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Put Securities On-Chain!

Published

5 месяцев ago

30 января, 2025

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This week, in a Washington Post op-ed, Robinhood CEO Vlad Tenev called for a new approach to capital markets in the United States. He suggested a number of policies – modernizing accredited investor standards is an old favorite among finance wonks – but one stood out. “[T]here needs to exist a security token registration regime, allowing companies to create token offerings that are open to U.S. investors.” Here, Tenev seizes upon the skeleton key to unlock cryptocurrency’s full potential.

Here’s how securities markets work in the United States. By default, companies aren’t really allowed to sell equity at all. The Securities Act of 1933 defines securities and prescribes conditions – and penalties – for selling them. If a company wants to raise money, it hires a lawyer like me and either registers or finds an exemption like Regulation D (Reg D).

Most choose an exemption and go private. And as Tenev points out, many of those choose to stay that way – OpenAI, SpaceX or Stripe. But exempt securities do not trade easily. They’re generally encumbered by contractual and regulatory restrictions that make them illiquid. For the richest few companies, this might be fine – or even the point. But not for most. Without liquid secondary markets, investors can only realize profit through dividends. And where investors cannot realize gains, primary markets run correspondingly dry.

Registered securities, on the other hand, are highly liquid on the secondary market. This means that investors typically jump to participate in an initial public offering. But this process is also restricted to the richest companies by its massive price tag. PwC estimates that even relatively small initial public offerings cost millions of dollars, along with millions more in annual legal fees and compliance. This is still before considering the onerous transparency and forfeiture of control that come with registration. For these reasons now even top firms “avoid going public,” Tenev says.

It’s no secret this is a problem. Washington D.C. recently tried to address it by creating Regulation Crowdfunding (Reg CF) in the 2012 JOBS Act. The idea was to make exempt securities more accessible to small and medium businesses (SMBs), but they just couldn’t help themselves. Familiar restrictions on secondary liquidity hamstring the program. Combined with still-significant compliance costs, the result will never be a meaningful segment of U.S. capital markets.

Instead, the solution came from outside. Ethereum developers introduced the ERC-20 standard in 2015, allowing anyone to create an arbitrary number of tokens and sell them into instant liquidity. Project founders could restrict resale as they chose. But, in practice, the best projects developed deep, efficient markets quickly. These fungible tokens took various names and functions, but practically, for a time, they were the internet’s capital market.

On top of secure, trustless blockchain technology, the crucial breakthrough was just letting people buy and sell tokens freely. It turns out this is a product people really want, and initial coin offerings grew 100X between Q1 and Q4 of 2017.

This halcyon moment couldn’t last – wholly unregulated markets were a sink for scams, and the subsequent SEC campaign to end cryptocurrency fundraising is well documented. These days, it is extremely difficult to make a legal primary token sale in the U.S. Projects are left to give tokens away for free. Even then, a single successful Hyperliquid airdrop created more value in a day than all Reg CF offerings from 2021 to 2023 combined.

Rather than gesture to the past, though, Tenev emphasizes the future:

“Tokenizing private-company stock would enable retail investors to invest in leading companies early in their life cycles…enabling them to draw additional capital by tapping into a global crypto retail market… [It] would [ ] provide an alternative path to the traditional IPO[.]”

He calls this “tokenized real-world assets.” I call it a regulatory third way. Sitting between exempt securities and public offerings, the SEC should promulgate rules that allow projects to sell securities in the form of cryptocurrency tokens with limited compliance and disclosures – combining the relative simplicity of a private placement with the secondary liquidity of a public offering.

We already know the first-order effects of such a system. In 2017 and 2018 more than 2,000 projects sold tokens to raise over $13 billion. As Tenev points out, “the risks are highest where the opportunity for upside is greatest” and many of those early crypto companies failed. Many survived, though, and are still building today. Early investors grew rich, and their leaders remain faces of the industry.

The second-order effects are where the real value accrues. Compared to any traditional securities offering, cryptocurrency token launches are trivially cheap. By some estimates, there is as much as a trillion dollars of potential SMB capital demand in the United States. This suggests vast potential for on-chain fundraising. Nobody knows what access to this capital would mean – some would no-doubt be vaporized – but there is real potential that underserved markets experience asymmetric growth.

Of course, there are risks beyond lost investments, too. A liberalized cryptocurrency regime might displace some or all of the current public securities regime. This would, in effect, radically decrease the compliance and disclosure requirements for public companies, possibly undermining market efficiency and increasing deceit.

But why anchor to the status quo? A third-way regime can require disclosures without being as onerous as public registration. Consumer protection need not arise from laws that were written before running water was ubiquitous – much less cryptographically secure blockchain networks.

It’s not obvious that public securities would vanish anyway. The relative cost of compliance diminishes at scale. For mature companies, investors will probably demand traditional disclosures and be willing to pay a corresponding premium in exchange. If they don’t, maybe these laws’ time has come.

It’s hard to imagine anyone arriving at the contemporary regime from first principles. The president can launch a memecoin, but tokens tethered to business fundamentals are prima facie illegal. So, here I second what Tenev says, “It’s time to update our conversation about crypto from bitcoin and memecoins to what blockchain is really making possible.” Let’s put securities on-chain.

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First Solana ETF to Hit the Market This Week; SOL Price Jumps 5%

Published

4 часа ago

30 июня, 2025

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Solana SOL jumped about 5% Monday morning amid rumors that a SOL Staking exchange-trade fund (ETF) by Rex Shares and Osprey Funds could start trading on the market as soon as Wednesday.

The token later fell back slightly, now trading up about 2.3% over the past 24 hours at $157 at press time.

A spokesperson for Osprey confirmed to CoinDesk that the «fund will launch Wednesday,» following a post on X by the automated headline account «Unfolded.»

Just last week, Rex filed a letter with the Securities and Exchange Commission (SEC) asking whether comments had been resolved for their filing. Later that day, the asset manager posted on X that the ETF was “coming soon,” suggesting that the SEC had no further comments.

The REX-Osprey SOL+Staking ETF would be the first of its kind in the U.S. Several issuers are still awaiting approval for a spot SOL ETF which would likely also include staking capabilities.

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Katana Mainnet Goes Live as Pre-Deposits Hit $232M

Published

4 часа ago

30 июня, 2025

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Self described ‘DeFi-first’ layer-2 blockchain Katana has launched its mainnet after receiving $232 million in pre-deposits.

Deposits flooded in after Katana was revealed to the public less than a month ago. DefiLlama data shows that deposited jumped from $75M to $2320M between June 1 and June 30.

Depositors will receive randomized reward NFTs called Krates, as well as a share of 70 million KAT tokens, Katana’s native token. Upon launch, yield farmers will be able earn more KAT by staking on platforms like Morpho and Sushi.

The blockchain aims to solve one of DeFi’s largest problems: Liquidity.

A lack of liquidity can lead to a multitude of issues including slippage, inefficient pricing and unsustainable yields.

Some of the mechanisms Katana will use to solve that the issues is VaultBridge, which is a product that enables yield generation on deposited assets on Ethereum, as well as chain-owned liquidity (CoL), which allows Katana to retain 100% of net sequencer fees and convert them into liquidity reserves.

«Katana represents the endgame for how blockchains create value in DeFi,» Marc Boiron, co-contributor of Katana said in a press release.

The launch coincides with yield farming incentives including token rewards for liquidity providers on Morpho and Sushi.

Despite being based on Ethereum, Katana is blockchain agnostic so users can generate a yield on blockchains like Solana through Katana’s collaboration with Jito, a liquid staking protocol.

UPDATE (June 30, 2025, 17:46 UTC): Updates to reflect new numbers in pre-deposits.

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Why Are There No Big DApps on Ethereum?

Published

4 часа ago

30 июня, 2025

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On July 30, 2025, we will be celebrating a decade since Ethereum launched on mainnet. Inarguably, one of the biggest milestones in this industry’s short life.

When it launched as the world’s first smart contract platform, this was obviously something entirely new and a completely new way of thinking about software. Instead of renting access to someone else’s platform that could change the rules or lock you out at any moment, one could – in theory – now participate in systems that belonged to everyone and no one, where the rules were written in code and couldn’t be arbitrarily changed by a CEO’s whim. Users would own their date, and software would be maintained and managed by a network rather than a boardroom. The consequences seemed pretty utopian.

However, nearly ten years on from Ethereum’s launch and the dreams of a Web3 version of Amazon, eBay, Facebook or TikTok haven’t arrived, and are nowhere on the horizon.

Gavin Wood, Ethereum co-founder, and his vision of “Web3” envisaged exactly that. Joe Lubin, the renowned founder of Consensys, said that “Ethereum will have that same pervasive influence on our communications and our entire information infrastructure.»

The libertarian journalist Jim Epstein predicted a year after Ethereum’s launch that “the same types of services offered by companies like Facebook, Google, eBay, and Amazon will be provided instead by computers distributed around the globe.”

Vitalik Buterin himself envisaged Ethereum “law, cloud storage, prediction markets, trading decentralized hosting, [hosting] your own currency,” in his 2014 Bitcoin Miami speech, where he announced Ethereum to the world. “Perhaps even Skynet,” the fictional artificial neural network from the Terminator films. He has described the platform he created as both a threat and an opportunity to platforms like Facebook and Twitter back in 2021.

The Scale Problem

The barrier to achieving this vision is scale. The most successful consumer applications today serve hundreds of millions of users. Instagram processes more than 1 billion photo uploads daily. eBay handles roughly 17 billion dollars in transactions each quarter. Facebook’s messaging platforms process trillions of messages annually.

Ethereum processes about 14 transactions per second, and Solana can handle over 1000. Instagram handles over 1 billion photo uploads daily. eBay processes 17 billion dollars in transactions quarterly. The math doesn’t work.

Let’s entertain the decentralized eBay example for a moment. A truly decentralized eBay would demand far more than simple payments. Every listing creation or update would require onchain transactions for item metadata, pricing, and condition details. Auctions would need automatic bidding resolution with time-locked smart contracts. Escrow systems would have to hold funds until delivery confirmation, with DAO arbitration for disputes.

User reputation systems would require immutable rating storage tied to wallet addresses. Inventory management would need real-time stock tracking, possibly through tokenized goods. Shipping confirmations would demand oracle integration for delivery proofs. Marketplace fees and tax royalties would need smart contract enforcement. Optional identity verification systems would require decentralized credential management. Each interaction would multiply the transaction load exponentially beyond what current infrastructure could support.

It goes without saying that this would require a blockchain of unprecedented speed and throughput. Frankly, a decade after Ethereum, the infrastructure just hasn’t been there to support it.

The Economics Don’t Work

The business model hasn’t always made sense either. Modern applications need massive scale to generate revenue that covers development costs. Furthermore, layer 2 solutions fragment users across platforms, where (for example) Arbitrum users can’t directly interact with Polygon applications. This defeats the purpose of building unified global computing.

This isn’t theoretical. OpenSea struggled with profitability despite dominating NFT trading with high-value transactions & fee-tolerant users. If you can’t profit from selling digital art to crypto enthusiasts paying hundreds in fees, how do you build a marketplace for used goods? The economics are even worse for lower-value transactions that define mainstream commerce. A decentralized social network charging $5 per post would be dead on arrival.

Gaming applications that require a few dollars in transaction fees for every item trade won’t attract players who expect the same for free elsewhere. So far, the only viable on-chain businesses have been those that can extract massive value from relatively few users – essentially high-stakes financial applications and speculative trading.

The Calvary Is Coming

The industry accepted a false tradeoff: security and decentralization, or functionality and scale, but not both. But transaction throughput has steadily increased (and will continue to) across networks as the technology matures. We can now achieve massive scale even with proof of work chains, maintaining the security and decentralization that made blockchain revolutionary in the first place (rather than the premature embrace of proof of stake that compromised these principles).

Zero-knowledge proofs allow users to prove transaction validity locally, submitting only small cryptographic proofs that are aggregated recursively and in parallel by a network of provers. Networks can process millions of transactions without every node verifying each one individually. When users prove their own transactions, the marginal cost of adding an additional transaction approaches zero, and blockchains can finally support the economics that mainstream applications require.

But ten years on, it’s clear that the vision once laid out by the futurists of Web3 has moved at a disappointing pace. Let’s hope the next decade moves a little faster – and, fingers crossed – our blockchains too.