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We Can’t Regulate Our Way to Crypto Leadership. We Still Need Science

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The following open letter was written by Dan Boneh (Stanford), Joseph Bonneau (NYU), Giulia Fanti (Carnegie Mellon), Ben Fisch (Yale), Ari Juels (Cornell), Farinaz Koushanfar (U.C. San Diego), Andrew Miller (University of Illinois at Urbana Champaign), Ciamac Moallemi (Columbia), David Tse (Stanford), Pramod Viswanath (Princeton).

Here’s a multiple choice question.

Algorand, Arbitrum, Avalanche, Axelar, Babylon, Cardano, Cosmos, Eigenlayer, Espresso, Flashbots, Oasis, Starkware, Sui.

Byzantine Fault Tolerant (BFT) protocols, digital signatures, formal verification, maximal extractable value (MEV), public-key cryptography, proof of work, rollups, trusted execution environments (TEEs) used in blockchain systems, verifiable random functions (VRFs), zero-knowledge proof systems.

Which of the following is true of the companies, projects, and concepts listed above?

A) They were invented / created by researchers employed at or with deep roots in academic institutions.

B) They have fueled and transformed the crypto / blockchain industry.

C) They demonstrate how essential academic innovation is to the crypto / blockchain industry.

D) All of the above.

The answer is D. The lion’s share of these innovations happened at universities, largely in the United States.

Crypto and the U.S. Federal Government

Both the White House and Congress are working to support and accelerate innovation and bolster U.S. dominance in the crypto economy and the blockchain technologies that power it. The White House has established the Presidential Working Group on Digital Asset Markets, while two major pieces of legislation, the GENIUS and STABLE bills, are pending in Congress. There is a crying need for regulatory and legislative reforms that prioritize and support innovation in crypto while enforcing robust protections for consumers. Efforts to accomplish these things sensibly are to be applauded.

At the same time, though, we are on the brink of seeing massive cuts to academic research funding in the United States. The White House budget proposal for 2025 includes a cut of 55% for the National Science Foundation (NSF). In the meantime, China increased its budget by 10% last year. NSF is the source of most federal funding for research in computer science at U.S. universities. It’s the main source of funding that has driven crypto innovations like those in the list above. Companies provide little funding for academic research because it’s not product-specific. So defunding NSF means defunding scientists in the U.S.—including those leading crypto innovation.

Defunding the Innovation Pipeline

We are academic researchers in the field of crypto, representing five U.S. universities. Alongside our teaching, we conduct research and train PhD students.

While market cap is a short-term indicator of the crypto industry’s health, the number of PhD students studying blockchain is a long-term one: it reflects the depth of future scientific leadership. That pipeline is already thinning. Several of us could not take on new PhD students this year due to the uncertain U.S. funding climate. And we are not alone.

Several of the companies in the list above were co-founded by former members of our academic groups or by us. If future members of our groups vanish alongside scientific funding, so will successful future founders of crypto companies in the U.S. And PhD students don’t just start companies. They are also the engine that powers academic and ultimately industry research, doing the brain- and labor-intensive work behind the technical innovations that lead to faster, more secure blockchains. PhD students in our groups played a key role in creating or advancing in many of the concepts in the second list above. If they vanish, so will the breakthroughs they would have brought to the industry.

When we’re funded to do research and stay on the cusp of innovation in crypto, we’re also better teachers—able to equip students with the latest advances. That means stronger technical leaders educated in the U.S.

Conclusion

Better regulation and legislation could be a boon to crypto. But U.S. leadership in crypto won’t be secured by policy alone. At the forefront of crypto innovation is science—and U.S. universities have long been its powerhouse.

If you’re a farmer trying to ensure a strong harvest, it’s wise to upgrade your equipment and expand your fields. But if you stop planting seedcorn, no amount of machinery will save the crop.

If you care about U.S. leadership in crypto, contact your congressional representatives and senators. Urge them to support the research funding that has made American universities the seedbed of global scientific and technical leadership—blockchain technology included.

Authors:

Dan Boneh is a Professor of Computer Science and Electrical Engineering at Stanford University, and advises a16z crypto and several projects in the blockchain space.

Joseph Bonneau is an Associate Professor of Computer Science at New York University. He has served as an advisor for Zcash, Algorand, Chia, O(1) labs and Espresso Systems and as a Research Partner at a16z crypto.

Giulia Fanti is the Angel Jordan Associate Professor of Electrical Engineering at Carnegie Mellon University. She is a co-director of the Initiative for CryptoCurrencies and Contracts (IC3), a member of Department of Commerce Information Security and Privacy Advisory Board (ISPAB), and a member of the UK Financial Conduct Authority’s Synthetic Data Expert Group (SDEG).

Ben Fisch is an Assistant Professor of Computer Science at Yale University. He is a co-founder of Espresso Systems and has advised several prominent crypto projects, including Chia and Filecoin.

Ari Juels is the Weill Family Foundation and Joan and Sanford I. Weill Professor at Cornell Tech and a Computer Science faculty member at Cornell University. He is also a co-director of the Initiative for CryptoCurrencies and Contracts (IC3), Chief Scientist at Chainlink Labs, and author of crypto thriller novel The Oracle.

Farinaz Koushanfar is the Nemat-Nasser Endowed Chair Professor of Electrical and Computer Engineering at the University of California San Diego. She is also the founding co-director of the UCSD Center for Machine Intelligence, Computing, and Security (MICS), and a Research Scientist at Chainlink Labs. She is a fellow of ACM, IEEE, and the National Academy of Inventors (NAI).

Andrew Miller is an Adjunct Associate Professor of Electrical and Computer Engineering at the University of Illinois at Urbana Champaign. He is also a co-director of Flashbots[X], a co-director of Initiative for CryptoCurrencies and Contracts (IC3), and a board member of Zcash Foundation. He has been an advisor to Cycles, Chainlink, Inco, Clique, and Pi2.

Ciamac Moallemi is William von Mueffling Professor of Business and the director of the Briger Family Digital Finance Lab at the Graduate School of Business at Columbia University. He is also an advisor to several firms in the blockchain and fintech space.

David Tse is the Thomas Kailath and Guanghan Xu Professor of Engineering at Stanford University. He is a member of the National Academy of Engineering, and a recipient of the Claude E. Shannon Award in 2017 and the IEEE Richard W. Hamming Medal in 2019. He is also a co-founder of the Babylon Bitcoin staking protocol, currently ranked 8th in TVL (total value locked) among all DeFi protocols.

Pramod Viswanath is the Forrest G. Hamrick Professor of Engineering at Princeton University. He is a core contributor to Sentient.

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

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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

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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?

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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.

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