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Solana monetary decisions in the spotlight
This is a segment from the Lightspeed newsletter. To read full editions, subscribe . The Solana world has worked itself into a frenzy over SIMD-0228, a proposal to change Solana’s inflation mechanism. It’s either a ploy to destroy Solana’s decentralization or will only fail to pass due to CIA-style sabotage. I was sure voting on the proposal would be pushed back, but as far as I can tell, voting is still slated to begin in Solana epoch 753 at around 8:30 pm ET. Helius CEO Mert Mumtaz, Blockworks Research data lead Dan Smith, and yours truly broke the proposal down in this week’s Lightspeed podcast roundup episode . SIMD-0228 proponents say Solana is overpaying for security and market-based mechanisms are more efficient, while detractors say the reduction of issuance rewards could centralize the network’s power. My editors tell me I need to add analysis to my reporting on the news, however, so I’ll give you my take. Although network centralization is a concern — MEV tips will contribute proportionately more REV, so Jito will have relatively more power, for instance — what’s more important is that Solana doesn’t lose the scrappy pragmatism that made it so popular in the first place. Issuance is probably too high, and validator revenue should start coming from real value creation in the form of MEV and priority fees. SIMD-0228 should probably pass. We’ll have more to say on that next week, but I think there’s an even more interesting conversation to be had around SIMD-0096, a move to stop burning half of Solana priority fees that was implemented in February . Since 100% of the fees now go to validators, Solana’s inflation has climbed a bit — from 3.7% to 4.6% on an annualized basis, Blockworks Research analyst Carlos Gonzalez Campo told me on this week’s other Lightspeed podcast episode . That’s a predictable outcome. But what I found interesting is how unpredictable parts of the response to SIMD-0096 going live has been. If users and validators were perfectly rational, then users should have started paying fewer priority fees, Campo said. That’s because Solana removed what was essentially a 50% tax on fee revenue, so validators could charge half as much for fees while generating as much revenue as before. But so far, priority fees have stayed constant — perhaps indicating that competition between users isn’t putting downward pressure on priority fees. On top of this, validator revenue from priority fees was proportionately lower after SIMD-0096 than it had been previously. Users made proportionately more use of MEV tips, and validators couldn’t get them to switch to paying priority fees instead. All of this is a little early to extrapolate absolute trends from, but it’s still interesting to note. Campo offered an interesting goalpost for SIMD-0096’s success: a reduction in the number of transaction processing units on Solana. TPUs are out of protocol services for transaction inclusion, and their proliferation adds developer complexity and overhead cost. SIMD-0096 — which was first pitched as a way to prevent side deals — could prevent new TPUs from coming to the network. Get the news in your inbox. Explore Blockworks newsletters: Blockworks Daily : The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam. Empire : Start your day with top crypto insights from David Canellis and Katherine Ross. Forward Guidance : Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. 0xResearch : Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more. Lightspeed : All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus. The Drop : The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.

2025-03-07 23:30
Reactions are mixed to BTC reserve, crypto stockpile
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe . So the US has officially moved to create that long-awaited strategic bitcoin reserve ? And a separate stockpile for other crypto assets? Yes, sort of. Reactions are mixed as people read the fine print. First, some details you might already know: Donald Trump signed an executive order to create a Strategic Bitcoin Reserve (SBR) and a Digital Asset Stockpile (DAS). The latter sports the same acronym as Blockworks’ upcoming event ! The SBR is to be capitalized with BTC forfeited to the Treasury department via criminal/civil proceedings. The US won’t sell bitcoin in this reserve. There’s not yet a plan to buy more BTC, leaving some disappointed. However, the EO notes that the Secretaries of Treasury and Commerce — currently Scott Bessent and Howard Lutnick — can “develop budget-neutral strategies for acquiring additional bitcoin.” Essentially ones that won’t burden taxpayers. As for the DAS, that would include digital assets beyond bitcoin (none specifically named in the EO) also collected via forfeiture. The government would not buy more assets for this stockpile. Many thought a bitcoin reserve announcement could be a catalyst to send BTC price to new heights. We did not see that immediately. Compass Point analysts called the reserve and stockpile creation “a nonevent.” Based on price action around the reveal, they added, the market seems to agree with this view. Bitcoin was trading around $88,200 at 2:10 pm ET — down nearly 2% from 24 hours prior. “Since these accounts are created by an EO, they can be undone by a future EO,” Compass Point’s Ed Groshans, Joe Flynn and Ed Engel wrote in a Friday note. The elements making a reserve “durable” include legislation authorizing specific actions and appropriating funds for those actions, they argue. So they’re labeling the EO issuance “a dud” — at least for now. “We will reassess the relevance of the SBR when Treasury and Commerce publish the strategies to acquire BTC.” Despite this reasonable take, many still consider this a monumental step in legitimizing BTC and the broader asset class. Bitwise’s Ryan Rasmussen encouraged people to “zoom out,” detailing the potential ripple effect. The end game was never “the U.S. government buys all of the world’s bitcoin.” A U.S. Strategic Bitcoin Reserve means… – Other countries will buy bitcoin – Wealth managers have no excuse – Financial institutions have no excuse – Pensions/Endowments have no excuse – Fear of the… https://t.co/iAoyeo3PYL — Ryan Rasmussen (@RasterlyRock) March 7, 2025 Falcon X research head David Lawant pointed to a few other positives. One being that Trump’s order clearly put BTC in a separate category while still acknowledging the value of other digital assets (remember Trump’s mention of ETH, SOL, XRP and ADA on Sunday?). And the EO seems to shield the reserve from any backlash on taxpayer money usage, he added — noting the US could diversify its gold reserves into BTC and/or utilize the Exchange Stabilization Fund . It’s unclear how much more we’ll learn during/after today’s White House crypto summit (happening now). Keep an eye on Blockworks’ X account (and mine and Casey’s ) for updates. Get the news in your inbox. Explore Blockworks newsletters: Blockworks Daily : The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam. Empire : Start your day with top crypto insights from David Canellis and Katherine Ross. Forward Guidance : Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. 0xResearch : Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more. Lightspeed : All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus. The Drop : The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.

2025-03-07 22:30