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WE-Launch
Deep Dive into Bittensor: What Exciting Projects are on the Horizon?
Original Title: Into the Bittensor Ecosystem
Original Author: 0xJeff, AI Investor
Original Translation: Rhythm Little deep
Editor's Note: The author introduced the Bittensor ecosystem, a Web3 platform driving decentralized AI development through "Darwinian AI." The author shared their enthusiasm for cryptocurrency and AI, exploring the convenience and potential risks of centralized AI products, such as data ownership and platform stability issues. Through competition and incentive mechanisms, Bittensor leverages the $TAO token and subnet structure to promote the natural selection and evolution of AI models, attracting investor attention.
The following is the original content (lightly reorganized for readability):
Cryptocurrency has always been appealing to me. There is always something new to learn. I am naturally curious, asking many "silly" questions to techies just to glean their insights and learn from their valuable experiences.
Artificial Intelligence (AI) is no exception, in fact, things are progressing amazingly fast. Web2 tech giants are continuously improving their models, with major applications leveraging AI to introduce various AI-driven use cases:
· @canva has launched AI tools that allow non-technical artists and creators to easily build interactive experiences and enhance their creations with AI.
· @YouTube introduced a new AI tool that allows creators to generate background music for videos.
· Ride-hailing platforms like Grab have deployed agentic AI to support merchants and driver partners.
· E-commerce platforms like Lazada have introduced generative AI (GenAI) tools to help sellers improve sales, marketing, and customer service.
The list goes on. Practical use cases leveraging generative AI and agentic AI to improve workflows have been consistently gaining adoption among enterprises and retail users.
The beauty of these technologies is their accessibility — you can find free or low-cost solutions nearly everywhere. Their benefits far exceed the financial costs.
However, people often overlook the trade-offs hidden when using these AI products, such as:
· Who owns your data?
· Can others take your idea and develop a competing product?
· Is the platform secure? Will your data be leaked?
· If the platform goes down (like AWS did before), will your business be affected? Is customer funding at risk?
· Can you always access your platform? Is identity verification required? If the platform shuts down, can you still own your product or business?
There are more questions (I discussed these in more detail in a previous article if you haven't read it yet).
Centralized players have centralized power, and their decisions may (inadvertently) have a significant impact on your life.
You might say, "So what?"—maybe you don't use these tools often, or you believe these companies will act in the users' best interest. That's fine. You might even want to invest in these AI startups because they are tapping into a massive market. But the issue is—you can't. Unless you're at @ycombinator or a top-tier VC, you won't get these investment opportunities.
On the other hand, in Web3 AI, there are many investable AI ecosystems, with teams dedicated to bringing decentralized AI products and services to users. One of the most promising decentralized AI (DeAI) ecosystems is @opentensor (Bittensor).
Bittensor: Darwinian AI
Bittensor falls into the category of "Darwinian AI"—driving AI evolution through natural selection. Think of it as an AI version of "The Hunger Games," where each subnet has its own "Hunger Games," and "miners" act as participants (or "tributes"). They compete with their models and data on specific tasks. Only the most adapted model (the best-performing model) will receive a reward. Weaker models will be replaced or evolved (through training, tuning, or learning from other models). Over time, this will create a more robust, diverse, and high-performing AI ecosystem.
One particularly exciting aspect of Bittensor is its competitive and incentive mechanisms designed to coordinate incentives between different stakeholders. I outlined the challenges faced by Web3 AI agent teams in the tweet below...
tl;dr: Current agent tokens are a useful tool for speculators and teams to generate hype but are detrimental to user acquisition and retention and cannot serve as an incentive mechanism to retain talent (developers, founders, etc.), especially when prices drop.
Bittensor addresses this issue through a market-driven mechanism, allocating $TAO emissions to subnets to incentivize and support team operations. The market determines which subnets receive more emissions by staking $TAO within the subnet. Once staked, $TAO is converted to Alpha Subnetwork tokens. The more people stake, the higher the price of Alpha tokens, and the more emissions you receive (in the form of Alpha tokens).
TAO's emission mechanism is very similar to BTC, with a fixed total token supply of 21 million, halving every 4 years (emitting 7200 $TAO to subnets daily). The first $TAO halving is expected to occur around January 5, 2026, at which point the circulating supply will reach 10.5 million tokens.
Why This Matters to Investors
Not delving into technical details here—just sharing why I believe Bittensor is one of the most exciting ecosystems from a trading/investment standpoint.
In addition to the dynamics mentioned above, trading the Alpha Subnetwork tokens feels like trading and mining simultaneously.
This is because every time the Alpha token price appreciates, you not only benefit from price appreciation but also receive $TAO emissions (in the form of Alpha tokens).
If a subnet performs exceptionally well and rises in ranking, the $TAO you initially staked will experience significant price appreciation and emission spikes. The earlier you stake $TAO in a subnet, the higher your Annual Percentage Yield (APY) will be (as the market has not caught up yet, with fewer stakers and $TAO amounts).
dTAO vs. Solidly
Solidly's ve(3,3) requires long-term locking and continuous engagement. Emission losses due to incorrect voting (voting for the wrong LP pool) are borne by all holders (emissions are sold off, leading to a price drop for all token holders).
On the other hand, dTAO does not require long-term locking, and anyone can enter or exit at any time, but staking on the subnet requires extensive due diligence (DYOR). Investing in the wrong subnet can lead to significant losses (as people can easily exit without a lockup period).
However, the Fully Diluted Valuation (FDV) is too high! How to invest in a subnet with an FDV exceeding $500 million?
FDV may not be the best metric here, as the subnetwork is still early-stage, and Market Cap (MC) may be more suitable (if you are looking at short to mid-term trading).
If you are concerned about inflation, understanding the emission distribution of 18%/41%/41% can be helpful — these are the emissions received by subnetwork owners, validators, and miners, respectively (in the form of Alpha tokens). As a staker/Alpha token holder, you benefit from the 41% portion allocated to validators since you delegated your $TAO to them when staking.
Many subnetwork owners continue to hold the Alpha tokens received from emissions to show confidence, and many engage in active dialogues with validators and miners to express their optimism for the project and avoid massive token dumps (this information can be viewed on taostats).
Zooming out, one of the best charts showcasing trends within the Bittensor ecosystem is as follows:
Source: taoapp
Since the launch of dTAO in February, the %TAO in Root (the original subnetwork managing the Bittensor incentive system) has been steadily declining, while the %TAO in the subnetwork has been consistently rising. This indicates that stakers/investors are increasingly willing to take on risk (the conservative APY for staking in the Root network is around 20-25%, with no price appreciation of Alpha sub-network tokens).
This trend aligns with the speed at which subnetwork teams are rolling out products. Since the launch of dTAO, teams need to publicly build, develop products users want, iterate quickly, find product-market fit (PMF), acquire users, and rapidly drive real utility and substantial revenue. Since I entered this ecosystem, I can feel the team's development pace is much faster compared to other ecosystems (due to competition and incentive mechanisms).
This leads to the subnetwork and its unique investment DeAI use case.
Leading Subnetworks and Use Cases
Considered the most adept at launching teams with PMF products for the mainstream and executing professional and continually public builds is @rayon_labs
—SN64 (Chutes), SN56 (Gradients), SN19 (Nineteen).
Chutes—provides infrastructure for you to easily deploy AI in a serverless manner. The best-case scenario is the recent AWS outage; if you rely on centralized providers, an outage can cause your AI application to be down (potentially resulting in financial loss or vulnerabilities) due to a single point of failure.
Gradients — Anyone with no coding knowledge can train their own AI model on Gradients (for specific use cases, image generation, custom LLM). The recently launched v3 is more affordable than peers.
Nineteen — Provides a fast, scalable, decentralized AI inference platform (usable by anyone for text and image generation use cases, far faster than peers).
In addition, Rayon is launching the Squad AI Agent platform, an easy-to-use drag-and-drop node-style AI agent building platform that has piqued the interest of the community.
These three subnets collectively hold over 1/3 of the $TAO total issuance — which proves the team's ability to openly build and deliver high-quality products that users want (Rayon has been praised by many subnet owners as the top team).
· Gradients has grown 13x in a month (current market cap $32 million).
· Chutes has grown 2.3x (market cap $63 million).
· Nineteen has grown 3x (market cap $18 million).
This trend does not appear to be stopping in the short term, especially given Chutes' adoption rate (currently the top-ranking subnet).
In addition to Rayon Labs' subnets, there are many interesting teams — protein folding, deepfake/AI content detection, 3D models, trading strategies, role-playing LLM. I have not delved deep into all the content, but I find the "prediction system" (taopill) subnets under it most easily understandable, especially:
SN41 @sportstensor
You might know them through @AskBillyBets. Sportstensor is an intelligence that empowers Billy's decisions (led by the core team of Billy @ContangoDigital, a VC investing in DeAI, also a validator and miner of the Bittensor subnet).
The uniqueness of SN41 lies in its product—the Sportstensor model. This is a competition among miners with the best model and dataset to predict sports match outcomes.
Example: In the latest NBA season, if you follow the public betting (on the favorite teams), you would have around a 68% accuracy/win rate. Does this mean everyone can make big money by betting on the favorite teams? No, in fact, they are losing money. If you bet $100 on each favorite team, your return on investment (ROI) would be negative, resulting in a loss of about $1700.
Although the favorite teams have a higher win rate, the odds are lower, meaning you earn less when you guess right. People tend to bet heavily on the favorite teams, leading to low odds on underdogs. This means that if you choose the underdog correctly, you can make a lot of money.
The Sportstensor model comes into play here. Miners run their own machine learning models (Monte Carlo, Random Forest, Linear Regression, etc.), using their own data (free or proprietary) to obtain the best results. Sportstensor then takes the average/median of these results as intelligence to identify advantages in the market.
The actual market odds may be 25:75, while the model may show odds of 45:55. This 15 difference is the advantage. If the model finds many such advantages, you can accumulate a positive ROI in the long term without needing a high win rate.
Check out their full trading report (if you want to delve deeper):
These are the model results shared in their latest report, and the data is quite impressive. The team also runs a monthly betting fund, starting with a buffer fund of $10,000 and continuing to bet with profits. By the end of the month, they repurchase Alpha tokens with the profits. The team made approximately $18,000 in profit in March.
Depending on how you use the intelligence, the results can vary greatly. For example, the intelligence shows 35:65, while the actual market odds may be 40:60. Someone may bet based on this, while you may not because the difference is small and lacks enough advantage. Billy uses the intelligence differently from Sportstensor. (Currently, no one knows how to sustain positive ROI because it is still early days.)
The Sportstensor project aims to further monetize their intelligence by creating a dashboard that allows users to easily understand insights and make betting decisions based on them.
I personally like this team because their product has a lot of potential directions for development. We have already seen how Billy has attracted attention and made sports fans excited to follow the betting. With the team covering a variety of sports, the landscape could change the way people interact, bet, and experience.
SN44 @webuildscore
Score originally built a product similar to Sportstensor but realized the ability to predict future events could bring more value and shifted towards computer vision.
To understand this, you need computer vision to analyze the content on the screen, make AI understand the objects on the screen, locate and annotate data, then draw conclusions using different algorithms (e.g., the probability of a player making a certain move), and convert all this into a universal score used to improve player performance (and early talent discovery).
Miners compete to tag objects (this is the miner's primary goal). Score utilizes its internal algorithms to draw conclusions (at least for now).
When you score players (similar to Elo ratings in chess or League of Legends but more nuanced and dynamic... changing dynamically based on player decisions and their impact in each game), as a club owner, you can do many things like discovering talent at a young age. If you have videos of children's matches, the analysis is the same as professional matches. This is quantifying the entire football world with a unified approach.
Through proprietary data, Score can monetize scores and insights, selling them to data brokers, club owners, sports data companies, and betting firms.
Soon, users will be able to upload videos on Score's self-serve platform to be tagged by miners. Typically, tagging football match videos takes hours, but on Score, miners can tag a 90-minute match in just 10-12 minutes, far faster than other platforms. Users can use the tagged data for their own models and use cases.
I like Score because it can be applied to fields beyond sports, such as autonomous vehicles, robotics, and more. In a world full of data noise, high-quality proprietary data is extremely valuable.
SN18 @zeussubnet
This is a newly popular subnet that has been gaining a lot of attention recently. I haven't had a chance to engage with the team yet, but the product is very intriguing.
Zeus is a machine learning-based weather/climate prediction subnet designed to surpass traditional models and provide faster, more accurate forecasts.
This intelligence is highly sought after by hedge funds as accurately predicting the weather can lead to better commodity price predictions (hedge funds are willing to pay millions to access this intelligence as winning in commodity trading can earn them billions).
The Zeus subnet is a recent addition and has recently acquired subnet 18. Its Alpha token has seen a 210% increase in the past 7 days.
Other Subnets of Interest That I Have Yet to Dive Deep Into
· @404gen_ SN17——Infrastructure for AI-generated 3D assets. Creating 3D models for games, AI characters, virtual influencers, and more. Recently, integration with
· @unity may enable seamless 3D model generation, transforming the creative process for Unity's 1.2 million monthly active users.
· @metanova_labs SN68——Decentralized Science (DeSci) drug discovery subnet, transforming drug discovery into collaborative, high-speed competition to address traditional challenges such as cost and time (traditional processes take over a decade and cost billions).
There is more to explore, and I will share after deeper research. I start with the most easily understandable (as I'm not a technical person).
Summary
I try to avoid being overly technical. There are many high-quality resources for technical explanations on dTAO, emissions, incentive distribution, and all stakeholder benefits.
Based on my experience in the Delegate Rush (since October 2024), staying flexible is crucial. I've held too many project tokens, and I believe dTAO provides a great mechanism for me to flexibly rotate between different investment-oriented DeAI startups.
Currently, there are not many participants, and users can earn 80%-150%+ APY, plus subnet token price appreciation. This dynamic may change in the next 6 months as more people join and the TAO ecosystem's bridges, wallets, and transaction infrastructure improve.
Now, I suggest you enjoy the PvE season of TAO and join me to learn more about the cool DeAI technology.
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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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Key Market Intelligence on May 14th, how much did you miss out on?
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 ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.
Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.
Community members speculate that the meteoric rise of GOONC may be the "last hurrah".
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$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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