforms such as Virtuals, vvaifu, Zerebro, and frameworks like ElizaOS, ARC, Swarms, the current competitive landscape resembles the early Layer 1 public chain competition. According to the theory of time machines, it can be inferred that, compared to application-oriented projects, AI agent infrastructure projects attract more attention from mainstream market funds in terms of survival cycle and market cap due to their strategic importance, enjoying a premium due to scarcity.
With the maturation and saturation of infrastructure, the collaborative development of infrastructure and applications will become the core theme of the next stage, driving the field into a period of deep integration. Unlike traditional project development, AI Agent applications focus more on post-Roadmap and TGE, continuously driving ecosystem innovation and development through pre-market validation and mechanisms such as ecosystem tokens or associated tokens, achieving several-fold growth in overall market value within this quarter. With the emergence of the wealth effect, an increasing number of new projects are coming to the forefront, showcasing significant potential in various subfields, including market analysis, on-chain operations, and intent execution. For example, Aixbt's Twitter bot can answer user questions online 24/7 and provide real-time market analysis, serving as an AI version of an analytical opinion leader; AVA focuses on the social sphere, offering emotional companionship and personalized services through AI virtual personalities; CGPT integrates functions such as trading, market analysis, and NFT generation to become a comprehensive AI Agent tool.
ArkStream believes that the current enthusiasm in this race is obvious, with funds of all kinds pouring in under the driving force of FOMO, trying to get a piece of the pie. This rapid expansion pattern has led to a proliferation of projects like mushrooms after the rain, but currently, no single project has a market value exceeding tens of billions. This stage can be considered the "early stage" of the Web3 AI Agent track, characterized by a time-oriented approach: market participants generally hold a speculative mindset and are eager to enter the track at the fastest speed.
ArkStream Capital predicts that the "second stage" is on the horizon, shifting the market's focus to product quality, followed by a great reshuffle—low-quality, speculative projects will be quickly eliminated by mainstream funds. With the continuous iterative upgrades of traditional AI technology, ArkStream Capital remains optimistic about the prospects of the entire track. The current level of heat is sufficient to indicate its potential development space, and it is expected that the first batch of AI Agent projects with a market value exceeding tens of billions will soon become a significant milestone in the industry's development.
Meme
Over the past three months, Meme has experienced significant growth and evolution, especially in total market value, trading activity, thematic diversity, and exchange support. From October to early December, the total market value of Meme coins has grown significantly, reaching a historic high, and trading volume has also surged. The market has witnessed the emergence of various new types of Meme coins, including AI Agent-related Memes (GOAT, ACT), art BAN linked to Sotheby's art auctions, squirrel PNUT related to Trump and Elon Musk, and CHILLGUY attracting a large number of TikTok fans, among others. The rise of these emerging Memes has injected vitality into the market, spurred on-chain liquidity, attracted a large number of new investors to enter the market, and contributed to the prosperity and development of the Meme and crypto industries.
Compared to emerging Memes, traditional Memes such as DOGE, PEPE, and WIF have also shown strong performance in the market. In particular, PEPE and WIF successfully landed on Robinhood in November 2024, highlighting not only the recognition of Memes by North American compliant exchanges but also further expanding the market influence of these established Memes.
Combining the relevant data of the Meme sector from the past year, as of the end of 2023, the number of Memes in the top 500 market cap was extremely limited, mainly including a few such as DOGE, SHIB, BONK, PEPE, FLOKI, and ELON, with most Memes having a lower market cap. However, by the end of 2024, the number of Memes in the top 500 market cap had significantly increased to 48, accounting for nearly 10%, with a total market cap reaching around $104.7 billion and a 24-hour trading volume of up to $7.4 billion. All of these indicate that the acceptance and market consensus of Memes are continuously breaking through.
Meme Sector Market Cap, Source: https://coinmarketcap.com/view/memes/
Especially in this quarter, Memes have become the focus of the cryptocurrency market, attracting a lot of investors' attention. With the return of the value investment trend in November, some funds began to flow out of Memes, but some newly listed popular Memes quickly listed on mainstream exchanges such as Binance and Upbit due to their good market performance and large user base. Although the lack of market relay funds caused these Memes to experience significant pullbacks from their highs, ArkStream Capital believes that this pullback is a perfect reflection of market attention economics, indicating that the flow of funds in and out of Memes will undergo significant changes with market attention fluctuations. Many Memes quickly grew their market cap to over $1 billion in a short period of time, so experiencing a pullback and time validation is reasonable.
ArkStream believes that the prosperity of Memes in the industry is not just a temporary phenomenon. As a bridge connecting Gen Z and the Web3 world, with their easy-to-understand and engaging features, Memes are expected to continue to exist and bring emotion and value to the market. Therefore, ArkStream Capital actively seeks opportunities to invest in the Meme sector. In particular, it focuses on and invests in two main areas: portals that provide token information and trading data, as well as Bot products that provide trading convenience and custom strategies, and new Meme launch platforms like Pump Fun. These are core infrastructures in the Meme sector that have sustainable revenue potential; Memes are gradually becoming a means of fair asset issuance, and many projects with actual value support are trying to adopt the Meme form to attract users. They follow the concept of organic growth, with low market cap openings, which is a relatively healthy growth model and reflects the active exploration and innovation of primary market projects in the Meme space.
Project Investment
Ethena
Project Introduction
Ethena, as an innovator in the DeFi space, is committed to providing a variety of stable and scalable crypto-native currency solutions. Its first stablecoin is the crypto-native synthetic dollar USDe, with the core innovation being the use of a Delta hedging strategy to hold a mix of crypto mainstream assets in spot and corresponding short positions to maintain intrinsically stable value. This design does not rely on the traditional banking system infrastructure's USD assets. As a result, USDe not only compares favorably in stability with USD-backed stablecoins like USDC and USDT, but also significantly improves capital efficiency and returns. The second stablecoin, USDtb, was jointly developed with the RWA sector's reputable institution Securitize, leveraging BlackRock's BUIDL to connect traditional financial products such as the dollar, short-term US Treasuries, and repurchase agreements to create a digital dollar supported by real-world asset-backed stable yields. USDtb not only has the advantages of high liquidity, low risk, and stable returns but also achieves transaction transparency and settlement efficiency through Web3 technology. These two stablecoins, USDe and USDtb, expand Ethena's presence in the stablecoin market and enhance the overall robustness and credibility of Ethena's stablecoin solution through synergies.
Why Invest in Ethena
Ethena's vision is to reshape the cryptocurrency system to bridge DeFi, CeFi, and TradFi and foster the prosperity of the next generation of Internet finance. Its first stablecoin, USDe, has achieved deep integration in several key DeFi areas, including the money market, derivative market leveraging collateral, stablecoin infrastructure, interest rate swap agreements, and spot AMM DEX. In the exchange sector, Ethena's liquidity pools support both existing centralized and decentralized trading platforms and help emerging exchanges overcome liquidity challenges in the early stages, becoming a market-leading provider of depth and off-exchange liquidity. In TradFi, Ethena's USDe is highly favored for its unique yield, integrating real yields from two billion-dollar-scale crypto assets, with its yield weakly negatively correlated with traditional financial rates, and the underlying assets are custodyed by TradFi-recognized custodians. USDe provides large investors with a convenient way to access excess returns in the cryptocurrency market through a single asset.
The ENA token plays a key role in the Ethena ecosystem, serving as a governance token that gives holders the right to participate in key decisions, such as electing Risk Committee members and shaping policy direction, as well as providing the opportunity to stake and become an sENA holder to earn additional rewards. As ENA is set to be used as a voting tool for the Ethereal derivatives exchange in the future, its importance in the Ethena development roadmap is becoming increasingly prominent. These functionalities not only solidify ENA's position as a core part of the Ethena protocol but are also crucial for maintaining the protocol's decentralized governance and incentivizing user participation. In terms of liquidity, ENA has shown outstanding performance on major exchanges, with trading volume consistently ranking at the top. This not only demonstrates the market activity of the Ethena protocol but also indicates its broad market recognition and acceptance.
Through deep collaboration with major exchanges, Ethena has implemented a series of hedging strategies to address sudden market events in derivative markets such as futures contracts, ensuring the stability and security of USDe. Additionally, the use of USDe as a trading pair base currency is gradually being implemented, thanks to Ethena's efforts to increase liquidity to mitigate risks. Resource-wise, Ethena has partnered with several top global market makers, providing liquidity and market depth, further enhancing the market adaptability and resilience of USDe.
ArkStream Capital believes that in the stablecoin field, the competitive landscape is far from being determined. While USDT and USDC hold a leading position, emerging competitors have the full ability to challenge their market dominance. The key is to select stablecoin protocols with unique mechanisms that can stably anchor value, increase market capitalization, and expand use cases. Just as DEX now accounts for 10% of CEX trading volume, decentralized financial products are rapidly capturing market resources due to their verifiability and convenience. It is expected that by 2025, decentralized stablecoins represented by Ethena will continue to grow in market size, reaching a 10% market share, equivalent to $200 billion. Additionally, Ethena will become a key financial tool for the implementation of Trump's policies. The implementation of Trump's policies will also drive Ethena's strategic position in the rejuvenation of the U.S. economy and the reshaping of global finance, becoming a key support for the domestic and global digital financial landscape.
TRex
Project Introduction
TRex aims to build a publisher network focused on gaming and entertainment content projects within the blockchain industry. Its goal is to guide project teams through high-quality, scalable, and sustainable development, providing them with support in various aspects such as resource connection, tokenomic design, strategic consulting, and marketing. Taking the recently hatched two-game projects as examples: Legend of Arcadia and Last Odyssey, both have attracted over 100,000 active users. Legend of Arcadia is a multichain card game that accounts for 7% of the total trading volume on X Layer; while Last Odyssey is an MMOSLG strategy game that holds 1.2% of the total trading volume on opBNB.
Why Invest in TRex
Leveraging the strong EVG ecosystem, TRex has a significant advantage in terms of funding and resources. EVG is one of the most successful Web3 project incubators and investment firms in the Asia-Pacific region, with investments and incubations including well-known enterprises and funds such as Celestia, Wormhole, Berachain, Animoca Brands, The Sandbox, Yuga Labs, and Kraken. Furthermore, TRex has established a deep partnership with Animoca Brands. The Sandbox, under Animoca, as a pioneer in the metaverse space, has gained widespread recognition from traditional internet and luxury brands, demonstrating Animoca's excellent incubation capabilities. Both EVG and Animoca are institutions in the Asia-Pacific region with rich resources, solid strength, and extensive experience in the Web3 field, with team members largely from traditional financial backgrounds in Hong Kong. With these advantages, TRex can adopt a high-quality, scalable, and sustainable strategy to provide comprehensive support to project teams, including resource matching, tokenomics design, strategic consulting, and marketing.
Additionally, ArkStream Capital has observed that the trend of continuous development in gaming within the Ton ecosystem and the entertainment content application trend are becoming increasingly evident, whether it be the Web3 game fund launched by traditional gaming giant Nexon or Sony's plan to launch a Layer 1 blockchain. From the Web2 game "Black Myth: Wukong" to the popularity of Taptap games on the blockchain, the market's recognition and demand for such applications are continually growing. It is foreseeable that in the near future, more developers and project teams will actively engage in this field. TRex's one-stop, customizable issuance and incubation services will help project teams develop projects at a lower cost and access higher-quality resources, undoubtedly providing strong support for the project's development.
ArkStream believes that with its outstanding track record and high-caliber team background, TRex has garnered support from multiple senior experts in the Web2, Web3 gaming, and TMT industries. The platform's planned publisher network and expanding ecosystem make TRex a high-quality project with investment value. As blockchain applications diversify and scale, the TRex network and its platform token are expected to become an indispensable component of the GameFi sector.
Research Report
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Never Underestimate the Significance of the US Stablecoin 'Infrastructure Bill'
If the US stablecoin bill, the "GENIUS Act," passes smoothly this time, its significance will be tremendous. I even think it's significant enough to enter the top five in Crypto history.
Although abbreviated as the GENIUS Act, which translates directly to the Genius Act, it is actually the Guiding and Establishing National Innovation for U.S. Stablecoins, which translates to "Guiding and Establishing National Innovation for US Dollar Stablecoins."
The proposal is lengthy, with several key points summarized for everyone:
· Mandatory 1:1 Full Asset Backing: Assets include cash, demand deposits, and short-term US Treasuries. At the same time, misappropriation and rehypothecation are strictly prohibited.
· High-Frequency Disclosure: Reserve reports must be published at least monthly, introducing external audits.
· Licensing Requirement: Once the circulating market cap of the issuer's stablecoin exceeds $100 billion, it must transition into the federal regulatory system within a specified timeframe, adopting banking-grade regulation.
· Introduction of Custody: The custodian of the stablecoin and its reserve assets must be a regulated qualified financial institution.
· Clear Definition as a Payment Medium: The bill explicitly defines stablecoin as a new type of payment medium, primarily regulated by the banking regulatory system, rather than restricted by the securities or commodities regulatory system.
· Embracing Existing Stablecoins: A maximum 18-month grace period after the bill's enactment, aimed at encouraging existing stablecoin issuers (such as USDT, USDC, etc.) to promptly obtain licenses or become compliant.
After finishing the main content, let's talk about the significance of this matter with an excited heart.
Over the years, when others asked, "After working in the Crypto industry for 16 years, what application have you created?"
In the future, you can confidently tell others—Stablecoins.
Some people have held opposing views. In the past, people's impression of stablecoins was that they were an opaque black box. Every few months, there would be FUD — whether Tether's assets were frozen or Circle had a significant black hole deficit.
In fact, if you think about it, Tether easily rakes in billions of dollars a year just from the interest on those underlying government bonds. Circle, slightly less, also made a $1.7 billion profit last year.
They basically made money while standing there. From a motivational standpoint, they have no malicious intentions. In fact, they are the most eager for compliance.
Now, this opaque black box will become a transparent white box.
In the past, the only complaint was that Tether's funds might have been frozen by the United States. Now, they will be directly placed into U.S. compliant custodial institutions, with high-frequency disclosures, so you can rest assured.
【No need to worry about a rug pull】 is such a huge advantage—I think especially all Crypto people understand this.
Stablecoins were once almost on the verge of being overtaken by CBDCs. In any country, if a central bank digital currency really exists, it is highly likely not built on a blockchain, at most it is built on some internal central bank consortium chain, which to be honest, is meaningless.
When CBDCs were at their peak, that was the most dangerous time for stablecoins.
If CBDCs had become a reality back then, stablecoins today would have been relentlessly suppressed into a dark corner, and blockchain would only be able to play a minimal role.
The remaining half-dead stablecoins would even have to learn the standards of central bank digital currencies, completely relinquishing their standard-setting power.
And now, stablecoins have won (or are about to).
Instead, everyone should learn the 【Blockchain + Token】 standard.
Nowadays, many blockchains actually have no meaningful applications on top, only stablecoin transfers. For example, with Aptos, the only scenario I use Aptos for is transfers between Binance and OKX.
And now, stablecoins will be legislated, what does that mean?
That's right, blockchain will become the only standard.
In the future, every stablecoin user will be the first to learn how to use a wallet.
As an aside, I actually think Ethereum's concerted push for EIP-7702 is quite forward-thinking. While other chains are all about memes, thank you Ethereum for sticking to account abstraction.
EIP-7702 is about Account Abstraction, which can support, for example:
· Social Account Registration Wallet
· Paying GAS with Native Coin
· And more
This paves the way for future new users to heavily use stablecoins, solving the last-mile problem.
Furthermore, once stablecoins receive legislative support, deposits and withdrawals will become even easier.
Let's imagine a scenario: previously, hindered by the gray nature of stablecoins, but after the bill passes, many traditional brokerages can support stablecoins themselves. The money from a US stock investor can be converted into stablecoins in minutes and instantly deposited into Coinbase. Believe it or not.
Let's imagine another scenario: if the brilliant bill smoothly passes through the House of Representatives, next, you will see:
Due to the extremely lucrative nature of this trading, existing stablecoin leaders and newly entering traditional giants will crazily start promoting their stablecoin products.
And an outsider, due to these promotions, will start using stablecoins. And then one day, after finding out that the wallet account has been created, will explore Bitcoin inside. Is mining Bitcoin difficult?
Stablecoins are a huge Trojan horse. The moment you start using stablecoins, you unwittingly step half a foot into the Crypto world.
As a large reservoir for digesting US debt, although stablecoins cannot directly absorb debt, they at least provide ammunition for the US debt secondary market. These functions are quite important, and slowly, stablecoins are becoming a part of the US debt market's body. Therefore, once the US legislation is passed and experiences the benefits, there is no turning back.
And, we are also confident that stablecoins are indeed one of the great innovations in our industry. People who have used stablecoins will find it hard to return to the traditional cash-banking system.
Once the bill is passed, users can't go back. In the future, concerns are about to be resolved, standards will be mastered, and the era of large deposits seems to be on the horizon.
Original Article Link
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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1.Binance Alpha Launches HIPPO, BLUE, and Other Tokens
2.Believe Ecosystem Tokens See General Rise, LAUNCHCOIN Surges Over 250% in 24 Hours
3.Tiger Securities Introduces Cryptocurrency Deposit and Withdrawal Service, Supports Mainstream Cryptocurrencies such as BTC and ETH
4.Current Bitcoin Rally Possibly Driven by Institutions, Retail Traders Yet to Join
5.Binance Wallet's New TGE Privasea AI Participation Requires a 198 Point Threshold, with a Point Consumption of 15
Source: Overheard on CT (tg: @overheardonct), Kaito
PUMP: Today's discussions about PUMP focus on its new creator revenue-sharing model: the platform will allocate 50% of PumpSwap revenue to token creators, sparking varied reactions from users. Some criticize the move as insufficient or even misleading, while others view it as a positive step the platform is taking to reward creators. Meanwhile, PUMP faces market pressure from emerging competitors like LetsBONKfun and Raydium, which are rapidly gaining market share. Users also express concerns about PUMP's sustainability and potential regulatory risks in the U.S., with discussions extending to the platform's impact on the entire memecoin ecosystem.
COINBASE: Today, Coinbase became the first crypto company to join the S&P 500 Index, replacing Discover Financial Services, sparking widespread industry attention. The entire crypto community views this milestone as a significant development, signaling that crypto assets are further integrating into the mainstream financial system. The news has sparked lively discussions on Twitter, with many users pointing out that this may attract more institutional investors to enter the Bitcoin and other cryptocurrency markets.
XRP: XRP became the focal point of today's crypto discussion, with its significant market movements and strategic advances drawing attention. XRP has surpassed USDT to become the third-largest cryptocurrency by market capitalization, sparking market excitement and discussions about its future potential. The surge in market capitalization and price is believed to be related to increasing institutional interest, deepening strategic partnerships, and its role in the crypto ecosystem. Additionally, XRP's integration into multiple financial systems and its potential as a macro asset class are also seen as key factors driving the current market sentiment.
DYDX: Today's discussions about DYDX mainly focused on the dYdX Yapper Leaderboard launched by KaitoAI. The leaderboard aims to identify the most active community participants, with a total of $150,000 in rewards to be distributed over the first three seasons. This initiative has sparked broad community participation, with many users discussing the potential rewards and the incentive effect on the DYDX ecosystem. Meanwhile, progress on the ethDYDX to dYdX native chain migration and historical airdrop events have also been topics of discussion.
1. "What Is 'ICM'? Holding Up the $4 Billion Market Cap Solana's New Narrative"
Overnight, the hottest narrative in the crypto space has become "Internet Capital Markets," with a host of crypto projects and founders, led by the Solana ecosystem's new Launchpad platform Believe, releasing this phrase. Together with "Believe in something," it has become the new slogan heralding the onset of a bull market. What exactly is the so-called "Internet Capital Market," will it become a short-lived hype phrase like the Base ecosystem's previous Content Coin, and what related targets are available for selection?2.《LaunchCoin Surges 20x in One Day, How Did Believe Create a $200M Market Cap Shiba Inu After Going to Zero?｜100x Retrospective》
LAUNCHCOIN broke through a $200 million market cap today, with the long-lost liquidity and such a high market cap "Memecoin" almost bringing half of the on-chain crypto community CT into the fray. The community is crazily discussing this token, with half of it being FOMO and the other half being FUD. This token, originally issued by Believe founder Ben Pasternak under his personal identity, transformed into a new platform token after a renaming. From once going to zero to a $200 million market cap, what happened in between?May 14 On-chain Fund Flow
Within 24 hours, GOONC's market cap soared to 70 million, could GOONC be the next billion-dollar dog on the Believe platform?
Bitcoin has broken $100,000, Ethereum has surpassed 2500, and is Solana's hot streak about to make a comeback?
The current market is in a state of macro euphoria, with GOONC riding the wave today, skyrocketing 10x in just a few hours, reaching a market cap of tens of millions of dollars, trading volume soaring past 50 million, and rumors swirling that the developer may be from OpenAI (unconfirmed but intriguing enough).
A ludicrous and absurd Solana meme that some actually buy into.
GOONC is a meme coin that has sprouted from the "gooning" subculture, offering no technological innovation or practical use, its sole function being speculation.
It takes inspiration from an NSFW term "gooning," which refers to a person being deeply immersed in certain content (you know what), eventually entering a nearly religious-like trance.
In Reddit (such as r/GOONED, r/GoonCaves) and some counterculture media outlets (such as MEL Magazine in 2020), "gooning" has gradually transitioned from an adult label to a meme-addicted, digital content and virtual self-indulgence synonym, arguably the epitome of Degen spirit.
GOONC is playing around with this concept, packaging the addictive nature, uselessness, and irony of gooning into a tradable financial product. The project team has made it clear: "We do not solve blockchain problems, we only trade absurdity." Blunt but oddly genuine.
GOONC launched on May 13, 2025, using the meme coin launch platform Believe App's LaunchCoin module on Solana. This tool is highly Degen: zero technical barriers, a few clicks to create a coin, perfect for projects like GOONC that can come up with ideas out of the blue.
The mastermind behind GOONC is also quite something and is the most talked-about, with KOL @basedalexandoor on X platform (alias "Pata van Goon") personally involved. His profile even caught the attention of Marc Andreessen, co-founder of a16z, making onlookers unable to resist speculating if GOONC has a hint of OpenAI lineage.
While this 'OpenAI Endorsement' is currently just community speculation, it is definitely a good card to play to fuel hype. Saying "we are pure speculation" on one hand, while tagging a few "AI + a16z" on the other.
GOONC took off as soon as it launched. After its launch on May 13, 2025, its market capitalization skyrocketed to $22 million within 4 hours, with a trading volume exceeding $25.6 million in 24 hours. According to platform data, the first day of trading saw an astonishing +41,100% surge, soaring from $0.0000001 to $0.02, becoming a "missed-the-boat" situation.
GOONC quickly formed an active trading community post-launch, with a lot of discussion and trading signals appearing on X platform (such as the 292x return signal provided by DeBot). Liquidity pools on exchanges like Raydium and Meteora grew rapidly, supporting high trading volumes and price increases.
The real climax occurred between May 13 and May 14, with the market cap rising to $5.5 million in the morning and directly surpassing $55 million in the afternoon. By the 14th, it briefly approached a $70 million market cap, with the trading volume soaring to $59 million. Some community members even posted screenshots claiming an increase of +85,000%, creating a new myth out of the ruins.
As of 1:30 pm on May 14, the price stabilized around $0.039, with a total market cap and FDV both around $39.6 million, and a 24-hour trading volume of $5.43 million. Active platforms include XT.COM, LBank, Meteora, and others.
Although there was a slight pullback from the peak ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.
Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.
Community members speculate that the meteoric rise of GOONC may be the "last hurrah".
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After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?
Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.
As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.
At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.
Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"
It's not just Ethereum itself, as Wall Street also brought important bullish news.
The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.
Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.
Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.
Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.
However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.
Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"
If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.
Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.
In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.
For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.
The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.
@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.
Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"
The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.
@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.
@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.
@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.
@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.
Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.
Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.
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Never Underestimate the Significance of the US Stablecoin 'Infrastructure Bill'
If the US stablecoin bill, the "GENIUS Act," passes smoothly this time, its significance will be tremendous. I even think it's significant enough to enter the top five in Crypto history.
Although abbreviated as the GENIUS Act, which translates directly to the Genius Act, it is actually the Guiding and Establishing National Innovation for U.S. Stablecoins, which translates to "Guiding and Establishing National Innovation for US Dollar Stablecoins."
The proposal is lengthy, with several key points summarized for everyone:
· Mandatory 1:1 Full Asset Backing: Assets include cash, demand deposits, and short-term US Treasuries. At the same time, misappropriation and rehypothecation are strictly prohibited.
· High-Frequency Disclosure: Reserve reports must be published at least monthly, introducing external audits.
· Licensing Requirement: Once the circulating market cap of the issuer's stablecoin exceeds $100 billion, it must transition into the federal regulatory system within a specified timeframe, adopting banking-grade regulation.
· Introduction of Custody: The custodian of the stablecoin and its reserve assets must be a regulated qualified financial institution.
· Clear Definition as a Payment Medium: The bill explicitly defines stablecoin as a new type of payment medium, primarily regulated by the banking regulatory system, rather than restricted by the securities or commodities regulatory system.
· Embracing Existing Stablecoins: A maximum 18-month grace period after the bill's enactment, aimed at encouraging existing stablecoin issuers (such as USDT, USDC, etc.) to promptly obtain licenses or become compliant.
After finishing the main content, let's talk about the significance of this matter with an excited heart.
Over the years, when others asked, "After working in the Crypto industry for 16 years, what application have you created?"
In the future, you can confidently tell others—Stablecoins.
Some people have held opposing views. In the past, people's impression of stablecoins was that they were an opaque black box. Every few months, there would be FUD — whether Tether's assets were frozen or Circle had a significant black hole deficit.
In fact, if you think about it, Tether easily rakes in billions of dollars a year just from the interest on those underlying government bonds. Circle, slightly less, also made a $1.7 billion profit last year.
They basically made money while standing there. From a motivational standpoint, they have no malicious intentions. In fact, they are the most eager for compliance.
Now, this opaque black box will become a transparent white box.
In the past, the only complaint was that Tether's funds might have been frozen by the United States. Now, they will be directly placed into U.S. compliant custodial institutions, with high-frequency disclosures, so you can rest assured.
【No need to worry about a rug pull】 is such a huge advantage—I think especially all Crypto people understand this.
Stablecoins were once almost on the verge of being overtaken by CBDCs. In any country, if a central bank digital currency really exists, it is highly likely not built on a blockchain, at most it is built on some internal central bank consortium chain, which to be honest, is meaningless.
When CBDCs were at their peak, that was the most dangerous time for stablecoins.
If CBDCs had become a reality back then, stablecoins today would have been relentlessly suppressed into a dark corner, and blockchain would only be able to play a minimal role.
The remaining half-dead stablecoins would even have to learn the standards of central bank digital currencies, completely relinquishing their standard-setting power.
And now, stablecoins have won (or are about to).
Instead, everyone should learn the 【Blockchain + Token】 standard.
Nowadays, many blockchains actually have no meaningful applications on top, only stablecoin transfers. For example, with Aptos, the only scenario I use Aptos for is transfers between Binance and OKX.
And now, stablecoins will be legislated, what does that mean?
That's right, blockchain will become the only standard.
In the future, every stablecoin user will be the first to learn how to use a wallet.
As an aside, I actually think Ethereum's concerted push for EIP-7702 is quite forward-thinking. While other chains are all about memes, thank you Ethereum for sticking to account abstraction.
EIP-7702 is about Account Abstraction, which can support, for example:
· Social Account Registration Wallet
· Paying GAS with Native Coin
· And more
This paves the way for future new users to heavily use stablecoins, solving the last-mile problem.
Furthermore, once stablecoins receive legislative support, deposits and withdrawals will become even easier.
Let's imagine a scenario: previously, hindered by the gray nature of stablecoins, but after the bill passes, many traditional brokerages can support stablecoins themselves. The money from a US stock investor can be converted into stablecoins in minutes and instantly deposited into Coinbase. Believe it or not.
Let's imagine another scenario: if the brilliant bill smoothly passes through the House of Representatives, next, you will see:
Due to the extremely lucrative nature of this trading, existing stablecoin leaders and newly entering traditional giants will crazily start promoting their stablecoin products.
And an outsider, due to these promotions, will start using stablecoins. And then one day, after finding out that the wallet account has been created, will explore Bitcoin inside. Is mining Bitcoin difficult?
Stablecoins are a huge Trojan horse. The moment you start using stablecoins, you unwittingly step half a foot into the Crypto world.
As a large reservoir for digesting US debt, although stablecoins cannot directly absorb debt, they at least provide ammunition for the US debt secondary market. These functions are quite important, and slowly, stablecoins are becoming a part of the US debt market's body. Therefore, once the US legislation is passed and experiences the benefits, there is no turning back.
And, we are also confident that stablecoins are indeed one of the great innovations in our industry. People who have used stablecoins will find it hard to return to the traditional cash-banking system.
Once the bill is passed, users can't go back. In the future, concerns are about to be resolved, standards will be mastered, and the era of large deposits seems to be on the horizon.
Original Article Link
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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