A company that wants to borrow $200 million can either tap into a commercial paper programme or use a slice of its medium-term note (MTN) shelf. The former helps fund immediate cash needs through a continuous, revolving issuance facility. The MTN route allows corporates to utilise a “shelf registration” filed with regulators once, to sell tranches of notes on demand when market conditions look favourable. But if the same company wants to raise $200 million by selling its own shares, it must hire bankers, tour fund managers for weeks, and pay up to 7% of the proceeds to cover the costs of the process.

This is one of the oldest problems in corporate finance. Raising debt is routine, but issuing equity involves a ceremony.

Paperwork or regulation are not the only reasons for this asymmetry. The bigger problem is demand. A company’s shares trade in one pool on an exchange during the market hours. When it wants to sell more shares than that pool can absorb, a bank or a fund manager has to go out and find new buyers through a roadshow.

Blockchains can address this asymmetry by broadening the geographic market from which demand for fresh equity flows.

In today’s piece, I explore how tokenised rails can let equity behave like debt and who captures the value in this process.

On to the story…

Stripping the Ceremony

While IPOs involve a roadshow and 5-7% processing cost in the form of bank commissions, raising follow-on equity has become relatively easier over the past few decades. In 1982, the US SEC adopted Rule 415 that created “shelf registration,” allowing qualifying companies to register securities they plan to issue over the next two years and sell them piecemeal later.

The at-the-market (ATM) programme took this one step further. In this, the company issues new shares to an appointed broker-dealer in the secondary market. The broker then drips these shares into the primary public markets in small amounts to avoid a sudden supply glut. Often, the market notices this only after the company files its quarterly report.

An ATM could cost the issuer only 1-3% in commissions, half of what IPOs cost.

Still, a problem persists with these ATMs. If the company’s broker-dealer pushes one too many shares into a thin order book, then it manufactures its own price drop. This is why the route is only ideal for those seeking to raise modest sums. For higher raises, companies still prefer to go for the roadshow. That’s what the IPO fees buy from the company’s partner bank - the ability to find buyers for their new shares.

Blockchains can fix this problem.

Widening the Pipe

Last week, Cantor Fitzgerald partnered with Securitize to let companies issue shares directly on a blockchain. It is different from other tokenised versions of stocks that have emerged on the blockchain. Vaidik and I wrote about how ownership works across these versions. Some of these tokenised versions are merely wrappers that give price exposure without voting and ownership rights.

But Securitize isn’t wrapping the stocks. Cantor, the bank that topped the US IPO table in 2025 for funds raised through Equity, SPAC, and ATM placements, understands well that there is value to be captured in widening the surface area over which demand accumulates for US public companies.

On July 2, Securitize became the first US company to go public and on-chain on the same day. About $270 million of its common stock (SECZ) went live on Solana and Avalanche on the same morning it was listed on the NYSE.

Two weeks later, Securitize joined hands with Cantor to take the proof of concept as a product and sell it to other companies. Cantor will contribute with its equity capital markets desk and trading relationships. Securitize offers the tokenisation infrastructure around issuance, distribution and settlement through its SEC-registered broker-dealer - Securitize Markets. Together, they will offer companies IPOs and follow-ons in which some portion of the shares are born on-chain.

On-chain issuance, in principle, can let investors across the globe access and own US securities in the same way a US-domiciled investor does. A token issued through Securitize carries the same voting rights and dividend claim as the underlying share that is recorded on the official share register.

But whether this parity reaches non-US investors depends on the regulatory landscape. The issuing company must issue a parallel Reg S tranche alongside the US-registered offering. While the shares issued under this tranche carry similar voting rights and dividend claims, Securitize’s own SECZ tokens today are restricted to eligible US investors.

If this parity can be ensured, then a company issuing on-chain is no longer capped by the depth of its own listed order book. The drip of new shares gets wider demand.

The tokenisation of the issuance layer of stocks has also coincided with the tokenisation of the settlement layer.

DTCC, the institution that clears almost every US stock trade, settled its first live tokenised trades of SPY, QQQ and Treasuries with more than 50 institutions, ahead of a full launch scheduled for October this year.

Streamlining the Demand

Setting up the infrastructure alone isn’t enough to get adoption. Only crypto-native investors straightaway understand the ease and value in preferring tokenised stocks. For the majority of investors who are not crypto-native, tokenisation and blockchain are foreign concepts.

This is where companies are assembling a market in a language best understood by their retail, traditional investors. Robinhood has spent the past year making tokenised stocks a key offering for their 28 million funded accounts. It recently launched stock tokens on its native Robinhood chain for retail users who want to hold on-chain instruments without knowing or caring what chain they sit on.

Read: Building a Financial Supermarket

Although Robinhood’s wrappers raise no capital for anyone, they help the issuance side by addressing one of its pressing needs. Retail platforms like Robinhood train an audience to hold a tokenised share through a familiar app without touching a seed phrase. Such an investor is more likely to become a future buyer of a directly issued tokenised stock from the pipeline being built by Cantor and Securtize.

This pipeline removes complications from a follow-on offering and makes it as easy as a treasury operation. Raising debt is easier for companies because it lets them raise funds on an ongoing basis, offers a deep pool of buyers, including money market funds, insurers, and bond desks, and has a relatively lower impact on the company’s share price. While the ‘shelf registration’ rule introduced in 1982 allows companies to raise equity on a continuous basis, it remains less effective because a fresh issue of shares in a shallow order book can lead to large price swings. Tokenised share issuance closes these gaps and makes equity behave like debt.

What’s at Stake?

US companies raised approximately $207 billion of new equity in 2024 and $219 billion in 2025 through IPOs and follow-on offerings, per SEC data. When you include SPACs and other blank-check vehicles, the number goes up to $216 billion and $246 billion, respectively. Follow-ons alone brought in $175 billion each year, spread across 1,000 deals annually.

2026 has kept up the pace. Companies raised about $115 billion through IPOs alone in the first half, driven largely by SpaceX’s $75 billion debut in the second quarter. Follow-on issuance is holding steady at a $175-180 billion annual run rate, per the SEC.

Cantor’s own equities desk expects issuers to test tokenisation with 5-10% of an offering. Even with a conservative starting range of 1 to 2%, earnings could reach $220 million, depending on the fee percentage.

At 1% adoption, roughly $2.2 billion flows through on-chain rails every year, larger than the entire current stock of tokenised equity. At 5%, the fee pool approaches $330 million a year, or a fifth of JPMorgan’s 2025 equity underwriting revenue.

The tokenised layer is a market opportunity for whoever owns the rails. As the fee for underwriting IPOs compresses due to the unbundling of IPOs (Read: The Unbundled IPO), tokenised stock issuance works like a hedge for underwriters like Cantor that are trying to capture value at this new layer.

A Bet on Incremental Demand

Today, tokenised versions of major stocks trade less than 1% of the volume of their primary listings. In its current form, the adoption looks like capital being largely rerouted from existing crypto users. But there is an incremental pool that tokenised stock issuance taps into. A retail investor in Bangalore or Lagos with stablecoins and no path to a US brokerage account can still own a share in the same way a US resident does. The size of this pool hasn’t been counted yet. But the growth of tokenised stocks (four times in the last 12 months) signals what is possible.

The Art of Capturing Value

Cantor’s positioned to capture the utmost value here. Its number-one IPO ranking is built heavily on SPAC underwriting. A lot of other banks charge 5-7% of IPO proceeds to tour institutional investors and find demand that exceeds what the company can supply. It’s this business that the on-chain issuance would erode. Cantor’s business is not heavily reliant on roadshows. In fact, it was Cantor’s SPAC that took Securitize to debut at the NYSE at a $1.25 billion valuation. If tokenised issuance scales, Cantor profits through its stake regardless of who runs the offerings.

You can see Cantor’s value-capturing strategy across its other deals. Cantor custodies Tether’s Treasury holdings. It also co-founded the bitcoin treasury vehicle Twenty One Capital with Tether and SoftBank. The template is to take equity in the crypto counterparties it serves, so it can own a piece of any value that accrues in the future layer.

When a function commoditises in this industry, the fee moves to the adjacent layer that is not yet overpopulated with competitors.

In the corporate world, we saw pricing commoditise first through blockchain-enabled trading tools like perp contracts, prediction markets and tokenised stock wrappers. Markets now signal a company’s IPO price level before bankers open their books. Settlement is commoditising as we speak, with DTCC racing to tokenise. The Cantor-Securitize deal is an attempt to commoditise demand-manufacturing and make a banker’s job redundant for every round of fresh stock issuance.

Although I believe the bet on incremental demand is premature, its direction is right. Today’s on-chain buyer pool would not fund a mid-cap follow-on. But over time, those demand pools will be built with the help of centralised platforms like Robinhood that onboard millions of retail users and offer them these tokenised stocks. They will not need to know that there is an underlying chain powering all this. The more that happens, the higher the likelihood that companies will choose the tokenised issuance route.

Roadshows and ceremonies might still not die. They will perhaps retreat to where demand still has to be manufactured. For companies and sectors that don’t enjoy liquidity as deep as SpaceX’s and OpenAI’s on the blockchain, roadshows and ceremonies will remain relevant. But for cost efficiency and ease of raising funds, most companies prefer raising equity to borrowing.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

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Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

The job of any financial market is to move capital out of declining businesses and into those likely to do well. Every other function in the market, including trading, wrapper products, and research, exists to serve that one job. The faster a market does this job, the more efficient it is considered.

For most of financial history, capital movement has been slow for numerous reasons. Investors could have enough information to know that a business was in trouble, but they had to wait for proof. They often had to wait to see quarterly earnings, guidance cuts, and analyst notes before they moved their capital.

On June 30, Circle’s stock fell 16%, its worst day since listing. Nothing had changed in Circle’s business. In fact, that same month, USDC settled a record $1.21 trillion in transactions. The cause was a press release from a consortium of 140 firms announcing a rival stablecoin. Just an announcement of a nonexistent digital dollar. Yet capital moved.

In today’s piece, I will explore how crypto rails have compressed the time between information and capital movement, and why this tells us about crypto’s maturity into fintech.

On to the story…

Waiting for the Proof

In 2000, financial economist Jeffrey Wurgler measured how quickly capital moved into growing industries and out of declining ones across 65 countries. Jeffrey’s research found that the speed at which financial markets moved capital distinguished developed markets from undeveloped ones.

The speed with which you can move capital in traditional markets has seen extremes across the spectrum. In 1975, Kodak’s own engineer built the first digital camera. The market took another 25 years to punish the stock considerably. The price fell from a peak of $100+ in 1975 to under $40 in 2000. It then moved to zero only in 2012, when it filed for bankruptcy.

Phonemaker BlackBerry’s market share also grew for two full years after the iPhone launched, from 9.6% in 2007 to nearly 20% in 2009. Although everyone had seen the iPhone, the market still waited for BlackBerry’s revenue to slip.

The traditional world has even seen the other extreme. When the CEO of US educational services provider Chegg admitted on a May 2023 earnings call that ChatGPT was hurting new customer growth, the stock fell 47% on that day. Chegg’s revenue at that point was down just ~6-7%.

So, the difference between old and new markets is not the willingness to act early. Markets have always tried to price the future if they had enough information.

Chegg’s investors needed the company’s CEO to confirm the extent of the damage during a scheduled call before they could pull their money out. In the smartphone market, investors waited for signs that the iPhone was taking over from its competitors before acting. The market moved only after the signal became credible. For a long time, information availability has been a bottleneck in traditional markets. In the case of public companies, the information was made available when the company chose to share press releases or four times a year during their quarterly earnings. Private competitors reported nothing at all. Analysts would downgrade a company much later.

Crypto removes this bottleneck.

Eliminating the Bottleneck

Every protocol’s revenue, fees, deposits, and user flows are recorded on a public ledger and updated in real time. Nobody has to wait for an earnings call to know how much money a business makes. Anyone with a Dune dashboard or a DeFiLlama tab can see it in the frequency with which these platforms update their datasets. When a layer commoditises and a new player launches something in the adjacent layer expected to accrue more value, the revenue at stake for the incumbent is clearly visible on dashboards.

Over the past three months, my colleagues and I have written about layer after layer of this industry turning into a commodity. Stablecoin issuance, lending infrastructure, blockchains themselves. Each layer is getting attacked by cheaper, modular alternatives, and value keeps migrating to whichever layer stays scarce. That means the repricing trigger and a credible competitor showing up at an existing layer happen every few weeks.

Read: From Issuance to Infrastructure

In such environments, capital can move on the announcement because investors can immediately do the math on the revenue and market share at stake, without waiting for any analyst reports or earnings.

Take Circle for instance.

On June 3, CRCL’s share price fell 11% when reports of a Visa-Mastercard-Stripe stablecoin partnership first surfaced. On June 30, when the 140-firm consortium made OUSD official, it fell 16%. To be fair, another factor could also have driven the fall. FTSE Russell removed Circle from its growth indices on the same day, forcing index funds to sell. But the direction for Circle was apparent almost a month before the index exclusion was announced. Anyone could see what OUSD was attacking. Reserve income accounted for 99% of Circle’s revenue in 2024, and the consortium’s pitch was to return nearly all of that yield to its partners. The market did not need to wait for a single dollar to leave USDC.

A week later, Circle won approval for a national trust bank charter, signalling an improving operating story. But the issuance layer is commoditising, and the capital parked in CRCL will not wait for earnings to move elsewhere.

Transparency of information is just one half of what contributes to faster capital reallocation in crypto. The other half is the tools that make taking an action possible after having access to information.

This is where crypto’s market structure does what traditional markets cannot.

Think about what it takes to express a new opinion in traditional finance. If you hold a mutual fund and change your mind, you redeem at the end-of-day NAV and wait for the cash to settle. If you hold an ETF, you can sell intraday, but only during the six-and-a-half hours the exchange is open, five days a week. If your thesis involves a private company, there is often no instrument at all. You wait for a funding round or a tender offer. And if you are a limited partner in a venture fund, your capital is locked for ten years. You can change your mind, but good luck with moving your money.

Every one of these frictions delays repricing. Even though investors have new information that could convince them otherwise, the infrastructure prevents the free reallocation of capital.

Crypto markets run around the clock, so no opinion has to wait for an opening bell. Settlement is near-instant, so capital that exits one thesis is available for the next one within minutes. And the industry keeps building new instruments to express increasingly specific views.

Spot markets let you back a protocol. Perps let you hold a leveraged short or long position in any traditional or crypto asset or commodity, like gold or oil, without owning the underlying assets. Prediction markets let you price an event, like whether a stablecoin bill passes, separately from pricing the companies affected by it.

Hyperliquid’s permissionless markets have processed around $270 billion since last October, with 99% of that in non-crypto assets. When crude oil moved on Middle East headlines one weekend, Hyperliquid’s perps had priced most of the move before CME even reopened.

Read: Every Exchange Is an ‘Everything Exchange’

Put transparent information together with instruments that let anyone act on it immediately, and you get repricing capabilities that traditional markets can never offer.

Earlier this month, Robinhood made Lighter its in-app perpetuals engine and put $11 million of LIT in front of its 28 million funded accounts. Immediately, the market moved significant capital into the new entrant’s ecosystem.

LIT rose 50% in two weeks simply because investors reviewed a distribution deal and decided to reallocate capital.

Read: Building a Financial Supermarket

This changes the job of everyone allocating capital.

I feel this discipline travels beyond liquid markets. Private valuations famously lag public repricing by quarters, which is how venture funds carried their 2021 valuations deep into 2022. But using crypto infrastructure, liquid markets can also mark illiquid markets in real time.

Read: The Unbundled Term Sheet

The Commoditisation Era

Commoditisation has been the operating condition of every industry. Every few months or years, especially in a maturing industry like crypto, we see various incumbent layers get commoditised due to the concentration of competitors around a single stack within an ecosystem. As competition increases, that layer becomes less valuable, and value shifts to adjacent layers with fewer competitors. The competition then migrates to that new layer. This is what has been happening for years, and this is how industries evolve.

We saw it with open-source software, and now we’re seeing it happen in crypto. Stablecoin issuance, lending infrastructure, exchange venues, and the blockchains themselves - we have covered each of these layers in the past three months. We wrote about how they are being targeted by a cheaper, modular alternative, and every incumbent margin is being eaten away by others. In an industry built on open-source code and permissionless entry, no layer stays scarce for long.

A market where the playground and the reward are migrating often from one layer to another also needs to enable faster and more frequent capital movement between those layers. You cannot penalise the investors for wanting to reallocate capital, lest they move to more efficient and freer markets. The transparency and instruments that blockchains enable allow this precise movement with little to no friction.

This is why I agree with Jeffrey Wurgler’s yardstick to measure a developed market - one that enables its constituents to quickly pull money out of the declining industries and reallocate it into the growing ones. By that measure, this is the most developed capital market ever built.

While equity markets also enable quick reallocation of capital, as we saw in Chegg’s case, the difference between traditional markets and crypto lies in what follows. Crypto compresses the entire process of rotating funds into a single sitting.

The investor who sold CRCL on June 30 could have done so using the equity in the traditional markets. But that could have been done only during market hours. The same investor could also have expressed their opinion on Circle by trading its perpetual contract on Hyperliquid or by betting against the company using an event contract on a prediction market. Both these options are always on and wouldn’t have required the investor to wait for the market to open.

This is not to say that crypto investors will always get their quicker reallocation decisions right. High speed could mean more mistakes. But I’d gladly welcome the ability to make quicker decisions with better information and be occasionally wrong, rather than being shut off from the information flow and being late to decision-making due to market frictions.

Read: Netting Is the Moat

I don’t think there’s a greater liberation for investors in a free market than being empowered to access important information at any time and act on it using the right tools at their disposal.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

You want to sell me a product? Don’t tell me about it; show me if you use it first. Amazon runs on AWS. Every product Amazon sells you is hosted on the same servers Amazon leases to its competitors. If you don’t use the product you are selling, then why would your customers?

Securitize is a company that sells tokenisation infrastructure for a living. Its business is to convince public companies, private funds and asset managers to put their securities on a blockchain. And what better way to convince the world to put their shares on the blockchain than by putting its own stocks on the chain? So it did that.

On July 2, 2026, Securitise co-founder and CEO Carlos Domingo rang the opening bell at the NYSE to mark the company’s public debut. The same morning, the same stock was also available as a token on Solana and Avalanche. It wasn’t in a wrapper format but rather a share whose ownership was recorded on a blockchain, not a centralised register. Roughly $270 million of common stock was held on-chain on Day 1.

Tokenising your own stock at listing invites regulatory scrutiny that most newly public companies prefer to avoid. Securitize chose the scrutiny.

This begets a bigger question. If a company can launch the tokenised equivalent of its share on its public debut, then what stops a private company from doing the same for its Series A fundraise?

In today’s piece, I explore how tokenised stocks fundamentally change what VCs offer private companies in a packaged term sheet.

On to the story…

What’s in a Term Sheet?

Founders don’t go to venture capitalists (VCs) only for money. Whenever a VC signs a term sheet, they agree to deliver a bundle of services.

First, there is a commitment of capital. The VC agrees to fund the company with the required capital to scale from 0 to 1.

Second, there is a price. Every private company needs a valuation. In private markets, the valuer is usually the lead investor.

Third is curation. A respected name on the cap table tells the world that this company was worth backing. It helps the company attract other investors, customers, and good talent. The VC also helps the company in networking by introducing enterprise clients, senior engineers and the “who’s who” of their industry.

Sometimes the VC also commits to a follow-on round. This is an implicit promise to keep writing more cheques as the company grows.

Lastly, and most importantly, a term sheet also includes a governance clause. As part of the deal, the VCs typically take a board seat, information rights, protective provisions, and the power to set transfer restrictions.

This is the bundled product that the VC sells to the company as part of a fundraising round.

The bundle was untouched all this time because private shares were locked out from the general public. As an individual investor, you couldn’t buy or price them without the company’s cooperation.

A few weeks back, I explained how the walls around private-market pricing were being gradually pulled down.

Read: Pricing the Private

Last month, I wrote about how blockchain infrastructure unbundled banks’ role in underwriting a company’s IPO. The same infrastructure for tokenised stocks now shows that VCs no longer hold a monopoly on pricing private companies.

There’s one catch, though.

Securitize tokenised its stock, SECZ, at a time when the company is already a decade-old business with audited financials, disclosed cash flows and over $4 billion in tokenised assets across its platform. A market can price it because there is enough material to base its valuation on. For a Series-A startup, the market has only a founder’s story, reputation, and a hypothesis to work with. Although equity is the common denominator in both cases, the underlying factors that drive valuation differ.

This is where the curation aspect comes into play on a term sheet. A VC at Series A lends more than a name to the cap table. They underwrite a business for which there’s not enough public data. Late-stage pre-IPO companies like SpaceX and OpenAI are easier to tokenise because they already behave like public companies. Their prices show up on secondary marketplaces, in tender offers, on perp contracts and in analyst notes long before they get listed on public markets.

However, early-stage tokenisation is tricky because the market has less data to base its pricing on. Yet this doesn’t stop the rest of the bundle from coming apart.

The Unbundling

Securitize was not the first American company to put its own listed stock on a blockchain. Exodus did that on Algorand in 2021. Digital asset and data centre company Galaxy Digital has also put a version of its equity on the blockchain. Securitize did it one better by becoming the first company to do it on Day 1 of being public.

Token trading on Solana and Avalanche is legally the same as stock trading on the NYSE. Each token carries the same voting rights, dividends and claim on the company. It is not a synthetic contract tracking a price or an offshore special purpose vehicle (SPV) holding a share on your behalf.

The tokenised shares of Securitize are as good as the off-chain common equity stock, SECZ, itself.

Investors are usually concerned about the nature of ownership associated with these tokenised versions of stock. Vaidik’s Who Actually Owns Your Stocks? walked through the different kinds of “tokenised stock” the market currently sells. Issuer-backed, like SECZ and Exodus, where the token is the share. Custodial wrappers, like xStocks or Robinhood’s stock tokens, are SPVs that hold a real share and issue you a claim on it. Only the first kind carries the rights a shareholder would recognise. That is what the entire thesis of a VC is built on.

Once the shares themselves become continuously priced and easily transferable, the bundled jobs of a term sheet no longer need to come bundled. The other jobs start finding cheaper, better routes.

Capital and Price start collapsing into a market layer, at least for companies that are mature enough to be priced. The market sets the price, and capital follows it. As of now, Ondo’s Global Markets has surpassed $1 billion in tokenised equity TVL. On Hyperliquid, a pre-IPO perpetual on Cerebras priced within 1.3% of the chipmaker’s eventual Nasdaq opening print.

The curation and network roles still remain with an anchor investor. But the anchor investor no longer needs the institutional machinery of a Sequoia or a16z. Elad Gil raised a solo vehicle of roughly $1.5 billion. The lead cheque and the reputation attached to it can now be delivered by one person and a rolling fund.

Services move to specialists. Fairmint and Pulley for cap tables. Coinbase bought LiquiFi for token vesting in July 2025. Echo, acquired by Coinbase in October 2025, handles fundraising. Magna and Sablier handle vesting streams. A founder in 2026 can assemble the platform team that a venture firm used to sell as part of a bundled deal.

Governance becomes programmable. Fairmint’s structure enables a rolling, SAFE (Simple Agreement for Future Equity)-style raise that converts on its own terms. Vesting cliffs are enforced by smart contracts rather than lawyers.

Secondary liquidity, the ability for insiders and early investors to sell their stake, is growing. Employees and angels at tokenised private companies now have exit routes without waiting for an IPO.

That is what continuous liquidity via tokenised stock trading enables. Continuous liquidity changes what equity means to a founder and an employee. When shares can be sold any day, the equation around vesting cliffs and cash-out windows shifts. An employee who used to wait four years for a tender offer now has a live market to go to. It does have some trade-offs, though. Crypto has already seen this play out with layer-2 tokens like Arbitrum’s ARB and Optimism’s OP, where teams received tokens that traded from day one. Employees dumped them at cliff dates. Token prices decoupled from underlying network activity. Founders spent as much time watching charts as building products.

This is not a perfect example because ARB and OP are governance tokens and not equity, and their prices reflect network usage more than corporate performance. But the incentive problem is similar. Legal restrictions like Reg D 506(c) accredited-investor gating, Rule 144 seasoning, and multi-year lockups slow it down but do not eliminate it. Tokenised equity provides practical exit routes for insiders and opens the door to exit patterns that private markets have historically had time to smooth out.

Even the follow-on cheque, the piece of the bundle that most founders value most, is the last one waiting for a tokenised replacement.

That’s because every regulatory framework announced so far, including the SEC-approved Depository Trust Company pilot, Nasdaq’s tokenised trading, and DTCC’s October launch, is around already-public Russell 1000 shares. None of them accommodates a Series A startup’s tokenised equity trading on their venues today.

What Stays with the VC

When music streaming took the world by storm, it commoditised distribution but did not kill record labels altogether. Anyone can put a song on Spotify. What was not commoditised was the Artists and Repertoire (A&R) division, still deciding which artists were worth betting on, building brands around them, and opening doors that data alone could not open. The labels that survived the transformation became data-driven talent scouts. The bundle they used to sell split into specialists, and the labels held on to the part that was still scarce.

Venture capital will likely go the same way. Tokenised stocks are taking over the parts of the term sheet that were about mechanics, like recording ownership, discovering a price, moving a share from one wallet to another, and releasing a vesting tranche on schedule. Blockchains are better at mechanics than a term sheet can ever be.

What stays scarce is the person whose name on a term sheet convinces the next round to happen, an enterprise buyer to switch vendors, or a senior engineer to leave Google and join a startup. Tokenisation cannot underwrite a founder.

But every unbundling invites a rebundling, often controlled by new owners. The London Big Bang of 1986 broke apart the city’s brokers and jobbers. Within a decade, universal banks had absorbed the pieces.

For decades, founders walked into a VC’s office because it was the only place where they got access to capital, pricing, curation, and governance in one place. Tokenised stocks are like a hallway with multiple doors. One gives the founder access to capital, another gives them pricing, and another addresses governance. The founder still needs all of them, but no longer from the same person.

That also fundamentally changes the questions a founder asks at the start of their company’s journey. The founder will no longer be forced to think in terms of the one fund they would want on their cap table to solve all their problems. It gives them the freedom to choose which layers of their company they want the market to run and which they’d rather bet on a human to run.

The mechanics in a term sheet are the first to get tokenised because that is what markets can adopt well. Judgment gets tokenised last, or probably never, because it is what markets need someone else to provide. A Series A startup will eventually put its shares on a chain, but will still need someone to decide if the shares are worth putting there.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

On July 1, Robinhood launched its own Ethereum Layer 2. It built an L2 at a time when doing so is becoming increasingly trivial and cheaper because anyone can just rent one. What stands out for Robinhood is its 28 million funded accounts, most of whom have never used a blockchain. Even now, many will probably never know they are using one.

While Robinhood’s chain will face stiff competition from other L2s in generating considerable economic value, its traditional finance audience will paradoxically become its biggest moat in helping it stand apart from the competitors.

In today’s piece, I will explore what makes Robinhood the best-placed TradFi consumer app to make crypto rails invisible and turn a barely crypto-aware retail base into users of a full financial supermarket.

On to the story…

Chain Is No Longer a Business

Thanks to Rollup-as-a-Service (RaaS) platforms and modular frameworks, building an L2 scaling solution in 2026 is a weekend project. One could rent the Arbitrum Orbit or OP stack and settle in Ethereum.

Every other large company that thought owning the rails rather than paying rent on someone else’s ended up in the same graveyard of chains. Only two L2s recorded three-digit user operations per second (UOPS) in the last 24 hours. When you look beyond the top 12, none of the 100+ chains crossed single digits in the last 24 hours.

This shows that running a chain itself is no longer a business. The chains that managed to stay economically relevant did so not through their superior technology but by riding on the ecosystem environment in which they operated.

Base rode a crypto-native moment that Coinbase could tap because its users were already on-chain curious. It further piqued the interest of its onchain-curious users through Onchain Summer, its annual festival and promotional campaign featuring collaborations with major brands and artists for NFT drops, gaming events, hackathons, and developer grants. It helped create an environment conducive to Coinbase’s goals for Base.

But blockchains never had to be the product that made money. Every major infrastructure eventually got commoditised, shifting value to the adjacent layer. The internet is the best example. It was the centre of all talks in the last two decades of the 20th century. In the 21st century, nobody consciously cares much about what it does, even when the entire world runs on it.

For crypto maximalists, a blockchain could mean many things. Maybe a tool of resistance against the centralised world of traditional finance, or a decentralised infrastructure that enables a parallel financial system. But when you zoom out, blockchains just become a useful infrastructure that enables capital to move more efficiently than existing tooling.

The product is then moving capital, not the blockchain itself.

So long as you can use a chain to move capital as efficiently as possible, it no longer matters who has the superior chain. Robinhood has 28 million funded accounts. This makes it one of the best-placed platforms to benefit from its chain.

Why Robinhood, But Not a Crypto Exchange?

Robinhood’s audience is the opposite of Base’s. The TradFi-first, retail-first people initially arrived for commission-free stocks and were then cross-sold adjacent products like options, retirement accounts, margin lending, stock lending, and so on. Robinhood only later eased its audience into crypto products as a nice-to-have asset class for those seeking exposure to emerging asset classes. None of the users ever had to think about the rails underneath. Most never cared about the crypto culture. They just wanted access to multiple asset classes in an app that they already trusted, and that is exactly what they got.

Making the blockchain almost invisible is the only strategy that would work for Robinhood’s audience. Blocks, blobs, gas fee and seed phrase will never be the vocabulary that amuses their users. Yet they will buy event contracts on Robinhood’s prediction markets, sign up for tokenised versions of stocks and lend money via Robinhood’s Earn product even without having to understand that it is being routed through a stablecoin (USDG, issued by Paxos) that is being lent into a DeFi vault powered by Morpho (a crypto protocol).

As long as the interface still looks like the brokerage app they have been using for over a decade, they won’t care about the underlying technology powering the assets they want to own or transfer. This is clearly reflected in how Robinhood CEO Vlad Tenev positioned the company’s image during their keynote speech on July 1 at the Old Royal Naval College in London.

The hour-long speech titled ‘The World is Flat’ that involved half a dozen speakers, including Vlad, focused strictly on “ownership” and spared the technological jargon. Even though the company announced the launch of its chain, it never mentioned decentralisation, blobs, TPS, or developers.

This is why a comparison of Robinhood versus Kraken or Coinbase isn’t apt. While Coinbase built Base, Kraken has the Ink protocol as its L2 solution. But the difference is that both are crypto-native exchanges building chains for crypto-native users. That is convergence within crypto. While Coinbase’s edge with Base was its cultural proximity to on-chain–curious users, Robinhood’s edge with its chain is to use it to distribute a suite of crypto-adjacent products to an increasingly aspirational audience that does not care about the underlying commoditised layer of blockchain.

The Financial Supermarket

Robinhood’s chain enables it to offer its customers a full financial supermarket under one roof. They can buy Stock Tokens for equity exposure, Robinhood Earn for a ~7% yield on their USDG stablecoin through a Morpho-powered vault, leveraged exposure via perpetual futures through Robinhood’s integration with Lighter and use agentic accounts for automation.

Even beyond the DeFi product suite, they can get pricing probability through prediction markets, which is already Robinhood’s fastest-growing business.

Robinhood’s chain already inspires confidence for a newly launched L2. Its TVL is a touch away from $100 million, less than two weeks after launch. The 24-hour DEX volume on the chain has made Robinhood Uniswap’s largest non-Ethereum venue. In terms of 7-day DEX volume, the chain ranks 8th.

The chain barely makes any money, though. Gas fees are subsidised for 90 days. But the interesting part is that Robinhood doesn’t need the chain to make any money.

Most other chains that need to justify their existence by charging transaction fees would be under pressure to juice activity. But Robinhood doesn’t need to. For Robinhood, the chain just needs to become an efficient layer that can bring the dozen business lines, from equity-to-event contracts, closer and hold the customer inside that circle. It can then use the chain to more efficiently cross-sell different products to them.

The appeal of the chain is in the convenience and access it offers for a user profile that matches Robinhood’s audience. For instance, a user in Europe with no simple path to a US brokerage account, or to earn dollar yield, or to access leveraged exposure via perps, now gets all of it in an app they trust, without having to worry about the technical jargon surrounding blockchains.

The chain serves as the horizontal connective layer that helps Robinhood offer a suite of asset exposures, earn product, and pricing tools across its user base. It is also what makes Robinhood dangerous in the industry. In its 2025 Q4 call, Vlad said the company now runs 11 business lines, each generating over $100 million in annualised revenue. The blockchain can allow Robinhood to let its users move capital between businesses across the whole stack without ever leaving the app.

Many argue about the money the Robinhood chain can generate on its own as the 12th business line, but for Robinhood, the chain could simply be the common layer that makes the other 11 businesses stickier.

The biggest advantage of Robinhood’s chain over Base is that nobody expects anything from it. Robinhood’s users have no opinion on decentralisation. They will not care if the sequencer is centralised or whether the validators are whitelisted. The ranking of Robinhood’s chain on the L2BEAT dashboard will be of little relevance. A crypto-native audience could punish a chain for failing the neutrality test. But a typical Robinhood user has never heard of the test. So, Robinhood can run the most centralised chain across the board, turn it invisible and monetise it on its own schedule.

Robinhood enjoys the freedom of low expectations.

But that’s not to say the chain cannot generate any income on its own. Robinhood has chosen USDG, issued by Paxos, as its settlement dollar stablecoin. Like any other stablecoin issuer, Paxos shares its reserve income with the partners that drive usage. Paxos needs Robinhood’s 28-million-user funnel more than any other issuer right now.

Robinhood could also get a cut of the fee that Lighter charges on perp contracts sold on the former’s app.

All of this is incremental income that Robinhood might not be desperate to earn, but it will happily pocket it if there’s a way to do that. And I won’t be surprised if the company’s next step is to replace the USDG with USDR (its own stablecoin) and capture the full float on the dollar that runs on its chain.

While the crypto industry focused on decentralisation and built the distribution around it, Robinhood is solving it backwards. It has a distribution of 28 million accounts and an audience that wants the financial world brought closer. Robinhood is in a position to do just that by letting them access and price every asset and instrument using blockchain or otherwise. As long as its users don’t care about the underlying technology, Robinhood won’t either.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

For most of financial history, moving money was the hard part. The friction was in making the payment from point A to point B, involving a chain of banks, each of which took a cut. Sometimes it involved moving money across a border.

In the past decade, crypto and stablecoins promised to minimise these frictions through crypto apps and wallets. But these fast, low-cost transfers are of no good if that money is not usable in the broader economy. A dollar stuck in some crypto wallet is worth less than a dollar. This is why crypto is now assuming the role of better infrastructure for moving existing traditional assets.

This convergence of the old and new financial worlds has created a new orchestration layer, in between, where the value accrues. In today’s piece, I explore who captures value in this new layer.

On to the story…

The Need for Web 2.5

The crypto industry has spent over a decade convincing people to download wallets, bridge assets between blockchains, and hold their money in new apps. But people don’t leave the systems they’ve known and used for decades just for something new. No supplier would want to receive their payment over blockchain just to see it sit in their wallets while they figure out how to swap it back into dollars in a bank account that they can actually use for general purposes. Moving money from a wallet to a bank account costs a fee and requires a compliance check in most cases.

The problem was never crypto’s ability to move money in seconds. It was that the crypto’s architecture expected people to leave the systems they already used, like their bank accounts, credit cards and payroll, and switch to a new system altogether. On-ramps, off-ramps, and bridging solutions are frictions meant to be hidden beneath the surface and not features to be flaunted. People will always adopt new technologies that move the money they already have faster and cheaper, in the accounts they already use.

An ideal infrastructure is one in which crypto serves as an efficient, invisible enabler and substrate for traditional finance. We call that sweet spot ‘Web 2.5’. Although the term might sound clumsy, the idea behind it is to have the best of both worlds. We retain the good parts of traditional finance. Think regulations, licence, verification and the UI & UX that people already trust and use. We then marry it with the cheap, programmable, always-on settlement that crypto enables. Neither side has to become the other. The bank stays a bank, while the crypto offers a facelift to the old, dilapidated infrastructure that moved money at a snail’s pace.

But if crypto becomes an invisible substrate and traditional finance stays the familiar surface, where does the value now accrue in this new world of Web 2.5?

The layer that connects two large financial systems has historically been worth more than most of the institutions it connects. Visa earned $24 billion in operating margin last year (FY ending September 2025) by charging just a fraction of a per cent on every transaction that it processed on its network. That’s still a 60% operating margin. The Depository Trust & Clearing Corporation (DTCC), which is now building its own on-chain settlement chain, earned $2.9 billion in 2025 on $4.7 quadrillion worth of securities transactions it processed.

The Layer in Between

Institutions on both sides are now building translation layers that let banks keep their infrastructure while converting ISO 20022 instructions into on-chain settlement.

On June 23, Chainlink and a consortium of more than 50 European and Korean banks, with roughly $10 trillion in assets among them, announced Project Pangea to test the real-time settlement of foreign-currency trades.

The aim is to transition the FX settlement infrastructure from a traditional T+2 cycle to a real-time T+0 model.

Chainlink’s Runtime Environment (CRE) serves as the orchestration layer, connecting blockchains and other external payment systems without requiring manual routing or bridging. It takes each conventional instruction, turns it into an atomic on-chain swap, and hands back the result that the bank’s systems can read.

Chainlink is a relative newcomer. Yet the DTCC, the 50-year-old institution at the centre of American markets that processed approximately $4.7 quadrillion in securities transactions last year, chose the same Chainlink runtime to power its Collateral AppChain.

On the legacy institutional front, there is SWIFT. By every early crypto prediction, SWIFT is the institution that blockchain was supposed to kill. Many predicted the stablecoins would route around the messaging monopoly. Eight years back, the same global messaging network for banks had called blockchain “not ready for mainstream use”. Instead, SWIFT is building its own blockchain-based shared ledger with more than 40 banks.

This is not a replacement for SWIFT’s network but an orchestration layer that sits on top of it. Money moving on-chain was never the threat. For SWIFT, the concern was being cut out of the layer that decides how money moves on-chain. As long as it has a presence and a say in deciding how that happens, it remains in the game. So it is building that layer itself.

Even sovereign players are rushing to capture value on this layer. The Bank for International Settlements (BIS) has convened Project Agorá with seven central banks and over 40 private institutions to test atomic settlement using tokenised central bank reserves.

Read: Meet Me at the Agorá

But what’s really the value in orchestrating the layer between two financial and/or banking giants?

The Value of the Bridge

The translation layer that merely lets the parties on both sides talk to each other could very well prove more valuable than the players themselves.

Visa and Mastercard began as routing networks between banks and merchants. Even today, they hold no deposits, don’t issue any cards and underwrite no risk. Yet, Visa is worth more than every bank on earth except JPMorgan.

Operating the translation layer offers more than just monetary value. Those who decide how the money flows can also decide when to shut that route.

SWIFT began in 1973 as nothing more than a way for banks to send each other standardised messages. Fifty years later, it is as powerful to impose sanctions on nations. In the past decade, SWIFT has assumed its role in economic warfare by imposing sanctions on Russia for its war in Ukraine. It even imposed EU sanctions on Iranian banks to counter the country’s nuclear programme and consequently relaxed them after developments around the nuclear agreement took place.

The addressable pool for real-time settlement of foreign exchange transactions that Chainlink is now piloting with Project Pangea is significant.

Cross-border payments range between $150-$190 trillion annually and are projected to cross $250 trillion by 2030. If Chainlink can capture even 1% of these projections along with the consortium of 50 banks it has collaborated with, then it could imply a total addressable market (TAM) of over $1.5 trillion. Even a 0.1% fee on this TAM could translate to $1.5 billion in income by simply orchestrating the layer between traditional finance and on-chain settlement.

But there’s a caveat here. Both SWIFT and Visa became the dominant single standard in their respective layers, where the whole system eventually had to adopt them. It was a case of one winner in each layer, reinforcing its position over decades.

Now, we have four different models - a protocol, a market utility, a banking cooperative and a central bank club, racing for the same single translation layer that bridges the financial worlds of Web 2.0 and Web 3.0.

Permission and Float

The economics driving value beneath this layer are old. When technologies that move money improve, processing transactions always becomes a commodity. As it becomes cheaper to move money, the value to capture then pools in two different places. The first is permission, which lies with those who decide whether a transaction may proceed and under what conditions. The second is float, which is the interest earned on balances sitting idle while they wait to move.

We have written about how this plays out when AI agents pay each other, here and here. The same logic now scales up to settlement between banks.

This is what makes the orchestration layer in between worth fighting for. It develops a two-sided network effect. The more banks plug in on one side, the more attractive it becomes to settlement venues on the other, and vice versa. Every institution that joins raises the cost of leaving for everyone already inside. While individual banks and blockchains compete with each other, the one that orchestrates the translation layer serves them all and earns a fee from each.

Stripe followed this exact playbook on card payments. It hid an ugly tangle of processors, acquirers and payment networks by allowing businesses of any size to easily accept and manage online payments through a simple, developer-friendly set of APIs. It then charged all its users a fee to remove the friction and tuck it away in the background.

This is what makes the connecting layer a hot target for acquisitions. Once someone builds this layer, others would rather buy it than rebuild from scratch. We saw it more than five years ago when Visa agreed to pay $5.3 billion for Plaid. Although the deal was thwarted by an antitrust suit from the Justice Department, the intent behind the attempted deal is well documented. Visa was attempting to buy a position in the market where Plaid operated the layer that wired thousands of fintech apps into bank accounts.

The New World of Web 2.5

The world of Web 2.5 is more promising than the utopian vision of a decentralised-only Web 3.0 alternative because it doesn’t ask capital to flee incumbent players in search of what crypto offers. Instead, it uses crypto as the underlying, more efficient infrastructure to move money and assets within the existing ecosystem.

Although the bank-side projects, including Pangea, DTCC’s AppChain, and Agorá, are still in pre-production, what makes us bullish is the direction that players like Chainlink have taken. For a long time, the echo chambers of crypto kept arguing about how to build a better crypto app to move users away from their traditional alternatives. Builders kept arguing over which blockchain offered the lowest gas fees and which token was best for parking funds. Web 2.5 makes this argument redundant by stripping away all the jargon and hiding the infrastructure in the background.

The internet we use is just data packets of information transmitted over a global network of computers. This is a nice-to-know fact, but not knowledge worth flaunting when all you want to do is use the internet. Nobody cares whether the technology powering the lightning-fast, low-cost transactions underneath is crypto or otherwise.

Blockchains are getting commoditised as an interchangeable, invisible, low-margin part of a transaction. The value now pools one layer up in the business of making money spendable in new places and having a say in whether and how that money should move.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

If you live outside the United States and want to buy a share of SpaceX or Nvidia, it’s not easy. You need a brokerage account that accepts residents of your country, a compliant bank transfer route, and often an investor accreditation. Most people cannot buy a US stock directly.

Blockchain is building workarounds. You can now get exposure to US companies through tokenised stocks. But “tokenised stock” is often used as an umbrella term for three different products.

First is the on-chain equity registered with the company’s share issuer. Second, it could mean tokens that are backed 1:1 by real shares, often held by an offshore company on your behalf. Lastly, there are perpetual futures contracts that hold no underlying shares. Each of these could mean different things for the holder in terms of ownership, voting rights and price exposure.

Right now, all three exist for Nvidia. Over 650,000 real Nvidia shares back the first two types of tokens. Yet the perpetual futures version, which has no underlying shares backing the token, trades at 4-5 times the volume of the other two types.

Last week, Vaidik traced how most stock ownership, tokenised or otherwise, has been built around the same nominee structure since 1973. He explained how almost nobody who “owns” a stock actually owns the share.

Read: Who Actually Owns Your Stocks?

In today’s piece, I explore how ownership of tokenised shares is structured across different on-chain instruments and what drives the market to trade them even when ownership is completely abstracted.

On to the story…

Tokenising Stocks

Tokenised stocks are digital representations of company shares on the blockchain. These tokens are programmable instruments that can move between wallets, trade around the clock, and integrate with decentralised financial protocols. The share’s economic properties, like price exposure, dividends and corporate actions, are embedded in the token.

The market for these tokenised stocks is no longer small. Over the last year, the total market value of tokenised stocks has shot up almost five times from $327 million to $1.5 billion.

This wave of tokenised stocks is interesting because of who is leading the experiments. The DTCC, the centralised body that clears, settles, and custodies the vast majority of US and global securities transactions, announced last month that it’d launch a tokenised securities pilot in October 2026. Earlier this year, the NYSE said it was developing a platform for 24x7 tokenised stock trading. These are incumbent institutional giants that are reconsidering the infrastructure that has facilitated stock trading for decades.

Many protocols are tokenising stocks in different ways. Each of these on-chain instruments offers a different level of ownership, redemption, composability and price exposure.

Let’s dive in.

The Tokenisation Trade-Offs

The first model gives you real ownership.

Superstate, an SEC-registered transfer agent, records ownership directly on Solana, and the holder’s name appears on the company’s shareholder register with full voting rights, dividend eligibility, and legal standing.

Galaxy tokenised its registered equity this way and ran on-chain proxy voting through Broadridge in May 2026. In December 2025, Superstate equities went live as collateral on Kamino, the first regulated equity usable inside a DeFi protocol.

The second model trades some ownership for access.

xStocks by Backed issues tracker certificates for 160+ equities through a Jersey-based SPV (Special Purpose Vehicle), backed by 1:1 real shares. Ondo issues total-return notes for over 200 tokenised stocks through a British Virgin Islands-based SPV and has crossed $1 billion in TVL within eight months of its launch. Both offer economic exposure and dividend rebasing, in which dividends increase the holder’s token balance rather than being paid in cash.

The value of this model is in its composability. xStocks are collateral on Kamino and Morpho, and less than 24 hours ago, Ondo enabled 24x7 minting and redemption for its most popular tokenised stocks, making the primary market always-on.

The risk here is that you own only a claim on an SPV, not the shares. PreStocks showed what happens when that breaks. Its pre-IPO tokens collapsed in May 2026 after the underlying share transfers were called void, with $23 million backing over $1.3 trillion in implied valuation. Although Backed and Ondo mitigate this with segregated custody and proof of reserves, the risk does not disappear. It just shifts from the company to the wrapper.

The third model abandons ownership entirely.

Hyperliquid’s HIP-3 framework lets anyone deploy a perpetual futures market with an oracle and a funding pool. TradeXYZ, the leading deployer with over 90% of HIP-3 open interest, runs perps on Nvidia, Tesla, Google, Amazon, and a Nasdaq-100-style index. Ostium on Arbitrum does the same.

The funding rate, which is paid hourly to balance long and short positions, keeps the price of the perp contract tethered to the spot price.

There’s a reason why perp trading outperforms spot trading by volume multiple times. Building a spot market for a stock requires an SPV, a broker-dealer, a custodian, and a proof-of-reserves regime. Building a perp market just needs an oracle to feed the price. TradeXYZ launched a SpaceX perp that hit $50 million in open interest before the company filed its S-1.

A wrapped tokenised product cannot move that fast because an SPV cannot source shares that fast.

The Role of a Token

Most retail shareholders never exercise the voting right that tokenised wrappers trade away. Research by the Harvard Law School Forum found that only 12% of the average firm’s retail accounts vote. For global traders who want exposure to blue-chip stocks like Nvidia, Google, SpaceX and Tesla, giving up a vote they would never cast is not a matter of concern.

The value of holding a tokenised stock on a blockchain is what you can do with the stock while you hold it. You can deposit your NVDAx or Superstate equity as collateral to borrow stablecoins on Kamino and Morpho. On Raydium, you can provide liquidity with xStocks in an automated market maker pool. A traditional brokerage account cannot offer any of these. The same stock, as a token on a blockchain, becomes a productive financial instrument. It can collateralise loans, earn trading fees, and compose with other DeFi protocols simultaneously.

For the perp trader, the value is different. There is no underlying asset to use as collateral, but leverage allows you to take a position with multiple times the capital deployed. Perps trade around the clock. When news breaks about Nvidia’s next-gen chip while the NYSE is closed, the perp market prices it in immediately. For directional traders, the always-on pricing is the main product.

The benefits of blockchain-enabled stock instruments come not as substitutes but as additions to what traditional, off-chain stock holding offers.

This is how the best financial assets have always behaved. They let the holder do more with them than just holding them. A treasury bond not only earns a coupon rate but also serves as collateral in the repo market. A share of stock is worth more than its price appreciation because it can be lent, margined, or used in a structured product. Blockchain does the same for tokenised stocks.

A tokenised stock is more than just a new kind of wrapper. Historically, the financial markets have evolved by creating layers of access to the same underlying value. Bonds, stocks, options, futures, and ETFs were all invented for different kinds of investors who wanted a different kind of exposure to the same economy. A pension fund sought a conservative yield. A retail investor wants price appreciation, while a hedge fund seeks leverage.

Tokenisation is another fintech evolution that changes who can access stocks and what they can do with them while they hold them.

Blockchain now allows fund houses, retail investors, and perp traders to gain exposure to the same Nvidia stock for different reasons. One might want to hold a registered share for governance, the other might want a wrapped token for composability, and the third might want a perp contract for leverage. But all three are valid expressions of their respective financial opinions.

The token can be the asset. It does not need to be the share.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Going public for a company is one of capitalism’s great rituals. A company spends weeks on the road (quite literally) parading its pitch deck before fund managers, hoping they buy in. Bankers play the role of the jury, weigh the demand, determine what they believe is the value of the shares the company is offering, and allocate the shares. Then a bell rings on one fine morning, and voila - the private company is now public. The buyers and sellers then engage in a battle of orders in public markets, leading to price discovery over the next few hours or days.

These rituals involving the roadshow, book and bell exist because nobody could see inside a private company and had to wait for the bankers to set a price. Every company had to go through it all and arrive on the other side.

But SpaceX, the latest to go public in the US stock market, didn’t quite walk this journey. Elon Musk named his price even before the roadshow or the bankers calculated it.

An IPO has historically bundled three things as a job for bankers and paid them a fee for doing so. They figured out the price, found the buyers, and delivered the shares. With SpaceX, all three were unbundled and functioned separately. The public had already priced the company, and buyers had already lined up before it went public.

In today’s piece, I explain how SpaceX is changing the way companies go public and the role banks play in the new journey.

Onto the story,
Prathik

The Bankers’ Fee

Bankers charge the company a fee to execute the IPO process. For most of the past century, that fee was calculated as a spread on what the company received from its investors.

As part of the execution, the banks ran a roadshow, collected soft orders from institutions and retailers across a range of price bands, and settled on a price that the market would deem right. It then had to ensure delivery of shares. In a standard firm-commitment deal, the underwriting banks buy the entire offering and resell it to those who applied for the offering.

These three functions of price discovery, distribution and allocation were fused together because it couldn’t have been done differently for years. Banks were the only institution that saw the full picture, which made them the best party to estimate demand. They had access to the company’s financials and plans ahead, which let them price its shares more accurately. Banks’ diverse clientele and cross-sector relationships enabled them to place the stock in the hands of influential institutions and retail investors. Banks’ robust settlement systems guaranteed that the shares actually moved.

So the company going public had no choice but to buy them as a set and pay the bank for the bundled services.

With an unbundled IPO, that chokepoint no longer exists. The demand is now visible to everyone in public through perp venues, prediction markets, and pre-IPO platforms, even before the bank begins work on the public offering. This lets the company negotiate its fee and choose the best venue for each service in the IPO journey.

For mid-sized American IPOs, that fee averages around 7% of the total deal value. Big deals pay less. In 2014, Alibaba’s $25 billion listing paid 1.2%. SpaceX paid only 0.67%. There could be multiple reasons for the largest IPO in history paying one of the smallest fees. The unbundling of the expectations from an underwriting bank must surely be one of them.

The Public Pricing

SpaceX went against conventional IPOs even before the roadshow began. Instead of banks testing a price range before arriving at the offer price, Elon Musk straightaway named one price, $135. Investors can either take it or leave it.

SpaceX could skip the banks for price setting because that had already been done for weeks before it went public.

Three public markets priced SpaceX differently. On pre-IPO secondary marketplaces like Hiive and Forge, where employees and early investors trade private shares, SpaceX’s share price hovered near $150, its opening price at debut.

On Polymarket, the crowd was pricing in where the stock would close on its first day, with the highest cumulative betting volume implying a valuation above $2.0 trillion.

On Friday, June 12, SpaceX shares did close at ~$161 apiece, 20% above its offer price, with a valuation of $2.1 trillion.

On Hyperliquid, a perpetual futures contract on SpaceX traded continuously, around the clock, acting as a live public signal of how the market wanted to price its shares.

Until the public listing, these pre-IPO perpetuals have no underlying shares to anchor their price to. So, they act more like leveraged bets on how the market thinks the stock will be priced when it debuts.

Most of the open interest in Hyperliquid’s permissionless markets was tied to this one SpaceX contract. On debut morning, the perp contract on HIP-3 markets was trading around $174–185, a 30–35% premium to the offer price of $135. On its first day of trading on the stock market, SpaceX reached an intraday high of $176 per share.

The price of the perp contract also immediately corrected towards the opening price of $150 when the stock debuted on the bourses.

Possible coincidence? Well, it wasn’t the only time the unconventional pricing mechanisms got it right.

When chipmaker Cerebras went public weeks earlier, its pre-IPO perpetual on Hyperliquid landed within 1.3% of the eventual Nasdaq open, which then compressed to a near-zero spread once trading began. The venue predicted a company’s opening price before the company had a price.

This is how SpaceX skipped the banks for the first job in the IPO bundle - the price discovery.

The Delivery Problem

After banks help set the price for conventional IPOs, they help distribute the shares by finding buyers. We will get to this part later. Let’s jump to the third aspect of the bundled services the underwriting banks offer: allocating and delivering the shares.

On the listing day, SpaceX was trading at different venues and under different arrangements, contrary to how conventional IPO stock trades. A token on Solana issued by Backpack, a US-registered product from Kraken, a tracker from Ondo, and Hyperliquid’s synthetic perpetual all had SPCX as their underlying asset. Many centralised exchanges, like Bitget, Bybit and Binance, also allowed their users to apply for these IPOs.

On the day of listing, some of them delivered and others didn’t.

The products that held the asset directly, or sourced it through a registered broker-dealer, opened on time and tracked the stock. Backpack’s Solana token was backed 1:1 by real shares held at its broker-dealer arm. Kraken’s US product sourced stocks through Payward Securities. Ondo ran daily custody attestations against its tracker. Hyperliquid’s perp never needed a share in the first place, but its price corrected to track SPCX’s stock once SPCX went public.

Binance, Bybit and Bitget had run tokenised allocation campaigns, allowing users to subscribe to SpaceX, with xStocks (Kraken-owned tokenised stocks platform) promising to source the actual stock underlying those tokens. The shares were never allocated, and the exchanges refunded subscribers in full, with Binance alone returning roughly $557 million.

Was it a failure of blockchain? The other venues that held the asset honoured their agreement. So, the tokenised version of the stock itself wasn’t the problem. SpaceX was oversubscribed, with demand reaching 3.5 to 4 times the $75 billion on offer. It was just in case of centralised exchanges that were counting on a middleman to get shares allotted that the delivery failed. Eventually, the subscribers were compensated in full.

So, when the price discovery is commoditised and public, pricing is no longer the scarce and valuable thing in the IPO bundle. It comes down to proving whether you can deliver the shares.

This is not a new problem, though. Wall Street faced a similar problem about 60 years ago and built an institution to end it.

In the late 1960s, American trading volumes outran the paperwork. The back offices drowned in paperwork because the stock certificates were physical paper that had to be located, checked and hand-delivered for every trade. Trades failed constantly because the seller simply could not produce the certificate. The exchange closed every Wednesday just to dig out from the backlog. The industry came to a fix that involved avoiding paper movement.

In 1968, the Central Certificate Service was established (later reorganised into the Depository Trust Company in 1973) to hold certificates in a single vault and record ownership as book-entry entries. If everyone’s shares sat in the same trusted place, delivery would no longer be a question. The depository could guarantee that the seller had the share and the buyer received it.

This is the fundamental problem that custody infrastructure has to answer: Does the seller actually have the asset, and can they hand it over?

Tokenisation presents a similar problem because a token can be issued before the shares behind it ever reach the depository’s guarantee. When the claim is backed by real stock sitting at a broker-dealer, it inspires confidence in delivery. When the token is sold ahead of shares that were never sourced, the claim isn’t as strong. In 2026, it was a tokenised claim whose shares were never procured that became the problem. The difficult part of an IPO to crack will no longer be price discovery. It will be around proving that the underlying asset exists and can be transferred.

What’s Left for the Banks?

Let’s walk the IPO from start to finish and see what’s changed hands.

At the earliest stage, the private price discovery will no longer be the banks’ stronghold. It now happens continuously and in public, on secondary marketplaces, prediction markets and perpetual futures, for weeks or months before a listing. By the time a company like SpaceX decides a price, the market has already priced it using multiple tools.

Read: Pricing the Private

The listing itself is now contestable. SpaceX traded on Nasdaq and, the same morning, on a handful of on-chain venues. Secondary trading no longer stays within a single exchange, courtesy of blockchain-enabled 24/7 venues.

The answer to the delivery problem rests on who actually holds the asset. This, too, used to be the bankers’ monopoly, where they guaranteed delivery of assets by relying on the depository in which they held the shares. Now, anyone who can prove custody can stand in that position.

What still rests with the banks? The four things in the messy, middle phase.

First is the certification. The endorsement of a lead underwriting bank at the top of the prospectus vouches for the deal, telling cautious institutions this one is safe to buy. That endorsement is reputational, built over decades, and a token wrapper cannot issue it. Banks charge a fee for this reputational validation. Goldman Sachs and Morgan Stanley each walked away with $100 million from the $500 million in total fees SpaceX paid the bankers. This was despite the fact that these banks played little role in price discovery.

Second is the distribution authority. The lead bank still allocates the vast majority of shares at its own discretion, deciding who gets in and who is left out.

Next is the risk absorption. In a firm-commitment deal, the kind SpaceX had signed, the banks contractually buy the entire offering and resell it. If demand collapses and the book goes unfilled, the banks, and not SpaceX, would have to hold the unsold stock. No on-chain venue will step up to bear that kind of risk.

Lastly, the stabilisation. In the fragile initial days of trading, if a stock is wobbling, the lead bank buys back shares it had deliberately oversold at the offering (also called the “greenshoe” mechanism) to prevent wild price swings. In SpaceX’s case, it was Morgan Stanley supporting SpaceX after the bell. It is a job that needs a balance sheet and a market-making desk, and it is the banks doing that, for now.

Everything else in the IPO journey is being picked up by markets that run cheaper, for longer hours and in public.

Blockchain-enabled pricing venues have proven effective for pricing companies planning to go public. These venues are always on and offer a market for continuously pricing the stock, better than any bank does. It was evident in how SpaceX’s book was oversubscribed multiple times, and the stock closed its first day up about 19%, close to a textbook-perfect example of an IPO pop.

The old IPO model has been unbundled, and each part is being taken over by the venue that executes it most efficiently. We see this happen across every market - financial or otherwise. In Pricing the Private, we argued that markets no longer wait to price private companies. Banks that guarded and held a monopoly over pricing a company and delivering its shares will no longer be paid for these services in the new IPO model.

So, will the bankers’ revenue from IPOs all but vanish? Not really. SpaceX paid 0.67%, but that spread alone was not what the bankers focused on.

Consider the first-day pop. SpaceX closed about 19%, which on a $75 billion deal amounts to roughly $14 billion in unrealised gains in a single session. Some of the lucky investors who book part of these profits are most likely clients of the underwriting banks that made the allocation possible. Although banks can’t allocate shares to their own books, they still receive inflated trading commissions from their clients, who thank banks for continued access to favourable IPO allocations.

This is why a 0.67% fee still drew almost two dozen banks into a fight for position. The spread is no longer the main deal. The allocation power, the soft dollars banks get to make on their positions, and the wealth tail are what the banks will be in it for.

So the bank’s economics will migrate up the prestige ladder, from a commodity (pricing, which anyone can now do) toward a scarcity (access, which some banks still control).

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

For most of banking history, depositors have had no leverage. You’d park your money, which the banks would then lend out for a return that would be multiple times what they would pass on to you. Depositors accepted this arrangement because the alternative was worse; try saving your money from its worst enemy - time.

The national average savings account in America pays 0.6% interest, while the money parked in US Treasuries and money market funds earns at least 4%. This model survived so long because depositors didn’t have an easy alternative. Except, every once in a few decades, they do have one.

Stablecoins offer a dollar that moves 24/7 on the blockchain, settles in seconds, and costs a fraction of a cent to transfer. Although the law prevents stablecoin issuers from passing interest on directly to holders, DeFi composability allows a stablecoin holder to route funds into a lending protocol and earn 5-8% APY. This has given depositors an exit that doesn’t require them to trade off convenience for something new.

In today’s deep dive, we explore what banks are doing to stop the flight of deposits and how this will change the way world banks and moves their money.

Onto the story,
Prathik

How Depositors Behave

In 1977, wealth management and investment firm Merrill Lynch launched the Cash Management Account (CMA). At that time, Regulation Q had capped the interest US banks could pay on deposits at 5.25%. The US Treasuries yielded over 7%. Merrill found the loophole and used the CMA feature to sweep its users’ idle brokerage cash into money market funds every night. It also gave its clients check-writing and debit card access. Combined together, this let its clients earn interest at superior market rates while being able to use it as a checking account to withdraw money whenever they need.

Money market funds grew 55 times from ~$4 billion in 1977 to $220 billion in 1982, mostly at the expense of bank deposits.

The banks revolted. Eventually, Congress repealed the rate caps set by Regulation Q. Banks regained deposits by creating Money Market Deposit Accounts that offered higher yields. But it took nine years for this to happen, from the CMA’s launch to the repeal of the interest rate caps.

Depositors don’t wait as long anymore, especially with the evolution of technology that allows them to move money in minutes, if not faster.

When Silicon Valley Bank collapsed on March 8, 2023, customers initiated withdrawal requests worth $42 billion in less than eight hours. That’s roughly $1.5 million per second. More than 85% of the SVB deposits were uninsured. That explains the flight of deposits.

A prudent depositor will always move their money to a safer place, where it is likely to at least retain its value if not grow further.

Two Kinds of Digital Dollar

The response to this problem has led to two competing digital-dollar instruments. One sucks dollars out of the banking system, while the other retains them, albeit in a different form.

First is the stablecoin route.

When Circle issues USDC, it takes a customer’s dollar and parks it in US Treasuries. This dollar leaves the bank’s balance sheet. That’s one less dollar for the bank to loan out and earn interest income on. On the flip side, that dollar is no longer insured by the FDIC. If the stablecoin issuer shuts shop, the holder can no longer claim the dollar back.

The GENIUS Act, signed in July 2025 to regulate the issuance and use of stablecoins, bans stablecoin issuers from paying interest to holders. That’s similar to what Regulation Q did by capping deposit rates. But just as Merrill circumvented Reg Q through money market funds, issuers circumvent the yield ban by offering rewards. This is still being debated in the proposed CLARITY Act. A holder can also deposit their stablecoins into a lending protocol and earn yield.

This is an existential threat to the banking industry, which saw billions of dollars in deposits withdrawn within hours of the SVB collapse. Standard Chartered estimates that $500 billion in deposits could migrate to stablecoins by 2028, with US regional banks bearing the brunt due to their excessive dependence on net interest margin.

Although these projections may or may not materialise, the direction cannot be argued with. This is clear from the fact that the four largest US banks have joined hands for the first time in decades to tackle this problem in a different way.

Enter tokenised deposits.

One of the biggest USPs of stablecoins is the low-cost transfers and sub-second settlements. So, the banks decided to solve this.

Using tokenised deposits, a bank can issue a tokenised form of user deposits that can be moved on the blockchain at low cost and high speed. At the same time, the original dollar deposits remain on the bank’s balance sheet, allowing it to lend and earn interest income. These tokenised deposits still carry FDIC insurance.

Two banking consortia have emerged to operate using this approach.

First is the Clearing House network, where JPMorgan, Citi, Bank of America, Wells Fargo and more than a dozen other banks are building a shared tokenised deposit platform targeting H1 2027. This consortium will be wholesale-focused and offer 24/7 settlement, programmable treasury settlement, and cross-border payments.

This tackles what the competition from stablecoins head-on.

The second is the Cari Network, formed by five regional banks including Huntington, M&T, KeyCorp, First Horizon, and Old National. Collectively holding about $780 billion in assets, this network is building a retail-facing tokenised deposit platform on ZKsync’s Prividium stack and plans to launch in Q4 2026. This move by regional banks explains the intensity of the risk they face from the flight of deposits to stablecoins and their disproportionate dependence on net interest margin to keep the lights on.

But what will depositors prefer?

In theory, depositors rarely choose the best product. Instead, they pick the product that offers them the least painful escape from the constraint they face at that moment.

In the late 1970s, that constraint was yield maximisation. Regulation Q made deposits safe but uncompetitive once market rates moved beyond what banks were allowed to pay. Merrill’s edge was that it unbundled the bank account into two things people wanted: market yield and everyday access. Banks eventually copied the bundle through MMDAs once regulation allowed them to pay market rates.

Stablecoins have the same edge as Merrill. They sit outside the traditional deposit stack, move money globally, plug into crypto venues, and make idle dollars more programmable. Their weakness is also similar to the weakness that money funds had relative to bank deposits. They are not insured bank liabilities. Trust depends on the issuer, the reserve stack, the redemption venue and the broader regulatory perimeter around them.

Tokenised deposits have the same edge as banks had in the 1980s. They keep the dollar inside the regulated banking system, preserve the bank’s lending economics, and attach the familiar comfort of deposit protection. But, the same guardrails that make tokenised deposits bank-like also make them less open, less portable and less composable than stablecoins. A bank deposit can become faster and more programmable. But the moment it becomes as open as stablecoins, the bank loses the control that made it a bank deposit in the first place.

This makes the competition more about who controls convertibility.

So, a third route has emerged, something that gives us a sneak peek into what the future of banking and money could look like.

The Bridge

On May 27, SoFi Bank launched SoFiUSD, the first stablecoin issued by a US national bank. SoFiUSD is available on Ethereum and Solana and is issued via a mobile application to its 15 million members. It moves like any stablecoin around the clock and enables cross-border and sub-second settlements at a few cents in fees.

At the same time, SoFi also plans to let members convert SoFiUSD into tokenised deposits that earn interest and carry FDIC insurance within the same app. So users can choose to move their money as a stablecoin while holding it as tokenised deposits to get the best of both worlds. If they are not happy with the yields offered by banks, they can switch their tokenised deposits back to a stablecoin and deploy them across lending protocols to earn a higher yield.

SoFi may never become more decentralised than Circle or systematically more important than JPMorgan. But it has an edge in that it can collapse three user choices into one interface: a bank account, a stablecoin wallet, and, eventually, a tokenised deposit wrapper.

That is closer to what Merrill did than what a pure stablecoin issuer or a pure bank consortium is doing. SoFi is trying to get customers to stop choosing between the convenience of blockchain technology and the interest-earning potential of bank deposits.

The evolution of these products tells us why, when it comes to holding and moving money, the form of the product matters less than the convertibility it offers.

When stablecoins gave the depositors an alternative way to hold and move their money, banks first responded by lobbying to ban stablecoin yield and rewards. But I don’t see the banks winning this battle by lobbying. The only way they win this is by evolving to offer what crypto products deliver. Offer what stablecoins promise, but better. Let users move their money at the same lightning speed, with the same programmability, plus interest and insurance. Interestingly, the path to that evolution runs through blockchains.

This is the beauty of markets. They force incumbents to keep evolving until the system is optimised for its participants. Merrill’s CMA forced banks to repeal Reg Q and create Money Market Deposit Accounts. Stablecoins are forcing banks to tokenise deposits and build 24/7 settlement. In both cases, the incumbent didn’t die. It had to pick lessons from the innovators and evolve to stay relevant.

This evolution will have the sharpest impact on regional banks. They depend more heavily on net interest margin and have less room to absorb deposit flight than the largest banks. If they offer only a better bank account, they lose the dollars that want mobility. If they offer only crypto-like speed, they give up the protection and lending economics that made them banks in the first place. Cari is their attempt to defend both. The Clearing House consortium is the large-bank version of the same defence. SoFi is the more aggressive version: turn the bank into the bridge before someone else builds a bridge around it.

In the past financial cycles, the first entrant usually wins by exposing an inefficiency. The incumbent survives by absorbing the feature once the inefficiency becomes too important to ignore. Merrill exposed the gap between capped deposit rates and market yield. Banks eventually absorbed that feature through MMDAs. Stablecoins exposed the gap between banking-hour settlement and internet-hour money movement. Banks are now absorbing that feature through tokenised deposits and 24/7 settlement.

The edge keeps moving from the product that first reveals the problem to the institution that can bundle, regulate and distribute the solution at scale.

We have been writing lately about how crypto, or blockchain, if I were to be more politically correct, is emerging as fintech infrastructure.

Read: Every Exchange is an ‘Everything Exchange’

That thesis holds here, too. Crypto is not replacing bank deposits as much as it is forcing them to reveal what each part of the product is worth. Yield is one layer. Settlement is another. Insurance is another. Convertibility may be the most valuable layer of all.

Either way, the deposit won’t die. It will just get unbundled and rebuilt. The winner will be the one who lets money move between safety, yield and speed with the least friction.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Loans are bets on collateral. For over a decade, the SaaS companies enjoyed excellent access to debt by using their revenues as collateral. These subscription revenues were predictable and recurring, which made the collateral strong and reliable.

In the past decade, private credit funds have turned their $8-billion loan book into a $500-billion one, backed by this revenue. It seemed like a perfect model until AI arrived and disrupted it, rendering these subscriptions redundant. A customer paying $50,000 a year for enterprise software can now choose AI agents instead.

These SaaS revenues are no longer reliable and are being replaced by the chips that run the AI computation. The $40,000 chip, which sits in a data centre and loses about a third of its value every year, is now being used as collateral to secure debt.

It’s not the ideal collateral, but the shift is happening nevertheless.

The shift inverts a century of credit logic. Normally, you’d lend against a company’s cash flows rather than against its equipment. A going concern with predictable revenue is any day safer than a depreciating machine. But with AI, software revenue has become less predictable than the chip that’s rendering the business redundant.

This shift has built an entire financing stack, from Wall Street futures to DeFi protocols, around that inversion.

Onto the story,
Prathik

This is not the first time physical equipment has been considered more creditworthy than the company using it. We have seen it happen during the American railroad era.

In the 19th century, railroads needed enormous capital to scale. But because of their speculative and overleveraged nature, no bank wanted to underwrite such credit risk. There was no problem with locomotives. They were tangible and carried resale value. If the railroad went bankrupt, you could repossess the engine and sell it to the next operator to recover the value.

The Philadelphia Plan created an entire debt product to address this gap. A trustee held title to specific rolling stock and allowed investors to fund about 80% of the railroad cost. The railroad made lease payments, and if it defaulted, the trustee took back the equipment.

The takeaway was that by separating the asset from the entity, you could finance an unreliable industry by betting on its most reliable component. The system was so efficient that when Penn Central collapsed (America’s largest bankruptcy until then) in 1970, the equipment obligations were honoured at 100% face value without having to seize and shut down the rails.

Later, aircraft finance also adopted the same trustee structure. The structure also laid the foundation for the principle behind modern secured lending: when the company is risky but the asset is essential, lend against the asset.

GPUs follow the same principle. Here, too, the entities using them are largely fragile competitors like AI labs, neocloud operators and inference providers. Their only moat is the generation of chips they have access to’. A better model on better hardware can displace their market position overnight. Just like the locomotives of the railroad era, the chip here is the essential asset. It sits in a secure facility and generates measurable revenue.

GPUs are also unwinding the old collateral regime.

The Bank for International Settlements (BIS) published data showing that private credit’s SaaS loan book grew from almost nothing to a fifth of all direct lending in a decade. The rush to service SaaS companies with debt was built on the assumption that software revenue will be durable. That assumption cracked when AI agents offered a cheaper alternative. Software stocks fell 30% in four months, and UBS warned that private credit defaults could hit 13% in an aggressive disruption scenario.

SaaS subscription revenues are no longer the best collateral in tech.

But lending against GPUs has some inherent issues.

If you want to lend against a house, there’s an appraisal industry, comparable sales data, and a century of price indices. But until May 2026, a GPU had no equivalent data. GPU rental rates were scattered across bilateral deals, opaque broker markets, and DePIN protocol dashboards that most bank credit committees had never heard of.

But that changed three weeks ago. On May 12, the CME Group announced GPU compute futures with Silicon Data. CME’s pivot tells you traders want exposure to compute the same way they want exposure to oil and corn. A week later, Intercontinental Exchange (ICE) announced a competing product with Ornn.

These derivatives add a price-discovery layer to GPU lending, helping scale the credit market. But there’s another problem here. Traditional asset-backed securitisation involves bundling loans, tranching and risk-rating them, and getting them to trade. This takes 2-3 years for a new asset class. That’s too long a timeline for hardware that becomes obsolete in 3-4 years.

Computing assets also differ fundamentally from other traditional assets in how their values move. Over time, a house tends to be worth more than you paid for it. So the collateral appreciates. On the other hand, a GPU declines from the moment it is installed.

The day NVIDIA ships Vera Rubin chips, the resale value of its Blackwell chips falls. Today, there is no direct depreciation hedge. Maybe the market could develop GPU depreciation derivatives. But we are not there yet.

So, time is of the essence when you want to issue a loan against an asset that depreciates rapidly.

Enter crypto. Permian Labs’ USD.AI lends against individual GPU chips through special-purpose vehicles (SPVs), covers the loan risk through Barker’s collateral warranty, is fully reinsured by Munich Re, and tokenises the debt the moment the loan is created. So far, it has approved over $1.28 billion in GPU-backed facilities. This cuts the timeline for securitising a loan from years in traditional cases to near-instant deployment using on-chain credit products.

The USD.AI model changes who can access compute.

Today, the GPU financing market is skewed in favour of the big players. If you’re Meta, you borrow $27 billion at investment-grade rates. A mid-sized AI company is forced to go to a private credit fund that could charge as high as 25% interest, Permian Labs CEO and co-founder David Choi said on a DCo podcast last week. If you run a small AI firm, you must rent compute by paying roughly three times the ownership cost over the chip’s life.

USD.AI lends against the chip itself, not the company. A $100,000 deal for a handful of RTX Pro 6000s gets the same underwriting process as a $300 million facility. The borrower’s corporate profile is less important than the hardware, the revenue it generates, and its insurance coverage.

Asset-backed loans work only when the financial system moves as fast as the collateral depreciates. On-chain issuance is one way to do that.

But can GPU-backed debt hold up during a market downturn? Nobody knows. The market hasn’t been tested yet. Lenders have not been forced to repossess and bulk-sell a rack of H100 chips because the next-generation chip got shipped. Even the insurance backstop hasn’t been tested yet, although being live since February 2026. The secondary market for used GPUs is yet to mature.

But the industry isn’t waiting. It has already started building the pricing infrastructure around the asset.

Architect, which started as a trading technology company, is now turning compute into a tradeable commodity through an exchange platform. Its American Innovation Exchange is a U.S. derivatives market built specifically for the AI economy, with contracts tied to GPU compute costs and other AI supply-chain inputs such as energy, power and metals.

Architect offers futures and options across H100, H200, B200, and B300 chips, with contracts ranging from monthly to yearly. Its target customers include traders, neoclouds, hyperscalers, model labs and lenders trying to hedge long or short compute exposure.

Although there is no resale market here, a derivative contract on a used H100 chip indicates its value after its first use. A futures market on computing power tells us what the market thinks a chip’s earning power may be worth.

These contracts don’t solve the problem altogether. If a borrower defaults, somebody still has to take custody of the machines, verify the hardware, find a buyer and sell the chips to recover value. But it adds a market price for depreciation and future compute demand, which the GPU credit currently lacks.

So, should we abandon GPU-backed credit markets? It isn’t an option. The old market built on SaaS cash flows is deteriorating rapidly. The hyperscalers, including Microsoft, Google, Amazon, Meta, and Oracle, are spending a combined ~$800 billion on AI infrastructure in 2026. All this needs financing.

None of these problems is unique to GPU-backed loans. Every collateral regime in financial history faced a version of this problem. Mortgage-backed securities had to survive the 2008 crisis. Auto loan asset-backed securities (ABS) faced subprime stress. But there is a pattern in this. Once a debt market emerges, it scales, encounters a downturn that tests its recovery assumptions, and then either reforms or contracts.

GPU credit is still being built in real time. While CME futures help in price discovery, DeFi protocols provide speed, and private credit funds provide scale.

Right now, most AI companies rent compute because they can’t get a loan to buy it. Renting often accounts for 80% or more of their total costs without offering them any ownership. It’s as good as paying rent for an apartment forever because no bank will give you a mortgage. USD.AI’s thesis is that once chip-level lending scales, every AI company can own compute the same way home ownership expanded once mortgage securitisation made housing debt tradeable.

Historically, the company was the most fundamental unit around which finance was organised. Banks lent to the company, investors invested in it, valuation was derived based on its cashflows, and the world trusted its durability. The entire credit system, from leveraged loans to SaaS-backed private credit, was built on the assumption that a well-run business outlasts its equipment. The AI company may not have brand value, but the hardware it uses may have a resale market. This shift can alter what the financial system treats as the fundamental unit of value. The chip could outlive the company.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Last week, Hyperliquid’s HIP-3 markets launched a perpetual futures (or perp) contract on SpaceX. It opened at $150 per share and pegged the company’s implied valuation at $1.78 trillion, less than the $2 trillion valuation that SpaceX has targeted for its IPO. Within hours, traders pushed its price on Hyperliquid to $216. The implied valuation crossed $2.5 trillion. On its second day, the perp price touched $230.

Retail traders on a decentralised exchange had priced Elon Musk’s rocket company over 25% above its own IPO target before a single share had been listed.

Two days later, Polymarket launched prediction markets on private company milestones in partnership with Nasdaq Private Market. Now, you can bet on various events, such as IPO timing and valuation thresholds, for companies that are not yet publicly listed.

Individually, these perp markets and event contracts around private companies do little. Combined, they let the market provide SpaceX with a continuous valuation and an IPO probability. But how reliable is this price before a single share of the company has been issued to the public?

In today’s deep dive, I will explain how crypto has built a parallel pricing infrastructure for private companies and what that means for these firms.

Onto the story,
Prathik

In the 1880s, establishments called “bucket shops” appeared across American cities. From the outside, they passed for bootstrapped brokerage offices. They too had ticker tapes that showed live stock prices and counters where customers placed orders. Except they weren’t legal.

Nasdaq still defines these “bucket shops” as illegal brokerage firms that accept customer orders but do not execute them immediately.

Bucket shops let working-class Americans wager on stock price movements with tiny margins, sometimes as little as a dollar. The operator took the other side of every bet. If a customer wagered that US Steel would rise, the operator paid out when it did. If it fell, the operator kept the margin. No shares changed hands, and no ownership was transferred.

The establishment despised them. The regulators argued that these shops degraded public trust, and the states outlawed them one by one. In 1921, New York’s Martin Act effectively finished them off.

The very shops they had killed, the same ones the regulators had tagged as “gambling dens”, had created an appetite for real shares. America’s stock ownership surged between 1900 and 1922 because of the retail interest these shops had cultivated.

Despite their illegality, bucket shops became highly popular because they separated ownership from pricing. A century later, crypto has developed a similar mechanism for pricing some of the most valuable private companies. However, it contrasts with bucket shops in terms of legality and transparency. A bucket shop was a black box. The operator set the price, took the other side of every trade, and settled in cash with no audit trail. If the operator went bust, so did your money.

On-chain perps are structurally different. Every trade on Hyperliquid is recorded on-chain. Funding rates are public. Settlement is automatic and verifiable. Open interest, liquidation thresholds, and counterparty exposure can be traced in real time by anyone. The pricing layer that crypto has built strips out ownership in the same way bucket shops did, but it replaces opacity with transparency.

A Price for Everything

Polymarket’s partnership with Nasdaq Private Market (NPM) enables it to issue contracts covering IPOs, timing, valuation thresholds, and secondary market activity for companies like OpenAI, SpaceX, Kraken, and others.

The pricing these contracts enable will be nothing like what bucket shops of the 19th century enabled. That’s because this time, traditional players have partnered with the crypto infrastructure. NPM’s resolution data for these event contracts will be pulled from actual corporate-sponsored tender offers and structured secondary auctions.

In an event contract that bets on OpenAI surpassing a $1 trillion valuation at IPO, the resolution will be anchored to cleared institutional trades. This is the first time a regulated secondary market data provider has licensed proprietary pricing data to a crypto prediction protocol.

But these event contracts will just scratch the surface. They form just one layer in what has become a full, parallel pricing stack around private companies. Each tool in this stack can price a different dimension of the same company.

While event contracts can price the probability and timing of the IPO, pre-IPO perpetual futures can continuously price changes in valuation sentiment in the run-up to the debut listing. On Hyperliquid, market makers like Trade.xyz and Ventuals run perps that track SpaceX, Anthropic and other private companies. These trade 24/7 and produce a rolling mark-to-market on companies whose official valuations otherwise update once a quarter or through sporadic funding rounds.

On Hyperliquid, the cumulative volume traded across just five tickers tracking Anthropic, SpaceX, OpenAI and Cerebras touched $1.9 billion in the last six months. Out of this, more than $1.6 billion was traded in May 2026 alone.

There’s a third layer that goes beyond the synthetic pricing of private companies.

PreStocks, a Solana-based platform backed by Republic Capital, tokenises pre-IPO shares through special purpose vehicles (SPVs) that in turn hold actual equity in companies like SpaceX, OpenAI and Anthropic. Phantom, one of Solana’s largest wallets, has integrated PreStocks directly into its interface, making these tokens accessible to millions of users.

Unlike perps and prediction markets, these tokens aim to provide economic exposure to real shares, not just a price bet.

The demand for PreStocks has been substantial.

The Anthropic token on PreStocks climbed 733% between October 2025 and late April 2026, pushing its implied valuation past $1 trillion. It made Anthropic the third private company to cross that threshold on-chain, alongside OpenAI and SpaceX.

At the same time, Forge Global, a major regulated secondary marketplace, was independently pricing Anthropic near the $1 trillion mark. What’s interesting is that a Solana-based token and a regulated share marketplace were converging on the same number for a stock that has no public listing yet.

PreStocks has processed over $1.25 billion in cumulative trading volume across 3.67 million transactions so far. Of that total trading volume, 93% occurred in 2026.

Today, over 20,000 holders have exposure to pre-IPO stocks such as Anduril, Neuralink, Kalshi, and Polymarket, with a combined value exceeding $25 million.

But how reliable are these? Data shows they do carry signals.

When Trade.xyz launched its HIP-3 pre-IPO perp on Cerebras Systems earlier this month, the on-chain contract traded near $340 about an hour before the Nasdaq opening. The stock on Nasdaq opened at roughly $350. The IPO price was set at $185. The price on Hyperliquid was just about 3% off the eventual opening price. Traditional secondary market platforms were off by around 35%.

Together, event contracts, perps, and SPV-backed tokens start generating a composite, multidimensional, and market-generated price for private companies. This has historically existed only for public companies.

But there’s a cost of holding these instruments.

Perpetual futures contracts carry funding rates, a continuous cost that long holders pay to short holders, or vice versa, depending on market imbalance. For a pre-IPO perp where the majority of participants are bullish, this funding cost can compound over weeks of waiting for an IPO that hasn’t been scheduled.

SPV-backed tokens charge platform fees and carry counterparty risk tied to the underlying vehicle. Prediction market contracts lock capital until resolution. Each instrument attracts a different kind of participant. Short-term speculators are willing to absorb funding rates for quick directional bets. Those with long-term conviction lean towards prediction markets that carry a lower cost. Eventually, the composite price derived from multiple such instruments can reflect this diversity.

Ownership Not Included

There’s a catch. The entire pricing layer is detached from the ownership layer.

Nobody trading a Polymarket contract on OpenAI’s IPO timing gets a claim on OpenAI’s earnings. Those going long on a SpaceX pre-IPO perp on Hyperliquid don’t get voting rights.

Then why do we need these pricing tools for companies not yet publicly traded?

What event contracts, perp markets and SPV-backed tokens have collectively built is closer to what credit default swaps (CDS) did in the 2000s. A CDS lets you express a view on a company’s creditworthiness without lending it a dollar. It created a parallel pricing layer around credit risk that was often more liquid and responsive than the underlying bond market.

PreStocks attempted to go a step further. Its SPV-backed tokens claimed to give holders proxy ownership through indirect economic exposure to real shares. But Anthropic has hit back at that claim. Anthropic said that any share transfer to an SPV without board approval would not be recognised on their books. As a result, the Anthropic token fell from ~$1,400 to $812 in a single day.

Yet the token recovered. Two weeks after the crash, Anthropic’s PreStocks token was trading close to $1,050. The demand for Anthropic’s pricing took a hit when its legal backing was called into question, but the market absorbed the shock and repriced the risk.

This tells us how a PreStocks trader differs from a perp trader.

A trader who bought Anthropic exposure through PreStocks in October at $122 was sitting on an 8x paper return by late May, even after the offering’s legality was called into question. But SPV-backed trades continue to face thin on-chain liquidity and a risk of future legal notices from the private companies.

A trader who expressed the same bullish view through Hyperliquid’s Anthropic perp could enter and exit at any time, against far deeper liquidity, with every position verifiable on-chain and no counterparty risk tied to a company’s transfer restrictions. But the perp trader has to forgo the 8x return.

It shows that the private markets have acknowledged the role of these instruments. They help fill the gap between having an opinion and having no way to express it, and not necessarily give them absolute ownership of the equity.

The Case for Pricing the Private

Polymarket said nearly 1,600 unicorns globally represent a combined valuation exceeding $5 trillion. Companies like OpenAI and Anthropic have brand recognition, revenue at scale, and hundreds of millions of users. They have everything a public company has except public shareholders. Yet, the communications and marketing around these products and companies have ensured that everyone has an opinion about even private companies like SpaceX or OpenAI. In fact, there was never a wider gap between everyone having an opinion on SpaceX, and yet almost nobody being able to price it.

It’s this gap that crypto fills with the entire pricing stack for private companies. They still can’t price using direct equity exposure. Instead, they use indirect SPV-backed holdings, probability, sentiment, timing and continuous valuation as tools to do that.

The story of pricing private companies is about more than just prediction markets or pre-IPO perps. It shows us what happens to an asset class once a full pricing layer is built around it, even before the traditional market structures have caught up.

We have seen this happen before. Last year, Hyperliquid listed a silver perpetual contract. Within a month, it was handling 2% of the world’s silver trading. Not 2% of crypto silver volume, but 2% of the entire global silver market was routed through a blockchain protocol with no headquarters, CEO, or brokers. Silver has been traded on COMEX for decades, fed by a mature institutional infrastructure with deep liquidity. But that infrastructure also came with brokers, high-margin requirements, exchange hours, and minimum account sizes. Hyperliquid let traders price the same old shiny metal by stripping out all the friction points.

Read: A Sliver of TradFi

Robinhood is also building something similar. Its app now lets users hold equities, options, crypto, and prediction markets in a single interface. When a user sees a Kalshi election contract embedded next to their NVDA position, the pricing of each instrument provides richer context for the collective whole. The value is not in any single product.

Read: Why Robinhood Will Eat Kalshi’s Lunch

This infrastructure isn’t being built in isolation. We have seen what tokenisation can do to existing assets. Kraken’s xStocks has tokenised over 100 public equities, generating $25 billion in trading volume with 80,000 on-chain holders. Each token is backed 1:1 by the underlying share held in regulated custody. The xStocks precedent shows us what is possible with tokenisation at scale for public companies. If the same mechanism can be replicated for private companies along with securing issuer-consented pre-IPO tokenisation, it could further boost the adoption of these pricing tools.

The more instruments you can use to price a related outcome, the more accurate a price the market produces about what the world collectively knows (or believes).

This is what should matter the most about the private company pricing stack. A prediction contract, a pre-IPO perp, an SPV-backed token and a secondary transaction each price a different dimension. But collectively, they approximate what public markets do for listed companies.

The accredited investor regime that drives valuations in public markets was built on the assumption that private companies are too complex and risky for ordinary people to evaluate. That assumption is no longer sound when the same ordinary people have been tracking, following, engaging with and pricing SpaceX through social media, X posts, and a handful of different instruments for years before the S-1 lands.

The bucket shops were shut down because the establishment saw only the gambling. They overlooked the demand signal evident in how people priced things they couldn’t own. That demand went nowhere, even after the shops were shut. It has moved from the shops to brokerage accounts, futures markets, and eventually the blockchain.

Today, $5 trillion in value is behind accredited investor gates and priced only occasionally by insiders and venture capitalists. This is reason enough to validate the need for a robust parallel pricing stack for pricing private companies whose affairs and reputations are all but private. PreStocks tried to bundle pricing with ownership. Hyperliquid and Polymarket couldn’t offer ownership but enabled high-leverage, permissionless routes for pricing information.

These tools could change how some of the most important upcoming IPOs are priced by the market long before the first share is listed. They could significantly bridge the gap between price variation in companies’ S-1 filings and the eventual listing price by pricing the sentiment and information developments that occur between the two events.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

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Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

In 2025, brokerage firm Charles Schwab earned $11.75 billion in net interest revenue. That was about half of its total revenue for the year. Schwab earned this by sitting on its clients’ idle cash, not by trading stocks on their behalf or advising them.

When a client sells a stock and doesn’t reinvest the surplus cash, Schwab moves it into safe, short-term assets. It keeps the spread between what it earns on these investments and what it passes on to its customers.

This is not unique to Charles Schwab, though. It’s called a float business, something most investment and trading intermediaries do. Except, a new class of depositor is emerging - human-coded software - which will likely create one of the biggest float opportunities.

These agents need funded wallets with stablecoin balances parked in advance. Whoever custodies those balances will earn the spread on idle capital and a fee on every micro-transaction flowing through the agentic stack. That’s two revenue streams compounding off the same deposit base. Every major player from Circle to Visa is now racing to capture it.

In today’s analysis, I will explain what this opportunity means for companies trying to earn in the age of agentic payments.

Onto the story,
Prathik

The Appeal of Float

Every significant financial intermediary in history has built one of its most reliable cash flows from idle money. In its S-1 filing 24 years ago, PayPal disclosed earning a 3.8% blended yield on customer balances in 2001. That yield was PayPal’s primary revenue source before its transaction fees scaled.

The habit persisted as financial institutions evolved. Robinhood ended 2025 with $1.5 billion in net interest revenue, more than a third of its total revenue.

For trading intermediaries and investment advisory businesses prone to cyclical downturns, income from holding customer deposits is often the most reliable revenue stream.

Now imagine what happens when the depositor is not a person but a piece of software that autonomously buys compute, calls APIs, books services and pays other such software. Think AI agents. All these agents need funded wallets with balances parked in advance, ready to be used whenever triggered.

This need for working capital forms the base for building a similar float opportunity in the emerging agentic economy.

Nothing about this opportunity should surprise you. That’s how money has always worked. Whenever it sat idle, even for hours, someone always found a way to make it productive.

The Machine’s Savings Account

In September 2025, Coinbase and Cloudflare launched the x402 protocol. It allows AI agents to pay for a web resource, like a data feed, a compute job, or an API call, by attaching a stablecoin payment directly to the HTTP request. It removed humans from the loop by not requiring any checkout page or card numbers.

So far, the protocol has processed more than 171 million transactions, with cumulative volume exceeding $50 million. Each of those millions of transactions requires a pre-funded agent wallet that has a stablecoin balance sitting idle until it is spent.

Anyone who has studied the Schwab or PayPal playbook understands that the jackpot lies in the custody of working capital and in earning the spread on it.

Although the agentic numbers are currently insignificant relative to global payments, they represent an opportunity that didn’t exist about eight months ago. Machines paying machines, settlements happening in stablecoins and transactions being processed at sub-cent fees and sub-second finality would have sounded like futuristic ideas a year ago.

Now the world is betting on this opportunity.

The Fight for Float

There are two ways to make money from agentic payments. The first is to charge a small fee for every transaction. The second is the float, where the wallet provider earns interest on idle balances sitting in agent wallets.

USDC-issuer Circle is betting on doing both by building infrastructure to hold agentic wallet balances and process their transactions.

Earlier this month, Circle launched its Agent Stack, which includes a suite of agent wallets, a nanopayments protocol that settles transfers as small as $0.000001, and an agent marketplace.

I wrote here about how the agentic layer helps a stablecoin issuer whose primary income so far has been earning interest on treasury bills.

Read: From Issuance to Infrastructure

For Circle, a human holding $1,000 in USDC might move it once a month. But an AI agent holding $100 might execute hundreds of micro-transactions a day. If Circle can integrate these idle balances via smart contracts and deploy the capital into yield-bearing primitives such as staked treasuries or other short-term yield-bearing assets, it can pocket the spread and earn a nanopayment fee on every transaction flowing through its rails. The two revenue streams compound off the same deposit base.

In February, Coinbase launched Agentic Wallets. These are purpose-built, non-custodial wallets with programmable spending limits, session caps, and gas-free transactions that settle on the Base network.

SkyfireAI, founded by ex-Ripple executives, calls itself “Visa for the AI economy” and is building alternatives to traditional card rails by charging fees in the tens of cents to process agentic transactions.

Traditional payment giants aren’t missing the opportunity either.

In March 2026, Banco Santander completed Europe’s first live end-to-end payment executed by an AI agent using Mastercard’s Agent Pay. In December 2025, Visa announced it would list the Visa Intelligent Commerce platform in AWS Marketplace for developers and enterprises building towards agentic commerce. In the same month, Stripe launched its Agentic Commerce Protocol to enable pay-as-you-consume micropayments that settle in stablecoins.

From crypto-native rails to card networks, to big tech and startups, everyone is racing to be where the agents park their cash.

But how big is the pie they are fighting for?

The AI Float Opportunity

Microsoft projects 1.3 billion AI agents to be in operation by 2028. I understand these are just consultant projections and not realised volumes. Treat it with the scepticism any forward-looking estimate warrants. But let’s consider what this opportunity means for a company like Circle.

In March, Circle’s marketing head, Peter Schroeder, posted that USDC accounted for 98.6% of the 140 million transactions AI agents made over nine months.

The cumulative volume of $43 million is still negligible. But if Circle can scale the agent deposit base to $1 billion, then it’d add $40 million in annual income at a ~4% yield. If Circle deploys capital into other DeFi primitives, it adds an additional $10 million to its income for every percentage point of yield the primitives offer above the risk-free rate.

For context, Circle’s total reserve income from all of USDC’s $77 billion in circulation was $653 million in Q1 2026.

The yield on agent deposits complements its treasury income when interest rates are low.

Doing Business in a Post-Agentic Era

Circle’s marketing head noted that the average transaction size across 140 million payments was $0.31. Traditional payment companies like Visa and Mastercard charge interchange fees that often exceed $0.20 per swipe. The system that charges 20-cent fees per transaction cannot process a 31-cent payment. Its math is almost comical. This is why companies are rushing to build agent-specific protocols with different fee structures.

The impact of the agentic economy extends beyond payment companies. The agentic economy rewires how every business on the internet will be paid. The primary consumers of web content are soon shifting from humans to AI agents. An AI agent surfing through hundreds of articles to answer a user’s query won’t see the banner ad next to it. This topples the entire advertising model that funds most of the web’s content based on human eyeballs.

Stablecoin-enabled micropayments replace this model with a pay-per-request system that lets agents pay a few cents per article click. The content management systems (CMS) on the web are also evolving to integrate the new business model that is native to AI agents. Last month, Cloudflare and x402 launched EmDash, an AI-native open-source CMS that supports a pay-per-request model for AI agents.

In the post-agentic era, protocols like x402 can turn any point on the web into a pay-per-request service.

What happens if the businesses don’t adapt and offer AI-native payment options?

Consider a SaaS company that offers monthly and yearly subscription packages for its APIs. If it doesn’t offer a pay-per-request option, the AI agents will just use a competitor that does. The agent will show no loyalty like a human would.

This forces a re-pricing of the internet economy.

Businesses will be forced to repackage their products through micropayments that are so frequent that they add up to sizeable revenue. The companies that expose their services behind the paywalls of x402 and similar protocols earliest will capture the agent traffic.

Agentic wallets will also have a trust layer around programmable spending conditions, session budgets, and audit logs to enable monetisation. Whoever builds this layer will own the deposit base, the resulting fees, the float, and the overall yield.

Companies will still face regulatory obstacles, as they have with every other new technological adoption. Whether agent working-capital balances will be classified as deposits, e-money, or something else is still undecided. Stablecoin yield restrictions debated in Congress as part of the CLARITY Act could decide who captures the spread.

Irrespective of which side the regulation leans, what is inevitable is that idle money won’t stay idle for too long. Participants always find a way to capture value by targeting market inefficiencies. That’s the natural course of markets.

That’s it for today. I will be back with the next one.

Until next time, stay curious,
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

On a Saturday in August 2025, something happened that should have broken every crypto group chat on the internet. Bank of America, Citadel Securities, DTCC, and Société Générale settled a U.S. Treasury repo transaction in real time on a blockchain over the weekend. A repo, for context, is one of the most basic trades in institutional finance, where one party sells a government bond to another with an agreement to buy it back the next day, usually to raise short-term cash overnight.

It’s the plumbing of the financial system. Banks, hedge funds, and central banks use repos every day to manage liquidity, and trillions of dollars move through this market. And for the first time ever, that transaction occurred on a blockchain, outside market hours, with near-instant atomic settlement among some of the world’s largest financial institutions.

Eight months later, on April 20, 2026, Japan’s central clearing house JSCC, Mizuho Financial Group, Nomura Holdings, and Digital Asset launched a proof-of-concept to move Japanese government bond collateral (JGBs) onto the Canton Network. JGBs are among the most important financial instruments in Asia, with over $9 trillion in outstanding value, and are the single most widely used collateral asset across the region’s institutional markets. When banks and hedge funds across Asia need to back their leveraged positions, JGBs are often the first ones they reach for. And now that the entire collateral system is moving on-chain.

This is probably the most consequential blockchain story of 2026. In this piece, I’ll break down why JGBs are the right asset to tokenise first, why Canton keeps winning institutional deals while public chains fight over retail volume, and what always-on collateral settlement actually changes for global trading desks.

Why JGBs, and why now?

For decades, Japan tried to make the yen a global reserve currency, but it never really happened. Even today, the yen accounts for only roughly 4-6% of global reserves, trailing the dollar, the euro, and even the pound. But somewhere along the way, something unexpected happened: Japan’s government bonds became one of the fastest-growing collateral assets on Euroclear’s Collateral Highway, the infrastructure that moves collateral between the world’s largest financial institutions. Foreign ownership of JGBs has climbed to about 11.9%, or roughly ¥144 trillion, held by institutions outside Japan.

In institutional finance, collateral is everything. Every leveraged position, every derivative, every repo trade needs high-quality assets backing it as collateral. And JGBs, backed by the world’s third-largest economy and with essentially zero default risk, are among the few assets that meet that bar globally. When a hedge fund in Singapore takes a leveraged position, or a bank in London covers derivatives exposure, JGBs are often pledged as collateral. Crypto’s most important infrastructure win is happening inside traditional finance. They’ve become the operational infrastructure in Asian institutional finance without Japan ever having to win the currency war.

The problem is that the entire collateral system still runs like it’s 1995. A JGB collateral transfer between two institutions goes through a tiered holding structure. It starts with the Bank of Japan at the top, then with Hofuri (Japan’s central securities depository), then with custodian banks, then with sub-custodians, with each layer reconciling separately, and each operating only during Tokyo business hours, roughly 9 am to 3 pm JST.

A collateral move that should take a few seconds ends up taking days. And during those days, that collateral is frozen. A desk in New York that needs it at 10 pm can’t touch it until Tokyo wakes up. AGFMA study with BCG estimated that Blockchain could free up $100 billion in stuck collateral globally, and for a single bank running $100 billion in daily repo volume, tokenised settlement could save $150-300 million a year just on operational overhead.

And here’s something that should be very concerning for Japan. The U.S. has already moved on-chain. The Depository Trust & Clearing Corporation (DTCC), the single entity that custodies $99 trillion in American securities and processes $3.7 quadrillion in transactions annually, partnered with Digital Asset in December 2025 to tokenize U.S. Treasuries on the Canton Network. That means the backbone of the U.S. securities infrastructure is now moving towards 24/7 tokenised settlement.

Broadridge is already processing $354 billion daily in tokenised Treasury repos on the same network, and JPMorgan’s Kinexys has moved over $1.5 trillion in cumulative volume through its on-chain payments rail. U.S. Treasuries are quickly becoming always-available, always-movable collateral assets, while JGBs are still locked to Tokyo office hours.

If you’re a global fund manager and you need to post collateral at 2 am for a margin call, and if you have the option to pick a tokenised Treasury that settles instantly compared to a JGB that won’t move until Tokyo opens in six hours, I believe you’ll pick the Treasury every single time. Multiply that decision across thousands of desks, and JGBs risk losing their status as top-tier collateral.

For a country whose sovereign bonds are deeply woven into the collateral fabric of Asian finance, it could even be an existential problem. The four companies behind the JGB on-chain trial used the word “urgent” in their press release, and given how quickly U.S. infrastructure is moving, it’s hard to disagree.

Why Canton keeps winning

Pratik & Tejaswini have covered Canton extensively at Token Dispatch, including its architecture and privacy model, its position in the broader institutional blockchain race, and the competitive debate around its approach. So I won’t rehash the basics here. What I want to focus on is why Canton specifically keeps landing these massive institutional deals, and what that tells us about where institutional finance is actually headed.

When Japan’s JSCC had to pick a network for JGB collateral, they picked Canton, the same chain that the DTCC, Broadridge, and JPMorgan are already building on. And the reason comes down to what sovereign bond collateral actually demands from a network.

Sovereign bond collateral has a very specific set of requirements that most blockchains can’t meet. When Mizuho moves JGB collateral to a counterparty in London, the transaction must comply with Japan’s Book-Entry Transfer Act, which governs how ownership rights are recorded across a tiered custody chain. The blockchain record needs to stay legally synchronised with Hofuri’s official registry.

Every party in the transaction, from the clearing house to the custodian and the counterparty, needs to see only the data they’re authorised to see under Japanese and international securities law. And the whole thing needs to settle atomically, meaning the collateral and the payment move at the exact same instant, or neither moves at all.

That’s an insanely specific set of constraints. And the reason Canton keeps getting picked is that its architecture was designed to tackle these problems. Each institution runs its own ledger, and cross-institutional transactions synchronize only the data each party is legally entitled to see. The smart contracts themselves, written in Digital Asset’s Daml language, encode who can see what and who must authorise what at every step.

So when JSCC, Mizuho, and Nomura run a JGB collateral transfer on Canton, the clearing house sees the full picture; Mizuho sees its side; Nomura sees its side; and nobody sees anything they shouldn’t. Canton is now the only network in the world where the three largest pools of sovereign bond collateral - The U.S. Treasuries, Japanese government bonds, and European government bonds- can move freely, 24/7, across borders in real time. No other network, public or private, is anywhere close to that.

What always-on collateral actually changes

Most coverage of tokenised on-chain settlement stops at making the point that it’s faster. But that’s where it starts, the real change lies in what happens to the system’s behaviour under stress.

Think about what happened during the COVID-19 pandemic in March 2020. Markets crashed, volatility spiked, and initial margin requirements on equity futures jumped 100% in a matter of weeks. Funds that couldn’t meet margin calls had to liquidate assets to raise cash.

But selling assets into a falling market pushes prices lower, triggering further margin calls and forcing more selling. That feedback loop is one of the most dangerous dynamics in finance, and it nearly broke things again during the UK’s LDI pension crisis in September 2022.

Here’s what 24/7 tokenised settlement changes about that.

Right now, when a margin call hits, most funds have to sell assets to convert them into cash before they can post. With on-chain collateral, a fund can pledge JGBs or Treasuries directly to meet the call without first converting them to cash. The forced-selling loop weakens as fewer institutions dump assets into a falling market solely to raise liquidity.

Then there’s the “give-before-get” problem. In a traditional repo, the cash lender sends money first and receives collateral later. There’s a brief window when one side is exposed, they’ve sent their end, but haven’t received the other side. Banks price that intraday exposure into their haircuts and funding costs.

But with atomic settlement on-chain (meaning the transaction either settles fully or doesn’t execute at all, with no in-between state) both legs of the trade, the collateral, and the cash move at the exact same instant, or neither moves. Santander actually tested this in December 2024, executing $50 million in USD and €50 million in EUR intraday repos on JPMorgan’s Kinexys that unwound automatically three hours later. Intraday repo, which used to require complex tri-party setups or committed credit lines, has now become routine.

What’s more interesting is that during the January 2026 Canton demo, London Stock Exchange Group (LSEG) brought its Digital Settlement House (DiSH) into the transaction, which uses tokenised commercial bank deposits as the cash leg instead of stablecoins. This is because banks won’t settle billion-dollar trades in USDC; it’s a private IOU, not money good. DiSH tokens represent actual deposits at regulated banks and are transferable 24/7 on-chain. That solves the cash side of the equation, the last missing piece for institutional adoption, and now Japan wants to plug JGBs into this same infrastructure.

What this means

If this JGB trial works, U.S. Treasuries are already live, and European sovereigns are in the demos, then Canton, to me, is starting to look a lot like the next SWIFT.

A single network that becomes the default layer for moving the world’s most important collateral across borders. And just like SWIFT, once enough institutions are on it, leaving becomes almost impossible. The network effects compound. Every new sovereign bond class that joins makes the network more valuable for everyone already on it, and harder to compete with for anyone trying to build an alternative.

I think that’s worth sitting with for a second. We spent years in crypto debating decentralisation, worrying about single points of failure, building systems where no one entity could control the rails. And now the most consequential blockchain deployment in history is converging towards a single permissioned network governed by the same institutions that already run global finance.

Whether that’s a good thing depends on what you think the point of all this was. If the goal was to make capital markets more efficient, reduce settlement risk, and free up hundreds of billions in stuck collateral, this is working. If the goal was to redistribute power away from incumbent financial institutions, it’s doing the opposite. The same gatekeepers are now running better infrastructure.

I don’t think that makes it less important. The financial system settling government bonds on a blockchain, 24/7, across borders, with atomic execution, is a genuine upgrade to how global finance works. But I do think it’s worth being honest about ‘what kind of’ upgrade this is. It’s an efficiency revolution: the plumbing is being rebuilt, but the plumbers remain the same.

That’s it for today. See you next week.

Until then, stay curious.

Vaidik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

For over a decade, Bitcoin miners faced a lot of flak in the energy and technology world. Their humongous power consumption drew congressional hearings, ESG downgrades, and sustained public criticism. The same facilities are now signing 15-year lease deals with the likes of Microsoft, Google, and Anthropic. Little about the sites has changed. In fact, if there’s one thing consistent with these miners in the past decade, then it’s the crisis. So, what happened?

There’s an interesting quote on crisis: ‘The best opportunities often come from the worst crisis.’ That’s what has happened with Bitcoin miners. Between July 2016 and April 2024, they faced three halvings. Each one cut block rewards in half and forced operators to chase cheaper electricity across increasingly remote corners of the American grid, including West Texas, rural Georgia and the plains of North Dakota.

The weak ones died. Some pivoted at the right time. Others learned the lesson later.

In today’s story, I will explain how the surge in AI infrastructure investment coincided with miners’ growing power and processing capabilities, helping them find a new lease of life.

Onto the story now,
Prathik

Halving - The First Pivot

BTC miners’ first test of survival came in April 2024 with the most recent bitcoin halving. Every halving event is a stress test. But with each one, the rewards get halved, and the struggle doubles.

The April 2024 halving cut block rewards from 6.25 to 3.125 BTC. In a week after the most recent halving, hashprice had fallen from $0.12 per terahash to $0.047. Hashrate is the revenue miners expect to earn per unit of computing power. By Q1 2026, it hit a five-year low of $0.023 per terahash per day.

The average cost to produce one bitcoin currently stands at ~$81,000. The all-in cost of mining each BTC will go far above $115,000 once you include other non-production costs that these listed miners have to spend to keep the lights on. Bitcoin is trading at $70,760. Its price has never crossed $80,000 in the last three months. You do the math.

The BTC mining industry is left chasing lower mining costs for a commodity whose price it has no control over.

The financial statements of the miners that made most of their revenue by pocketing the difference between mining a BTC and selling it in the open market suddenly went into the red. So they switched to mining and holding the mined BTC. The idea was to wait for the price to appreciate enough for them to make a positive return on the same.

That strategy worked until the bitcoin price rallied. But markets move in cycles. Every bull rally will have its bear phase and correction. Crypto has its cycles, too.

10/10 - The Second Pivot

October 10, 2025: the dreaded date in the crypto industry, which witnessed the largest crypto liquidation ever recorded. With the cryptocurrency prices seeing record-level drawdowns since that event, the bear cycle began. That led to the unravelling of miners’ ‘mine and hold’ strategy.

Some were left second-guessing whether to change their strategy. But others announced pivots within 24 hours of the liquidation event.

On October 11, Bernstein published a report that reframed Bitcoin miners not as producers of hashrate but as holders of gigawatts of secured grid access. The analysts called the miners “key in the AI value chain”. They named IREN (formerly Iris Energy) as their top pick to make a successful pivot from BTC mining to an AI-focused cloud infrastructure provider.

Galaxy Digital, a digital assets leader and AI infrastructure provider, announced it had raised $460 million to convert its Helios mining facility in Texas into a high-performance computing (HPC) campus for CoreWeave on a 15-year lease, with projected annual revenue exceeding $1 billion.

Read: From Volatility to Predictability 💰

What followed the 10/10 event was a systematic liquidation of the balance sheets that had defined the sector’s identity with a ‘mine and hold’ strategy. Miners had spent at least 18 months accumulating BTC as a treasury asset, treating unsold BTC as a signal of confidence.

That stance was cracking under the weight of a bear market that saw BTC’s price fall ~40% from its all-time high of ~$126,000 in 45 days. Listed miners who had never sold BTC before started doing so. Marathon Digital (MARA), the third-largest listed BTC holder in the U.S., broke its streak of holding BTC by selling 15,133 BTC in three weeks.

This is the same company whose CEO consistently supported and took inspiration from Strategy, the largest corporate BTC treasury. Less than two years ago, MARA’s CEO and Chairman, Fred Thiel, announced that BTC would be their strategic treasury reserve asset.

Just last month, the Fred took a 180-degree turn and admitted that the selling of BTC “enhances financial flexibility and increases strategic optionality as we expand beyond pure-play bitcoin mining into digital energy and AI/HPC infrastructure.”

I wouldn’t blame him, though. Tough times call for tough calls. And MARA isn’t the only one to make such a pivot away from holding BTC forever as their strategy asset.

Although some added more BTC to their treasuries after the liquidation event, others reduced the pace of BTC additions or made public comments indicating they no longer treated BTC as their strategic treasury asset.

Bitfarms’ CEO was straightforward in admitting, “We are no longer a Bitcoin company.” Ben Gagnon added that Bitfarms will focus on “building the infrastructure for the compute of the future.” CleanSpark took a different approach, treating its 13,000-plus BTC as productive capital and layering covered calls against it.

Even if BTC was not vanishing off their balance sheets, they were identifying it as a resource to strategically fuel their infrastructure pivot.

A Blessing in Disguise

Repurposing a BTC mining site to AI-ready infrastructure is not a simple affair. It costs $8–11 million per megawatt, including new liquid cooling systems, Tier-3 power redundancy, high-bandwidth fibre, and the networking overhauls that GPU training clusters demand.

Yet, mining infrastructure, including cooling, power, and compute capabilities, came closer than any other industry to meeting the requirements of the AI and data centre industries. Bernstein analysts wrote in their note that miners’ existing infrastructure could cut deployment timelines by up to 75%.

It wasn’t just analysts who felt so. This is evident in the deals these miners were able to close over the last few months.

IREN signed a $9.7 billion contract with Microsoft for GPU cloud hosting at its Childress, Texas campus, making it the largest single hyperscaler deal by any miner. Hut 8 landed a $7-billion deal with Google-backed Fluidstack and Anthropic. Cipher Mining bagged $8.5 billion worth of contracts with AWS and Fluidstack. By Q4 2025, Core Scientific’s AI colocation (the space rented out for IT equipment in data centres) went up to 39% of its total revenue, up from 9% just four quarters earlier.

The Surprise Moat

But why are hyperscalers paying mining companies, of all people, for data centre space?

Time is the secret sauce. To survive each halving, miners had to chase cheaper electricity. So they did what they had to do to survive. They negotiated long-term utility agreements, acquired industrial land in low-cost energy corridors, built private substations and secured direct grid interconnections. A modern mining facility is equipped with dedicated high-voltage transformation equipment, redundant power feeds, and thermal management systems built to run at full load, around the clock.

Maybe it wasn’t planned, and you’d say the miners just got lucky. But who minds getting lucky and striking gold while struggling for survival?

Public miners now hold approximately 6.3 GW of operational sites with another 2.5 GW under construction. Data centre interconnection queues in the U.S. run 5 to 7 years in most markets. Microsoft’s internal forecasts show its data centre crunch persisting into 2026 and beyond.

This is why hyperscalers are ignoring mining companies’ lack of expertise in AI infrastructure. Instead, they are paying for the substation, the land-use permits, the utility relationships, and the grid connection, all of which take years to secure elsewhere.

There are incremental gains a miner can make by deploying their existing equipment for AI applications. MARA recently announced a $1.5 billion acquisition of energy infrastructure that will bring its total power capacity to over 2.2 GW. This allows it to convert an already-depreciated facility for AI infrastructure with a cost basis that no other AI builder can replicate.

CEO Fred Thiel called the assets ready-made infrastructure that would have taken up to 10 years and $2bn–$3bn to assemble independently. “Power is the scarce input in AI and, with the planned addition of Long Ridge Energy, we are gaining control of a highly efficient, contracted energy platform,” he said.

The Closing Window

There’s a catch in this story. Every megawatt of energy diverted from Bitcoin mining to AI infrastructure subsidises the economics of whoever remains behind in BTC mining. It reduces the difficulty of mining, making it cheaper for BTC miners to mine a block.

There might still be those who choose to swap or reserve some of their equipment for BTC mining when it does get cheaper. But that’s exclusive for those who can afford to swap or set aside equipment for mining. It won’t be everybody’s play. That’s also because those who repurpose their mining equipment for AI infrastructure won’t be able to swap it back and forth repeatedly. Mining is an interruptible process. You can shut it down when the electricity charges are high. You cannot do the same for AI and high-performance computing. Once you lease out or commit your computing power, you cannot back out of the deal temporarily to use the equipment to mine some bitcoins.

However, for most miners, this is not an option. They have a short window to make the shift. And they won’t get lucky too often.

The timing of how well everything lined up for them is almost unbelievable. The halving squeezed mining economics to the breaking point. Then came the 10/10 liquidation event, forcing miners to confront the reality that holding BTC through a bear cycle is not a feasible strategy. But the AI infrastructure boom arrived at the exact moment when miners had both the motivation to pivot and the assets to execute the pivot.

This will likely not repeat. The miners signing the contracts today will bear the fruit of a decade of economics that will not be available to whoever comes late to this party.

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

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There’s this famous Crypto Influencer who goes by the name of ThreadGuy. He rose to prominence in 2021 by teaching people how to trade NFTs. Now he sits in his New York apartment with a barrel of American crude oil behind his desk, trading pharmaceutical stocks and commodities on Hyperliquid. A few weeks ago, he had Cobie on his stream. Cobie has been one of crypto’s longest-running voices since 2012, sold Echo to Coinbase for $375 million, and now works there full-time. When ThreadGuy asked him about the state of crypto, he described something called a “K-shaped” dynamic.

“There’s this weird K-shaped thing happening in crypto,” he said, “where crypto seems to be having phenomenal success stories, much more than any previous year. But it’s just not represented in asset prices that people can buy.”

That line has been stuck in my head since. Because he’s right. Polymarket and Kalshi have become a $44 billion prediction market duopoly. Stablecoins are being used to pay gig workers. DoorDash now pays drivers through Tempo. Hyperliquid processes more trading volume than most centralised exchanges, on a chain it built from scratch. Trade XYZ predicts the Monday stock market open within 50 basis points. Crypto was supposed to move money without banks, make markets without brokers, and let anyone trade anything from anywhere at any time. By almost every measure its critics ever threw at it, it’s doing exactly that.

And the people who believed in it earliest, the ones holding tokens, have gotten almost nothing from it. You can’t buy Polymarket equity. You can’t buy Tempo. Circle went public, but half of USDC’s net interest margin goes to Coinbase for distribution rights before shareholders see a cent. The platforms are all winners, but token holders lose every time.

That is the K-shape. And the more I looked into it, the more I realised this isn’t just a crypto problem.

Where Does The Value Go?

Let’s start with stablecoins, because they’re crypto’s true Product-market-Fit. Tether is estimated to have made $10 billion in 2025 and has roughly 100 employees. That is more profit per head than almost any company on earth. Circle went public and has a market cap of $23 billion as of April 28. Stablecoin supply has grown 100x over the past few years from $6.8 billion in 2020 to more than $315 billion today. And it is the US Treasury itself that projects it to grow to $2 trillion by 2028

This is real financial infrastructure being built on crypto rails. And for anyone holding a token, the economic relationship to all of this is zero. Tether’s profits flow to Tether’s shareholders. Circle’s economics flow to Circle’s equity holders and to Coinbase, which effectively takes 50% of USDC’s revenue just for putting it in front of users. DoorDash pays drivers through Tempo, and the value of that transaction accrues to DoorDash, Tempo, and the driver. Not to anyone’s token portfolio.

Prediction markets tell the same story. Polymarket went from a niche crypto experiment to a CNN fixture. The Wall Street Journal now uses its data alongside editorial reporting. Substack built a direct integration with Polymarket so writers can embed live odds in their posts, turning every newsletter into a real-time data terminal. ICE, the company behind the New York Stock Exchange, invested $2 billion at an $8 billion valuation. Kalshi won its CFTC legal battle and expanded into economics, sports, and science. Combined volume across both platforms hit $44 billion in 2025, with $10 billion in a single month.

None of that value went to token holders. Polymarket’s early backers, Founders Fund, General Catalyst, and Blockchain Capital, are sitting on massive unrealised gains. One of crypto’s biggest success stories runs on crypto rails, was built by crypto people, and ended up with a traditional equity cap table where the upside sits with venture capitalists (VCs).

You might argue that Polymarket hasn’t launched a token yet. That’s true, and it might launch one eventually. But even if it does, private investors have already set the valuation at $8 billion. The window where early users could have captured meaningful upside closed before most of them knew it existed. And if it never launches a token at all, then the entire value of the prediction market revolution, the thing crypto people spent years arguing would change how the world processes information, will have been captured entirely by a traditional equity cap table. Funded by VCs, exited to institutions, with zero on-chain ownership for users.

Even in DeFi, the pattern is the same. Crypto spent the better part of a decade building the infrastructure for decentralised finance — from lending protocols, automated market makers, perpetual exchanges, and stablecoin rails, mostly in the open, mostly with tokens, and mostly while regulators were actively trying to kill it. The people who built this stuff took enormous risks. The users who provided liquidity and tested these protocols when a single smart contract bug could drain everything took risks, too.

And now that the technology has proven itself, now that it’s clear that stablecoins, on-chain trading, and tokenised assets work, the companies showing up to capture the value are not the ones who took that risk.

They’re traditional firms with equity structures, private fundraising rounds, and no obligation to distribute anything to the users or communities that made the technology viable in the first place. Stripe is building stablecoin payments. PayPal has launched its own stablecoin. Banks are tokenising assets on private blockchains.

They were all observing from the back seat at what crypto built, and once they confirmed it worked, they are now rebuilding it inside walled gardens where the economics flow to shareholders.

The upside is being privatised. Tokens were supposed to be the mechanism that prevented this, the thing that let early participants share in the value they helped create. Instead, the projects that actually succeeded either never launched a token or launched one so late and at such an inflated valuation that public holders were effectively the exit liquidity for insiders who got in at a fraction of the price.

The K-shaped Capitalism Problem

And this isn’t some crypto-specific failure. This is how wealth creation works now, everywhere, and crypto just inherited the same disease it was supposed to cure.

SpaceX has gone from zero to roughly $1.75 trillion in private valuation. OpenAI is at $852 billion. Anthropic is somewhat in the same territory as $800 billion. These three companies alone represent trillions in value creation. If you were an ordinary person in the 1970s or early 2000s and thought Apple, Amazon, or Google would be important, you could just buy their shares. You could participate in the wealth creation of a company you believed in. That relationship between being right about the future and being rewarded for it, that was the basic social contract of capitalism. It no longer holds.

These generational companies remained private at every stage when the real returns were made. The only people who got access were already in the club, the Silicon Valley networks, the fund-of-funds, the LPs writing $50 million checks into venture vehicles. By the time SpaceX or OpenAI eventually goes public, the price will reflect a decade of compounded private gains that retail investors had zero access to. The number of publicly traded companies in the U.S. has dropped 46% since 1997, from about 7,500 to 4,000.

There are over 1,400 venture-backed unicorns worth a combined $5 trillion, all staying private. Companies used to go public to raise capital. Now they raise billions in private rounds, indefinitely, from the same tight circle of funds. By the time they IPO, price discovery had already happened in rooms that regular people would never be allowed to enter.

The data confirms this isn’t some paranoia. IPO returns from 1970 to 1990 averaged 5% annually, less than half of what you’d have made just by buying public companies of a similar size. Low-float IPOs, the kind SpaceX and OpenAI would likely do, have a 90% historical failure rate. Ten out of eleven low-float IPOs since 1980 underperformed the market by 50% or more within three years. So the deal being offered to normal people is, you don’t get to invest when the company is worth $10 million and growing. You get to invest when it’s worth $1.5 trillion, and the insiders are looking for liquidity to exit.

This is what is called the K-shaped economy, where gains are privatised as they flow through closed circles, and losses are socialised through overpriced IPOs, through index funds forced to buy at the top, through inflation and stagnant wages, which get spread across everyone else.

This is also what’s driving talent out of crypto. Crypto code commits fell 75% since early 2025, from 850,000 weekly to 210,000. Active developers dropped 56% to about 4,600. Where are they going? AI. GitHub now has 4.3 million AI-related repositories. LLM imports grew 178% in a year.

And this makes complete sense if you think about it in terms of the K-shape. Every major crypto onboarding wave, from 2013 altcoins, 2017 ICOs, 2021 DeFi and NFTs, to memecoins, had one thing in common: normal people made money fast. AI has that energy right now. One person, called Peter Steinberger, built OpenClaw and later sold it to OpenAI for billions, all by himself. That is the kind of energy crypto used to have. If you’re a 22-year-old like me and deciding where to spend the next five years of your life, the math isn’t that complicated. Crypto is offering you governance tokens that launch at $16 billion and bleed for two years. AI is offering you the chance to build AI agents with three people that could be worth a billion dollars before your next birthday.

The talent started leaving because, somewhere, crypto stopped distributing the upside it creates. The K-shape pushed the gains upwards, to VCs, to equity holders, to the same insiders the industry wanted to build to displace. Where is Decentralisation Anon?

Okay Enough! What’s the Solution?

So crypto has a problem. The technology is fantastic, but the people who believe in it don’t get to participate in the upside. The same privatisation dynamic that is eating away at traditional markets has infected the industry specifically designed to prevent it. Is there a way out?

Cobie thinks there might be, and I agree with him. The answer is the one thing crypto can do that no other industry can, airdrops.

Airdrops distribute ownership directly to users globally, without intermediaries, at the exact moment when ownership is most valuable. That’s what airdrops were always supposed to be. In practice, most of them have been a joke. But there’s one case that proved it can actually work, and it’s worth understanding.

I am talking about Hyperliquid. Jeff Yan and his team built a perpetual exchange from scratch on its own L1 blockchain, ran it for over a year, grew it to over $4 trillion in cumulative trading volume to date, and, when it came time to distribute ownership, allocated 70% of the total token supply to the community. All of this with no VCs, Advisors, or exchange listing partners. The actual traders who used the platform, moved capital through it, and stress-tested it for months. 94,000 addresses claimed tokens in a $1.5 billion airdrop. Some of them became millionaires overnight.

And here’s the best part. They didn’t dump the tokens. Because the people who received HYPE weren’t mercenaries farming a product they didn’t believe in. They were Hyperliquid’s best users. The most active traders, the people who moved the most capital, the ones who stayed because the product was better than the alternatives. They got ownership proportional to their contribution, and they held. The team mirrored it. After distributing about 20% of their vested tokens in the first two months (likely for taxes), they cut distributions to 1% in the following months. Today, 97% of Hyperliquid’s protocol revenue flows to HYPE buybacks and burns.

Saurabh at DCo broke down the valuation math in detail. Hyperliquid earned $960 million in revenue in 2025 on roughly $3 trillion in volume, but trades at just 10-13x revenue, compared to 25x for CME, 23x for ICE, and 22x for CBOE. It grew to nearly a billion in revenue in its first full year, has no debt, no headcount drag, and a buyback mechanism that returns almost all fees to token holders.

Hyperliquid is proof that this is possible. Distribute to users, not investors. Let actual usage drive value. Align incentives so the people who build the product and the people who use it are on the same side of the trade. But of course, most airdrops are not Hyperliquid.

Most of them are elaborate performance theatres where people pretend to use products they don’t actually care about just to farm tokens they plan to sell the second they unlock them. The projects know this is happening. The users know the projects. But everyone still plays along because admitting that an airdrop is a customer acquisition cost paid in inflated tokens won’t help raise more money on VC pitch decks. Because 90% of these tokens exist just to give VCs an exit, not to align incentives with the users.

The data from Cobie’s own analysis is damning: Ethereum’s ICO allowed retail investors to buy at a $26 million valuation and capture 7,500x returns. By the time you get to projects like Berachain, the seed round is $40 million, and the public launch price is at its peak. Retail holders are underwater, while seed investors are up 138x.

So the question is simple, and I think it matters more than most people in this industry realise: Is Hyperliquid a model or an exception?

If it’s a model, if more teams can build real products, skip the VC extraction machine, and distribute ownership to the people who actually use what they built, then crypto has something genuinely unique. SpaceX can’t airdrop shares to the people who watch its launches. OpenAI can’t distribute equity to everyone using ChatGPT. But crypto can. It has a mechanism. It’s been done at least once, and it was a success.

If it’s an exception, if Hyperliquid was just a one-off with the right team, the right product, and the right timing, then Cobie’s K-shape thesis wins. Token holders keep losing. The smart builders keep leaving for AI. And the only way to participate in crypto’s success is to buy Coinbase or Circle stock. Which is exactly the kind of outcome crypto was supposed to make impossible.

That’s all for today.
Vaidik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

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Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

I love discussing how crypto is changing the way money moves. It feels nice, but the reality is nuanced. One look at how the big institutions have been moving money for the past decade tells you the story.

A bank wire transfer across the Atlantic still takes one to two days. It needs to pass through intermediary banks, generates reconciliation entries at each point, and costs the client about $25 to $45. It’s the same architecture from the 1970s, except email replaced telephone communication and SWIFT replaced the tangled cables. Of course, the databases got faster, too. But that’s that. Timelines didn’t shrink proportionally.

You might think this is a technology problem, but I think it’s more of a coordination problem.

We have had blockchains and stablecoins for over a decade now. Yet they never resolved all the problems at once. Some offered the speed institutions needed, but put all data in public by calling it transparency. Others ensured both speed and privacy but created siloed systems that couldn’t talk to each other.

The thing with new technologies is that they easily scare away large institutions operating in highly regulated industries. Think banks. For them to migrate to new technologies, they need to see all their pain points addressed in advance. None of them can be issues that are “can be taken care of after we migrate”.

It took a while, but this is finally changing. Ironically, banks are now resorting to blockchains to avoid ceding ground to digital assets.

Last month, five US banks with over $750 billion in combined assets launched Cari Network. This system will convert ordinary deposits into digital tokens that settle instantly, operate 24/7, and remain FDIC-insured.

In today’s deep dive, I will tell you how blockchain builders have tried to build solutions for institutions in the past and what makes this time different.

Swings and Misses

About a decade ago, consortia like R3 and Hyperledger built private blockchains for institutions with ambitious roadmaps and membership lists that included the BNPs, Citis and Barclays of the world. Although these chains worked and updated the ledgers accurately, they were siloed and couldn’t interact with anything outside the walled infrastructure.

Such efforts died a slow death. Some others pivoted to other approaches.

Then, the banks tried the public blockchains - mostly Ethereum. It immediately solved the composability problem. A shared, neutral ledger that everyone can access enabled banks to interact within their ecosystem. But solving one problem gave rise to another. On a public chain, every counterparty, every transaction, every balance was visible to anyone who knew where to look, just using a browser.

What banks needed was a single system that offered them privacy, compliance, speed and connectivity.

What Changed

Two breakthroughs came in 2025: one technological and another - necessity.

First, let’s understand the technology. Zero-Knowledge (ZK) proofs caught people’s attention for what they offered. ZK proof is a cryptographic method that lets you prove a transaction is valid without revealing its details.

Read: The Privacy Correction 🔐

Although the technology has existed for years, it has only got cheaper and faster recently. Generating these proofs used to be expensive enough to make the whole system impractical to deploy from a business perspective.

The number of transactions processed per second has jumped from as low as 400 to at least 15,000. The time taken for a transaction to reach finality has dropped below a second. All this while keeping the transactions and the details of the parties involved private. For context, traditional financial infrastructure still takes at least a day to process these transactions.

ZK proofs also solve what enterprises saw as another deterrent.

A bank evaluating blockchains in 2018 had to hire engineers, build a chain from scratch, figure out how to generate proofs, run its own servers, and then see if all this translated to business gains. So much for a system they weren’t even sure would work.

ZKsync, an Ethereum-scaling platform built by Matter Labs, addresses this by giving enterprises a blockchain equivalent of AWS. Its institutional product stack, including Prividium, Connect, Gateway and others, offers chain deployment, transaction processing, proof generation, compliance tooling - including KYC checks, role-based access, login controls, and connectivity to other chains.

The stack allows an enterprise to tailor its configuration and get started with deployment. Think of it as buying blockchain-as-a-service.

ZKsync isn’t the only one here. Canton Network, backed by Goldman Sachs, DTCC, Citadel, and BlackRock, takes a different approach to the problem. Instead of ZK proofs, it uses a permissioned model where approved validators coordinate private transactions between known counterparties.

They are both building connective layers that institutions need. But they disagree on whether trust should come through cryptographic proof or from contractual governance between known parties.

If you ask me, there’s little to separate between permissioned and permissionless approaches so far. Both want to solve the same problem for institutions. In fact, Canton even has better institutional partners than ZKsync.

Read: Wall Street’s Stealth Chain

Yet there is something about it that could prompt institutions to flip over to ZKsync. Canton’s permissioned network works fine as long as the interaction and movement of money is happening between known parties in familiar jurisdictions. But when an enterprise wants to expand across jurisdictions and transact with parties outside Canton’s walled-off jurisdiction, ZKsync is what helps achieve composability there.

It’s this technological breakthrough that convinces banks to adopt blockchains.

But why would banks move away from their age-old, battle-tested systems, no matter how slow they are? Just because there’s a cheaper alternative that works faster?

Do you really think banks went from “blockchains are interesting but impractical” to “blockchains make business sense” just because a technology they knew little about suddenly became economically viable? It’s funny how every technology becomes “strategically important” when businesses start losing money.

Deposits Under Siege

In the past decade, stablecoins have grown into a $300-billion market. They did what banks had refused to do for years: move money fast. Today, each of those digital dollars in circulation left the banking system at some point.

The infrastructure I described above, ZKsync’s Prividium and Canton’s permissioned rails, are what is helping these banks take the fight back to the digital assets. With these blockchains-as-a-service, banks can move their existing deposits just as stablecoins do. They can process and settle transactions with the same speed and finality. There’s also a bonus. Banks can do all this while guaranteeing their depositors with regulatory protections and balance-sheet advantages that only they can offer.

This is already happening in real-life cases.

The Cari Network, launched last month by five US regional banks (Huntington, First Horizon, M&T, KeyCorp, Old National), is tokenising bank deposits on ZKsync’s Prividium. The deposits stay on the banks’ balance sheets, are FDIC-insured, and settle in seconds.

Cari Network isn’t an isolated event.

In February 2026, the UAE’s Central Bank approved DDSC, a dirham-backed stablecoin running on ADI Chain, built with ZKsync’s proving engine.

In June 2025, Deutsche Bank began building a tokenised platform on a ZKsync-powered chain that compresses the timeline of setting up a new fund from months to weeks.

Future of Institutional Finance

There’s one core thought I often come back to when I write on finance: “How will money move in the future?” It’s an interesting question to ask oneself because it tells you about the financial behaviour of individuals and corporations.

I don’t think a majority in either category cares too much about the cardinal principles that crypto stands for. Banks care even less. I am sure the banking leadership team doesn’t sit in a boardroom debating decentralisation versus centralisation. They are surely not bothered if their transactions are processed on Ethereum, Solana or a private network based in Timbuktu.

They care most about privacy, composability and speed. If a system delivers these to an enterprise by making them save a couple of extra dollars, then you’ve got their attention. It helps further if there’s a “strategically important” reason to adopt a new technology (like a stablecoin revolution waiting to steal your business).

So, I expect the convergence of Web2 and Web3 finance to happen around the technology that helps move money more efficiently. That could be via ZKsync or Canton-powered chains that move tokenised versions of fiat currencies. Or it could even be through payment-specific chains that payment companies like Circle’s Arc, Stripe’s Tempo, and Stable are building.

I don’t think there’s going to be a winner between the two approaches. That’s because for banks that want to avoid adopting stablecoins, ZKsync’s blockchain-as-a-service will be the most obvious choice for evolution. Those already integrating stablecoins in their payments will choose digital dollar-supported chains.

But I surely know who will be the biggest loser: the one who stays adamant about using the technology that still moves and settles money based on the date and time.

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

I pay about $5 a month for home internet in India. It’s a 100 Mbps plan with unlimited data, and half the time they throw in a Netflix subscription to sweeten the deal. A few years ago, that same connection would have cost $25 or more. Then a company called Jio entered the market, started a price war with incumbent telcos, and the whole market repriced within a couple of years. Today, internet access in India is so cheap that it barely registers as a household expense.

For the longest time, I assumed this was how things worked everywhere. Once enough cables land and a competitor shows up, prices eventually fall. Africa has 25 submarine cables and over a million kilometers of terrestrial fiber. There’s no shortage of bandwidth at the coast. Yet broadband across the continent still costs about 15% of gross national income per capita, which is seven times the international affordability target. About 600 million people still lack meaningful internet access.

My $5 plan in India would cost over $100 a month in Nairobi, and even the most basic connection starts at $15. The median Kenyan household earns about $170 a month. The average Indian household earns about $250 a month, which is higher but not by a sufficient factor to explain a 10x to 30x gap in what people pay for the internet. There is enough bandwidth to serve the entire coast, but something inland consumes it before it reaches more users.

This piece is about what’s actually broken in the African internet landscape, how a DePIN project called Share is trying to fix it, and why its use of crypto is unlike anything I’ve seen before.

Why Africa Pays the Highest for Internet

To understand that, we need to look at where the money in Africa’s internet ecosystem actually goes. Google’s Equiano gave West Africa twenty times the bandwidth it had before. Meta built 2Africa, the longest subsea cable ever. Between them and the 23 other cables already in the water, African landing stations, the buildings on the coast where submarine cables come ashore, today have more bandwidth than most of the continent can use.

But none of that bandwidth is useful until it reaches the person paying for it, and that last stretch is where the entire problem starts. The next part is turning that into a connection for a household 50 kilometers inland, which means someone has to build local infrastructure, buy upstream capacity, set up billing, and sell service, one building at a time. That work today falls on thousands of small ISPs, most of them one or two-person operations, because the big telcos that could do it have no reason to.

They sell wholesale bandwidth to these small operators, and that’s a good business for them. If they built out the last mile and started selling directly to households, they’d be killing the wholesale contracts that pay them today. A single bulk deal with an ISP brings in steady revenue with almost no support cost. Replacing that with retail means billing millions of people one at a time, running customer support, and competing door-to-door with ten thousand operators who already have the relationships. No telco wants that trade.

Kenya is the easiest place to look at. The regulatory environment is stable, Safaricom runs one of the best mobile money systems in the world through M-Pesa, and multiple submarine cables land right at Mombasa. If any African country should have cheap internet by now, it’s Kenya.

The Communications Authority of Kenya has over 400 registered ISPs on its books. But the real number is much higher. Once you count the neighborhood-level operators who run a single router in a building and resell to a few dozen customers, the total is probably north of 10,000. That’s ten thousand separate internet businesses in a country of 55 million people, most of them serving a handful of users each.

As a result, when someone in Nairobi goes online, their traffic typically passes through three to five of these small networks before it reaches the open internet. Every handoff between them adds cost and adds latency. By the time the signal reaches the end user, the price per gigabyte has multiplied several times over from what it costs at the Mombasa landing station. The bandwidth starts cheap, but it gets expensive on the way to the customer.

Running one of these small ISPs is a terrible business. You buy bandwidth in fixed bundles from an upstream provider and pay upfront before your customers pay you. Every month, you’re guessing how much capacity you’ll need. Buy too little and your service is unusable by evening. Buy too much, and that money is locked up in bandwidth nobody’s using, and you won’t see it back for weeks. There’s no room to invest in better equipment or a backup connection. You run one upstream link, oversell it, and hope the congestion doesn’t get bad enough that your customers switch to a different service.

This is one of the biggest reasons India’s Jio strategy will never work here. Jio walked into a market with a handful of national telcos and undercut them all at once. That only works when there’s a concentrated market to disrupt, and when you can spend $30 billion building your own last-mile infrastructure across a country of 1.4 billion people, losing money for years before seeing a dollar back. Kenya doesn’t have that. It has 55 million people. No Kenyan telco has $30 billion, and even if they did, the market isn’t large enough to justify that kind of spend. So the last mile stays with ten thousand small operators, and nobody above them has the reason or the resources to replace them.

In fact, you can see how fragile the whole arrangement is when something goes wrong. Four subsea cables off West Africa failed in March 2024. Eight countries went offline for days, and repairs took weeks to months. Two months later, SEACOM and EASSY were damaged off the South African coast, and most of East Africa lost access to cloud services. There were plenty of cables. The problem was that nobody inland had built local caching, proper routing, or any backup path. Most of the traffic was being routed through a single upstream link to Europe, even when other cables were still working. When that one path broke, there was no way to reroute and nothing locally cached to fall back on.

What Share Built

So that’s the problem. Thousands of small ISPs with no scale, no bargaining power, buying overpriced bandwidth through chains of middlemen, running on thin margins with no backup infrastructure. And on top of all that, the big telcos have zero incentive to fix any of it.

Share is a DEPIN project that is solving this exact problem by building the missing layer between the landing station and the last mile. The company is based in Kenya and started in Mombasa, and what they’ve put together touches three parts of the stack.

1. The first thing Share did was set up its own points of presence inside Kenya’s major data centers and connect directly to Meta, Google, Akamai, and Cloudflare. These are the content delivery networks that serve most of what people actually do online. YouTube, WhatsApp, Instagram, Netflix. Depending on the market, that’s 70-80% of all internet traffic. When an ISP connects to Share, that traffic no longer has to travel through three to five upstream middlemen to reach a European exchange point and come back. It terminates locally, inside Share’s own network. For the ISP, the cost per gigabyte drops on day one. For the end user, the video they’re streaming now comes from a cache in Kenya instead of being routed through Frankfurt, so it’s faster, too.

2. The second thing is physical fiber. Share laid a 40-kilometer fiber ring around Mombasa. It’s a loop, which means if any one segment gets cut, traffic automatically reroutes in the opposite direction. That ring alone can reach about 1.5 million people without anyone having to rebuild last-mile connections. Along the ring, Share places what it calls micro-PoPs. These are small, standardized network boxes at tower sites and rooftops, where nearby ISPs can plug in and connect to the backbone. Through its own fiber and infrastructure-sharing deals with tower companies and utilities, Share now has access to over 1,000 kilometers of fiber across Kenya. They just moved to Nairobi.

3. The third part is software. Every ISP that connects to Share gets access to a single system that handles routing, billing, customer onboarding, plan management, and revenue sharing. For a small operator who was managing everything on a spreadsheet and a handshake deal with an upstream provider last month, Share entirely changed their business operations. They go from reselling someone else’s marked-up bandwidth to operating as a last-mile partner on a real network with a real backend. Their costs drop, their service gets better, and they keep their customers. Share takes a minority cut of the revenue.

What makes all of this work together and scalable is how Share grows. When a small ISP joins Share, it doesn’t just get better infrastructure; its existing subscriber base immediately migrates to Share’s backbone, meaning Share inherits those customers without having to acquire them. That’s how they went from a test network in Mombasa to covering 8 million people in 15 months.

This is a model where everyone wins. The ISPs get lower costs and better service without losing their customers. The telcos and tower companies that own fiber and tower sites become suppliers to Share, which is a more predictable business than competing against 10,000 small competitors. Share gets a growing network with recurring revenue. Nobody in the arrangement is worse off than they were before, which is probably why it’s held together in a market where nothing else has.

Where Crypto Earns its Place

Most DePIN projects launched between 2020 and 2024 were pretty much the same. Launch a token; use it to pay people to set up hardware, to pay early users to show up, and to fund whatever activity generates a decentralised network. Helium did it. Render did it. A dozen WiFi hotspot projects did it. Most of them never shipped any real infrastructure. Even the ones that did were paying for hardware deployment with token incentives, and the moment the token lost value, the people running the hardware walked away.

Share doesn’t do any of that. The physical network already generates recurring revenue in Kenyan shillings. The company is profitable at the infrastructure level before crypto enters the picture. Crypto is only used in two places, and only because those two places have real problems that traditional finance hasn’t solved.

The first is settlement. Share’s ISPs collect revenue in Kenyan shillings. As the network expands into Uganda, Nigeria, and Ghana, they’ll be collecting in a different local currency in every market. But hardware and wholesale bandwidth are priced in dollars. So you have revenue in a dozen African currencies and costs in USD, and the financial infrastructure to move money between African countries barely exists.

Cross-border B2B payments between African companies today still route through correspondent banks in Europe and New York. The IMF’s numbers put the share of intra-African transactions that actually settle on the continent at roughly 12%. The other 88% takes a detour through Frankfurt or London, takes days to clear, and loses 3 to 5% to FX spreads and bank fees. A Kenyan ISP paying a Nigerian equipment supplier is sending money through Europe to reach the country next door.

The second is financing, and this is the part I think is sharpest.

Each micro-PoP unit is built to the same spec, so you can model what it will earn before you deploy it. All traffic flows through Share’s billing system, so revenue is verifiable on-chain in real time. No bank is going to write a $5,000 loan for a networking box at a Mombasa tower. The deal is too small, the borrower too thin, and the lender would need a local office just to do diligence. But an on-chain structure can underwrite the device itself: a buyer takes a claim on a specific micro-PoP through a smart contract and gets paid based on actual traffic. If the device goes down or users drop off, it shows up in the data immediately. The lender doesn’t need to trust the borrower. They need to trust the data coming off the device, and that data is verifiable.

If this works at scale, and I believe it will, small-ticket African internet infrastructure can be financed with global capital for the first time, one device at a time, without going through a development bank or waiting for a government guarantee.

Markets like Kenya exist all over the developing world. Indonesia’s archipelago has the same problems. Thousands of small operators, deep gaps between coast and interior, upstream pricing controlled by a few large wholesalers. You see it in rural South Asia and parts of Latin America, where submarine cables landed years ago, and nobody built the inland distribution. In each of these places, there is demand and coastal bandwidth, but nobody builds the middle layer because no single company has the incentive to do so.

If the model keeps working in Kenya, and 8 million people over 15 months say it is, this might be the template for how internet infrastructure gets built in fragmented emerging markets over the next decade. I think we’ll look back at Share as proof that DePIN was always supposed to be an infrastructure business that uses crypto to move money and finance hardware, and nothing more than that.

That’s all for today.

Until then, stay curious,
Vaidik

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When Warren Buffett took over Berkshire Hathaway in 1965, he began writing letters to the shareholders of a dying textile mill. In them, he explained in detail where the cash from the mill was being redeployed and why.

Capital allocation became a public affair in a true sense. Despite being owners of a company, shareholders generally trust the management to carry out operations as their fiduciary agents. Buffett’s letters made shareholders feel heard in annual discussions around what the business should become.

Most public companies do capital budgeting in closed boardrooms. Corporate law mandates the disclosure of audited numbers, not the reasoning behind the decisions. But Berkshire’s transparency with reasoning was timely and crucial. Sixty years of letters read like a continuous conversation about where to put the money next.

A version of this practice is now showing up on-chain.

DeFi protocols have their own versions of these boardrooms: backchannels, founder calls, and delegate huddles. Yet the vote, the proposal text, the dissent, the amendments, and the final proposal all rest on the public record.

On April 12, Aave’s token holders voted on a $25 million capital allocation proposal. The vote, which passed with a landslide majority, allows Aave’s token holders to vote on governance, protocol upgrades, and risk parameters.

Beyond Aave, this move helps crypto evolve from debating whether a token has a claim on protocol cash flow to allowing token holders to decide which project to fund next and how much capital to allocate.

In today’s analysis, I will tell you how.

What’s in the Vote?

Aave’s vote matters because of its relevance in the lending marketplace. Aave currently has over $26 billion in total value locked (TVL) and generated about $907 million in fees last year. Most of that flows to suppliers who earn interest on deposits, leaving around $125 million in annual revenue with the protocol. That’s what accrues to the DAO treasury.

As of December 31, 2025, Aave held over $21 billion worth of active loans on its books.

That’s a larger borrow book than Robinhood’s $16.8 billion margin book at the end of 2025, and nearly twice the size of LendingClub’s $11.8 billion in total assets. The latter is a NYSE-listed marketplace lender whose business model most resembles Aave’s.

In 2025, LendingClub, an NYSE-listed marketplace lender with which Aave’s economic model resembles the most, recorded $136 million in net income on a revenue base of a billion dollars. The two-decade-old company closed 2025 with $11.8 billion in total assets. This is a business competing with well-known traditional fintech peers.

LendingClub made $136 million in net income on a $1 billion revenue base in 2025. Aave’s $125 million accrues to the DAO on a loan book nearly twice as large, which means LendingClub earns roughly twice as much per dollar lent.

That’s because Aave is just a protocol. It can’t charge more interest without breaking its own market since it doesn’t own the deposits. Raising the reserve factor would push suppliers to a rival protocol with better yields. LendingClub can charge more because it owns the loans, takes the credit risk, and funds a full bank of underwriters and default provisions to do so.

Aave’s proposal is to route all revenue from Aave-branded products, including the App, the Card, and the Pro institutional tier, to Aave DAO’s treasury. In return, the DAO will pay Aave Labs $25 million plus 75,000 AAVE, to be vested over four years, to keep building.

Aave Labs, which is the development entity behind the Aave protocol, had been keeping a share of product revenue to fund itself. The Cowswap integration on Aave.com applied a 15-25 basis point fee on swaps and sent proceeds totalling roughly $10 million a year, or about 10% of the DAO’s potential revenue, to a private Labs address. ACI's Marc Zeller called it the "stealth privatisation" of the DAO's earnings. Under the new structure, it will be paid by its token holders, on terms they set and against milestones they can withhold disbursements against.

Token holders didn’t approve the ‘Temp Check’ version that was initially proposed in early March. They split the bundle involving the V4, brand, funding, and growth grants into separate votes and stretched vesting from two years to four. They also tied disbursements to milestones instead of writing a single cheque.

Not everyone supported the initial version. Some agreed to the negotiated version, others walked away after a long association.

In the past two months, three of Aave’s most embedded contributor organisations ended their partnership with the protocol. BGD Labs left in February. Aave Chan Initiative (ACI) announced its exit from Aave in March after contributing 61% of governance actions and 48% of protocol income during its three-year tenure. Chaos Labs stepped down from risk management on April 6, after helping scale TVL from $5.2 billion to over $26 billion without material bad debt.

The bigger shift is that large protocols with product-market fit and surplus are now enabling token holders do what public markets typically confine to boardrooms.

Uniswap is moving in the same direction from a different angle. Its UNIfication proposal hinges on protocol fees, routes them into UNI burns, disables Labs-level interface and wallet fees, and funds Labs from the treasury.

In 2025, Uniswap recorded $1 billion in fees, nearly identical to Aave. But almost all of it has historically gone to liquidity providers. Its current annualised protocol revenue stands at $42 million. UNI holders got nothing.

In March alone, Uniswap processed $42 billion in DEX volume. Meanwhile, Robinhood’s app recorded $34 billion in crypto notional volume throughout Q4 2025. Uniswap is doing slightly more than that in just a month.

Two of DeFi’s most-watched protocols are moving toward the same structural move, albeit with different mechanisms. Both of them want to route revenue up to the token layer and then publicly decide where to redeploy it.

The new treasury strategies change who decides how revenue is redistributed once it reaches a treasury. Should the funds be deployed to buy back and burn the tokens? Or deploy them for operating budgets and growth grants? Maybe fund new product lines or save it for a longer runway? All these are capital allocation questions. The same thing that Buffett was answering in his letters for decades.

For years, DeFi has argued whether the token deserves a claim on protocol cash flows. We saw Hyperliquid and pump.fun settle that conversation through their extensive planned buyback programmes.

Read: Burn, Baby, Burn 🔥

What Public Capital Budgeting Requires

Buffett’s letters were voluntary. What makes his act seem more than just a goodwill gesture is the audited financials that back the letters. He had a fiduciary duty that’s enforceable in court. Berkshire shareholders have rights that don’t depend on Buffett’s goodwill; they can sue the company, vote out the board and demand records.

A corporate regulator mandates baseline disclosure regardless of how nice Buffett’s letters might sound.

With DeFi, transparency takes the front seat. On-chain architecture forces every transaction, treasury movement and vote to be public. But that’s not enough to make crypto protocols transparent to the public. Token holders need a collective understanding of the business to make capital budgeting decisions.

The financial statements and filings of publicly listed companies are accessible and legible to the public because of standardised accounting requirements. What Nvidia means by gross revenue is about the same as what Apple might mean. If you can make sense of Nvidia’s balance sheet, you will likely understand the line items in the iPhone-maker’s financial statements, too.

But this standardisation of financial terms is mostly absent in crypto protocols. Terms like revenue and fees are often used interchangeably, while they may mean different things.

Token holders may still read the Aave treasury balance sheet to the cent. But they cannot separate what counts as “Aave-branded product revenue” unless the definitions are standardised. They still need to know what happens if Aave Labs and the DAO disagree on the number.

This isn’t hypothetical. One of the biggest criticisms of Aave’s proposal was on what “100% of revenue” actually meant. Is it gross or net of operational costs? Who verifies it? How do you enforce it?

Even Marc Zeller, the founder of the now-exited ACI, raised these concerns in his X post after acknowledging Aave DAO’s win.

As token holders, you simply cannot allocate what you cannot define.

Checks and Balances

Although the vote signals a transfer of power to the token holders, those who left Aave argue that the transfer is incomplete.

The two teams closest to Aave’s governance machinery, one that coordinated 61% of all governance actions (ACI) and one that wrote the production codebase (BGD Labs), complained about similar things. The entity asking for the money, Aave Labs, was also the one voting to approve it. That’s a conflict of interest.

A budget recipient cannot vote on its own funding.

This is a structural problem in every on-chain capital budget in which founders or core teams hold large token positions. Although theoretically, it’s the token holders who get to decide where the surplus goes, it’s often the largest tokenholder who drafts the proposal.

You may argue that a larger stake brings a larger say in how the company is operated. But if DeFi protocols want to emulate the capital budgeting practices of public companies, they need to ensure similar checks and balances. For instance, minority shareholders are protected against abuse by majority shareholders through legal frameworks.

DeFi needs similar checks and balances. Revenue numbers must be independently verified, including those off-chain. When Venice AI said it would burn VVV using Stripe subscription revenue, DefiLlama’s 0xngmi asked for read-only Stripe access so the off-chain numbers feeding an on-chain claim could actually be audited.

There must be on-chain milestones that trigger capital releases in tranches and reverse them if the milestones aren’t met. Protocols must standardise the disclosure of voting power held by entities that will receive the DAO funds. None of this is hard to achieve. It’s just not desirable because the people who have to agree to be constrained are the same ones writing these proposals.

One team had specifically requested safeguards to ensure on-chain milestone tracking and self-voting limits before supporting the Aave proposal. Those recommendations were ignored, and the proposal was passed anyway.

What Aave’s ‘Win’ Means

The vote itself is not the achievement. Passing a $25 million funding proposal on-chain is not hard when the largest token holder supports it. But there’s a lesson to be learned here.

Token holders rejected the first version. They broke a single mega-proposal into smaller decisions. They doubled the vesting period. They forced a founder-led entity to negotiate terms in public, revise them in public, and accept constraints it didn’t volunteer. This is a step toward achieving capital budgeting in public.

If Aave’s proposal becomes a template, the fact that token holders can reshape a proposal before it passes must become the part that every other protocol copies. Just like in a democracy, a policy isn’t sound enough if it can’t see the light through all dissent and disagreements. Pushback in DAOs is not a dysfunction. It’s what makes DAOs more transparent and stand the test of time.

Uniswap’s UNIfication proposal is going through a similar journey. It needs to address similar questions, such as “Who decides where to allocate the treasury funds?” What is the recourse if something doesn’t work?” These are the questions many other blue-chip DeFi protocols will face. They must understand that the DAO community will not remember buybacks or token burns if the policy decisions are not justified and grounded in reason.

Buffett and Berkshire came to be respected not right after the first letter. Shareholders read years of letters before they gradually trusted the entrepreneur to judiciously apply their funds to profitable use.

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

Stability can be a mirage. This is often true in finance. You bet on a boring financial instrument thinking it’d offer you steady, reliable returns. It does stick to the template until the underlying fundamentals wobble. These ‘steady bets’ are often more deceptive than the speculative ones. People expect the latter to be risky anyway. But few expect that to happen with steady, boring bets.

We saw this play out about 75 years ago.

In the 1940s, dollar-denominated deposits accumulated in European banks following the Great Depression and World War II. These allowed account holders to hold U.S. dollars at non-U.S. banks as a hedge against local currency devaluation. They offered attractive yields and led to some out-of-the-box thinking. Some account holders, like American companies, got creative by parking dollars abroad to dodge capital controls at home.

The European banks welcomed them all. They accepted these deposits and lent them further at higher interest rates. The glut of these deposits in Europe led to the Eurodollar market, a parallel dollar system that was not regulated by the U.S. Federal Reserve. Things began to unravel as the Cold War started in the late 1940s. More people started demanding their U.S. dollars back, but the banks didn’t have enough physical dollars on hand. The entire cycle crashed.

We see a similar trade happening now in the stablecoin market. Except that the digital dollar issuers seem to have learned from history.

In today’s deep dive, I will explain whether Ethena’s reliance on traditional equity markets can save its stablecoin reserve strategy.

The Initial Act

In early 2024, Ethena launched USDe as a synthetic stablecoin that was different from the rest. USDe was issued as a dollar-pegged asset without actually holding dollars in bank reserves. Instead, it held crypto assets like bitcoin and ether, for every dollar of USDe minted. Simultaneously, it shorted an equivalent amount of crypto futures.

The two positions balanced each other. If BTC goes up, the short position on futures loses what the spot gains. And vice versa. Eventually, the USDe was always worth $1, even without an actual physical dollar in the bank account.

But why should people hold USDe over incumbent cryptocurrencies like USDT orUSDC? They were rewarded for doing so.

The incentive was tailor-made to align with how crypto derivative markets are wired. In a bull market, more traders bet on prices rising. Exchanges charge those bullish bettors a small continuous fee, called the funding rate, and pay it to whoever is on the other side. Ethena was permanently on the other side. It collected those payments and passed them on to USDe holders as yield.

At its peak, the yield crossed 20% annually. In 18 months, USDe’s circulation grew sevenfold to approximately $15 billion, the fastest growth ever recorded by any stablecoin.

Read: The Ethena Speed Run 🏎️💨

I loved the design, except that it was heavily reliant on the crypto markets holding the status quo. It worked in bull markets because they were getting paid for being a minority holding a short position against a majority that were long. But markets flip with time; they always do. When they did, the cracks appeared. On October 11, a day after the largest crypto liquidation wiped out over $19 billion, USDe briefly lost its dollar peg. Ethena’s synthetic stablecoin fell to 65 cents against the dollar on Binance.

USDe’s circulating supply fell from about $15 billion to under $6 billion over five months, starting on October 10.

A Lesson Learned Too Late?

More than $9 billion was redeemed. Perpetual futures, which once accounted for almost 100% of the model’s reserve backing, now represent only 11% of it. The bigger irony is that all of this was avoidable. Ethena should have seen it coming.

The signs were telling. Markets always move in cycles, and crypto was no exception. We have seen it over the past 16 years. A reliance on a single collateral source via perpetual futures, which was closely tied to market movements, was always a ticking bomb.

Even other stablecoin issuers had begun adapting. As the U.S. Fed started reducing interest rates, the top two stablecoin issuers increased their activity to supplement their reserve income. Tether diversified its reserves by adding record levels of gold to its coffers. Circle, the USDC issuer, has been aggressively building its infrastructure revenue stream through Arc, its Layer-1 network, and the Circle Payments Network, a full-stack internet payment system.

But Ethena was slow to act. The slide would have been worse had it not addressed the situation at all. That’s not my observation, but what its founder, Guy Young, admitted in a post on X.

Guy also listed out the measures Ethena has started taking to adapt to the regime change.

The TradFi Fix

Ethena would expand its collateral base to include equities and commodities basis trades, overcollateralised institutional lending, prime brokerage services, and a broader set of real-world assets (RWAs).

Ethena started as a crypto-native synthetic dollar, unlike pioneers like Tether’s USDT and Circle’s USDC, which back their digital dollars by holding physical dollars or equivalent treasury bills in their coffers.

Life has come a full circle for Ethena. It’s now going back to wiring itself into the traditional finance infrastructure to keep paying yield to its holders. And not one, but multiple such sources.

With an equities-basis trade, it pockets the gap between buying spot S&P 500 exposure today and simultaneously shorting its futures. The same strategy that Ethena used with BTC and ETH earlier. That’s a small, but predictable return that is independent of crypto market movement.

Now imagine Ethena following a similar trade across multiple asset classes: commodities such as gold, silver, wheat, and oil, indices, lending markets, and more. Every asset will have a spread that is driven by market supply and demand dynamics. Ethena can run delta-neutral trades across all of them and collect spreads around the clock, regardless of what retail feels about crypto or Bitcoin.

While this reduces dependence on crypto markets, it now moves in line with equity, commodity, or other asset markets. Each time volatility in these markets spikes and liquidity in futures markets dries up, these strategies could also fail. It could squeeze USDe’s revenue further.

But that pessimism is the same as expecting a portfolio well-diversified across asset classes to fail. It can still happen, sure, but it’s rare. Yet that’s how the finance world works; on probability and math. People don’t diversify their portfolios expecting to see a green balance when the entire market is drowned in red. The expectation of diversification is to reduce the likelihood and intensity of losses.

For Ethena, diversifying across uncorrelated yield sources will do the same thing. It will reduce the likelihood that its yield will be squeezed out completely when either one or two of these asset classes underperform.

The Liquidity Test

Ethena’s diversified strategy is the logical solution to tackle market cycles. Spreading exposure across equities, commodities, credit and crypto makes the income stream more resilient. That’s probably the only edge it will have over a T-bill-backed USDT and USDC, which pays its holders no yield.

But the new strategy still faces a strong headwind.

The liability side of USDe is fully liquid, meaning any holder can redeem it at any time. But the assets generating the yield are not perfectly liquid during periods of stress. Equity basis positions could take time to unwind cleanly. Institutional loans have fixed tenors. Collateralised Loan Obligations are not always liquid in choppy markets. This gap between liquid liabilities and imperfectly liquid assets can become a structural tension for any yield-bearing stablecoin. It’s a gap that even a diversified yield strategy can’t fix.

In calmer markets, different asset classes can move to different signals. Gold moves up on inflation fears. Good earnings drive up equities. A geopolitical crisis involving oil-producing nations can inflate oil prices, as we are witnessing now. Crypto funding rates are high because retail is bullish.

But that’s not how they move in extreme stress scenarios. The correlation assumptions can fall apart, cancelling out the diversification advantage. The common denominator tying all these assets is liquidity.

And when things go south across the board, everyone wants to cash out of their positions.

Harry Markowitz won the Nobel Prize for showing that diversification reduces risk. Yet, the 2008 crisis needed no Nobel Prize to show us an anomaly to Harry’s Modern Portfolio Theory (MPT). Academician Nassim Taleb had argued the same in his book The Black Swan. The contention is that correlation is not a constant property of asset pairs. It’s a variable that changes with market conditions.

Despite all these anomalies, it’s important to recognise that these are black swan events that are unavoidable and rare. There’s little anyone can do to predict or control them. A diverse portfolio across asset classes is still likely to outperform a concentrated portfolio reliant on one single asset class. We saw it happen during the money market meltdown in 2008.

The Reserve Primary Fund held short-term corporate debt instead of Treasury bills because the spread was attractive. When Lehman Brothers failed, that paper became worthless overnight.

Overcollateralisation of loans is one of Ethena’s responses to this. If borrowers post more collateral than they borrow, losses are theoretically absorbed before they reach USDe holders. But overcollateralisation ratios are calibrated to historical volatility ranges. Stress events can spill outside those ranges.

No strategy will be free from risk. Ethena’s task will be to inspire enough confidence in investors to believe that its new, diversified strategy is better positioned than the earlier model , which depended on a single crypto market dynamic.

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

“The farther backward you can look, the farther forward you are likely to see” - Winston Churchill

Hello,

The current state of Digital Asset Treasuries (DATs) bears a striking resemblance to America’s closed-end funds of the 1920s. People purchased shares in closed-end funds, which then bought stocks in the public market. Indirectly, investors gained beta exposure to these stocks in the market and paid a premium in return for those shares. The speculative premiums on these funds peaked at 30% above the net asset values (NAV) of the funds until the stock market bubble of 1929 turned them into discounts. Investors learnt it the hard way that the math didn’t add up.

When I read this, it felt like déjà vu about what we saw unfold in the DATs ecosystem over the past few months. Hard not to draw parallels.

Bitcoin-based DATs, like Strategy, offered leveraged beta on BTC’s price. Investors paid a premium for it. The flywheel worked as crypto rallied, but it fell apart when the markets slumped. The trick to making DATs sustainable across market cycles is in what the token’s appreciation is linked to. Most crypto treasuries around BTC and ETH were leveraged bets that the prices of the underlying cryptocurrencies would go up.

But what if the token price were closely tied to the revenue generated by its ecosystem? What if it had little correlation to uncertainties? Even better, what if it were negatively correlated to how other asset classes behaved during macroeconomic uncertainties?

In today’s deep dive, I will explore why asset selection for DATs could decide how sustainable their treasury strategies are, using the case of a HYPE-based digital asset treasury (DAT) company.

Hyperliquid Strategies (ticker: PURR) started its DAT journey by incorporating Rorschach LLC, a Special-Purpose Acquisition Company (SPAC), and hold. It then reverse-merged the SPAC with Sonnet BioTherapeutics, a struggling Nasdaq-listed biotech company whose flagship cancer drug had spent years seeking a commercial partner.

It’s the same playbook that Twenty One Capital had used for BTC, backed by Tether, Cantor Fitzgerald, and Softbank.

Read: SPAC to the Future ⌛️

At launch, PURR held 12.6 million HYPE tokens, valued at $583 million, and $305 million in cash. Earlier this year, it deployed $129.5 million to purchase an additional five million HYPE tokens.

But why does Hyperliquid Strategy deserve a better outcome than the previous DATs?

A Different Jar

In the first wave of DATs, the wrapper itself was the innovation. A company could swap BTC for ETH, ETH for SOL, and the playbook worked just fine. That’s because the flywheel was built around the premium on net asset value (NAV) of the companies. It didn’t matter what the underlying asset was. As long as DAT shares traded at a premium, investors bought in, expecting more upside beta on the token’s price appreciation.

However, that bet flipped when the market struggled to recover from the crypto industry’s largest single-day liquidation.

Although the liquidations were sudden and followed US President Donald Trump’s new trade tariff threats against China, what happened with the DATs was not unexpected.

A couple of months before the liquidation event, we wrote about the risks that the leader of the BTC treasury pack, Strategy, carried in its DAT model:

Fast forward to mid-November, and we saw what had been feared about DATs for months unravel in real time: sliding mNAVs, slowing treasury purchases, and falling DAT company share prices.

Read: Where’s DAT Beta? 🎁

The problem with the playbook was that all top three treasury assets - BTC, ETH, and SOL - were tied together by a common, awkward feature. They didn’t generate cash flows. Their price appreciation was linked to how people traded the cryptocurrency. And that trading was driven by multiple factors: ETF flows, institutional interest, conversations on online forums and communities, and investors’ perceptions of BTC’s role as digital gold in the macroeconomic landscape.

Surely, ETH and SOL generated staking rewards to offset their slow token appreciation. But staking rewards are paid in newly minted tokens. Each time ETH and SOL staking rewards are paid, they dilute current token holders to pay validators.

A treasury holding any of these assets, whether BTC, ETH, or SOL, acts like a closed-end fund with a single non-dividend-paying position. The only way it makes money is if the token price rises or if the premium to NAV widens. The first is beta, and the second is driven by narrative.

Although Ethereum and Solana generate fees, a comparatively small portion of revenue gets routed back to its holders. In 2025, Ethereum generated about $515 million in chain fees, while Solana collected $645 million. Most of it didn’t reach token holders; it was either captured by validators or offset by fresh issuance.

Compare that with almost a billion dollars in fees that the Hyperliquid protocol generated last year. It becomes even more convincing when you factor in that 97% of those fees were routed back to HYPE holders through buybacks via the Assistance Fund.

Read: Burn, Baby, Burn 🔥

Hyperliquid now runs $5-7 billion in daily perp volume, roughly $200 billion a month, generating around $730 million in annualised fees from trading activity. So, each dollar traded on Hyperliquid contributes toward strengthening the underlying fundamentals of HYPE’s pricing.

This makes HYPE treasuries feel less like holding BTC or ETH in a vault and waiting for the market to value it. Instead, it feels like holding a receipt against the fee stream of a derivatives exchange.

Any listed wrapper holding HYPE, including the most recent bet by PURR, is still fundamentally a bet on HYPE’s price. Its corporate structure is the same as that of a BTC, ETH, or SOL treasury company. This makes it easy to look at them through the same lens. Yet I am more optimistic about a HYPE treasury company given the underlying factors driving the token’s price movement.

The share price of PURR reflects an indirect claim on the present value of all cash flows that the Hyperliquid protocol can generate from its derivatives business.

You don’t have to take my word for it. Hyperliquid has shown it multiple times recently.

A Proven Case

During the US-Israel-Iran war last month, risk assets and traditional markets stumbled. HYPE rallied 40%, while S&P and BTC lingered. The former fell by 3-5%, while the latter gained 5%.

Since the largest crypto liquidation event on October 10, HYPE has appreciated by about 60% while BTC slid by 40%.

It wasn’t just a coincidence. Volatility driven by uncertainty is bad for a passive store of value and excellent for a derivatives exchange. Uncertainty drives perp traders to hedge their positions. Liquidation events generate fees on both sides of the trade. The same conditions that eat into the mNAVs of BTC treasuries become conducive for printing more money for a perps venue.

The bear market that rang a death knell for BTC and ETH treasuries brought record volume and fees for Hyperliquid’s ecosystem. While the former have no option but to wait out the market meltdown, Hyperliquid’s P&L thrives in these conditions.

Hyperliquid’s HIP-3 markets have only strengthened this thesis by bringing traditional assets, including metals like Silver and Gold, on the blockchain and enabling investors across financial markets to express their opinions across asset classes.

Read: Hyperliquid is Taking on CME, not Binance

This is the single biggest reason I believe HYPE’s DAT strategy stands apart from the rest.

Nobody’s Safe

PURR’s DAT strategy is still a bet on HYPE’s price. Hyperliquid could lose its perp market share to competitors like Lighter, Aster, or some yet-to-be yet conceived protocol.

PURR’s institutional backers pitched their DAT strategy as “the only way US investors can access HYPE”. But if fundhouses get approval for their pending HYPE spot ETFs, it could make the entire wrapper obsolete. Both 21Shares and Grayscale have filed their applications.

However, what inspires confidence despite these challenges is the choice of the underlying asset.

The older DATs had to worry about retaining the premium on their NAVs. This is a function of market psychology and investor confidence in the model. A HYPE-based DAT has to answer a simpler question: will Hyperliquid keep earning? This question is more a function of weekly fee data, perp market share, protocol’s roadmap - which also has HIP-4 lined up.

Read: Why HIP-4 Will Take Over Finance

All of these are numbers an analyst can use to make informed decisions. The analyst can still falter, but there’s data that backs the answer.

There’s a counterargument here.

What if Ethereum and Solana overtake Hyperliquid in terms of fees generated? That’s not impossible. But it becomes far more difficult when you consider the revenue ploughed back to HYPE holders through buybacks.

Although Ethereum routes a portion of its fees back to ETH holders, it is offset entirely by the new ETH it issues to validators. Solana’s fees accrue to validators, who keep them. Little trickles down to Solana holders. For either Ethereum or Solana to match what Hyperliquid does with its token, they would need to rewrite the underlying tokenomics. Along with that, the network activity will also have to multiply several times from the current level. None of them is an overnight process.

Even if it happens, I expect the same thesis to hold true. I don’t claim that HYPE will always be the only successful asset for DATs. I believe that DATs built on assets whose ecosystem generates consistent revenue for its holders will outlive DATs built on assets that do not generate consistent income.

Both these models are significantly different. The first wave of DATs expected investors to underwrite by believing in a narrative. The second expects investors to believe in the cash flows.

The closed-end funds that survived the 1929 bubble were those whose stocks continued to pay dividends during the drawdown. Everything else was simply a wrapper around a bet.

HYPE-based DATs might still end up in the same graveyard as the other DATs. Nobody knows for sure. But their critique will most likely be an argument about market share, fee durability and other fundamental business metrics. At least it won’t be another debate that ends with “I told you so,” as we saw with the collapse of BTC DATs.

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

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Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.

A clock is a bad place to hide a delay. For decades, financial markets were built around the speed of incumbent communication. They introduced closing bells, batch settlement, and regional exchanges, which made sense when information moved slowly. But that has all changed. Capital doesn’t wait. Just like water always finds a crack, so does capital. Financial gravity pulls it toward the fastest route to price information. That’s the law of markets. Its constituents don’t tolerate inefficiencies forever.

This is what I observed when I zoomed out from the financial market developments over the last fortnight.

In today’s piece, I will help you understand what’s breaking down the old, bundled structure of financial markets into a more efficient, unbundled one across venues, wrappers, and time.

Change of Guard

I have been studying finance for over a decade now. In the first half of my journey, I viewed a traditional stock exchange as synonymous with markets. For most of their evolution, it was the one place where everyone, and everything, came together. Buyers, sellers, regulators, and the technology driving the market. It had indices tracking its constituents and a clock that told everyone when they could and could not trade.

But that has changed in the past few years. In fact, just in the past fortnight, we have seen multiple developments that confirm this shift.

On March 18, S&P Dow Jones Indices licensed the S&P 500 to Trade[XYZ], allowing the HIP-3 market deployer to launch the first and only perpetual derivative contract for the S&P 500 on Hyperliquid’s exchange. The S&P 500 is the most-tracked gauge of U.S. large-cap equities across the globe. It tracks the 500 leading U.S. companies, covering ~80% of total U.S. market capitalisation, totalling over $61 trillion. The index covers at least half of the entire global equity market.

That’s nearly a 70-year-old index being listed on a market that’s barely six months old.

Read: Everything Is a Ticker 📊

A day after S&P’s announcement, the U.S. Securities and Exchange Commission (SEC) approved Nasdaq’s request to trade and settle certain stocks in tokenised form. Nasdaq is one of the most active trading venues in the world. Its notional trading volume often exceeds that of the NYSE, the world’s largest exchange by market cap.

On March 16, Cboe Global Markets submitted a proposal to the SEC to launch “near 24x5 U.S. equities trading”. The biggest operating engine behind American financial exchanges said it was ready to deliver around-the-clock equities trading as early as December 2026.

But why? More people are demanding extended trading hours for U.S. equities.

All three developments collectively target the outdated bundled structure. Hyperliquid’s perp market on the S&P 500 index challenges the decades-old practice of investors being able to trade traditional indices only via traditional markets. It also makes trading on one of the most-tracked large-cap indices possible 24/7 worldwide.

Nasdaq’s tokenised equity trading move is targeting the infrastructure. It introduces a new wrapper that allows the same share to be traded differently. Earlier attempts at tokenised equity faced criticism from the industry.

The investors questioned whether these tokens would offer the same rights as the original shares. I wrote about this here.

But what if I offer the same equity exposure via a token on a blockchain, without losing the voting rights and legal protections that came with the original dematerialised share, won’t you take it?

Why should you, and what’s in it for you?

Now, what if you were an investor outside the U.S. who wanted easier access to the equity market of the world’s largest economy? What if that tokenised share made it easier for you to integrate it with collateral and lending systems?

The benefits compound when you factor in round-the-clock trading.

That’s what the Cboe is attacking. Its near-24/5 trading proposal is its way of acknowledging that capital doesn’t wait for office hours. Traders would always want to express their opinions as soon as they receive information. If Cboe didn’t give them a market to express at that time, then the traders would flee to the market that does.

None of what I claim is a hypothesis or “could happen in the near future”. It’s happening as we speak.

An Unbundled Future

Nowhere is the adoption of unbundled pieces of finance more evident than in Hyperliquid’s HIP-3 markets, which launched only in late October 2025.

In the past month alone, HIP-3 markets added $72 billion to cumulative trading volume. In the preceding four months, the cumulative trading volume stood at $78 billion.

In March, Trade[XYZ]’s perp markets on traditional financial commodities and stocks consistently accounted for 90% of the daily trading on HIP-3. But that’s not even the most interesting aspect.

More than half of Trade[XYZ]’s trading came from just perpetual markets on silver, crude oil, Brent oil and gold. I wrote an entire piece at the start of this year when this trend first began to emerge.

Read: Hyperliquid: House of Finance 🏦

In that piece, I explained why traders prefer to trade commodities on-chain. Hyperliquid offered a single venue for trading both spot crypto and perpetual contracts on crypto and traditional assets. This provided not just ease of trading on a unified platform, but also better liquidity, a single user interface, and tighter bid-ask spreads.

Traders still wanted to trade on some of the largest and most popular assets across commodities, listed companies, large private companies and indices. You could be wanting to trade Silver, Gold, Oil, Tesla, Apple, Amazon, Google, the indices tracking the top 100 U.S. non-financial companies, and the S&P 500 - and do all of it on Hyperliquid.

HIP-3 unbundled the ability to invest in these assets from the existing exchange infrastructure, while still tracking the underlying assets from their original base. So, when you go long on a perp contract for Silver on HIP-3, the underlying asset it was tracking was still linked to the value of one troy ounce of silver on Pyth’s data feed.

What made traders switch to trading Silver on HIP-3 from their earlier platforms was that HIP-3 didn’t discriminate between U.S. and non-U.S. traders. It didn’t follow any one clock. Whenever there was an event that made traders want to express their opinions by pricing assets, HIP-3 offered them a market. Irrespective of the trader’s geographic location or time zone.

The result is evident in the growth of Open Interest (OI) on Hyperliquid over the past few weeks. OI measures the total value of outstanding derivative positions. Unlike trading volume, which captures activity, OI reflects commitment.

OI doubled from $1.13 billion on March 1 to $2.2 billion on April 1. This shows the conviction with which traders are locking in their money on Hyperliquid’s perpetual contracts.

These metrics demonstrate that when you make access to markets easier with fewer frictions, traders will not remain loyal to a platform or one asset class. They will adopt whatever gives them volatility, convenience, and liquidity.

That’s why legacy institutions like S&P, Nasdaq, and Cboe are making moves to acknowledge this behaviour.

At least two recent incidents prove how important round-the-clock trading and volatility are for traders.

Saurabh wrote in his tweet for Decentralised.Co: “On February 28, the U.S. and Israel struck Iran when the traditional markets were closed. Within hours, oil-linked perpetuals on Hyperliquid surged 5% as traders priced in the shock in real time.”

Trading on oil-linked perps shot up from $200 million to $6 billion in cumulative volume within just two weeks after the war began.

One of the concerns with newer platforms is liquidity. If there’s not enough liquidity, the bid-ask spread could widen, leading to worse pricing for traders than on other platforms.

Hyperliquid demonstrated its depth of liquidity last week, when U.S. President Donald Trump and Iranian officials were going back and forth about having “productive talks”. The newly launched S&P 500 perp on HIP-3 tracked the sequence of moves of the underlying S&P 500 on CME’s E-mini futures down to the minute.

Although the on-chain perp sat about 50–70 points below ES, the magnitude of the moves was similar.

What This Means

For decades, traditional markets remained bundled and controlled the venue (exchange), the time (trading hours), and the wrapper (indices/contracts).

They preferred to maintain the status quo because they failed to introduce infrastructure to address inefficiencies such as time delays, restricted trading hours, and regulatory limitations for non-U.S. investors. Instead, they disguised these inefficiencies and offered them to investors by calling them procedural systems put in place to offer a trustworthy and credible institution.

People traded and invested anyway. Not because they were foolish or bought into the story that bundled legacy financial markets sold to them. They did so because they had no other option. That started to change when blockchain offered the world on-chain markets that made trading and investing easier than ever before.

People saw the option and took it.

They did not and will not care if the market structure changes. They wouldn’t care less whether the new structure was bundled or unbundled. Whether the incumbents like it or not, the trader and investor communities will adopt the new market structure as long as they have better access to express their opinions through financial instruments. It won’t matter whether that structure comes from traditional giants such as Nasdaq, Cboe, or the S&P 500, or from permissionless platforms running on blockchains.

Finance, as it always has, will continue to evolve and adopt whatever structure narrows the gap between the occurrence of an event and the expression of an opinion through price.

Important events happen round-the-clock across the globe. Why, then, should a price wait for a clock to start ticking on a Monday morning in a glassed building in New York?

That’s it for today. I will be back with another deep dive.

Until then, stay curious!
Prathik

Token Dispatch is a daily crypto newsletter handpicked and crafted with love by human bots. If you want to reach out to 170,000+ subscriber community of the Token Dispatch, you can explore the partnership opportunities with us 🙌

📩 Fill out this form to submit your details and book a meeting with us directly.

Disclaimer: This newsletter contains analysis and opinions of the author. Content is for informational purposes only, not financial advice. Trading crypto involves substantial risk - your capital is at risk. Do your own research.