Last week has been one of the biggest hits our industry has seen, with over $6 billion hacked from Binance.

However, this didn’t automatically push the market down, reflecting growing resilience to these events.

While we highlight what happened with Binance, we also cover:

• Re introduces low-correlated RWA yield through reinsurance and has now reached deposits of over $400 million with $reUSD and $reUSDe.

• An interview with David Choi, CEO and Co-founder of USDai, where he highlights why it will become the settlement dollar for compute.

• The Momentum Assets, where we cover $QNT, an infrastructure provider linking banks with blockchain, and $TRUE, now integrated into DeFiLlama.

And more.

Re Crosses $400M in Deposits

Re is an onchain reinsurance protocol that lets depositors supply their stablecoins, which are used to back regulated reinsurance contracts, a sector worth over $760 billion.

The market’s size and demand for onchain reinsurance yield, and an acute focus on DeFi composability, contributed to Re’s growth.

Re has now passed $400M in combined deposits across reUSD and reUSDe this week, which currently yield 7.14% and 12.56%, respectively. This yield beats multiple other asset classes, including T-bills, institutional lending, and basis trade, helping to attract even more flow.

More importantly, momentum in stablecoin deposits is picking up. It took Re only 40 days to move from $300 million to $400 million, while it took 186 days to move from $200 million to $300 million, reflecting a growing appetite for onchain reinsurance yield.

The capital is being put to work:

• $510.5M in bound premium written since inception

• $65M deployed in October to Cover Re to support further growth into 2027

• $13M+ accrued to reUSD and reUSDe holders since inception

As mentioned above, DeFi has been a great distribution layer for Re’s growth, as reUSD is now deployed across 14 networks.

Recent additions extend its composability, from reUSD looping on Jupiter Lend on Solana to PT-reUSD looping on Monad. PT-reUSD is also one of three launch markets in Pendle’s Ecosystem High Yield USDC vault on Morpho, expanding its use as collateral in DeFi lending.

DeFi composability reinforces growth: Reinsurance is a productive market that generates strong yields for depositors, outperforming multiple assets, and when the same asset is used further in DeFi, it boosts the asset’s potential and drives demand.

We believe Reinsurance is a great market to tap into, as it introduces a low-correlation source of onchain yield, driven by insurance outcomes rather than crypto markets, helping stablecoin liquidity keep earning and stay in onchain environments during periods of volatility.

To mint reUSD or reUSDe, deposit at re.xyz. Learn more about the protocol here and in our latest piece.

The Settlement Dollar for Compute: An Interview with David Choi, USDai

USDai provides GPU-backed loans to companies, denominated in $USDai, a stablecoin. The protocol recently executed a $1 million buyback of its governance token, $CHIP, and introduced programmatic buybacks from revenue.

To better understand what the team is targeting and how they see the category evolving in a few years, we interviewed David Choi, the CEO and Co-Founder of USDai.

The USDai model depends on borrowing demand, as it’s a lending protocol, and that demand is constantly evolving. The demand sits in the “compute middle market”, and “power is the binding constraint, so deployments are getting smaller: 250-megawatt sites are becoming 2- to 5-megawatt modular builds. That means more borrowers needing $5M to $100M, not a few needing billions.”

While the demand is there, what makes USDai special and separates them from traditional lenders is that they can do small deals economically.

This is exactly what onchain capital unlocks: USDai can “fund a standard loan quickly, hold it while it builds a payment history, and then sell it to the institutions that wouldn’t underwrite it from scratch”.

USDai calls this model “season-and-sell”, and they do this because crypto users “prioritise liquidity above all else, while credit funds are less duration-sensitive”. The team has completed their first season-and-sell: a $106 million GPU financing sold to Silver Point and Victory Park.

Through this model, USDai doesn’t really compete with traditional capital; instead, it “delivers finished loans”.

“Onchain is the warehouse. Banks, private credit funds and insurers are the permanent home.”

One of USDai’s major announcements is its focus on token alignment, but we asked the team why they felt this is the right moment to introduce programmatic buybacks. They added, “Now is the moment because we’ve proven the loop. We originated a loan, seasoned it and sold it. That turns the protocol from a balance sheet into a volume/origination engine.”

Additionally, “as the protocol scales, the source of purchases shifts. Today it is sUSDai’s net interest margin. As USDai outstanding grows, CHIP holders can switch on revenue from USDai itself for the stablecoin as settlement, which is the North Star of our protocol”

We ended our questions by asking what USDai looks like in its final form, and they added that it will be “the settlement dollar for compute”.

If USDai finance the next 10k neoclouds, “they all end up holding the same dollar, and they will transact in it.”

The Largest Hack of Crypto History, and DPRK is not involved?

On October 29th, Binance got hit with the largest attack in crypto history worth $6.36 billion, and it is larger than the next 7 hacks combined.

However, one positive is that Tether and Circle promptly froze a good chunk of the stolen funds (~$3 billion), and Binance can fill the rest of the hole with withdrawals beginning now.

Another interesting aspect of this hack was that a Kim family member denied performing this specific heist, which is new. North Korea has previously denied claims about the hack, but this time it came quickly and from an official member.

This doesn’t prove they didn’t do it, but it could be a quick brush-off, especially since Trump said the US is also looking into the attack.

The Momentum Assets: $QNT and $TRUE

Let’s start with $QNT.

Quant Network has recently got a lot of attention as a Universal adapter between banks and blockchains, so any bank can connect once and get data from different blockchains and bank ledgers without building each connection itself.

It got real attention when Clearing House mentioned in September that they are using Quant Network infrastructure.

QNT isn’t really competing with other cryptocurrencies, since it’s an infrastructure provider that helps banks interact with blockchains, so with more tokenised assets, you can expect more adoption of Quant Network.

Clearing House Network’s existing rails move over $2 trillion a day, and even a small slice of that could eventually flow through tokenised deposits coordinated by Quant; the scale is hard to ignore.

However, it currently trades at a $2.8 billion market cap, and with this new demand, the only question is how that links to the QNT token.

Next up is $TRUE.

The market it is capturing is Prediction markets (PMs), one of the fastest-growing categories, primarily represented by Polymarket and Kalshi, which account for most of the volume.

After the DeFiLlama (DL) partnership, Trueo embedded PMs into the DL frontend, curated by DL based on its data, giving Trueo access to its distribution. This partnership began a few weeks ago.

Both of these tokens have performed well recently and have truly captured the momentum.

Quant has already built the infrastructure powering institutions, while Trueo is targeting a huge sector and competing with the Polymarket and Kalshi duopoly, which is hard to break, making its path more difficult. However, the growth levers it has been using, like the DL partnership, are genuinely impressive.

On the Radar

• Beans introduced Isolated Exposure Tokens (IETs), a design inspired by Pendle’s YT and PT split. It separates tokenised equities into separate OVERNIGHT (close-to-open) and SESSION (open-to-close) tokens via deposit and redeem mechanics, enabling programmable exposure along time windows. You can trade exposure to both tokens separately, enabling multiple strategies.

• Our team is attending multiple conferences this month, so if you are going to any of them, we would love to catch up over coffee.

• We are releasing a podcast with Karn Saroya tomorrow where we discuss everything about Re, how it grew, and what the team is targeting in the near future. Releasing 3 pm UTC.

That’s a wrap!

See you next week.

Not a subscriber yet? Join for free:

Castle Labs

Research and Advisory for Digital Assets

PLUS, don’t forget to join our Telegram channel for the latest updates from Castle and all our research: Link here

Disclaimer: In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

Welcome to another week of our Castle Chronicle.

This week we explore some of the AI-related exposure you can get onchain through tokens like Venice and Pearl and why it might be a better opportunity to allocate than waiting for Anthropic and OpenAI IPO.

While we explore that, we also discuss:

• The Airdrop positioning for Metric, a capital-efficient DEX launched in mid-October, categorising the platform’s activity by risk and effort.

• In Q4, two perp tokens, Extended and Variational, are launching. It will be interesting to see whether they can follow Hyperliquid’s and Lighter’s trajectory and continue the perp narrative.

• We also cover some of the carry trade opportunities around tokenised stocks available on Base and Robinhood Chain through the two largest lending protocols, Aave and Morpho.

• Platforms like Toros enable closing your options positions before expiry (built on Derive infrastructure).

• USDAi performed a $1 million burn of its governance token $CHIP and has over $9 billion in active deals.

And more.

AI Exposure onchain: $PRL and $VVV

From the time you wake up until you go to bed, I am sure you use AI in some form, whether for work or to help with cooking.

However, gaining exposure to this tech from a portfolio perspective has been difficult for a daily investor because these companies are private and already diluted, with companies like Anthropic expected to trade at ~$1.7 trillion.

With these companies, you are essentially betting on the tech everyone in the modern world will use, so a premium is expected. Additionally, revenue is only growing. Anthropic made $16.3 billion in H1 2026 according to its S-1 filing, which is ~$32 billion annually, 6x more than what it made in 2025.

It is also important to look beyond these huge companies and see the market more broadly, since any product that provides AI-related services competes in the same niche.

In this section, we explore some onchain products you can gain exposure to right now. It includes Venice and Pearl. There are other projects too, but today I am going to cover these two because I think they are the most interesting.

Venice provides private, uncensored model access for its users, as an alternative to Claude and ChatGPT.

Its annualised revenue is $123 million, putting $VVV P/S at ~10, which is less premium than Anthropic. However, $VVV doesn’t capture all this value, and Venice equity is involved too, creating a disparity between tokenholders and equity holders and raising questions around who gets the most value when the project succeeds.

However, to ensure token alignment, Venice runs discretionary and automated buybacks for $VVV (part of the sale returns to the token). In the last 30 days, these burns totalled $1.02 million, or $12.19 million annualised, putting the revenue share for buybacks at 10%.

The team also reduced token emissions from 2.5 million a year to 2 million this month, reducing net-new sell pressure on the token. However, at current rates, the burns remove only 500k VVV tokens from the supply, leaving the token inflationary; but given the growth, we expect the revenue to increase from here, helping push the token to the deflationary path.

The second token is $PRL, and it has caught everyone’s attention because it meets AI’s compute demand.

On Pearl Network, miners perform matrix multiplication on their GPUs, the core operation behind every chatbot, “proof of useful work (PoUW)”.

It is also important to understand that, in the current network, most mining compute isn’t paid-inference revenue; only one partner, Together AI, uses it to fund discounts on its services.

While this is worrying, the scope of this tech is much larger than many expect, and if multiple customers start using inference and paying for it, it helps build miner revenue through burns, as users can be charged in $PRL.

Also, while we are talking about $PRL, its launch was fair, and anyone can mint the token by mining the network or buy it on exchanges.

If you don’t want direct exposure, you can farm funding rates of $PRL as well.

We also recommend reading this article from Sparsity if you are looking for more such projects in onchain AI: https://sparsitydata.com/research/ai-onchain

How to position yourself for the Metric Airdrop

This week we released an article on Metric.

Here is a small guide on how you guys can use the platform to position for a potential future airdrop.

The key contributors to the Metric design include Curators/Market makers, LPs, and traders.

While it is not yet clear how each will be rewarded, we can get a rough idea based on each participant’s work and the value it provides to the platform’s growth.

The first one is curators.

1. Curators run the pool, and it can be profitable as they configure the pools and decide the spread split between LPs and themselves, but it will attract flows only if you perform KYB, since unverified curators attract only a fraction of flows, as our analysis above shows.

Additionally, it requires significant management, which is difficult for individual curators, and even with successful KYB, attracting genuine flows can take time.

If you are a normal onchain participant, LPing and trading on Metric is the best choice.

2. For LPs, it is as simple as providing liquidity on the platform, and you can start earning yield today.

You can provide liquidity in either one token or both tokens in the pool.

Currently, LPing in tokenised stock pools seems like the best choice, as they generally yield better; even if you end up holding one side of the pool, stocks are generally less volatile than crypto, so choosing a blue-chip stock and a green-tier pool that yields well is an efficient strategy.

3. It is hard to say whether traders have an advantage, since platform fees are zero, which can attract tons of volume targeted at farming the platform.

However, every fill spread goes to LPs, curators and the platform, so they create value, making it the lowest-risk option in the category and the cheapest to perform. For reference, generating $1 million in volume costs about $16 on stablecoin pools.

Given the platform’s newness, Metric can offer strong returns, with a potential airdrop while you keep doing daily onchain activities like LPing and trading.

If you are planning to use Metric, you can use our link: https://app.metric.xyz/r/castle

In the full article, we also cover the Metric architecture in detail and compare its performance on the real-time pools: https://castlelabs.io/research/metric-the-next-gen-dex

Will Perp Narrative Continue?

Q4 2026 could be the quarter when some of the most-awaited perp tokens finally launch.

Will this end the perp narrative, or confirm a trend that can continue?

In particular, two names are staying above the rest: Extended and Variational.

Extended has postponed its TGE once, with all the drama that came with it. Nonetheless, on October 23, they announced the $XTEN token, coming in November 2026.

They will announce more tokenomics details on October 31, 2026.

So far, we know that $XTEN will have a 1 billion genesis supply, with 30% allocated to eligible participants in the point program, which will receive it in their Arc wallet.

The second, and arguably the most awaited airdrop, is the one by Variational, also set fo happen in Q4 2026.

We don't have any details yet, and we think it will probably be later, around December.

Variational released the details of their $VAR token in a blog post at the end of September.

About 32% of the total supply is expected to be distributed with the genesis airdrop, 18% will be reserved for ecosystem incentives and development programs, and about 50% (a significant allocation) is reserved for teams and investors, with a 12-month lock after TGE.

All revenues will be directed to the Variational treasury, which will use them (not clear if all) to buy and burn $VAR tokens.

It will be interesting indeed to monitor how perp tokens perform after the first initial wave of big projects like Hyperliquid and Lighter.

Will there be continually decreasing returns?

Will Extended and Variational be cooks instead?

Something to keep in mind is that these TGEs can have broader implications for the perps sector as a whole and the future direction of upcoming TGEs:

1. Point campaigns will go on for both projects until TGE, so if you haven’t been active yet, there is still a last window of time to position yourself before the point program closes

2. Perps for XTEN are already on Hyperliquid, allowing anyone with exposure to hedge and play the airdrop more safely.

3. This second perp wave will become increasingly important in shaping the sector’s future. If Variational and Extended can confirm perps tokens that go up after TGE, that will reinforce new platforms with open point programs such as TxFlow, Entropy, QFEX, and more.

Tokenised Stocks in DeFi and how to earn beyond basic APY

There are multiple issuers tokenising public equities right now and pushing their DeFi use cases.

Two recent deployments which I find interesting are Coinbase Stocks deployment on Aave and Robinhood Stocks on Morpho.

Coinbase Stocks hub on Aave has reached over $18 million in deposits with borrowed liquidity of $5 million.

On Aave, with ongoing incentives, you can earn 3% APY on your stocks, or you can deposit the stocks and borrow USDC at a rate of 2.06% and deploy it on other yield opportunities on base and keep the spread, all while you keep exposure to the stock you hold, which is called a carry trade. There are also products by Superform and Dialectic Vaults which automate this carry trade for you.

A similar opportunity exists on Morpho on Robinhood Chain, as the borrow rate is currently below 2%, making an efficient carry trade possible.

On our Radar

• Hyperliquid will be accessible to U.S. customers through the permissioned HIP-3 protocol by Payward. This reinforces Hyperliquid as a global perp platform and will attract new flows, as the U.S. market is huge. Below is the diagram showing how different entities within this instance work together.

• USDAI, which provides GPU-backed loans to help companies expand their hardware capabilities, recently executed a $1 million buyback of its governance token, $CHIP, which led to a price rise of over 17%. The project is being overlooked, trading at about a $100 million market capitalisation, and its niche is closely tied to AI growth, which we established above is quite high. In terms of loans, it currently finances about $327 million, with about $9.2 billion in active deals ready to deploy.

• Ascend, a social trading application on BNB Chain, just went live with early access. The consumer application category offers a tremendous opportunity to generate high revenue, as we saw with Fomo, but maintaining that revenue is hard because it depends on speculative memecoin volume. Fomo also expanded into Perps through Hyperliquid builder codes, generating over $300k in revenue last week and showing consistent volume patterns, underscoring the importance of offering parallel use cases to monetise some part of the initial demand.

• Toros launched on Base using Derive infrastructure to offer options on major assets, BTC, ETH, HYPE, SOL, and ZEC, and during the initial launch phase, you get 1% cashback on the premium paid, and your positions are tokenised. If you already use Derive, it may be worth exploring Toros for these assets, as you get access to the same liquidity base, earn cashback, and turn your positions into an ERC-20 token that helps you close positions before expiry.

That’s a wrap

Meet you next week!

Not a subscriber yet? Join for free:

Castle Labs

Research and Advisory for Digital Assets

PLUS, don’t forget to join our Telegram channel for the latest updates from Castle and all our research: Link here

Disclaimer: In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

Liquidity Providers (LPs) on Decentralised Exchanges (DEXs) have long faced a structural problem during market movements: as prices move on Centralised Exchanges (CEXs), which are hubs for spot liquidity and perform price discovery, DEXs still quote prices before the market moves, giving arbitrageurs room to rebalance the pool and match the asset’s global price. However, this activity affects LP profitability because they sell assets at prices that don’t reflect market value.

This phenomenon is also known as Loss-Versus-Rebalancing (LVR).

From January to September 2026, Uniswap V3 LPs recorded a net loss of $35.6 million across 62 major pools due to LVR, after accounting for fees earned on chains like Ethereum, Arbitrum, and Base, showing that LPs do make money from fees but lose more to arbitrageurs.

LVR measures what an LP loses compared with holding the same tokens and rebalancing them at market prices; arbitrageurs capture this value, and fees offset part of it.

However, it is not easy for an LP to capture this value on their own, and there have been efforts in the direction of minimising this problem and giving more value back to LPs or not losing it in the first place:

• Batch Execution: DEXs like CowSwap aggregate and clear the trades at a single “clearing price”, reducing any stale price to front-run.

• Dynamic Fees: When volatility appears on external venues, the pool increases swap fees, so arbitrage bots pay a premium that goes to LPs. This is possible through Uniswap V4 hooks.

• Concentrated Liquidity Market Maker (CLMM): With Uniswap V3, an LP can move liquidity around a reference price, making the design capital-efficient and offsetting LVR-related losses because liquidity is more utilised and makes more fees.

• Oracle-guided DEXs: They use an oracle as the price source and automatically shift the pool pricing curve or concentrate liquidity around the oracle’s price.

• PropAMMs: Proprietary AMMs also avoid most LVR because they quote using external venue prices and hold offchain inventory, enabling better fills for users. For this reason, PropAMMs have grown as a major source of liquidity on Solana today, with ~40% of swap activity coming from PropAMMs, and on Ethereum, nearly 7% and growing. Because they use their own inventory, retail LPs can’t earn yield.

The latest effort to solve LVR comes from Metric, an oracle-guided DEX, which introduces active pools that price using an external venue and keep liquidity moving with the market, reducing the need for active rebalancing.

In this piece, we explore what Metric is, how it works, some of its associated risks, and how to position for the potential airdrop.

Introducing Metric and its Architecture

Metric launched in March 2026 and ran in stealth mode for the first 7 months.

As part of the initial strategy, the Metric team deployed $2.5 million of its own capital as liquidity and connected its pools to aggregators, routing over $20 billion in cumulative volume across multiple chains.

They recently went public on October 15th, 2026, as a DEX on Ethereum, BNB Chain, and Robinhood Chain.

The core offering of Metric is its active pools.

An active pool on the platform uses an external source to set the price, holds the LP liquidity, and fills trades around that price, with a curator managing the pool.

The key benefit of this design is that the pool doesn’t perform price discovery; instead, it takes the price from an external source, minimising stale prices and reducing LPs’ arbitrage losses.

To understand how it works in practice, let’s look at the different contributors to an active pool.

A price provider is an external source of reference price for the pool from Chainlink, Pyth, or a market maker’s streamed quotes. Each pool reads this contract and gets a bid, an ask, and a reference price between them. If it cannot produce a valid quote, the pool stops trading while LPs can still withdraw.

A pool holds liquidity in bins around the reference price. Each bin is a percentage range around the reference, such as +1% to +2% (deviation, generally much lower).

LPs deposit liquidity into bins, and the pool calculates the price before the spread as: reference * (1 + deviation). For example, when a price provider reports a $100 reference and the deviation is +1%, the pool quotes $101 before the spread.

This deviation helps drive price discovery at the pool level. On Metric, pools don’t rebalance, so if traders rush to buy a certain asset, they consume liquidity across several bins, and the pool might remain single-sided. With this deviation, arbitrageurs have an incentive to sell that asset back to the pool at a higher price, capturing value from the localised flow.

Additionally, trades on the pool move the deviation: buys push it up, sells push it down, and large trades cross several bins at worse prices.

When the reference moves, the bins move with it, requiring no active management, unlike CLMMs like Uniswap V3, where liquidity is concentrated around a range from the reference price but must be actively repositioned to capture value from flows.

Because liquidity moves, it also enables capital efficiency by concentrating it around the reference price, which in turn generates higher volume from a small pool of capital.

This also enables true “passive yield” for LPs because they don’t need to constantly reposition their liquidity across the range; they can simply choose a set of bins to provide liquidity to, which moves with the reference price.

However, this isn’t risk-free, and Metric removes most stale-price arbitrage but not inventory risk: when flow is one-sided, the pool can end up holding more of the asset that is falling.

As established, pools are managed by curators. They pick the Price Providers, the bin width, the fees and the safeguards, and keep price updates flowing. LPs choose which bins to fund and can deposit a single token.

The curation process is permissionless, but there are certain constraints to protect LPs which also help set the risk profile of a pool:

1. The price provider sets hard limits on bids and asks, so a curator cannot quote a wider spread than the established limit.

2. A stop-loss extension rejects swaps that take a bin more than 15% below its recent peak.

3. Know-your-business (KYB) verification is an option for curators that affects their ranking from high to low risk.

4. If an oracle returns stale prices, the pool halts trading to prevent damage to LP capital.

LPs, curators, and Metric split the earnings from the spread inside the quote, and traders pay no separate fee. Metric takes a default 7.5% cut, and curators are responsible for adjusting the rest of the share between LPs and themselves (varies based on pool), with LPs earning most of the spread.

The curator-led model also introduces certain risks. Despite multiple constraints, curators still manage the price reference source, its update frequency, and spread, making it closer to a trading-strategy allocation. Moreover, the terms can also change after you deposit. On every pool, the curator and Metric can change their share of the spread at any time with no time lock.

This is why most of the volume is attracted by the top 2 verified curators that have done KYB and are relatively more trustworthy.

To protect users, the platform runs risk checks on pools and categorises them by risk, making it easier for LPs to allocate. Remember the constraints we mentioned earlier; the pools that follow all of them are green.

Currently, ~87% of TVL is in pools that follow best practices, while high-risk pools make up about 49% of the pools by count. This also shows that in an open system like Metric, where external curators are involved, depositors should be cautious and do their own due diligence when allocating to a pool.

We expect more curators to be verified in the upcoming time since the platform went live to the public very recently. Also, the current top 2 curators attract ~90% of the platform’s volume, but they are not well known; as more established curators join the platform, pool quality will improve, attracting more flows.

Quantitative Analysis of Metric: Capital Efficiency and Top Pools

Metric has already attracted over $20 billion in trading volume routed to it through aggregators.

However, aggregators route volume only if the platform can provide better fills.

To assess whether the platform is better for traders, we compared the median trader cost for the WETH/USDC pool on Metric and Uniswap, weighted against the Binance price between 15 and 26 October, so a negative cost means traders got a better price than on Binance.

On Uniswap, traders pay a flat fee (5 bps in our comparison) set by the pool; on Metric, traders are quoted a variable spread over the live oracle price, and because of the external price source, fills are generally better.

As the chart above shows, Uniswap was cheaper for larger trade sizes ($10k-100k and $1 million), and the negative cost means traders bought below the market price, overlapping arbitrage activity. At these sizes, Uniswap costs varied from -16 to +24 bps (-4 bps average), mixing arbitrage with genuine size.

Also, large trades on Metric cost a median of +1.9 bps (slightly higher than smaller sizes) because of lower liquidity, as these orders consume liquidity across several bins.

From an LP perspective, we also analyse whether Metric LPs earn more yield than Uniswap LPs.

Compared with the same pool and test window above and measured one minute after each trade, Metric WETH/USDC LPs earned +0.44 bps per dollar traded, while Uniswap V3 LPs lost 1.01 bps. Uniswap LPs earned about $150k in fees but lost $162k to arbitrage.

Retracing the same analysis through liquidity rather than volume, Metric LPs made roughly +78 bps (about $3k on $351k) against -5 bps for Uniswap (-$41k on $82.5 million).

While Metric LPs performed better and LVR is removed, it doesn’t reduce impermanent loss.

Within the same data context, Metric’s pool ended up holding 13.9 more ETH, and ETH fell 3.8%, reducing their liquidity value.

Also, this is a thin sample and may not reflect long-term pool performance.

Metric currently averages $150-200 million in daily volume with a current TVL of ~$17.3 million, which means 8-10x turnover.

Turnover measures a pool’s capital efficiency and is calculated by dividing daily volume by liquidity, showing how much volume $1 in liquidity can support. So a turnover of ~8x here means each dollar deposited on Metric on average powers $8 in volume.

For contrast, Uniswap across chains have a TVL of $4 billion and an average daily volume of $3 billion (turnover <1). This provides a concrete data point on the DEX’s capital efficiency: on Metric, the same liquidity can drive much higher volume, highlighted by its high turnover.

So far, the data suggest the launch didn’t create new demand; TVL grew while volume fell. Also, given the existing liquidity, Metric should now be able to support much higher volume.

At its peak turnover of 58x and current TVL of $17.3 million, it can support over $1 billion in daily volume, ~8x the current weekly average range.

However, that peak reflected scarce capital and could be pretty hard to achieve.

Additionally, if volume doesn’t grow, it will dilute the yield for existing and upcoming LPs.

To illustrate, we measure LP yield at different turnover levels to show how LP yield can fall if volume stays at current levels while liquidity keeps rising. For example, at peak turnover, the pool could yield up to 92% APY, while at 5x turnover, it could drop to 8%.

View the data above with caution, as it uses a single ETH/USDC measurement and ignores inventory price moments and impermanent loss.

After analysing flow sources, tokenised stocks and stablecoin pools drive most of Metric’s current volume.

One key reason is that Metric uses external price sources, which suits tokenised stocks best because the most liquid venues are in TradFi, with price discovery happening offchain.

These stock pools provide 24/7 access to spot trading, but on weekends, when markets are closed, they rely on internal price discovery because they lack an external price source.

In that case, if a news breakout or major geopolitical event occurs, the pool attracts flow, and without an external price source to arbitrage against, LPs might end up on the wrong side of the pool, with trades eating liquidity across all bins.

As noted, most of the current volume comes from tokenised stocks and stablecoin pools; the other pools attract little volume because of lower liquidity.

We believe Metric offers enough value for an LP to explore as a platform because its capital-efficient design can deliver better yields, and because the platform is relatively new, early activity could lead to rewards. Additionally, the team hasn’t raised so far, and the product is bootstrapped, leaving more room for potential community distribution, which makes the next section important.

How to position yourself for the Metric airdrop?

Key contributors to the Metric design include Curators/Market makers, LPs, and traders.

While it is not yet clear how each will be rewarded, we can get a rough idea based on each participant’s work and the value it provides to the platform’s growth.

The first one is curators.

Curators run the pool, and it can be profitable as they configure the pools and decide the spread split between LPs and themselves, but it will attract flows only if you perform KYB, since unverified curators attract only a fraction of flows, as our analysis above shows.

Additionally, it requires significant management, which is difficult for individual curators, and even with successful KYB, attracting genuine flows can take time.

If you are a normal onchain participant, LPing and trading on Metric is the best choice.

For LPs, it is as simple as providing liquidity on the platform, and you can start earning yield today.

It requires providing liquidity either in one token or in both of the pool’s tokens.

Currently, LPing in tokenised stock pools seems like the best choice, as they generally yield better; even if you end up holding one side of the pool, stocks are generally less volatile than crypto, so choosing a blue-chip stock and a green-tier pool that yields well is an efficient strategy.

It is hard to say whether traders have an advantage, since platform fees are zero, which can attract tons of volume targeted at farming the platform.

However, every fill spread goes to LPs, curators and the platform, so they create value, making it the lowest-risk option in the category and the cheapest to perform. For reference, generating $1 million in volume costs about $16 on stablecoin pools.

Given the platform’s newness, Metric can offer strong returns, with a potential airdrop while you keep doing daily onchain activities like LPing and trading.

Nomatic from Edge Pod weighs the opportunity even more heavily, calling it the Biggest Opportunity Since Hyperliquid.

Closing Thoughts

DEXs are a pretty diluted category with multiple DEXs and designs competing for the same flow.

However, this hasn’t stopped innovation. Over the years, multiple design approaches have emerged to improve the onchain trading and LPing experience, including Uniswap V3 CLMM, V4 hooks, CowSwap batched execution, and now Metric, an oracle-guided DEX mixed with a propAMM-kind experience.

In the first 10-11 days of Metric’s public launch, it has attracted over $17 million in TVL, and its capital-efficient design makes it more ready than ever to support large volumes.

The opportunity to allocate to Metric can’t be ignored, and there’s room for everyone. Curators can create their own pools and create value from the existing flows. LPs can earn lucrative yield, and traders can get better prices.

If you have read the piece till here and choose to use Metric, you can use our referral link: https://app.metric.xyz/r/castle

written by Noveleader

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Most onchain RWA yield today comes from short-dated US Treasuries (T-bills), wrapped in over 100 tokenised treasury products, including BlackRock’s BUIDL, Circle’s USYC, Ondo’s OUSG, and Franklin’s BENJI. Cumulatively, they represent $14.7 billion, or 38% of total onchain RWAs, and are among the most risk-free products, with an average 7-day APY of 3.48%.

Similarly, we find private credit, with Maple’s syrupUSDC at an average ~5.1% 30-day APY, and crypto funding rates, DeFi, and institutional lending, with Ethena’s sUSDe at ~4.7%.

Nonetheless, while different in scope and product, interest rates, borrower credit, and demand for crypto leverage are highly correlated and tend to move together.

That is, if rates fall, credit tightens, which in turn affects perps volume and funding rates.

To research additional yield-bearing RWA assets, this article looks at a different, largely uncorrelated source of yield: reinsurance.

We do so by using Re as a case study. As of October 20th, 2026, it reports over $375 million in deposits and $12 million in cumulative yield paid to its depositors.

We cover why reinsurance is an attractive asset class for RWAs, how Re works and how the yield is generated.

The Case for Insurance Yield

Reinsurance is insurance for insurers, a $760 billion sector as of October 2026.

The concept is less clear than with other RWAs, but it works like this: whenever you buy a policy, your insurer bundles your risk with thousands of others. To reduce risk and smooth earnings, the insurer sells part of its portfolio risk to a reinsurer. That reinsurer can decide to further sell a portion of it to other reinsurers (retrocession).

By offering unique risk exposure, reinsurance markets have also become an appealing source of largely uncorrelated yield that doesn’t depend on the broader market volatility and generates yield through real reinsurance activity. Some traditional finance reinsurance products, such as the Re Global Catastrophe Bond Index, returned 11.40% in 2025.

Transitioning these products onchain delivers three core benefits:

1. Broader Access: It democratises access to what are traditionally highly restrictive markets.

2. Radical Transparency: It enforces operational visibility through daily verification of offchain capital, public reinsurance books, and frequent audits.

3. Instant Liquidity: It unlocks idle capital. While funds backing reinsurance risk are traditionally locked offchain, an onchain representation keeps the capital liquid and accessible throughout the entire reinsurance lifecycle.

Keeping this in mind, we now explore Re, which brings reinsurance onchain.

Re: Onchain Reinsurance Capital

Re is an onchain reinsurance protocol that lets depositors supply their stablecoins, which are used to underwrite regulated reinsurance contracts.

Part of the deposited capital is deployed as collateral in US trust bank accounts to secure the reinsurer’s obligations. Before a reinsurer can write a treaty, it must post collateral that meets both CIMA obligations and the insurer’s requirements. The rest stays onchain as a liquidity buffer to fund redemptions. The portfolio’s performance (underwriting profits) supports token yield by increasing token NAV. For Re, in fact, NAV is a measure of yield accrual rather than total asset value.

Re currently has over $375M in total deposits, up 45% since September, making it the largest onchain reinsurance protocol by deposited capital.

All metrics can be tracked on: https://app.re.xyz/metrics

To attract depositors of distinct risk appetites and effectively manage risk, Re utilises a three-tiered, tranched system to absorb potential underwriting claims:

• Re’s capital and reserves (The Junior Tranche): At the bottom sits Re’s own capital, which acts as a first-loss layer to absorb any potential underwriting losses before user capital is touched.

• reUSDe holders (The Mezzanine Tranche): If underwriting losses compromise the junior tranche, this tranche absorbs any further losses before the senior tranche, accepting its place in the loss waterfall and lower liquidity (quarterly redemption) in exchange for a higher yield.

• reUSD holders (The Senior Tranche): At the top sits the reUSD, which earns a conservative yield, is insulated from losses, and has high liquidity (instant redemptions).

The protocol uses deposits in the senior and mezzanine tranches differently.

The reUSD deposits serve two functions: providing the onchain redemption liquidity and serving as offchain collateral deployed to reinsurance.

Whenever capital is deployed offchain, at least 50% of reUSD’s peak all-time deposits stays onchain to fund instant redemptions. This capital is primarily held in sUSDe, which earns yield expected to increase as USDe backing expands to equity-basis perps, boosting sUSDe yield and benefiting Re depositors.

The remaining capital can move offchain into trust accounts that use capital to collateralise reinsurance contracts.

As of October 2026, the offchain portion of the capital earns the risk-free rate (SOFR) plus a 250 bps spread determined by the protocol and funded by reinsurance activity, while onchain capital earns the 7-day trailing average sUSDe yield plus a 250 bps spread.

reUSD provides instant redemptions as long as the liquidity buffer has capacity. As of October 2026, onchain capital available for redemptions has never dropped below 40% of outstanding supply.

In contrast, reUSDe capital is allocated offchain and deployed only as reinsurance collateral. It earns the risk-free SOFR rate plus an 850 bps spread sourced from reinsurance.

reUSDe redemptions are planned to be quarterly, based on collateral requirements and cash flows from maturing reinsurance contracts.

Up to this point, Re focused on safer underwritings, with “little to no catastrophe exposure” in order to establish a safer portfolio and strategies. This is reflected in their portfolio allocation, which includes small business commercial property and liability, commercial vehicle coverage and liability, homeowners insurance (property coverage), workers’ compensation (injury coverage), and commercial property and personal vehicle coverage.

Now they are ready to slowly expand the areas covered, starting to write catastrophe risk as well.

Where the Yield Comes From

Re’s yield comes from a base rate plus a protocol-defined spread funded by reinsurance activity: 250 bps for reUSD and 850 bps for reUSDe.

Once brought onchain, these returns are much higher than Treasuries (3.7% on average), private credit (5.1%), and funding rates (4.7%). reUSD stands about 300 bps above tokenised T-bills and reUSDe about 800 bps above in terms of APY, as of writing.

The base yield

Offchain capital earns roughly the SOFR. The onchain buffer has been held mostly in sUSDe, earning Ethena’s yield.

In October 2026, Re reports ~$200 million of onchain capital and ~$250 million in offchain reserves (comprising both reUSD and reUSDe deposits). The onchain/offchain split is determined by multiple factors and doesn’t only reflect the strategy. It is primarily determined by the maintenance of the reUSD liquidity buffer (50% of the high-mark deposits, covered above) and how long it’s been since capital was deployed to reinsurance. Furthermore, the first venue for capital flows is onchain, as stablecoins explain the imbalance in favour of the former, since Re rebalances periodically.

Traction and DeFi Integrations

At the core of Re’s strategy is making reUSD deeply embedded as DeFi collateral, as shown by recent integrations.

The expansion of Solana has been one of the most strategic developments for the team: Solana ranks as the 3rd chain by RWA assets and is naturally one of the biggest markets for Re.

In August, Kamino’s deployment reached $20 million just over a week after launch, while Jupiter Lend took $6 million in under three hours, showing appetite for this yield.

Due to its profile, reUSD fits well in the ecosystem as one of the most appealing sources of differentiated RWA yield.

Solana has been one of the fastest-growing RWA ecosystems, a bet they made early on, and the perfect environment for growing the usage of Re’s yield-bearing assets.

reUSD also backs Morpho-powered vaults, which recently crossed $100 million in supply: users with idle USDC can lend it against PT-reUSD for over 7% in APY.

As of September 28th, reUSD was the top looping market on Pendle, with over 32% of the max looping APY for PT-reUSD maturing in December 2026, with over $200 million in TVL.

Additionally, three different reUSD vaults also launched on Fluid on Arbitrum:

• reUSD / USDC

• reUSD / USDT

• reUSD-USDC LP / USDC

For a more detailed map of reUSD DeFi implementation, you can refer to the table below:

However, these DeFi deployments carry downstream risks.

If any lending market accrues bad debt, liquidators rush to dump the asset in the open market, exhausting onchain liquidity and potentially causing severe secondary-market depegging for reUSD.

For instance, leveraged PT-reUSD positions face oracle-related risks if third-party price feeds rely on volatile onchain pools, which could trigger mass liquidations.

This vulnerability surfaced recently, when a big YT-reUSD purchase pushed the PT-reUSD price down about 3%, triggering $36.4 million in liquidations on Morpho.

Although this incident did not stem directly from Re’s, and their own contracts and reUSD were untouched, it shows the importance of considering third-party risk on leveraged assets, such as oracle risk and market leverage.

Finally, because Re’s onchain liquidity is backed by sUSDe (53% of reUSD capital is invested in sUSDe), any downstream depegging or high-redemption stress within the Ethena ecosystem could immediately lock up or impair assets for Re depositors.

Conclusion and Food for Thought

This article introduced Re as an interesting attempt so far to bring a different yield source onchain. Its roughly $320 million in deployed capital is still tiny compared with a $760 billion reinsurance market, underscoring the size of the opportunity: Alternative sources of RWA yield have barely any adoption yet.

Using a tranched system, it created two tokens, each with a specific asset liquidity profile.

Beyond that differentiator, reUSD already works as collateral on Kamino, Jupiter Lend, and Morpho vaults, and can be traded on Pendle.

While these products offer double-digit returns, they carry downstream risks that can arise from DeFi deployments, as in the August Morpho incident.

So far, Re has never encountered any issues with regard to underwriting risk and has been consistently profitable every year since inception.

Re is taking a step in the right direction, leading to a future where RWA yields are differentiated and move beyond the current yield-bearing assets used (e.g. T-bills) by targeting reinsurance, a massive traditional sector.

written by Francesco

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Disclaimer: This article was produced in collaboration with Re. Castle Labs applies the same standard to sponsored content as in our independent research. We strive to be accurate, unbiased, and educational. Commissioned partnerships provide resourcing and distribution, not editorial control.

The market has been a little quieter this past week.

However, if you are ready to allocate, there are opportunities we highlight in today’s newsletter that you might find interesting.

While we explore these opportunities, we also cover:

• Metric, a capital-efficient DEX which charges no fees to traders, launched on Ethereum, BNB Chain, and Robinhood.

• HPC commented on the SEC Crypto Asset Regulation, pushing for airdrop rules in the U.S. and arguing that automated buybacks shouldn’t be scrutinised, increasing S3 airdrop expectations.

• $PAPER announced non-transferability of the token, meaning it can’t be sold to preserve platform design.

• Lighter EVM devnet is live, the first step to create an ecosystem around the product.

And more

The DeFi Watchlist: Most Interesting Bets

In this part of the newsletter, we highlight some of the protocols which are tapping into newer growth streams, have a decent revenue multiplier, and are token-aligned.

First on my list is $LIT.

Last month, Lighter revenue reached $4.65 million or ~$50m annualised (highest since the beginning of Q2), pushing their P/S to ~15 at a current market capitalisation of $800 million.

They have recently expanded to binary options and will soon open vanilla options, so through $LIT we get access to three primary narratives: options, perps, and prediction markets.

In our latest perp report, the team also commented on some of their ongoing distribution efforts: “You can build the fastest exchange with the lowest fees, but users still need a reason and a path to find it. Our approach now is increasingly B2B2C. We want wallets, fintechs, brokers, trading terminals, agents, and other consumer applications to offer Lighter directly to their users.”

One such effort is Lighter Robinhood Perps, which added 35% to the protocol’s net revenue last month, an external growth lever the team has tapped that has driven real revenue growth. I believe more growth levers will come into play, helping Lighter expand its distribution.

Next in my list is $SYRUP

Maple made $1.63 million in revenue last month and, under its rule-based buyback (MIP-021), redirected 20% of that value to buybacks, reflecting token alignment. Additionally, the team is expanding into additional strategies that could boost yield and, therefore, demand for their assets, further boosting revenue.

Annualising September revenue, we get a P/S of 11.4, one of the lowest among lending protocols, including Aave, Fluid, and Kamino, suggesting repricing is also underway.

The last token in today’s list is $AERO

Aerodrome and Velodrome are merging into Aero on 21st October, 2026.

With this launch, they will expand to new chains like Ethereum, Arbitrum, Robinhood, and a few others. This launch will likely expand the addressable market by 3-4x, boosting market size and overall revenue.

On top of this, last month Aerodrome represented about 57% of tokenised equities spot trading, a primitive that is constantly growing, and with expansion to Robinhood, they can double down on it.

Aerodrome and Velodrome did ~$15 million in revenue and averaged ~$7 million this year, which puts their annualised revenue at $84 million even if we reject the last-month spike as one-time activity, pushing their P/S to 9.62, which, when compared to other DEXs like Uniswap, is pretty low, which trades at over 40.

As more protocols mature into revenue generators, I see them as a +EV play for the space because they show that revenue and positive token alignment get rewarded.

NFA, DYOR.

Metric: The Next-Gen DEX

Metric launched on Ethereum, BNB Chain, and Robinhood on October 15th, 2026, after a 7-month stealth phase where it provided liquidity for different aggregators.

It’s an oracle-based AMM that sources prices from external sources like Chainlink rather than discovering them within the pool, helping LPs avoid losses from arbitrageurs swapping in during periods of volatility when the AMM price drifts from the global price of the asset.

Arbitrage essentially returns the pool to the real market value, but LPs incur a loss because their liquidity is swapped at an older market price, known as Loss-Versus-Rebalancing (LVR).

Another benefit of Metric is that it doesn’t require users to actively shift liquidity, as in concentrated pools, because it deploys liquidity in bins at a percentage range of the current market price (+1% to +2% deviation), and these bins move as the market moves, improving capital efficiency.

They have so far generated over $20 billion in volume.

Pool deployment and liquidity provision are permissionless, and curators deploy these pools; two of them currently account for 97% of the platform’s volume, reflecting high curator and, more importantly, risk concentration.

The platform charges no direct fees to traders, and LPs earn from quote spreads, which is beneficial but can encourage volume farms that indirectly suggest they wouldn’t be rewarded.

Most of the platform’s current volume comes from tokenised stocks, and these pools have a high APY because they’re highly capital-efficient, with a small amount of capital powering huge volume.

$HYPE S3 coded?

Hyperliquid Policy Centre (HPC) recently gave five recommendations to the SEC on their proposed Regulation Crypto Assets, with airdrops as the main focus:

1. Airdrops: Airdrops shouldn’t count as selling securities if the network is live, rewards go to the users who used the protocol, and the airdrop itself isn’t a way to raise money. Also, connecting a wallet, paying gas, or doing KYC shouldn’t count as paying for the airdrop.

2. Trading: Make it clear that reselling these tokens isn’t a securities trade.

3. Safe Harbour: Let teams use the SEC’s safe harbour (the token is no longer a security) without admitting their token was ever a security, and cover them while they are building.

4. Buybacks: Codify the SEC staff’s buyback guidance, meaning programmatic, rules-based buybacks and burns are fine and the discretionary buybacks can be scrutinised.

5. Preemption: Keep state preemption in place after a project qualifies for the safe harbour, through a light annual certification.

If the SEC adopts these, projects could airdrop to U.S. users without geo-blocking, and those users could trade the tokens without it counting as a securities trade.

Are we getting $HYPE S3 soon?

$PAPER can’t be sold?

Paragon launched $PAPER perps as a pre-listing market, but it lasted only 35 hours and $14.3 million in volume. The market was halted after the Paper team announced that these tokens would be non-transferable, meaning the market could never transition into a standard perp.

In last week’s newsletter, we highlighted a core design flaw in Paper: because the platform uses Hyperliquid BBO prices, an attacker could buy on Hyperliquid, manipulate the price, and profit on Paper. To contain this, Paper caps the bankroll so the cost of moving BTC or ETH on Hyperliquid always exceeds what the attacker can win. A $PAPER perp breaks this, as shorting it is effectively shorting bankroll solvency.

This announcement enraged the community because if the token cannot be sold, the only way to make money is through staking rewards paid in USDC from protocol revenue, which might not be enough to offset the losses they bore to mint $PAPER in the first place, as the only way to mint it is by either getting liquidated or closing the position at a loss.

Additionally, the team is also changing issuance. Every $1 million lost will now mint roughly 0.1% of the supply, so supply compounds as losses accumulate, slowly diluting early holders in favour of newer users.

On our Radar

• Silhouette recently went live with RFQ on Hypercore, enabling even larger sizes. They will soon expand to HIP-3 markets (currently BTC and ETH), which need more of this liquidity.

• The lighter EVM devnet is live, helping build an ecosystem around the protocol, similar to Hyperliquid HyperEVM.

• Last week, when Tesla announced its Roadster, the TradeXYZ HIP-3 market on Hyperliquid was one of the most liquid venues for active TSLA price discovery. In the hour after launch, the market processed $45 million in volume and, as you can see below, retraced to the pre-market open.

• ZKSync launched Airbender Prime, a high-speed ZK prover on Ethereum that demonstrates real-time proving on a single GPU, improving finality times for ZK-based rollups and speeding up cross-chain liquidity and settlement. Additionally, it is quantum-proof.

• Is the Robinhood chain dead? Some core metrics, such as stablecoin liquidity, perp volume, and tokenised equities on the chain, look very stable, suggesting the opposite.

• Paboxo launched on the Robinhood chain, a lending protocol for tokenised assets that pauses some core operations during closed-market hours.

That’s a wrap!

See you next week.

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Disclaimer: In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

Solana is now the top chain by application revenue.

Over the trailing 30 days, it generated $193.1 million in app revenue, almost twice that of its closest competitor, Hyperliquid ($86.5 million), followed by Ethereum ($53.8 million) and Robinhood ($34.6 million).

This lead comes from consumer applications, which account for ~80% of application revenue, including apps like launchpads, trading terminals, collectables, and more. The rest comes from DEXs, Lending, and other DeFi protocols.

This revenue mix is often contested because it is essentially a cut of speculative memecoin volume, which is narrative-driven, so the consensus is that when attention dries up, volume and fees may leave with it. To test whether this holds for Solana, the report assesses how durable consumer application revenue is.

We then look at what is being built beyond the consumer app layer, spanning categories across Solana and analysing how they are growing. This includes Lending, DEXs, and, most importantly, RWAs, which have grown rapidly on Solana over the past year.

Solana Consumer Applications Have Reached Escape Velocity

Solana is a high-throughput blockchain that makes onchain activities fast, cheap, and smooth, which is a core reason it attracts consumer applications, as they generate high transaction volume and need a near-instant, low-latency experience. Moreover, they want to launch on a chain with strong liquidity and a user base that drives demand, and Solana can provide all of this.

The consumer applications on Solana can be mainly categorised as Launchpads, Trading Terminals, and Wallets.

Launchpads currently represent the largest segment of app revenue, led primarily by PumpFun, which alone accounts for 20% of Solana’s app revenue with ~$39 million in trailing 30-day revenue from the launchpad business.

Solana had all the ingredients to host a successful consumer application, but it didn’t attract users until PumpFun launched in January 2024.

The app also serves as the distribution layer, enabling trading of all launched coins. Combined with Solana’s high throughput, this enabled over 20 million memecoins to launch on the chain and ultimately drive application revenue.

Trading terminals and wallets follow, including Axiom, Fomo, GMGN, Phantom, and others. An important aspect of these applications is that they have distribution, which they use to their advantage by offering social trading, perps, and prediction markets on the same platform, ultimately capturing a share of some of the top revenue-generating businesses, apart from their core offering, which is primarily being a wallet or a terminal to trade memecoins.

This also suggests their growth isn’t isolated: it carries across the space as they help drive additional user flow into the integrated application. For example, the fomo adapter routes purchases on their application to the most liquid DEXs on Solana, including Raydium, Meteora, and aggregators like Jupiter.

In PumpFun’s early days, they also graduated their memecoins and created a liquidity pool on Raydium to trade them further. However, in March 2025, they launched Pumpswap to expand their revenue base ($15 million in the last 30 days), largely because swap fees are a huge chunk of revenue.

PumpSwap’s strategy reflects how a launchpad would want to control the full lifecycle of the coins it launches and keep earning as they reach higher market capitalisation.

Similarly, a DEX would want to control the launchpad business because it keeps generating value as more coins launch.

This is what we are seeing actively happening in the Solana ecosystem.

Raydium, one of the major DEXs on Solana, launched LaunchLab in April 2025, a bonding-curve-based launch engine that other teams can build launchpads on and graduate tokens into Raydium pools.

In September 2026, StonkFun moved its launches to LaunchLab. StonkFun quickly grew because it offers flexible quote assets like stocks and lets token creators set a custom tax rate on each transaction, which then buys the quoted stock and distributes it to memecoin holders, creating a flywheel that lets users earn a real stock by holding a memecoin. This also boosts the RWA holder count and volume, benefiting a whole category on Solana.

Beyond these obvious winners, protocols like Collector Crypt, a marketplace for Trading Card Games (TCG), have generated an average of $8 million in monthly revenue this year, showing the variety of interest in the Solana ecosystem beyond memecoins.

How Durable is Consumer App Revenue?

As established at the beginning of the piece, consumer app revenue can be categorised as narrative-driven and may not be durable, especially since it depends on memecoins.

To test this for Solana, we aim to answer the following questions:

1. The Floor: How far did weekly consumer app revenue fall in the one-year time span?

2. Retention of Apps: Are the applications that led the category on Solana still leading it?

3. Competitive Landscape: Are applications losing market share, and does that revenue go to other Solana applications or leave the chain?

The analysis ran these tests over a 1-year period from October 2025 to October 2026.

Weekly revenue from consumer applications ranged from $13.5 million to $42.6 million, with a median of $18.2 million. Most of the credit for maintaining this baseline goes to PumpFun because of its consistent revenue. As the chart below shows, the red portion is the most volatile and represents smaller consumer applications that launched but couldn’t capture enough market share. In Q3 2026, consumer applications started to grow at an accelerated rate, driven by new applications like StonkFun, which some days generated as much revenue as PumpFun.

This shows that Solana consumer applications have started generating a baseline of consistent revenue, answering our first question.

To understand application retention, we check whether the apps that led last year are still leading. The top 10 largest consumer applications by revenue in Q4 2025 earned $211.7 million and earned $261.3 million in Q3 2026, with 8 of 10 still in the top 10. This list includes apps like PumpFun, Axiom, and others.

In addition, revenue concentration among these applications has eased this year: the top 3 applications contributed 64% of consumer app revenue in Q4 2025 and now contribute 50.2%, showing the market continues to show an appetite for newer applications. The largest contributor to the new application subset is StonkFun, which made $27 million in September compared to $46 million for PumpFun.

However, StonkFun activity seems to be declining, with its 7-day average revenue at $490k/day, about 21% of its $2.3 million peak, suggesting that new products can succeed, but sustaining high activity is difficult and often falls to a lower, established baseline.

Solana consumer application revenue appears sustainable and growing, and much of the credit goes to launchpads, which account for most of the category’s revenue. Revenue isn’t highly cyclical, and ecosystem applications can draw consistent demand, making Solana one of the best chains to experiment with and launch new products.

The Maturation Test: Solana DeFi

The Solana DeFi ecosystem isn’t the chain’s primary driver of application revenue; however, it consistently taps new primitives, especially RWAs, and is accelerating faster than many assume. To highlight this, we plot the growth of different Solana DeFi categories against Ethereum over the past 30 days.

Most Solana categories posted more growth than Ethereum, partly because of Solana’s smaller liquidity base. But some categories, like synthetic dollars and yield, are where Solana took a real hit while Ethereum grew, likely because these categories are much smaller on Solana. For example, in the yield category, the only major protocol is Exponent, which saw a decline in value locked.

Earlier, we briefly discussed how DEXs accrue value from Solana consumer applications, as shown by their growth in the chart above.

In this section, we focus on applications generally considered independent of speculative volume and that are also huge on Solana, such as lending, which needs hard assets in the system that aren’t expected to drop to zero at any moment, consistent demand, and longer user retention.

The lending category on Solana is led primarily by Jupiter Lend and Kamino, each using different growth strategies, but before we go into more detail, let’s establish a lending protocol’s key growth levers by analysing what is happening on Ethereum.

On Ethereum, lending TVL is 11 times larger than Solana’s, with borrowing demand that can be boiled down to three key asset categories:

1. Liquid Staking Tokens (LSTs)

2. Yield-bearing Stablecoins (YBS)

3. Pendle PT assets

The first two asset categories are yield-bearing, and Pendle PT assets provide fixed yield at maturity, so users can also use them as collateral to borrow and execute a looping strategy.

In looping, users buy a yield-bearing asset like an LST or YBS, borrow against it, buy the asset again, and borrow again to increase leverage; the strategy remains profitable as long as the yield generated exceeds borrowing costs.

This looping generates borrow demand for lending protocols, boosting their revenue and lenders’ yield.

While Solana has LSTs, it doesn’t yet have YBS and PT assets at scale, but protocols like Kamino and Jupiter are actively working to bring them and better utilise existing ones.

Current YBS Liquidity on Solana comes from USDe and USDY deployments, totalling over $635 million in supply. USDe liquidity sits in both Jupiter Lend ($313 million) and Kamino ($190 million), but the remaining YBS liquidity, coming from USDY, isn’t deployed in these top lending protocols.

Users on these platforms can run looping strategies through USDe promotional rewards (since USDe itself isn’t yield-bearing, sUSDe is), enabling flywheel effects for lending on Solana.

To bring PT assets onto Solana, Kamino, for example, uses Chainlink CCIP to deploy them into Kamino markets and enable PT looping, but most of these assets have already expired. However, Solana now has its own Pendle-like protocol, Exponent, which contributes over $7 million in deposits and pushes PT looping on the chain. While PT assets aren’t big on Solana yet, once they scale, either through Pendle PT bridging or Exponent growth, it would be useful to run leveraged PT looping and increase borrowing demand on Solana.

The growth of RWA assets on Solana has also helped lending protocols by bringing in more liquidity. This composability also drives further RWA deployments as demand grows. Kamino and Jupiter Lend list multiple RWAs from issuers like OnRe, Hastra, and xStocks.

In the next section, we cover in detail how these assets can drive DeFi growth.

Ultimately, borrowing demand depends on the spread between an asset’s yield and the borrow rate.

Lending on Solana is soon facing another problem: the recently approved double-disinflation proposal, which would reduce net SOL emissions, lower staking yields on LSTs, and make these assets less attractive for borrowing. As yields on these assets fall, the market would eventually lower borrowing rates to sustain borrowing, which would also reduce a depositor’s yield.

To keep this from affecting the broader DeFi ecosystem on Solana, especially lending, YBS and yield-tokenisation need to grow on Solana. Additional growth levers could help compensate by generating enough borrowing demand through higher yields and engaging both lenders and borrowers.

Turning to other categories like Perps on Solana, they generated $42 billion in perp volume over 30 days, 20.6% of Hyperliquid’s volume, making Solana 4th in onchain perp volume, with the main protocols being GMTrade, Pacifica, and Jupiter Perps.

The recent perps expansion came from GMTrade, a GMX V2 fork on Solana, and Pacifica, an orderbook-based exchange. They take different approaches: GMTrade is built specifically for RWA perp trading, while Pacifica attracts users with features like yield on resting orders, tap-trading, and AI tooling. We cover their detailed strategy and core functionality in our flagship research on perp venues here.

Additionally, Solana’s stablecoin supply has reached $16.3 billion, up roughly 6-7% YoY, while Ethereum’s has fallen 9% to $146 billion.

USDC supply on Solana fell by $4.2 billion, with its share dropping from 72% to 42%, as new issuers (USDGO, USD1, and BlackRock’s BUIDL) added $3.5 billion, showing market appetite for new stablecoins, but only about $5.6 million of this new supply is deployed into DeFi, which is fairly low. BUIDL is permissioned and cannot be directly deployed into DeFi. USD1 is deployed in Raydium pools but is a pretty small deployment, and USDGO isn’t deployed anywhere.

In terms of DeFi utilisation, USDC leads with $544 million in deployments and about $930 million in borrowed liquidity, but it has consistently lost market share on Solana. Next, USDe is the largest asset, actively deployed as liquidity in top money markets.

While stablecoins grew on Solana, not all contributed equally to DeFi. Only USDe is widely used because of Ethena’s established partnerships with both Jupiter Lend and Kamino.

RWAs on Solana

For RWAs, Solana’s growth rate is much higher than Ethereum’s: it grew over 600% in the last year, from $700 million to $4.3 billion, while Ethereum’s tokenised market cap stayed similar, growing just 7% from $15.5 billion to $16.6 billion.

In relative terms, one year ago Solana RWA market cap was just 4.5% of Ethereum’s, and today it is 26%. On Solana, users can now access U.S. Treasury Debt, asset-backed credit, tokenised stocks, curated strategies, commodities, and more.

One category that grew massively on Solana is tokenised stocks, which rose from $63 million to $455 million, driven by issuers like xStocks and Backpack. On Ethereum, the same category accounts for $750 million in market cap, comparable to Solana.

As we already established, the biggest advantage of bringing RWAs onchain is making them productive. On Solana, utilisation is growing, with over $65 million in tokenised equities earning yield, driven primarily by xStocks, which can be used as collateral on Kamino and Jupiter Lend.

In the broader active RWA TVL on Solana, OnRe issues ONyc, backed by reinsurance premium income, and Hastra issues PRIME and AUTO, backed by home and consumer auto loans. Next is Maple, which has expanded to Solana with syrupUSDC, giving chain users exposure to institutional lending or private credit.

They issue yield-bearing assets, and as they scale, borrowing demand on Solana grows as they offer competitive yield, making looping profitable.

Closing Thoughts

Solana is home to the largest consumer applications. In terms of app revenue, it beats every other chain. These Solana applications show durable revenue, highlighting a less cyclical nature often unseen in a volatile market like crypto.

Solana’s growth isn’t limited to consumer apps; it also includes broader DeFi and RWAs. Broader DeFi growth is driven by Liquid Staking, DEXs, RWAs, and Lending, each up in the last 30 days, but categories like basis trade and yield struggle with fewer deployments.

While DeFi growth is strong, RWAs have grown exponentially onchain, gaining over 600% in tokenised value in the last year and outpacing every other major chain. The category now gives exposure to tokenised stocks, U.S. Treasury debt, reinsurance yields, car and home loans, and much more.

The contributing factors to this growth come from deliberate institutional efforts to attract more RWA deployments and capture the tokenised equities market and other niche RWAs, and, most importantly, to maintain this growth, they focused on making these assets useful across DeFi and integrating them with money markets like Kamino and Jupiter Lend, which proved fruitful for the whole ecosystem.

This growth is ultimately reflected in the chain’s DeFi growth too, with over $500 million in active RWA TVL in DeFi protocols, reaching ~8% of the chain’s net value locked. Additionally, because these assets are yield-bearing, they are becoming an important growth lever for borrowing demand on the chain through strategies like looping.

Solana has matured to become a thriving ecosystem with growth across different verticals. From here, growth depends on reinforcing similar efforts to sustain momentum and push verticals like basis trading and yield-related applications that could build more borrowing demand across lending protocols, which in turn attracts more deposits.

written by Noveleader

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Last week was one of the most exciting weeks because of the Citrini Research drop, and their portfolio included applications close to fundamentals (consistent revenue, buybacks, and growth).

Beyond that, the spotlight was on PaperTrade, which launched on 10th October, led to a $38 million loss for traders, and was briefly manipulated due to a design flaw.

While we cover them, we also highlight:

• Ambire Wallet launch on iOS and Android.

• AI Money and key players, including Pearl, Nockchain, and Bittensor.

• The Post-Quantum Trade, covering some of the protocols that benefited from the recent spotlight on the topic by Justin Drake.

• On our Radar: Lido Lend, Securitize Stocks, and Maple Finance.

Ambire Wallet is now on your phone

Ambire Wallet is now live on iOS and Android.

The mobile app mirrors the extension’s UI/UX and includes every extension feature. Now, from the phone, users can access the same core features:

• Hot accounts

• Hardware wallets: Ledger, Trezor, Keycard (QR & NFC), Keystone, imToken.

• Safe multisig: Transactions are synced between mobile, extension, and SafeGlobal thanks to Safe API support.

This launch also makes it easier to track your portfolio, DeFi positions, and transaction activity, now available on the main dashboard.

The Ambire wallet app is private by default, but you can change privacy preferences in settings.

One of Ambire’s most talked-about features, clear signing support (powered by EIP-7730 and Ambire’s humaniser), is also available on mobile, showing users exactly what they are signing. On top of this, features like onchain transaction simulation and security checks for significant balance decreases improve the application’s security and help reduce signing mistakes.

When accessing your phone wallets, a common problem is finding a way to interact with apps; they aren’t embedded in your wallet, but with Ambire you can find your apps within the wallet itself. Additionally, the built-in swaps cover major aggregator routes, with fees as low as 0% depending on your staked $WALLET holdings.

The app is available to download, and you can access it with our invite code: castlefamily

Citrini Research Portfolio: Tokenisation Supercycle and Fundamentals Matter

Citrini released a report last week sharing their thoughts on blockchain applications reaching escape velocity and breaking down the wall between TradFi and DeFi, driven by tokenisation.

Multiple applications are positioned to benefit from the eventual growth of RWAs, including DEXs, lending, and, most importantly, tokenisers.

The best way to see this growth is to understand the stack: companies tokenising these assets (BP, SECZ) and the rails on which they go live (HOOD, SOL, ETH, ARB, etc.). Next are the platforms where they trade, including DEXs (UNI, AERO, HYPE, LIT, DRV), and the applications that bring these assets into the onchain economy, including neobanks and lending (ETHFI, AAVE, ENA).

Also, if you notice the tokens Citrini mentions, most are revenue-generating and enable buybacks, two of a token’s most important features. This supports the core of “revenue meta”, or treating crypto protocols as businesses: evaluating their P/S ratio, competitive positioning, and how much more market share they can tap.

Most of these tokens performed well recently, suggesting the importance of looking at the fundamentals.

If you wanna go into the rabbit hole of the coins that might make it into lists like the ones above, we suggest taking a look at TulipKing’s latest video where he analyses over 2k coins listed on CoinGecko.

The AI Money

We released a report on Pearl yesterday: an AI inference-embedded L1 blockchain where the computational resources used to mine blocks also power AI through matrix multiplication, positioning $PRL as AI money. As the network grows and compute demand rises, with people paying in $PRL or burning it (coming soon), the token has a major advantage: it essentially reflects the flow of compute demand.

However, it is not the only player in the AI money space. Other protocols are also positioned in the segment, including Nockchain ($NOCK) and Bittensor ($TAO).

Nockchain, launched in May 2025, is a more direct competitor to Pearl. It didn’t start by supporting AI inference; its miners originally produced ZK proofs, but in August 2026, an upgrade added a second mining type: the matmul Pearl uses, in the same simplified number format Pearl runs today. Additionally, Nockchain’s AI compute network is initially compatible with merge-mining Pearl to bootstrap compute, an effort from Nockchain to attract PRL miners.

$NOCK currently has a market cap of $56 million, compared to $ PRL’s $566 million at the time of writing, a 10x gap between the tokens, even though both serve the same niche.

Bittensor is the largest AI-related coin with a market capitalisation of $3.2B, and the network runs 129 subnets. Each subnet is a contest where participants supply an AI service, such as running models or renting out GPUs, and are paid in newly minted TAO. Nothing is mathematically proven, and validators judge outputs and score participants, creating subjectivity and opening decisions to collusion. The top 10 subnets today account for ~40% of TAO emissions, including Chutes, TAOHash, Gradient, and others. As of today, these emissions run at about 3.5k TAO a day (~$370 million a year), with published revenue from subnets being around $19 million.

It helps to view TAO as the index and the underlying subnets as individual businesses, then judge them by performance. TAO is more of the index of the compute the network is powering, and subnets are businesses generating value from the services.

The Post-Quantum Trade

Post-quantum cryptography (PQC) is back in the spotlight after Justin Drake suggested that, in the worst case, a quantum computer capable of breaking crypto could be “months, not years” away, plus Vitalik’s push on the same matter and the “bunker mode” scare.

In practice, that hardware is still far off. IBM’s roadmap targets 200 logical qubits by 2029, while breaking the 256-bit elliptic curve cryptography (ECC) most blockchains run on needs roughly 1200-1450 logical qubits.

However, the market moved anyway. Starknet got the most exposure to the theme: its STARK proofs are already hash-based, and it targets full quantum resistance in 2027, but the L1 move that drove the recent rally is still “being considered”. Tron, which has PQ signatures live in testnet, barely moved. Near is the largest chain where users can already sign with PQC, but it is currently only “opt-in”.

Fully PQ-native chains include QRL (hash-based signatures since 2018, which is why Vitalik’s post helped it catch the bid), Quantus (QTC), Abelian (ABEL, a Zcash-style privacy coin with PQC), and Neptune Privacy (XNT), though these are mostly small and have thin liquidity.

The theme also extends to equities, where quantum computing stocks fell over the same two weeks the onchain tokens rallied.

If you are more interested in this topic, we recommend reading Zero Knowledge’s in-depth research on the different players in this segment.

On the Radar

• Lido announced a proposal for Lido Lend, a security-first lending platform inspired by recent DeFi incidents, introducing features like filtering hacked funds, listing blue-chip assets, and isolated markets. Lido already has strong distribution for this product, as it issues stETH, which is widely used in leveraged looping strategies that boost borrowing demand on platforms. Lido Earn could also directly tap into Lido Lend’s markets. It would be interesting to see how its distribution advantage helps the platform grow and eventually open a new revenue stream.

• Securitize has launched Securitize Stocks for eligible U.S. and EU investors, and it is also launching global onchain trading of these stocks, expected to go live on the OKXICE platform too, bringing in additional liquidity and flows for the instance, developed on Uniswap v4 hooks.

• Top 25 PumpFun deployers extracted $128m from trenches, showing how unfair the trade is for a usual retail investor.

• Ethos did its TGE under the ticker $WHUF, but it didn’t perform as expected, largely because they pushed liquidity to CEXs while DEXs were thin, even though most of their traders were on DEXs. Serpin explains additional reasons explaining why it went wrong.

• PaperTrade, launched over the weekend, has recorded over $900 billion in volume, with net trader PnL reaching $38 million, which would eventually award them $PAPER (the platform’s core mechanics). The protocol was also manipulated by a design flaw: it used Hyperliquid BBO mid-prices, which the attacker externally manipulated to carry out the attack, possible only because of the high leverage Paper offered. They resolved this issue by imposing certain limits on OI and position size.

• Maple Finance closed September with $1.57m in revenue and passed down over $300k in buybacks under their MIP-021 rule. Among lending protocols, it is the second-largest by revenue after Aave (annualised September revenue) and trades at the lowest P/S.

That’s a wrap!

See you next week.

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Disclaimer: This newsletter includes a sponsored segment produced in collaboration with Ambire. In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

Artificial Intelligence (AI) is a pivotal technology, and as its use grows, it demands more computational throughput than ever.

To deliver this throughput, AI companies need GPUs and energy. Even well-capitalised companies may not be able to source enough because GPU supply is limited and energy is scarce.

A good solution is often to rent the infrastructure.

For several years, Bitcoin miners have built industrial-scale mining infrastructure and secured the most important resource: access to energy, or power. This edge is now being priced in as demand for AI computation grows. Although these miners run ASICs, they don’t use their compute capability directly for AI; instead, they lease their sites and power to AI tenants.

This offers a better chance to tap a more sustainable revenue stream by using the electricity they draw to power AI-related computations. Revenue across miners already reflects this: AI and HPC revenue grew from just 2% of miner revenue to 22% of 11 listed miners between Q1 2025 and Q2 2026.

As a result, Bitcoin hash power may face increased competition from AI inference.

Another way to view this growing relationship between AI and miner infrastructure is to look at how BTC is mined. Under the Proof-of-Work (PoW) mechanism, miners deploy intensive computational power to secure the Bitcoin network and validate transactions. This process requires continuously calculating cryptographic hashes, a computational asset with no value once processed, making mining economically viable when the value of earned BTC outweighs the cost of computation and infrastructure.

So why not have both?

The computation can power AI inference while still securing the network and mining the asset, a solution called “Proof-of-Useful Work (PoUW)”. The Pearl network, which we discuss in detail in the next section, focuses on this intersection of AI adoption and blockchain.

What is Pearl Network?

Pearl is an L1 blockchain, launched in April, forked from Bitcoin’s code, which replaces the SHA-256 hashing with matrix multiplication (matmul), the operation GPUs run for AI inference.

This is exactly what Pearl is set up to do: turn Bitcoin POW into useful compute for AI (PoUW).

To integrate AI inference into mining, Pearl designed a system that verifies matrix multiplication instead of Bitcoin’s standard SHA-256 hashes.

Matrix multiplication is how you train and run AI inference, and it requires a lot of computing power.

They share a lot in common with SHA-256:

• Require significant compute to solve quickly

• The solutions to the algorithm are not subjective

• Cannot be forged or guessed (nor can you guess ahead of time what the next block’s function will be)

In turn, these still “need to be expensive to perform, but the answer also needs to be objective and cheap for everyone else to verify”, which is why Pearl uses Zero-knowledge (ZK) proofs to make these results cheap to verify.

To source AI-related compute needs, Pearl connects with aggregate compute networks and inference providers like Together AI, so businesses can use the compute they produce while miners earn $PRL. However, Together AI runs its own mining infrastructure for the network and uses the PRL rewards to essentially discount its customers.

Ultimately, Pearl aims to replace the computations BTC miners do to mine BTC with the more useful matmul AI uses daily, keeping the core blockchain economics while prioritising AI.

It’s, however, worth staying a bit more on the “useful” part of POUW, with part of the criticism addressed to Pearl being that the protocol does not prove whether the matrix multiplications came from actually paying customers or useful work, as miners could feed synthetic matrices and still get $PRL rewards.

In fact, a paper from June found that the dominant mining software at the time produced “verifiable MatMul but no external inference output”, as highlighted by Brian Breslow in his $PRL thesis.

This is exactly the point: avoiding the subjective task of assessing the utility of inferences, as a similar system was already implemented by Bittensor:

• A scarce native token

• AI-related resources supplied by miners

• Validators judging outputs

• Emissions flowing to what the network deems valuable

However, this introduces subjectivity and more judgment. This also includes previous examples of collusion, as “validators are incentivised to work together to vote on usefulness”.

Instead, Pearl’s AI inferences are not subjective.

This is the most important aspect of adoption: the entire value proposition depends on the simplicity of committing two matrices for AI inferences, with little to no overhead (the value of PRL received has to outweigh integration friction, risk, lost throughput, and overhead).

Miners still have to pay the full GPU cost to earn PRL. As difficulty rises, only miners with the highest GPU class will be profitable because they have the most mining power.

If enough useful miners join the network, others won’t be profitable anymore and will have no incentive to keep mining.

Avoiding anything that could introduce subjectivity helps prevent the miner collusion issues previously seen in other networks such as Bittensor.

However, this assumes that overhead costs, currently estimated at about 10-15% because the network runs on a simplified number format (INT8), will fall enough for useful miners to become the most efficient block producers. To address this concern, efforts are already underway: Pearl-GEMM is live on testnet and handles the standard format with a 0-3% slowdown.

PRL: Tokenomics and Future Value Accrual

The token has a hard cap of 2.1 billion tokens. Instead of halving like BTC, emissions decay, and the supply is projected to be about 50% out by year 4.

At the time of writing, PRL has a market cap of $475 million, with a mined supply of 339 million PRL (16.2% circulating supply), and is expected to issue about 305 million more PRL over the next 12 months, nearly doubling the circulating supply.

It is currently listed on two venues (BigONE and SafeTrade), with $6 million in daily volume and about $22k of bids within 2% of the price range.

Nonetheless, $PRL’s re-rating seems to be outpacing its actual use. PRL has more than tripled since September, and it gained the most traction after Brian Breslow of No Limit Holdings published his thesis.

Additionally, PRL is currently dilutive. Pearl has no halvings and about 1.01 million PRL, valued at $1.4 million at the time of writing, reaching miners every day. On top of this, the PRL supply isn’t following the schedule: it issued about 122 million in the first 6 days (36% of the current circulating supply) when mining difficulty was at its minimum, and 20k blocks were mined within the first 30 hours of launch. Block times have since settled near the 194-second target. This initial lead created unwanted dilution and benefited the miners who mined in the first week, contributing to the supply concentration.

There is no revenue attached to the token. Miners mine PRL, provide AI inference services, and earn stablecoins, but there is no mechanism for PRL to burn or for the supply to shrink.

However, there are solutions that are being worked on to solve the current issues, including the overhead, synthetic mining, and token value accrual:

1. The Pearl-GEMM upgrade: The version of Pearl running today only handles a simplified number format (INT8), which most compatible AI models don’t use, and it slows them by 10-15%. At that overhead, an AI company has little reason to source the computation from miners. A solution, however, is in testnet: Pearl-GEMM, which handles the standard format with a 0-3% slowdown. This upgrade is essential, as an AI operator isn’t ready to sacrifice 10-15% of its output.

2. Real AI work has to replace synthetic mining: Currently, not all the mining is useful AI inference. Research in June examined about 8k machines running on inference-capable hardware but with no AI-related code. The decentralised compute marketplace Pearl envisions can solve this with partnerships with AI businesses: users can pay and get paid in PRL to run inference on the network. These include reserving GPU capacity, fine-tuning models, or settling compute contracts without relying on traditional cloud solutions.

3. AI usage creating buy pressure and a potential burn mechanism: AI inference usage creates sell pressure today. Together AI, a US cloud provider that sells access to AI models, launched a model in May 2026 and discounted access by 25%, which they earn through $PRL mining they perform to meet compute demand. The team is considering pricing AI services in PRL, or burning some PRL with each purchase, to remove dollar-based pricing and create more demand for the asset.

Closing Thoughts

Pearl is making compute useful, and its target market is compelling given AI’s growth and eventual adoption.

Building a novel network comes with challenges, and for Pearl, these include high overhead, synthetic mining, and a token value-accrual mechanism, all of which the team is working on.

Most importantly, Pearl serves models in exchange for USD, with little to no flow back to the token; using PRL will be fundamental to drive token value and improve sinks. Most PRL minted is used as incentives and may end up being sold by miners for profit.

Also, PRL is expected to be the utility token of the decentralised marketplace the team envisions, which makes flows and volume hard to predict. At this point, we believe a direct comparison to BTC price (e.g., Pearl reaching 1% of BTC market capitalisation) is more speculation than fact.

However, we believe this is a valuable proposition for BTC miners already selling AI inference and could capture a good percentage of miner computing power, especially given future growth in the AI inference market.

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This excerpt is from our research on Mapping the Perpetual Trading Ecosystem: A Comparative Analysis of Perp Trading Venues across Design, GTM and Microstructure, highlighting the perp ecosystem, including the key growth enablers, the architecture on which the protocols are built, and the GTM strategy they followed.

Download the complete report here.

Perp trading is 4.7x larger than spot trading on most major venues, accounting for over 82% of total crypto trading volume over the past 30 days.

Perps have become one of the sector’s most important products because they let users maintain continuous (and leveraged) price exposure without owning the underlying asset.

Perp trading was already powerful for liquid cryptocurrency assets like BTC and ETH, even more so now that more asset categories are being traded onchain.

Most perp trading still happens on CEXs, with over $4.56 trillion traded, compared to $614.5 billion on DEXs over the last 30 days. The gap is even bigger than spot, with DEX trading being more spot-weighted.

In this paper, we dive deeper into onchain perps and provide more context for the sector’s overall growth.

The initial perp landscape was dominated by players such as dYdX and GMX.

Each product had distinct characteristics, which we still see today, though adapted.

Built on the Cosmos SDK, dYdX was one of the first protocols to see the value in verticalisation and in becoming an app chain using a CLOB.

dYdX moved from StarkEx to its own Cosmos appchain. Strategically, that made sense for the team, as an appchain gave them more control, more decentralisation, and sovereign infrastructure. However, for traders, this added friction through bridging, funding complexity, and onboarding flow. Moving cross-chain might seem like a given now, but it wasn’t back then.

Furthermore, the transition to an appchain wasn’t without technical challenges, including downtime, validator delays, and more. Decentralised governance also slowed product development velocity and made decisions that eroded community trust, such as shutting down token bridges while holders still had liquidity and assets there.

GMX V1 instead pioneered the GLP model: a dynamically balanced basket of assets such as ETH, BTC, and stablecoins that acted as the counterparty to trades opened on the platform.

GLP was a good early answer to bootstrapping perp liquidity, but it was not a clean long-term market structure. It pooled assets, used LPs as traders’ counterparty, and paid LPs fees. The trade-off was that LPs absorbed traders’ PnL, asset exposure, and inventory imbalances.

In short, the GLP model was hard to scale and bundled too many risks into one product. Every new market added risk to the same liquidity base, so OI caps, fees, oracle design, and pool composition constrained long-tail expansion. GLP was never meant to scale for long-tail assets, but only for majors and large caps. This also caps demand for offered assets because of capital inefficiency, which can reduce demand as competition increases.

GLP V1 also suffered a $40 million hack in 2025 due to a reentrancy attack, further undermining depositors’ trust.

GMX eventually also moved away from GLP to V2 and the GLV model, adding more flexibility and capital efficiency. Because of their inherent design, pool-based models are less flexible than order-book models for launching new markets and scaling horizontally.

Nonetheless, others have modified and used this model: Hyperliquid with the Hyperliquidity Provider (HLP), and Variational with the Omni Liquidity Provider (OLP).

The total addressable market for perps has always been large. However, earlier models couldn’t scale liquidity and, as a result, failed to compete with CEXs, with most users still trading perps there.

This is still true today, but the share of perps traded on DEXs has grown to over 13%, from 4% in 2024.

The peak so far happened in December 2025, when DEX perps reached over 14.25% of total volume.

This higher-level view tells only half the story and could even look disappointing. But by looking deeper into perps, we can see consistent growth, especially through 2025.

While many catalysts have driven this, the chart above shows that volume picked up at the end of 2024, coinciding with Hyperliquid’s launch and success, which we cover in more detail in the next section.

The latest spike from 2026, instead, can be attributed to a combination of the rise of RWA assets, which now can be traded through perps, as well as the rise of many venues to do so, such as Lighter, Variational, Extended, Entropy, and all the other ones (and more) mentioned in this report.

After Hyperliquid, in fact, over 261 perp DEXs have launched.

As it stands, Hyperliquid still leads the perp DEX market share by far, with over 56% of total open interest, followed by Aster (9.7%), Variational (6.2%), and Lighter (5.7%).

We mentioned that the landscape was initially dominated by dYdX, then GMX. Since Hyperliquid’s launch, it has led in market share, except for a brief period in November 2025 when Lighter claimed the lead.

The end of 2025 still represents the peak in monthly perp volume, with a cooldown throughout 2026.

The leadership change reflects a broader shift in the perp landscape, especially around listing and supporting RWA assets.

One of Hyperliquid’s most distinctive aspects, which gave it broad resonance outside crypto, was Tradexyz’s role in listing assets previously unavailable onchain and making them tradable 24/7; at its peak, this accounted for 50% of the platform’s volume.

A prime example is crude oil (CL). During the Iran crisis, the US attacked Iran on a weekend, when traditional trading venues were closed. Tradexyz was the only place to trade CL.

We wrote a full microstructure analysis comparing the CL market on Tradexyz vs the CME. In 3 weeks, CL went from a novel market to an established venue where traditional finance players could hedge their exposure.

For us, this is one of the clearest ways to show the utility of onchain RWA trading and drive adoption. As a result, many funds, such as Abraxas, are now loyal aficionados of RWA trading on Tradexyz.

Part of Tradexyz’s success is that it allows 24/7 trading of RWA assets through discovery bounds. These restrict price movements within a ±(1/max leverage) benchmark of the reference price during outside trading hours.

During the first weeks of testing bounds, the CL market actually hit the 5% bound, and markets stopped during the weekend. Now that this method has been battle-tested, Tradxyz uses re-anchoring to ensure continuous price discovery: once an asset’s price hits a trigger (e.g., nears the bound), it can re-anchor and use that price to set new bounds.

Beyond offering previously inaccessible assets to the retail public, RWAs also offer an interesting alternative to TradFi institutions.

This becomes evident when we look at the top 10 assets traded in perps as of 10 September 2026. Seven of the top 10 assets are RWAs, led by the Nasdaq 100 index and Gold, which together have over $1.4 billion in 24h volume and $850 million in open interest.

For this reason, we argue that perps have shifted from venues offering leveraged exposure to underlying assets to venues offering price exposure to previously unavailable assets.

As a consequence, RWAs have become a key aspect of a perp GTM, as we will see in the related section.

The Hyperliquid boost

One of the main catalysts for perps has been Hyperliquid’s rise. Both its TGE strategy with the airdrop and its shift from a perp exchange to a full-fledged ecosystem, aimed at becoming the “AWS of Liquidity”, have revived demand to build these primitives and create a blueprint others can adapt.

The important point isn’t just that Hyperliquid grew in volume. It changed what an onchain perp venue could be. Before Hyperliquid, perp DEXs were mostly understood as front-end trading venues: onchain versions of CEX perps, with lower custody risk but usually worse execution, weaker UX and less liquidity.

After Hyperliquid, the category expanded into something closer to a full trading platform.

Hyperliquid changes what traders can expect from an onchain perp venue, bringing together several pieces that had usually been separate:

• HyperCore, the high-performance trading layer for spot and perp markets.

• HyperEVM, a native builder environment around the venue.

• HIP-3, which lets builders deploy new perp markets and pushes listings closer to a permissionless marketplace.

• HIP-4, which introduces outcome markets, useful for prediction markets and options-style instruments.

• Builder codes, which let external front ends route order flow to Hyperliquid and monetise that distribution.

• HLP, Hyperliquid’s liquidity provider vault, which gives passive capital a role in market making.

• RWA front ends such as TradeXYZ, which use Hyperliquid infrastructure to bring equity and other offchain exposures into the same trading environment.

Each element contributes to Hyperliquid’s success; together, they put HYPE at the centre of these growth vectors, elevating the venue above previous perps platforms.

HyperCore gives traders the core exchange experience: orderbook trading, fast execution, deep liquidity and an easy interface. HLP gives the venue a native liquidity primitive. HyperEVM gives builders an ecosystem to build around. HIP-3 turns market creation into a product and revenue surface. HIP-4 adds outcome markets to the equation. Builder codes turn wallets and apps into distribution partners. TradeXYZ shows how to use the stack to bring TradFi assets into the same trading interface.

Together, they let users maintain portfolio margin across the platform, so they can run more complex strategies, such as gaining exposure to spot and perp markets for crypto and RWA assets, depositing liquidity, hedging against events, and more. Last week, Hyperliquid also launched manual borrows, allowing anyone to supply HYPE or BTC to borrow USDC and USDT.

Early in its growth, Hyperliquid followed a pattern similar to previous perps: it ran a point campaign and a major airdrop to reward users with skin in the game, helping build an initial base of loyal traders.

However, unlike many, the TGE was only the beginning of Hyperliquid’s growth path.

At its core, it’s a strong alignment across every aspect of its protocol and ecosystem.

This is reflected in its lifetime revenue of over $1.24 billion.

Contrary to popular thinking, not all of it comes from perps. Instead, spot markets, auctions, priority burns, and HyperEVM gas fees all contribute to the revenue surface, while $HYPE remains at the centre of growth.

Here’s how each element contributes.

The HLP was initially strategic for bootstrapping HyperCore across several dimensions. The HLP was Hyperliquid’s market-making vault where users could deposit capital and run passive strategies.

It played a key role in bootstrapping initial market liquidity and offered an additional retention loop for users who don’t want to trade but prefer passive strategies.

HLP provided an initial, native liquidity layer, so Hyperliquid didn’t rely on external market makers or outside capital.

In several ways, HLP is different from GMX’s GLP model. The former is more active than a static pooled liquidity basket, reinforcing Hyperliquid as a frontend where users can run different strategies.

Eventually, Hypercore and market-making activity grew so much that HLP is no longer fundamental and has slowly been deprecated, even though it seems to have picked up again after mid August 2026, with plans to move underused HLP USDC into lending to avoid idle capital.

Using the HLP did not come without challenges. One was the JELLY incident in March 2025, when a trader tried to short-squeeze the Hyperliquid market by pumping the spot token and holding a combination of short and long positions on the asset. We cover this in more detail in the upcoming sections.

Let’s use HIP-3 markets as an example. Instead of Hyperliquid being the only team deciding which markets matter, builders can deploy perp markets through the protocol’s framework by purchasing tickers through an auction system, with fees flowing back to the token.

In addition, builder codes meant Hyperliquid didn’t have to focus only on acquiring users; it could also expand horizontally by offering its trading technology as a white-label solution, so others wouldn’t have to build a perp trading engine from scratch.

Builder codes have been extremely successful, showing Hyperliquid’s focus on backend infrastructure. They bring more distribution to Hyperliquid, driving over $40 billion in volume, or 7.4% of the total, in the last 24 hours. Many wallets, such as Phantom and MetaMask, avoided building perp trading infrastructure from scratch and instead integrated builder code, generating over $25 million for Phantom and $10.5 million for MetaMask.

Recently, Hyperliquid announced HIP-4 markets, its version of binary outcomes, which can help the platform expand into event and prediction markets as well as options.

With this competition, perps platforms have to move and operate faster than ever. Launching new features isn’t the issue.

User acquisition is becoming harder. There are only so many active traders, and they are increasingly mercenary. A venue needs distribution, liquidity, product breadth and a reason for traders to keep coming back.

Hyperliquid’s answer has been to make the platform useful from several angles at once: trade on the core venue, build on the EVM, route flow through builder integrations, deploy markets through HIP-3, trade outcomes through HIP-4, or access new asset classes through external front ends.

Something not evident from the pieces we have mentioned is the strong alignment between the platform’s success and HYPE, the token. This is reflected in the programmatic buybacks: 95% of all fees the protocol gathers (on HyperCore, Builder Codes, HIP3 tickets, etc.) go toward HYPE buybacks.

To date, the protocol has bought back over $1.26 billion through open-market HYPE purchases.

Whether through HIP-3, builder codes, or HIP-4, Hyperliquid has focused heavily on expanding distribution.

A venue can manufacture activity before a token launch. It is much harder to keep activity after the obvious airdrop trade is gone and mercenary capital leaves.

For most exchanges, activity peaks before the airdrop because the product’s value is still unknown. Studying Hyperliquid shows how token alignment, execution, and the right distribution can create a deeper flywheel that moves the project story well beyond TGE.

Many protocols are trying to replicate this model, but whether they can match Hyperliquid’s trajectory remains a question.

Closing Thoughts

Onchain perps are expanding rapidly and are at an all-time high in OI. These venues have struggled with and overcome multiple design challenges, from low blockchain throughput that didn’t allow orderbooks to scaling liquidity to support institutional sizes.

The onchain perp ecosystem has evolved, and most activity has shifted from previous incumbents like DYDX and GMX to Hyperliquid, Variational, and Lighter. This evolution brought different architectural choices, and these products explored and introduced a new growth lever for these markets: RWA perp trading.

Platforms like TradeXYZ didn’t just introduce TradFi assets; they also enabled 24/7 trading and gained momentum to lead active price discovery when traditional markets are closed, as we saw during the Iran strikes earlier this year.

Most of the growth these venues are seeing can be attributed to the Hyperliquid boost, which commands over 56% of the onchain OI and revived the perp landscape by converting venue usage into broader token alignment and a flywheel.

Onchain perps are still early, but their growth is hard to ignore. Hyperliquid has already shown that decentralised venues can compete with centralised exchanges on almost every metric. On top of that, onchain venues are focused on increasing distribution, whether through consumer-facing apps or partnerships, making their expansion inevitable.

We cover more about different protocols and design approaches to the perp landscape. We also do a microstructure analysis comparing the execution quality across CEXs and DEXs. Find our complete report here.

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Apps, wallets, and fintechs are launching their own dollars, giving them more control over the economics, rewards, and user-retention loops behind their products. 

In this episode, we discussed this evolution with @laert and how @m0 is helping to drive it. 

Welcome to another week of our Castle Chronicle.

This week brought great announcements and market moves. The AQAv2 reserve yield of $14.58 million starts to accrue value to HYPE through buybacks, and lending tokens are repricing.

The U.S. regulatory stance continues to evolve, with the CFTC making two major announcements around leveraged trading for U.S. users, and we have the first permissioned pool to trade tokenised equities using Uniswap v4 hooks, built in collaboration with OKX and NYSE.

With this, we also cover:

• DePIN and its relation to frontier markets like AI and Robotics.

• Dialectic vaults for MAG7 tokenised equities.

• Monad is growing consistently, and its token is pacing up too.

• Migration to Derive V3 is officially scheduled for today, and the proposal to set the buyback rate from 35% to 50% has passed.

• EtherFi launched its own stablecoin powered by Ethena.

And more.

This week’s newsletter is brought to you by NoRekt - borrow USDC against ETH, protect your loan from liquidation, and get up to $225 in ARB rewards.

The Market is Repricing DeFi Lending

Lending protocols are a core part of onchain finance because they enable different yield-earning opportunities. Today, these assets are repricing because they are active businesses generating strong revenue and growing, with RWAs and borrowing against tokenised equities playing a crucial role too.

To better understand their growth and valuation, we calculate their P/S ratio. For most protocols, this ratio is above 20, which can be highlighted as “overvalued”, but the market isn’t pricing them based on just revenue but more so on their future growth and the market they can essentially target, which is much larger: the yield sector.

Protocols like Aave have already taken the initial step in this direction by launching the Aave app and providing onchain yield to daily retail users in an abstracted UI. Morpho is attracting institutions to launch vaults on their infrastructure; the growth the lending sector can achieve is often miscalculated.

As you’ll see in the table below, we calculate Morpho’s P/S based on the average fee take rate from protocols like Aave and Kamino, since it currently doesn’t generate revenue, which puts its P/S ratio at 60.

Morpho is currently running on a net loss of $46 million. Enabling a take rate on fees could be a path to profitability and generate tokenholder revenue.

The U.S. regulatory shift is real

CFTC made two major announcements on Monday, October 5th regarding crypto regulations:

1. CFTC opened a comment period on a possible new Federal License, the “crypto asset market”, which would let exchanges legally offer leveraged crypto trading to U.S. retail.

2. Separately, CFTC gave registered U.S. exchanges a short window (until October 20) to turn their existing perpetual-style stock index futures into true perpetuals by removing the expiry date. This follows similar relief for crypto perps in June and extends the perp structure to equities onshore.

Another major development is OKXICE, a joint venture between OKX and ICE (parent company of NYSE). On September 17th, the SEC issued an exemption allowing certain venues to trade tokenised U.S. stocks without registering as exchanges. They essentially permitted permissioned environments to support this trading, and that is what OKXICE is bringing to X Layer (OKX’s own EVM L2) through Uniswap v4 hooks that restrict pools to KYC’d wallets. This gives Uniswap the exposure to a new market, helping boost its revenue base.

DePIN and Frontier Markets

AI models are built on data scraped freely from the public web, and that supply is now running out. Robotics has it worse, since the data needed to train robots or self-driving cars wasn’t available online in the first place.

These companies are already paying for the data they couldn’t get for free; for example, Google pays Reddit $60 million a year for the data, and similarly OpenAI have a deal with News Corp.

This data can also be supplied from one of the older crypto sectors: DePIN

Before getting into how, let’s rewind to how a DePIN protocol works. They usually run on a simple supply-and-demand flywheel. Network data providers are incentivised with project tokens, and businesses use that data to accrue revenue, which they can use to buy back and burn the original incentive token.

The data they collect over the years carries more weight in today’s market dynamics.

GEODNET is one of the clearest examples. Ordinary GPS is accurate to a few meters, which is not enough for a drone or a robot. A fixed ground station, for example, can reduce this error to about a centimetre. GEODNET paid individuals GEOD tokens to host these stations and now has over 20k+ of them. Similarly, protocols like Hivemapper pay drivers for dashcam footage, and robotaxi companies pay for the resulting map data. Grass users share spare internet bandwidth for incentives, and AI companies pay for the web data collected.

These are just a few of the companies we mentioned; the list goes on, and it’s hard to cover it all in this short section, but the key point is this: data produced by DePIN projects is becoming relevant for both AI and Robotics.

Kinetiq S2 concluded: surprise surprise

Kinetiq ended its kPoints program on October 1. Instead of the airdrop many users hoped for, they gave point holders the right to buy KNTQ at a fixed $0.26. The token fell after the news, essentially closing the gap between the discounted price and the market price.

Kinetiq initially rejected a fundraising round with investors worth about $20 million at a $250 million valuation, or $0.25 a token. They turned this points program into a community round; if they had taken the original deal, it would have created a long-term supply overhang that would have affected the project’s trajectory.

On our Radar

• Dialectic launched vaults for the MAG7 tokens onchain, built on top of Makina Finance. They take user-deposited tokens from their vaults, borrow against the stock collateral on the Aave v4 market, and deploy the borrowed capital into a higher-yield opportunity, giving the spread between the yield and the borrow rate to the original depositors.

• Umia raised $6.1m in its latest public auction at $18 million FDV. Moments after the news broke, the token surged and now trades at $38 million FDV.

• Polymarket announced V2 yesterday, with updates on scalable infrastructure and multiple resolution adapters, and Shayne Coplan, Polymarket’s founder, may have teased a token launch. Polymarket has already made over $100 million in revenue after turning the fee switch, reflecting its growth. If they decide to launch a token and then do an airdrop, current market conditions mostly support it.

• CME is dropping plans for 24/7 oil trading, and TradeXYZ maintains its moat and lead in the sector.

• The Monad ecosystem is quietly growing, with over $1 billion in TVL. Its token is also near an ATH, and it went live on Robinhood today.

• First reserve yield from AQAv2 hits HYPE token and is expected to accrue over $200 million a year.

• Derive V3 migration is scheduled for today at 6 pm UTC, and the proposal to increase the buyback rate from 35% to 50% has also passed. Derive’s revenue has grown at an average rate of 35% QoQ this year. Following a similar trajectory, it could generate over $900k in buybacks and $1.8m in fees in Q4.

• EtherFi launched its own stablecoin ether.fi USD powered by Ethena. Over $300 million in stablecoins are already live on EtherFi; through this launch, they can leverage reserve yield economics to expand the business.

That’s a wrap.

See you next week.

Every week for the last 3 years, we have shared our research for free, directly in your email. Not a subscriber yet? Let’s fix it:

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Research and Advisory for Digital Assets

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Disclaimer: In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

To understand what drove this growth, we have just published a report on the perp ecosystem, covering the key enablers, the architecture on which the protocols are built, and the GTM strategy they followed.

We also feature interviews with Lighter, Variational, and Ondo, highlighting their approaches to GTM and product.

Link to the report: https://docsend.com/v/sjv2g/mapping_the_perpetual_trading_ecosystem

Table of Contents

We sat down with Ben Ungvari, Raydium's CMO, to talk about their success and resilience, the Solana ecosystem, their partnership with Stonk, and more. 

Welcome to another week of Castle Chronicle.

This week we witnessed another major CEX hack: Bitget, which was hacked for over $350 million. Since 2024, one major CEX exploit has occurred every year.

But not everything last week was bad; the SEC released clear FAQs on crypto securities laws, suggesting how tokens should be classified.

With this, we also cover:

• Launch of Ondo Intelligent Portfolio, which includes curated investment strategies.

• Aave v4 deposits are at ATH, and AAVE burn is coming soon.

• Ethena expanded USDe backing to an equity perps basis, which could boost yield and attract more deposits.

• Variational announced tokenomics and is airdropping 32% of its supply.

• Aerodrome and Velodrome are getting merged into AERO

• Hyperliquid AQAv2 in 4 days.

And more

This week’s newsletter is brought to you by NoRekt - borrow USDC against ETH, protect your loan from liquidation, and get up to $225 in ARB rewards.

Bitget hacked for over $350 million

Last Friday, Bitget, one of the largest centralised exchanges (CEX), was hacked for over $350 million, making it the 5th-largest CEX hack.

The attackers exploited a vulnerability in a third-party product to harvest credentials and spoof transaction data, tricking the exchange into approving the transfers, meaning no private keys were essentially compromised.

However, the situation is much better now, and the exchange is slowly rolling out redemptions for different networks.

It has already opened them for BTC and major EVM networks.

Ondo Launches Intelligent Portfolio

Ondo Finance last week launched a new onchain product category: Ondo Intelligent Portfolios, curated investment strategies delivered as single onchain transferable tokens.

The launch marks the first time model portfolio strategies have been made available to onchain investors through a single token. Three custom portfolio strategies addressing three specific needs across income, allocation, and thematic investments:

1. BLKHIon: Ondo High Income Powered by BlackRock

2. BLKDIGon: Ondo Diversified Growth Powered by BlackRock

3. BLKGRWon: Ondo High Growth Powered by BlackRock

Explore other portfolios here.

Diversified, professionally constructed portfolios have historically required brokerage accounts and traditional fund structures. Now, delivered as peer-to-peer transferable tokens from Ondo, these onchain portfolios become accessible to eligible non-US investors in permitted jurisdictions through the wallets, exchanges, and DeFi applications they already use.

Ondo Intelligent Portfolios can unlock novel capabilities:

1. Programmatic rebalancing

2. Full composability with DeFi

3. Complete transparency onchain

4. Multiple asset classes in a single token

What this means for investors

Combining institutional portfolio allocations with DeFi-native flexibility provides investors with a new product category that is:

1. Simple. Instant access to a professionally curated portfolio, delivered in the convenience of a single token.

2. Precise. Exact exposure to targeted investment allocations underpinned by tokenised stocks.

3. Flexible. Freely transferable and fully composable in DeFi, removing the friction of traditional fund structures.

4. Transparent. Every holding, weight, and rebalance is fully visible onchain to holders in real time.

5. Accessible. 24/7 global access (outside of restricted jurisdictions) and without minimums, lockups, or intermediaries.

6. Efficient. Programmatic by design with sophisticated strategies that scale seamlessly and at low cost.

To summarise, Ondo intelligent portfolio essentially encapsulates different user demands, which can now be accessed in a DeFi native fashion. Learn more about them in detail here.

The growth of Aave v4 and burn soon?

Aave V4 deposits are growing quickly, now sitting at $1.33B across 8 hubs and 24 spokes.

The hub-and-spoke model is the key change in V4. Hubs act as a shared liquidity base, while Spokes are individual markets that can draw liquidity from a hub under their own risk settings. This solves three major problems:

• Idle liquidity: Liquidity can be utilised across multiple spokes within the same hub, reducing fragmentation.

• Market bootstrapping: Any spokes launched under a hub gain access to the same liquidity base as other spokes, rather than scaling from zero.

• Risk Segmentation: Each spoke runs with independent parameters (collateral factors, access control, etc.), and the hub limits how much each spoke can add and draw through caps, helping contain the risk at the spoke level.

Two of the most interesting hubs listed at the moment are:

• EtherFi cash on Optimism, powering borrows for its users. It has reached $308m in deposits, with $34m in borrowed assets.

• Coinbase stocks on Base, which enables borrowing against tokenised equities. It has reached over $8m in deposits, with borrowing demand still in the early stages.

Stani teased changes to Aavenomics 3.0 and enabling token burns. Aave bought back 250k tokens but paused the buyback earlier this year due to the KelpDAO incident. In their prior buyback program, they didn’t burn the tokens; instead, they directed them to the treasury.

$USDe expansion to equity perps basis, and why it is bullish for $ENA

Ethena is extending USDe’s backing to equity-basis trading on Binance, meaning Ethena will hold spot bStocks from Binance and create short positions in the same asset to hedge and earn from positive funding rates, which have averaged ~11% annualised on Binance.

USDe currently has a $4.9 billion supply and has exposure across crypto basis and lending. Adding equity basis could boost the yield Ethena depositors earn because funding rates on tokenised equities pay more, which would in turn attract more flows and push USDe supply higher.

Also, once supply hits $7.5 billion, ENA buybacks will begin.

However, the yield increase depends on positive carry costs for equities on Binance; some of the mean has already turned negative, reflecting that positive costs cannot be assumed and positions will unwind once they turn negative.

On the Radar

• Variational is airdropping 32% of its $VAR supply following more of a $HYPE genesis path. Moreover, the team stated that the revenue directed to the treasury will be used to buy back and burn $VAR.

• The SEC cleared the air around crypto securities law, stating that buybacks do not make a commodity a security and that wrapped assets of these commodities aren’t securities either. Petro covered it in detail.

• Paxos launches PAXGy, a yield-bearing gold token that sources yield from institutional gold lending, enabling looping strategies onchain for the first time.

• Aerodrome and Velodrome are getting merged into Aero, with Robinhood and Arbitrum as the first-day deployment. In September, revenue peaked at a year-high of $14.5 million, with positive annualised net token flow. Even with revenue similar to Uniswap, it currently trades at 1/7th of UNI’s market cap.

• Hyperliquid AQAv2’s first payment hits in 4 days and is estimated to reach $200 million annually, accruing value monthly to $HYPE.

• Vitalik released a piece recently framing Ethereum as a Cryptographic World Computer. The piece notes that Ethereum will enable offchain compute while keeping verification onchain. By shifting complex computations offchain, the DeFi experience becomes especially optimised. Cryptographic covers the piece in detail.

• Agentic Bank Run Soon? As AI grows and starts handling broader financial decisions, it could push users’ funds from banks that don’t provide huge returns to other venues, leaving banks without funds to lend out, disrupting the economy. This is essentially the end state of the machine economy, and most of these actions will happen onchain because it is cheaper, with the infrastructure controllers becoming the key tokens.

• Derive’s share of options volume rose from 0.9% to 5% recently. It is increasingly expanding the options market while taking market share from other major players.

• Arbitrum introduced PGA (Priority Gas Auctions) and FF (Fast Feed), phasing out Timeboost. Both features help boost transaction priority and speed up the latest block updates. All of this revenue goes to the Arbitrum treasury.

• As Q3 nears its end, it has been the best quarter for net inflows into ETH and BTC ETFs since Q4 2025.

• DePIN tokens are catching the bid, with GRASS being up 90% in the last 30 days.

That’s a wrap.

See you next week.

Every week for the last 3 years, we have shared our research for free, directly in your email. Not a subscriber yet? Let’s fix it:

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Research and Advisory for Digital Assets

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Disclaimer: This newsletter includes a sponsored segment produced in collaboration with Ondo.

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

We sat down with them to discuss the importance of making RWAs productive capital once they land onchain and the best practices for doing so.

Follow us at x.com/castle_labs

Options are picking up again.

Brought back to virality following a couple of viral posts with big payoffs and the growth of $DRV, is this the time for options to go mainstream?

Turns out they just needed a little push.

We already covered options earlier this year in our report with Block Scholes.

In this short article, we take our research a step further by addressing the market’s main misconceptions, which still see one word used interchangeably for several different option products.

We split the category into at least three live product families:

1. Exchange-style options venues: Derive and Paradex.

2. Binary and prediction-style venues: Polymarket, Kalshi and Hyperliquid HIP-4.

3. Structured products and yield strategies: Rysk and Hegic.

A trader buying defined-risk calls on Derive is not doing the same thing as a HYPE holder selling covered calls through Rysk. A user betting on an election or a BTC level on Polymarket is not using the same product as a trader pricing skew on Paradex.

This distinction matters because it helps users understand each platform’s value proposition and which one fits their strategy or use case.

Options Exchanges

This category includes protocols resembling more traditional options exchanges. Think of them as the Uniswaps for options. Anyone can use these platforms to find the right option strategy for the required exposure. This category has made massive progress.

Initially, these venues operated through passive liquidity-provision pools, which greatly limited liquidity and scalability.

Today, they have moved toward a hybrid of central limit order books (CLOB) and request-for-quote (RFQ), complementing orderbook liquidity with professional market-maker liquidity.

Examples include Derive and Paradex.

User fit: pro traders, market makers, funds, active retail options traders.

Less ideal for: passive holders, users who want one-click yield, prediction-market users who want yes/no outcomes.

Derive

Derive evolved from Lyra, one of the earliest options AMMs.

Today Derive runs its own L2 on the Optimism stack, offering cross-margined options through an orderbook interface.

Its volumes have been consistently growing throughout the year, representing over 90% of total option volume traded daily.

A quick look at the user interface (UI) makes their target clear: they don’t hide options complexity and target sophisticated volatility traders.

Rather than simplifying the experience, Derive wants to offer the full power of options to those who understand them, positioning itself as exchange infrastructure.

Users can pick between assets, strikes, and expiries, then combine them to create custom payoff structures.

One such example, shared by KoolAid, went viral recently:

This user opened a call spread trade on ETH.

He bought ETH calls at a $5k strike for March 26, 2027, and sold ETH calls at a $7k strike.

For those unfamiliar with options, this means he’s betting ETH will be between $5k and $7k by March 2027. And you thought you were bullish on ETH?

Beyond the dreamy target, this post went viral because of a massive payout: the user invested $300k to win up to $20 million if ETH hits $7k. He will only make money if the price is between $5k and $7k; otherwise, the option will expire worthless.

This shows Derive’s power: a plug-and-play interface that lets sophisticated users build their own option strategies.

Derive just recorded its biggest-ever day in volume, with over $500m notional volume.

In the backend, it uses an offchain matching engine to guarantee instant execution and its onchain L2 for settlement.

Derive is launching V3 soon, turning the protocol into a zkVM on Ethereum mainnet, with all the benefits that come with it.

In addition to this:

• Improved throughput

• Cross-margin across portfolio

• Faster RWA and long-tail listing

• Native vaults

• Borrowing of additional non-cash assets

Derive will be able to offer options on a much broader range of assets, including equities, commodities, etc. Native vault deployment means third parties can create strategies, effectively acting as curators for structured products.

Derive is therefore the best fit for users who want real options infrastructure rather than simplified yield: its weaknesses are the same as its strengths.

Paradex

Paradex announced the integration of the Paradigm RFQ for its options platform in mid-September 2026.

Users can select from a simple strategy to a multi-leg strategy, and build their own payoff structure. The quote is then sent to the RFQ, with market makers and institutional liquidity providers providing their best quotes for execution.

Leveraging an RFQ avoids bootstrapping orderbook liquidity for each market, which was a major obstacle for early option protocols.

Furthermore, Paradex can leverage Paradigm’s RFQ, one of the deepest and most liquid implementations, with years of track record. Since its inception in 2019, it has processed over $1 trillion in volume.

For context, this is the same RFQ that Deribit, the leading options trading platform, uses and, on average, is responsible for 27% of its volume.

The options platform wants to provide as many assets and payoff designs as possible. However, execution quality and liquidity often constrain them. Rather than orderbook liquidity, more and more options platforms are relying on RFQ systems with professional market makers providing efficient quotes.

With this implementation, Paradex moves to a full-fledged option trading platform where users can pick their own RFQ structure and get quotes from one of the most liquid RFQs in the industry.

Binary Options

As we have already discussed in our previous report with Block Scholes, prediction markets are structurally identical to binary options.

Each contract pays a fixed amount if conditions are met at expiry; otherwise, it expires worthless.

In that sense, prediction markets are determined by the price of vanilla call options and resemble a call spread, a “combination of two calls on the same underlying”.

Under this strategy, a user buys a call at a lower strike and sells another call at a higher strike. The result is a payoff with three zones, the two extremes of which resemble that of a binary option:

• Below the lower strike: Both calls expire worthless. Payoff $0.

• Above the upper strike: Payoff is the strike difference.

• Between lower and upper strike: Payoff ramps up from $0 to the strike difference.

Polymarket

Polymarket relies on the Gnosis Conditional Token framework to create outcome contracts. To source liquidity, they leverage a hybrid CLOB model with market maker incentives.

Market resolution is perhaps one of Polymarket’s most criticised aspects, as it sources from UMA’s Optimistic Oracle and Chainlink for cryptocurrency markets. UMA has already had its fair share of issues, such as during a Zelensky market on whether he was wearing a suit.

These markets are inherently simpler than options and can appeal to more retail users because of their ultra-short expiry duration, making them a good complement to other sports or politics markets on the platform.

Currently, Polymarket offers 5-minute, 15-minute, and 1-hour markets, which users can go long or short. Because of their fixed expiration and binary payouts, these are binary options. However, the problem is that the payout depends on the price at the market’s final timestamp, which can be above or below the strike and doesn’t let traders express their view of the asset’s range.

Nonetheless, adoption for these markets grew rapidly, and Option protocols can learn from prediction markets by abstracting complex outcomes into a simple yes-or-no decision, rather than a multi-outcome event.

Kalshi

Kalshi has focused on a regulated approach to offering its products to US customers, which is its main differentiator.

Kalshi also offers both 5-minute and 15-minute markets, with a liquidity model similar to Polymarket, a hybrid between a CLOB and institutional market makers.

Currently, both Polymarket and Kalshi offer permissioned market creation; however, a permissionless process with user-generated markets (UGM) can eventually become an additional binary option, like a hedging instrument where users could set their own strike price and expiry. This will be complemented and boosted by asset class expansion across prediction market venues.

HIP-4

HIP-4 offers a slightly different approach than the two behemoths it shares this category with. In fact, we can argue HIP-4 is a framework for decentralised outcome markets.

HIP-4 went live in May 2026 as Hyperliquid’s implementation of outcome markets that support binary market outcomes and, at the end of August, opened permissionless deployment.

Launching these markets follows a similar procedure to HIP-3: users must put capital (over 500k HYPE) at stake to create them and earn 50% of the fees.

HIP-4 markets include not only prediction markets, but also options at scale. Beyond supporting these primitives, HIP-4’s major unlock is supporting everything within the same environment, enabling trading strategies that were much more complex before.

Users had to operate across at least two or three different venues (e.g. vote on a prediction market for a rate cut while hedging your position with a BTC short with the same collateral).

Eventually, with HIP-4, they can do it all on a single platform.

HIP-4 has had a phased rollout and, to date, has accumulated over $150 million in volume.

After the initial launch with 15-minute BTC markets, HIP-4 slowly cooled off until the recent enablement of permissionless deployment, when Outcome and Tradexyz launched their markets.

This is also extremely significant for builders, and another example of Hyperliquid’s infrastructure-first approach. Shared accounts and collateral, along with full composability, unlock entirely new opportunities for what can be built on Hyperliquid.

User fit: Active Hyperliquid traders, retail traders, sophisticated traders looking for hedging or complex strategies complementary to their spot or perp trading.

Less ideal for: passive holders looking for one-click yield, or prediction-market users.

Structured Products and Yield Products

Rather than being general platforms for purchasing and settling options, these protocols are more narrowly designed.

They focus on a specific aspect of option design and a specific use case; as such, they are less general than the ones we mentioned above, which mostly resemble exchange interfaces.

Rysk

Rysk has made options feel like an income product for HYPE holders rather than a professional volatility screen.

Initially launched on Arbitrum, they have found PMF on Hyperliquid.

Rysk’s value proposition is simple: it lets users earn yield upfront on their spot holdings.

There are, in fact, a lot of HYPE holders in massive profit; Rysk gives them a way to hedge their position while generating yield through covered calls.

This highlights an immediate difference between the platform and others: this is not a platform for the general retail public looking for option strategies. On the other hand, Rysk has a specific utility: it lets users with spot exposure use covered calls to hedge their positions and generate yield.

In a way, it works similarly to Pendle: it transforms spot assets that aren’t yield-bearing into a yield-bearing product.

It takes what Pendle calls the YT and distributes it to users as yield until the covered call expires.

Let’s have a practical example of how Rysk works.

Users can pick their asset and expiry and clearly understand the yield they will generate.

They immediately receive the APR as upfront yield. Then, at expiry, if the asset price is below the strike, they will get their spot assets back plus the yield. If HYPE instead goes above $106, they will receive only the same amount in USDC plus the generated yield upfront.

For this reason, contrary to others, which are measured by option premium volumes, Rysk’s success is better defined by its TVL, that is, the amount of assets users are locking into covered calls to generate yield. Reaching $50 million recently is even more impressive, since monthly expiries reset TVL to 0.

This reflects a completely different user profile than other options platforms.

User fit: institutions, large treasuries, directional funds, market makers, retail whales, passive holders looking for one-click yield.

Less ideal for: retail option traders, neutral funds, prediction-market users who want yes/no outcomes.

Hegic

Hegic is an onchain options trading protocol that simplifies option trading into a one-click experience and lets users stay anonymous, like the Hegic dev.

Hegic restricts listed assets to ETH and BTC; however, compared to Rysk, it also lets users express different sentiments through strategies like spreads.

Hegic options are American-style, meaning users can exercise them any time before expiry.

Hegic also has its own native token, which users can deposit into its proprietary liquidity model called Stake&Cover (S&C).

Hegic uses a peer-to-pool model.

In this model, Hegic tokens in the pool contribute to collateralising options and strategies, similar to the early GLP, where a vault takes the other side of traders on the platform.

As a result, S&C depositors get 100% of all P&L accrued by the protocol.

Compared to Rysk, Hegic is a broader platform that focuses on specific assets and offers a wider range of strategies beyond covered calls.

It sits between Rysk and Derive, offering a few assets but extensive strategies that are abstracted and made as easy as possible.

User fit: large BTC and ETH holders, large treasuries, market makers, DeFi whales.

Less ideal for: retail option traders, market neutral funds, prediction-market users who want yes/no outcomes.

Many Options for Options

This brief article shows that options is a broad term, and builders in the sector focus on different parts of the stack.

These days, we have seen strong growth from Derive, as the main options exchange platform.

Paradex has just announced its support for Paradigm RFQ, so we expect their quotes and volume to improve and grow accordingly. Others like Polymarket and Kalshi are still figuring out how to expand their total addressable markets by attracting more options traders and combining that with their event markets.

HIP-4 events by Tradexyz will be a defining moment, showing whether Hyperliquid is the right place for event markets and eventually leading to competition with major binary options venues such as Polymarket and Kalshi.

However, yield products like Rysk are extremely interesting to us, with a clear niche and utility. Expanding to more assets and chains is only the first step toward growing the user base.

Expanding the scope of complex strategies is also a priority, as it currently mostly focuses on users with spot holdings who are sophisticated enough to want to hedge or generate yield.

Nonetheless, we feel the options sector is just getting started, with market conditions aligning and user profiles evolving accordingly. Institutional investors will become more sophisticated, and we expect the recent payout-virality posts to drive more retail users to experiment with these products eventually.

written by @francescoweb3

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Welcome to another week of Castle Chronicle.

Last week, and especially the weekend, was pretty interesting. We saw Kalshi wash-trading allegations all over the feed, growing interest in options trading, and SEC Exemption News. Also read:

• Zcash NFTs and the ecosystem heating up as $ZEC touches new highs.

• Clarity Cloture failed, but we got something better from both the SEC and the CFTC.

• Arc launched, but not without controversy.

• Kinetiq redirected 5.3 million KNTQ to Hyperliquid AF, and Elysium went live.

• Neutrl holders need to take a harsh 49% haircut in redemption.

and more.

This week’s newsletter is brought to you by NoRekt - borrow USDC against ETH, protect your loan from liquidation, and get up to $225 in ARB rewards.

Kalshi and the Weekend Run

This is probably not how Kalshi envisioned their week going.

After a post by ICO beast, claiming 96% of crypto market share, things got ugly.

This prompted one user, beniduboss, a known builder, to reply with claims of wash trading, to which ICObeast replied as follows:

If there is one thing everyone knows, it’s don’t poke the autist.

For Kalshi, this will be a very expensive option.

In fact, Beni came back with receipts and a post showing proof for its claim.

It starts by showing how Kalshi market makers benefit from rebates, which makes it possible to trade effectively on both sides of the orderbook without losing money.

This directly clashes with ICOBeast’s claim that they have fees and therefore it would not be beneficial for them to wash trade.

However, the most convincing evidence from Beni came from another post, showing a lot of spooky aspects in the data.

Among those, a lot of trades on ETH have the same size of $5500, comprising over 48-58% of all ETH perp volume on over four days.

If you can only read one piece to understand this issue, it should be Octopus Takopi’s research.

It compares Kalshi with other venues such as Bybit, Binance, and Hyperliquid, and uses academic literature on wash trading to run a quantitative analysis of Kalshi’s volumes.

The findings are extremely clear and hard to counter across the different frameworks used.

While we invite you to dive deeper into the research, a single look at this table immediately shows the difference between the Kalshi markets and other control venues.

This is highlighted by trade size, the absence of round-size clusters, and the presence of near-identical opposite pairs in short timeframes with near-identical sizes.

The analysis of Benford’s law emerges clearly from the pictures below, showing how Kalshi is far from a common distribution:

The difference remains staggering and significant across all aspects of the research.

In particular, recurrent trade sizes raise suspicion, as they comprise a large % of Kalshi markets: $5500 for ETH, $5000 for BTC, $1000 for LTC, and $2400 for HYPE represent over 20-30% of the total notional.

They also note that a large % of Kalshi orders end up in the same cluster.

We believe that the data presented is solid and does not need more explanation than this.

Curious to see how Kalshi will respond to this, and if this ends up getting them in trouble. One would wonder, why would you do this?

And even more, knowing volume is not 1005 organic, why would you go on the timeline to celebrate your dominance against Polymarket?

As always, it all comes down to ego, pride and greed.

For those interested, we recommend reading the full report as great academic research on volumes and wash trading.

You can find the full article here.

Options are cooking

Options are picking up again.

Aided by a couple of viral posts with big payoffs and the growth of $DRV, is this the time for options to go mainstream?

Derive just recorded its biggest-ever day in volume.

Turns out options just needed a little push.

One such example, shared by KoolAid, went viral recently:

This user opened a call spread trade on ETH.

He bought ETH calls at a $5k strike for March 26, 2027, and sold ETH calls at $7k.

For those unfamiliar with options, this means he’s betting ETH will be between $5k and $7k by March 2027. And you thought you were bullish on ETH?

Beyond the dreamy target, this post went viral because of a massive payout: the user invested $300k to win up to $20 million if ETH hits $7k. He will only make money if the price is between $5k and $7k; otherwise, the option will expire worthless.

DCF god has also contributed with his post, copying KoolAid’s strategy and showing the power of options in practice.

After opening his risky ETH trade, he posted that he could already sell in-the-money options and end up in profit, showing the power of options as a leveraged bet on spot assets: with ETH up 15%, his bet is already up 70% or more.

Interested in options?

Stay tuned as we are going to release an options article in the next couple of days on our profile.

Zcash NFTs

Zcash ecosystem is heating up. With the token heating up toward $2000 and more, several initiatives are launching.

Just last week, an NFT project, ZKsnarks, attracted over 16791 bids for its collection of 8000 NFTs.

Users had to apply and bid. The clearing price for the collection ended up being over 1.5 ZEC, or $2.19k, meaning the team made over $15 million from the sale.

The collection’s total volume was absurd, reaching almost 37 million, with the team refunding over $19.43 million.

The success of this collection sparked a new NFT mania on the network, with others following suit and trying to replicate ZNsnark’s approach. However, we recommend caution to users considering this. Others are plainly copying the mechanisms, with little to no novelty.

Even the ZKsnark project itself has no utility and is a simple PFP, raising questions about the high price and how much money the team made.

In fact, this launch has not been without criticism; among those voicing it, zachxbt has raised concerns.

However, for once, these seem more like general concerns than substantiated claims. Nonetheless, it’s suspected that most of these NFT project launches are actually coming from Ordinal teams.

We will monitor whether ZKsnarks takes any steps toward broader ZEC community involvement or adds any utility, as well as the other collections launching this and next week.

As always, unfortunately, these initiatives are primarily driven by greed.

However, the Zcash ecosystem is on a heater, and these may be the first signs of adoption and additional ecosystem creation that could spur new primitives.

CLARITY failure, SEC Innovation Exemption, and Rate Hikes

Last Tuesday, the Clarity Cloture vote failed in the U.S. Senate. The act everyone was super bullish on didn’t pass, but the SEC and CFTC have made major progress toward bringing more crypto regulation to the U.S.

On Wednesday, the U.S. Federal Reserve raised its interest rate by 25 basis points (0.25%) to a target range of 3.75%-4.00%, the first rate hike since July 2023.

This makes borrowing more expensive and slows purchasing power, which in turn would reduce inflation. As SOFR nears 3.84%, this decision increases Circle’s reserve yield earnings, which is why its stock also jumped last week.

Last week, the SEC announced an innovation exemption letting U.S. users trade tokenised stocks onchain in a permissioned AMM environment. They outlined three key rules:

• Tokenised stocks must carry the same rights as the underlying share, including voting rights and dividends.

• Contracts must be public, auditable, and deployed on permissionless chains.

• If a third party tokenises a stock, the company receives 30 days’ notice and can object.

This cleared a lot of the air around tokenised equities: which stocks can be traded and which cannot. What’s been skipped are stocks that provide synthetic exposure, meaning they don’t carry the same rights as stocks and merely track the asset’s price.

The problem is that most tokenised stocks today don’t meet the criteria. Ondo is moving towards a custodial tokenisation structure where the tokens represent rights tied to the securities held in regulated custody. Backpack token rallied on this news, but it also doesn’t meet the criteria because its tokens can be redeemed 1:1 but are essentially a claim on the SPV holding the underlying assets. 100y from FourPillars covered this in detail.

Another token that caught a bid is Uniswap because trading is only to be done in a permissioned environment; Uniswap v4 hooks can provide that.

More recently, the CFTC issued a no-action position for providers of passive software, meaning developers who build software to connect users to markets and hold no funds are in a regulatory clear zone.

Arc Launched, but not without Controversy

Last Wednesday, Arc launched, but not without controversy. The team itself tried to push a memecoin named “Duke” on Arc to gain initial traction, trying to copy Robinhood’s trajectory, but it didn’t materialise, as the token still didn’t do well.

The chain’s daily DEX volume averages around $50 million and has declined over time.

Argus, the chain’s largest launchpad, also shows a similar decline in the number of tokens launching on its platform.

On the DeFi side, things look good on the surface, with the chain’s TVL at ~$350m, but it is primarily concentrated in Morpho and Aave, where borrowing demand hasn’t picked up yet, leading to the low APY.

Will the activity pick up the pace?

On our Radar

• OpenZeppelin, one of the oldest crypto security companies, was acquired by S&P Global in a recent deal.

• Kinetiq redirected 5.3 million KNTQ to the Hyperliquid Assistance Fund. These are all the tokens they bought back for the last 5 months. Also, Elysium's testnet went live today.

• Neutrl finally communicated about the redemption after over a month of its asset’s depeg, but to the surprise of NUSD and sNUSD holders, they would need to take a 49% haircut on their holdings.

• Trueo, a prediction market built on Uniswap v4 hooks, recently went live on Ethereum, and Vitalik posted about it, causing its token to rise over 700% in the last 24 hours.

• We are going live tomorrow with xStocks, Veda, Kamino and Sentora discussing their latest release of xStocks vaults on Kraken. Tomorrow at 3 pm UTC.

That’s a wrap!

See you next week.

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In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn’t guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

We sit down with Mike and learn more about his experience, what led to start EtherFi, their pivot, and current growth strategy.