Consider a business that rewards its customers only with coupons they can spend inside the same business. That’s how most brands plan their loyalty programmes. And they do so for good business reasons. As long as people keep coming back, this arrangement works.

The idea is to make customers spend money, hand them coupons, and make them come back to spend those coupons again. The coupon-issuing brand can make these coupons scarcer over time by giving them an expiry date. But the entire system works only if customers feel the desire to earn these coupons.

For much of crypto’s history, its economic systems also have worked similarly.

Protocols created tokens and dangled them to attract users. They then rewarded those users with even more tokens. When that model made tokens inflationary, the industry found an alternative. Instead of printing new tokens, protocols began charging fees, buying back their own tokens from the market and destroying them from the circulating supply.

This mechanism worked better than the earlier one, but the money was still circulating inside crypto. That is beginning to change.

A new crop of projects is taking money generated inside crypto markets and using it to buy traditional assets. This is one of the most significant signs of crypto coming of age. The industry is beginning to connect its endogenous economy of fees, tokens and trading activity created inside its markets with the much larger exogenous asset universe of traditional finance.

On to the story…

PRED: Trade Sports at the Best Odds

Anyone who has watched a game with money on it knows the feeling.

A momentum shift in the fortieth minute, a red card, an injury or a goal against the run of play, and the game turns while you sit there holding a position you took before kickoff.

On most prediction platforms, that is all you can do. Hold and pray.

PRED, on the other hand, turns every fixture into a live market. You buy ‘Yes’ or ‘No’ and the price moves as the match does, so if the game turns, you can cash out and take whatever your position is worth at that moment.

Our odds are 10 to 14 per cent better than the rest of the market. Across the season, that gap adds up.

Markets on PRED settle instantly once the result is in, and you’re never stuck holding a position waiting on someone else to agree on what happened. You can cash out any time.

Built for how fast sport actually moves.

Start Trading

On July 1, Robinhood launched its blockchain as a permissionless network, letting anyone build applications on it. By early September, nine native tokens with live products on its chain had crossed a circulating market capitalisation of $10 million: Pons, The Index, Orbio, StonkBroker, Hookr, Delta, Statics Protocol, Down to Finance and Pare.

Although most are too young for valuation to tell us much, what they do with the money moving through them hints at crypto’s collective trajectory.

Pons, the token launchpad, routes roughly 80% of protocol fees to buy and burn PONS. Even Hookr, another token launchpad, uses collected fees to buy back and burn HOOKR. Both follow the same mechanism as Hyperliquid: routing exchange trading fees to buy HYPE through its Assistance Fund.

While this crypto system mimics the share buyback mechanism from traditional markets, it’s only as good as the business supporting the buyback.

Pump.fun helps us understand this. By the end of April 2026, it had burned roughly 36% of its maximum token supply and dedicated 50% of its revenue to buybacks and burns in the following year. Yet its native token, PUMP, still traded around record lows for almost 10 months, from September 2025 to June 2026, when launchpad activity weakened.

While the buyback-and-burn mechanism did what it was designed to do, it can’t manufacture demand.

Some protocols on the Robinhood Chain are opting for a different model.

The Index’s stock distribution model contrasts this by not using the 3% fee it earns from all the trades it facilitates to buy back its native token, INDEX. Instead, the protocol converts part of its fee income into a basket of roughly 18 Robinhood Stock Tokens, including Apple, Nvidia and Google, and distributes those assets to INDEX holders.

Although these are not conventional shares registered in the holder’s name, the stock tokens provide economic exposure to the underlying equities held in custody. Holders still don’t have legal ownership or the voting rights of ordinary shareholders. But not everyone wants to hold tokens for voting rights and legal ownership.

Read: A Token Can Be the Asset

This pitch connects the two financial ecosystems by converting revenue generated within the crypto world into rewards that give holders exposure to real-world assets like publicly listed company stocks.

For years, crypto has moved capital efficiently within its own ecosystem. A token could be deposited as collateral to borrow another, which could then be used to earn yield in the form of another token. Trading fees could buy a token, then burn it to support the same economy. The industry built sophisticated financial loops, but most ended at another crypto asset.

But this wall is gradually coming down. Both the ecosystems have begun feeding off each other’s moats and captive audiences to expand their revenue streams or bases.

This changes crypto’s customer-acquisition problem.

Until now, most protocols have effectively had to sell a user the idea of entering crypto, and then the idea of owning a new token. That limits the audience to people already willing to speculate on crypto assets. An Apple stock, an Nvidia dividend or an ETF-like basket does not need the same introduction. People already understand why they may want them. If crypto can become the infrastructure through which those familiar assets are bought, packaged and distributed, the asset itself becomes the acquisition funnel. The user does not need to come for crypto. They can come for Apple and end up using crypto underneath.

Read: Distribution Trumps Asset Class

Stablecoins were the first large breach in that wall. A blockchain token could represent a claim on dollars and US Treasuries sitting in the traditional financial system. Tokenised stocks extend the same idea to equities. The Index uses internally generated crypto activity to acquire those external assets and hand them to users.

Nvidia’s value does not depend on whether people keep trading INDEX. It sells chips and computing infrastructure to customers who need compute power. Apple sells phones and services that have little to do with the crypto ecosystem. But the aspiration to own assets outside the crypto ecosystem can drive activity within it.

StonkBroker, a marketplace for 4,444 NFTs, converts fees into stock tokens, like Tesla, Amazon, Nvidia, or Palantir, and airdrops them into the wallets held by NFT holders. When the NFT changes hands, the tokenised equities inside the wallets also move with it. The protocol turns a simple NFT wrapper into a portable financial container that can carry value across into an exogenous world of traditional finance.

Pare lets users split a stock token into two pieces: one representing the stock’s principal value and another representing the dividend stream it generates until maturity.

Traditional finance has done this for decades with instruments such as Treasury STRIPS, which separate principal from interest. Pare applies this logic to tokenised equities. Once an external asset becomes programmable, you can separate its cash flows and trade them in ways that were previously cumbersome.

Statics Protocol and Down to Finance do the reverse by bundling assets together.

Statics can create redeemable baskets containing several assets, including tokenised equities. Users can create fixed baskets of up to 16 assets, including tokenised stocks, and issue the basket as a single redeemable token.

Think of it as something closer to building your own index fund: rather than buying and managing Apple, Nvidia and a handful of crypto assets separately. For someone coming from traditional finance, this is a much more familiar proposition than navigating individual tokens, liquidity pools and wallets. The basket does not need to remain entirely crypto-native. A protocol can combine assets whose value originates in public companies with assets and financial activity that originate on-chain.

Down to Finance (DTF) packages tokenised stocks, lending positions and other assets into products it describes as decentralised ETFs.

Its baskets can span tokenised stocks and real-world assets alongside crypto-native positions such as Morpho lending and Uniswap liquidity pools, all wrapped into a single token. A traditional investor is already comfortable with the idea that one ETF can contain dozens of securities; DTF applies the same abstraction to assets that normally sit in completely different financial systems.

A non-crypto investor should not have to become a DeFi user before getting any benefit from DeFi. Someone buying an ETF does not need to understand how its market maker hedges inventory or how its custodian settles securities. In the same way, an investor should be able to buy a basket combining equities and on-chain yield without first learning Morpho, Uniswap or wallet mechanics. If Statics and DTF get this right, blockchain becomes invisible infrastructure underneath a familiar investment product. That is a much larger market than asking millions of traditional investors to become crypto natives.

Pare, Statics and DTF collectively show that bringing stocks on-chain is only the first step. Once traditional assets share infrastructure with crypto assets, they can be split, bundled and combined with entirely different sources of return. A stock dividend can become its own instrument. Several equities can become one basket. That basket can sit alongside income generated by an on-chain lending market.

For years, crypto’s composability was economically constrained. It could endlessly rearrange crypto collateral, crypto yield and crypto risk, but the total pie was still largely bounded by capital already willing to enter crypto. Connecting the same machinery to equities, credit and other productive assets changes the ceiling. Crypto protocols stop fighting only for a larger share of crypto’s market and start competing for activity that today belongs to brokers, exchanges and asset managers. The opportunity is no longer simply to grow crypto’s own pool of capital. It is to intermediate a small piece of the vastly larger pool of capital already invested elsewhere.

In some cases, the external asset doesn’t even have to be a financial instrument. Orbio converts part of its fees into OpenRouter credits for AI inference.

But none of this guarantees that the protocol will become a sustainable business. Paying someone with an external asset or tying a crypto token to a publicly listed company share isn’t a magic pill.

For now, the rewards have escaped the circular economy. But the protocols still need to find a way to keep user activity up.

The Index is only half a bridge. Its payout has become exogenous, but its revenue engine is still endogenous. It has replaced the coupon with Nvidia, but people still have to keep trading the coupon to fund the Nvidia.

The real graduation happens when both sides cross over: the protocol distributes value originating outside its own token and earns the money to fund that distribution from demand that would exist even if its token stopped trading tomorrow.

For instance, Hyperliquid pays value back through HYPE, an endogenous asset, but its revenue comes from traders using the exchange to trade crypto and real-world assets alike. This is a stronger foundation than a business whose revenue rises mainly because speculators keep trading the same token that finances its rewards.

This shows that exogenous rewards alone aren’t enough. External rewards work better when external demand finances them. Coca-Cola pays dividends because people buy its drinks, and not because people keep trading its shares.

This is ultimately why these tiny Robinhood Chain experiments matter beyond their current market caps. Connecting crypto to external assets changes the size and quality of the market crypto can serve. The person buying an equity basket may not care about crypto at all. The investor buying a dividend stream may simply want income. Someone using an on-chain fund may care about diversification rather than decentralisation. Crypto does not need to convert all these people into believers. It only needs to become a better rail for the financial product they already want.

If that happens, the relevant market for crypto protocols is no longer measured only by the value of crypto assets. It begins to include the trading, packaging, lending and distribution of assets from the much larger traditional financial system.

Crypto coming of age is about breaking the assumption that money entering crypto must ultimately end up in another crypto asset. The Index, Pare, Statics and DTF are early attempts to punch holes through that wall. Some of them might fail. But the direction is more important than the individual products: crypto is moving from building a financial economy beside traditional finance to building infrastructure that can connect to it.

The moment that connection becomes two-way with outside assets flowing in, outside demand generating fees, and crypto infrastructure sitting invisibly in the middle, crypto’s addressable market outgrows crypto.

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 165,000+ 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.

Credit is one of the hardest problems in finance. Every loan is a bet on a person or organisation’s future behaviour and needs a system to ensure the bet is well measured and risk is minimised. Lenders need to verify identity, check past records and put in place a recourse if things go wrong.

On the demand side, credit helps money reach the people who need it the most. This keeps the liquidity moving in the economy. But here, too, the cost of borrowing needs to be set in a way that makes credit inclusion in nature.

These problems are difficult but unavoidable.

For almost a decade, on-chain lending has struggled with solving many of these problems. One of the biggest is overcollateralisation, where you have to deposit $150 to borrow $100. This defeats the purpose for someone who needs $100 and doesn’t have it.

Every once in a while, we see attempts to fix the on-chain lending landscape. Many who dared faced the same sad fate. Yet few others persist. Today, I analyse some recent attempts to address on-chain credit.

On to the story…

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Ever since decentralised finance began offering credit, it has relied on overcollateralisation. Pseudonymity and privacy on-chain left no trace of borrower identity. For an industry built on decentralisation, this left no option but to resort to overcollateralisation to avoid bad debts. But collateral that requires you to deposit more than what you need doesn’t make sense. Yet over 90% of on-chain lending is overcollateralised today. This makes credit exclusionary for those who need it most.

But who needs on-chain credit anyway?

If you have a bank account and a decent credit score, on-chain credit offers nothing new. Your credit card already offers an unsecured, revolving line of credit. The card also includes fraud protection and chargebacks that on-chain credit doesn’t offer. At first glance, borrowing is also more expensive on-chain. 3Jane pays its depositors 7.2% to 13.42%, so it charges borrowers more than that.

But some groups of people still aren’t served by the current credit system.

The World Bank’s Global Findex 2025 found that roughly 1.3 billion adults lack financial accounts. Without on-chain credit, this group’s alternatives are to borrow from local usurers or do nothing. Another group with wide unmet credit demand is small businesses. The IFC estimates the financing gap for micro, small and medium enterprises at $5.7 trillion.

For all of them, the mainstream credit from the banking infrastructure is missing or insufficient. That’s because the economics don’t work for the banks. A crop of crypto projects attempted to fix this problem, but they failed.

A Bitter Pill from the Past

One core pillar of a reliable credit system is measuring trust. Credit scaled historically when the industry built systems that standardised and measured trust. We verified identity, shared records, and used courts to support both.

The world of DeFi lenders skipped this entire chapter.

Maple Finance, once the largest lending protocol, had replaced collateral with “pool delegates”. These credit professionals decided who could borrow and who couldn’t. That was the biggest vulnerability.

In late 2022, one borrower, Orthogonal Trading, defaulted on $36 million across eight loans after misrepresenting its FTX exposure to the pool delegate. Maple ended the cycle with about $54 million in bad debt. It survived by abandoning unsecured lending altogether and pivoting to overcollateralised institutional loans.

Goldfinch also faltered, making a contrasting play. It lent over $100 million to real-world lenders in emerging markets, underwritten by a decentralised community. About $18 million went bad.

Both of these failures had similar problems. They removed collateral without replacing it with another mechanism that ensured enforcement.

Newer on-chain projects are rebuilding the credit stack by focusing on elements the older ones ignored. These are the same ones that made Tappan’s system work — verified identity, a shared record of trust, and courts.

Rebuilding the Stack

One ingredient in a healthy credit system is tracking identity. On a blockchain, identities are free. A defaulter can open a fresh wallet and borrow again as a stranger. No credit system can survive this.

Divine Research fixes this with its product, Credit, which runs inside the World App. Using its scanning technology, Divine lends only to humans verified by an iris scan. It offers unsecured loans of up to $1,000 through a ‘progressive trust’ mechanism. You start with a small limit, repay on time, and grow your borrowing limit toward $1,000.

This directly addresses overcollateralisation. Borrowers need to submit zero collateral, but the trade-off is their privacy via iris scans.

Since December 2024, it has issued almost $4 million in loans to almost a million borrowers. These loans were taken out predominantly by individuals in Argentina, Nigeria, and Colombia, mostly for groceries, medicine, and transport. This is the excluded group that I referred to earlier in the piece.

But the model lacks a solid recourse. Nothing stops a verified human from keeping the money. The system is built to disincentivise defaults and not avoid them altogether. The borrower can take $80 today and walk away with it or build toward a $1,000 credit limit gradually.

While it serves excluded groups, the high cost of doing business without collateral is a hard ceiling. If it can’t lend above $1,000 without collateral, it means its interest income is also capped and scales slowly.

The second ingredient in a healthy credit system is a good trust record.

Ethos Network is rebuilding this layer as a portable, public reputation score built from reviews and vouches. It lets users stake their own ETH to support a person’s credit reputation. This staked ETH is slashable if that person misbehaves. Random reviews are gameable. But when people have skin in the game by investing their money, they are less likely to manipulate.

Credifi, a lender on Base, has attached money to Ethos’ reputation scores. An Ethos score above 1,800 unlocks up to $3,000. No need for collateral or KYC.

If someone defaults on a loan, their credit reputation score on Ethos Network gets permanently downgraded. This hurts their chances of accessing credit across the Web-3 ecosystem. The person who vouched for the defaulter’s credit reputation also faces a downgrade in their score and a possible penalty deduction from their staked ETH.

Credifi also runs a second lending track where U.S. borrowers can borrow by verifying their bank accounts. The reputation track builds their presence in the informal, non-US, and on-chain markets. The bank-led approach helps it scale faster because of lower default risk and existing risk systems.

The third ingredient is recourse.

A year ago, 3Jane pitched unsecured credit lines to individuals. Back then, it underwrote the borrower’s on-chain history and extracted your VantageScore and bank data through cryptographic proofs that verify without exposing details.

Its infrastructure ensured defaulted loans were sold to licensed US collections agencies and losses hit a junior tranche before senior capital. It solved recourse with courts.

This recourse-first design helped 3Jane pivot from issuing unsecured retail loans to giving out direct credit lines. 3Jane’s recourse-first design helped it originate about $8 million in loans in just seven months to 60 U.S.-based prime/superprime yield farmers at 376 bps over Aave borrow rates. The pool achieved 100% in monthly payments, zero defaults and zero principal impairment to the staked capital. The pool ran clean through the October 10 liquidation event, some of the worst stretch of the DeFi market in recent times. Careful underwriting of individuals might not scale fast, but helps build a disciplined customer base.

In May, 3Jane launched Fintech Credit Conduits, a standing funding infrastructure that channels its stablecoin deposits into short-duration Small- and Medium-sized Business (SMB) and consumer loans. Other U.S. fintech lenders originate these loans and already have borrowers and underwriting models but can’t access securitisation markets.

The individual credit lines stay live on one track, while these conduits, with a $60 million pipeline, become the growth engine to scale. The model is a strategic marriage between the best of both worlds. On-chain lending provides the capital, settlement speed, and a transparent loan book. Off-chain brings in borrowers, underwriting, and the courts. It is the least crypto-native of the three, yet the one I’m most bullish on.

Can They Troubleshoot On-Chain Credit?

For credit to work, all the pillars that hold it upright need to be stable. A lender needs to know who the borrower is, what their credit history is and how to keep the bad actors at bay.

On-chain-native builders in the credit industry need to understand that blockchains don’t replace off-chain credit; they just make credit more efficient. The chain moves capital faster, settles instantly, and keeps the loan book transparent. But the underwriting itself — verifying who is borrowing, judging whether they’ll repay, and enforcing when they don’t — is work the off-chain system spent two centuries perfecting. A complete on-chain system that targets the underserved has to merge the two: blockchain infrastructure for capital and settlement, and proven credit practices for underwriting.

Verifying identity, building a tested trust record, and putting reliable enforcement in place are the most obvious and inevitable ingredients of building a healthy credit market. Once that is achieved, borrowers wouldn’t care less if the lending platform is completely on-chain or off-chain.

Along with those three ingredients, builders in this industry need to track defaults closely in the first few months and have a business plan that earns money in the medium- to long-term.

The measures the above companies have adopted, including the reputation score and slashing of staked ETH, are merely conduits for discipline. While they may not solve the over-collateralisation problem from day one, I believe they can kick off a directory of reputations for credit-seeking participants in on-chain markets. We might still be years away from a reliable directory the entire on-chain lending ecosystem can rely on. But it is still a start that the industry absolutely needs and cannot do without.

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 165,000+ 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.

“Trust is one of the oldest and most indispensable ingredients in the world of commerce.” -Yours truly, circa 2026

Hello,

More than a decade ago, I prepaid for an online purchase with a card for the first time. My mother panicked. Why would you trust a faceless business hiding behind a website? What if the action camera never arrives? I didn’t have an answer for her then. I do now.

An aggregator — Flipkart (now owned by Walmart) — had stepped between a random seller and me, and offered a trust layer on the merchant’s behalf.

Every commerce era widens the circle of strangers who transact with each other, and each one needs a new kind of middleman to broker the trust. Long before money existed, the Sumerians and Babylonians ran on credit and social ties, as David Graeber writes in Debt: The First 5000 Years. When banks wouldn’t lend to strangers, credit bureaus scored them. When cards arrived, Visa and Mastercard vouched for every swipe. When the internet dumped thousands of anonymous sellers on us, eBay, Amazon and Flipkart rated them and controlled the ground they sold on.

Then followed the age of machines.

Today, I’ll explain how that trust gap gets filled in an era where machines are about to overtake humans in the number of purchases they make.

On to the story…

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The Non-Human Buyer

In every system that we discussed above, the trust system worked because the parties involved were humans or companies. We could hold a human responsible if a faceless legal entity like a company didn’t deliver.

None of this is applicable to autonomous agents. Today, machines make purchases based on the instructions their human principals fed them. But these AI agents are also increasingly creating their own sub-agents and instructing them to make purchases to reach the overarching goals.

These agents are anonymous lines of code and software that often cannot be traced back to their principal at first glance.

The agents now book our travel tickets, negotiate prices, clear invoices and often hire other software to handle tasks that they cannot do. While at it, they move at a speed no human can supervise. AI agents just carried out a couple hundred transactions in the time it took you to read this sentence. And the volume of money at stake is growing as we speak, making it difficult to ignore.

So who do you hold responsible on the other side if an agent does something that is not in line with the general laws of trade? These agents’ identities are disposable. They can spin a new wallet and start with a fresh identity in seconds.

Crypto is helping us address this problem in an industry that is inevitably taking over the world of commerce.

Read: Rewiring Commerce for Agents

The Transferability Problem

The ERC-8004 standard, which was launched on Ethereum in January 2026, gives every agent a permanent identity on a public ledger. It also attaches a record of the jobs the agent did, reviews it earned, and flags raised against it. Anyone in public can check the record without asking any centralised body.

This identity acts as both a passport and a reputation. But there’s one problem. This standard issues an agent’s identity as a transferable NFT smart contract - ERC-721 in crypto parlance. The transferability brings the risk of an agent’s identity changing hands.

If the identity can be sold and the reputation is tied to it, then the reputation can be sold too. This can lead to some complications.

Suppose a human sets up an agent and behaves well for six months. It finishes the jobs, collects good reviews and builds a clean score. Then it sells that identity to the highest bidder. The new owner inherits this credibility. The original agent and human principal can take the money and run away. If the new owner has mala fide intent, they can misuse the inherited credibility.

How do you plug this gap?

The Identity and Trust Stack

Let’s first look at the trust system that agentic commerce is replacing.

Merchants and online sellers aren’t vouched for with a one-time certification they keep forever. Instead, their behaviour is repriced constantly based on their recurring actions and conduct. A couple of disputes or fraud reports can tighten market access and immediately affect reputation. Online aggregators often fine select merchants, expect them to hold extra reserves, and also retain the power to delist a merchant from their network for good.

Agents too need to be evaluated similarly. Most treat trust around agents as a scoring problem; they think measuring it well is sufficient. But the tricky part is keeping the agent’s assessment attached to it so it can’t be traded or laundered away.

An agent is trustworthy when it is funded and traceable to a human principal or a human-run legal body.

Skyfire, backed by Coinbase, a16z, and Circle, has launched an agent trust stack to ensure you transact with identified and trusted agents. Skyfire issues an agent a signed identity token, the cryptographic equivalent of how bank websites prove they genuinely represent the bank on the web.

Skyfire’s token binds three things together: the platform that built the agent, the agent itself, and the human or company acting as the principal. When an agent shows up to transact, the seller can verify that token and know exactly who to chase if something breaks.

Skyfire also pairs this with its payment layer so that the same token that proves identity can also be used to spend.

As agentic payments become ubiquitous, the settlement layer will commoditise. There will be less value to capture there. Value will then accrue at the identity and trust layers, where cryptographic “credit bureaus” will set up a system to identify, trust, and transact with these agents.

Startups are taking different approaches to capture this value.

While Skyfire ties trust to an outside principal, RNWY attaches it to the agent itself. RNWY uses a soulbound token inspired by a three-decade-old reputation system.

It cites a paper published in Cambridge’s Knowledge Engineering Review: “It should be costly to change identities in the community. This prevents agents from entering the system, behaving badly, and coming out without punishment.”

The soulbound token imposes that cost. A normal NFT, issued under the ERC-721 standard, moves freely between wallets. A soulbound token, issued under ERC-5192, overrides that function. The token is minted to a wallet and permanently attached there. Like biometrics attached to your passport.

So the only way an agent escapes a bad record is to abandon the wallet holding it and everything it built there. That’s the cost. By design, the token standard makes it expensive to walk away from the reputation.

RNWY has already registered more than 230,000 agents on this basis, which are identified under the ERC-8004 contract.

The only way an agent can start afresh is by abandoning its entire track record. RNWY makes leaving expensive on purpose. It’s the cost an agent must pay to earn the credibility that is non-transferable and free from manipulation. This system also deters a merchant with years of clean history from engaging in bad deals.

The attachment can become a double-edged sword. If you lose the private key to your soulbound tokens, you can lose access to your agent’s identity, credibility, and the entire history of work your token has built over time.

ChainAware avoids this by not issuing a passport or identity. It reads a wallet’s activity and uses it as evidence to score the wallet. Its model is trained to spot addresses tied to known scams and those with clean histories.

Instead of tracing what went wrong, ChainAware flags what could happen. Just as fraud desks in our banks freeze our cards when they spot suspicious patterns. And because the score is built from behaviour, the only way to get a good score is to actually walk the talk. You can’t buy your way to a clean reputation.

Builders rushing to capture the value accruing at the trust and identity layers are taking different approaches. Skyfire ties trust to a principal. RNWY ties it to a non-transferable token. ChainAware skips the entire identity-issuance process and instead scores agents based on wallet activity.

I don’t think any one approach will work. The lesson from these companies is that the agent trust layer can capture substantial value only by building an entire stack. One layer of the stack needs to hold a principal accountable at the base, and another needs to make the earned reputation and identity non-transferable. On top of these, a behavioural score can add significant value for merchants or their agents. It helps them separate buyer agents from their principal and judge them by activity they can’t buy. All these pieces fit together in an identity and trust stack, just as we have multiple measures to securely authorise our banking transactions - OTPs, two-factor authentication, passkeys.

Humans spent an entire era training agents how to pay, discover and hire each other. But like every other era of commerce, the entire fate of the agentic economy rests on how we build around trust.

In every era of commerce, the middleman who solved for trust captured the most value. No reason why it would turn out different this time.

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 165,000+ 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.

Containerisation was a watershed moment in global trade. I’d call it one of the most underrated, world-altering milestones in human history, right up there with humans learning to make fire and inventing the wheel. All three are force multipliers that changed what humans could do.

By putting the freight in a corrugated steel box, loading costs dropped 97%, from $5.86 to $0.16 per ton. Standardised boxes and cranes made it possible to optimise ship space and cut freight costs and loading time.

A fourth force-multiplier is emerging in the 21st century, and it’s related to how we move and use our money.

Money is worth more, at least implicitly, when it can be easily stored, earned and moved across systems to optimise its utility. We call this composable money. Composability is the containerisation of money. The centralised banking system isn’t the most conducive ecosystem for making money composable; blockchains are.

Many of those operating in decentralised finance are now moving from offering one of the three functions of money - store, earn and move - to owning all of them. That’s because the value to capture in a space where money is made composable is a lot more than where the money can only perform one of its many functions.

Ether.fi, a staking protocol that held $12.4 billion in staked ETH a year ago, is the latest to pivot into a full financial services platform that wants to replace traditional banks. In today’s piece, we explore the reason behind such pivots.

On to the story…

For years, many in the crypto industry have built products around beating traditional money systems like banks. They created alternative internet money, then built new systems to move and compound such money. That gave them ideological loyalists who created communities and echo chambers. But that’s not how you build mass adoption and successful businesses.

The best way to beat banks is to offer the same services banks offer, plus a few more, but more efficiently. You could achieve that efficiency by making money more composable, moving it faster, and at a lower cost.

A Shrinking Asset-Class

Ether.fi started as a restaking business where users deposited ETH, and the protocol staked it. The same ETH was then pledged again to secure other networks through EigenLayer for extra yield. Ether.fi rode the crypto market rally through 2024 to become the largest liquid staking protocol, with $12.8 billion in deposits in August 2025.

But as the crypto market turned down in the last 12 months, the staking business came crashing down.

The networks that the restaked-ETH was supposed to secure didn’t generate meaningful fees. When the incentives dried up, so did the deposits. Ether.fi’s staking assets fell over 65% in a year, to about $4.3 billion now.

Things got worse in April 2026 when a $292-million bridge exploit at rival Kelp DAO cascaded into ~$200 million of bad debt on Aave. The event shook up how the entire market priced risk in restaking.

Less than 1% of Ether.fi’s assets now sit on EigenLayer, and the protocol’s documentation expects it to turn zero this quarter.

Last week, Ether.fi signalled its pivot away from the staking business by becoming a full-fledged neobank with its “Summer” release.

The Distribution Game

On August 13, Ether.fi CEO Mike Silagadze announced a bundle of financial services to “replace traditional banks for most users”. The “Summer” release bundles tokenised stocks and metals, a credit line, fiat rails in more than 30 currencies, and a Visa card paying 3% cashback, on top of the staking and yield products it already runs.

Although the company has no bank charter, it wants to offer all the functions of a retail bank.

The tokenised stocks will be backed by xStocks, issued by Backed and distributed on Kraken’s platform. The credit line runs on Aave’s market. Settlement happens on Optimism. Ether.fi’s contribution is the account it opens for users, the app interface that hosts these functions, and the card that enables spending and reward earning.

It is the same relationship we saw Robinhood build with its 30 million funded users.

Read: Building a Financial Supermarket

You might argue that tokenised stocks aren’t really equivalent to real shares. Some might treat tokenised stocks as synthetic wrappers that carry economic exposure and creditor rights without voting and direct ownership privileges. They are right, but it doesn’t matter because these tokenised stocks are for a specific audience that doesn’t care about the purity of these wrappers.

Read: Who Actually Owns Your Stocks?

Non-U.S. investors interested in getting exposure to American companies can only choose between these wrappers or nothing. They can’t access Schwab accounts.

Now add 24/7 trading, and the fact that the app lets you lend your tokenised stocks, metals and crypto assets. It also lets you borrow against your full portfolio at ~4%. You can currently borrow on Aave’s market against select tokenised stocks and gold, ETH, BTC, HYPE, and ETHFI - Ether.fi’s native governance token. But soon the company will also support other assets as collateral, said CEO Silagadze.

This creates composability that no traditional bank offers.

Although Ether.fi launched its Cash Card almost two years ago, the spending feature takes on a more meaningful role as it combines with the new bundle of summer releases.

Ether.fi’s Cash Card revenue growth coincides with the fall in its staking revenue.

Staking revenue still accounts for a little over 50% of Ether.fi’s total revenue. But consumer products, including card and borrowing, have snapped up almost half of the revenue share, up from a mere 1% last year. There are 150,000 cards now, across 500,000 members, spending at an annualised rate of almost $1 billion.

But Ether.fi isn’t making money composable on its own.

The Distribution Game

Behind Ether.fi’s neobank play is Aave’s credit ecosystem. Both of them already have an old relationship, where Ether.fi’s liquid staking token (weETH) has been among the largest collateral assets on Aave. Under the new arrangement, Ether.fi runs a dedicated Aave instance on Optimism, with Aave’s DAO taking 20% of its revenue and targeting $500 million in lending capacity by year-end.

It’s a win-win for both Aave and Ether.fi. The arrangement helps Aave gain distribution across 500,000 consumer accounts without acquiring them separately, while Ether.fi inherits a credit engine.

For its Cash card, Optimism provides the settlement. Ether.fi migrated its entire card stack there in April this year, with Optimism now settling roughly 29% of all crypto-card spending. Ether.fi alone accounts for over a quarter of the category’s volume.

A chain that spent more than two years courting developers has now found its growth engine in card swipes.

The most interesting aspect of this collaboration is that nobody in this stack is vertically integrated.

Aave doesn’t issue cards, Optimism is not where loans originate, and Kraken is selling its stock inventory through a competitor’s app. This is happening because each player has realised that they can capture the highest value by becoming the best component in an existing bundle. But the one running that bundle gets the biggest share of the revenue pie.

I discussed here how value concentrates with those who hold the accounts and distribution edge in the world of Web 2.5.

One constraint Ether.fi faces is that the tokenised stocks and the card don’t work in the United States. It acts as a ceiling on its growth, but Ether.fi’s business model is still larger than it appears. A neobank offering a financial supermarket to everyone that couldn’t access these asset classes before, including retail non-U.S. investors, is still a large business. It is larger than the DeFi market for a business that depends solely on staking income.

The Subtle Art of Building Composability

The importance of making revenue across the breadth of financial services - crypto or traditional - is evident across many businesses lately.

Robinhood launched its own chain this summer to move tokenised stocks. The chain, launched by a traditional finance platform, now contributes more to Uniswap’s revenue than any other major crypto-native chain. I wrote about how businesses are decoupling revenue from asset classes here. Hyperliquid makes most of its revenue by facilitating trading in non-crypto perp contracts.

Coinbase, Kraken, Binance and OKX are all adding banking features onto their exchanges. Each started with either an exchange, a wallet or a staking pool. But now they’re all converging around the distribution play. That’s because they have learnt that once you marry the distribution you have with the ability to spend the money with cards, earn through savings products and integrated vaults, invest via tokenised stocks and lend through credit products, the platform you run becomes a champion of composable money. That freedom makes financial infrastructure feel like Lego blocks that can connect to move money across them.

This possibility is waking up crypto protocols to the idea of building flourishing businesses, rather than setting up ideology-driven niche products that serve a select few and are far removed from the fundamentals of running profitable businesses.

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 Sunday, I wrote about the role of speculation in the evolution of finance. While working on it, I also pondered the evolution of the crypto industry itself.

Closer to home, a majority of my friends and family still don’t understand my work. They think I am shilling a coin or writing to persuade someone to throw away their life’s savings on some shitcoin. It’s sad they think so, but I don’t blame them. The initial ethos with which the crypto industry took off was aspirational, but also radical. Its marketing was problematic.

Many expected crypto to be the escape hatch from the current, problematic financial system. Even Satoshi Nakamoto had conceived Bitcoin as a parallel, peer-to-peer electronic cash system that was decentralised, permissionless and could route money around banks and third parties.

The problem began when enthusiasts built the crypto industry — much of which we saw rise and fall over the last 18 years — by swearing by decentralisation and permissionless as their core ethos. While I don’t have anything against these principles, ethos alone cannot build great businesses. The problem was that the builders expected a niche set of ethos to drive mass adoption and turn their hypotheses and ideas into successful, money-making businesses. An unpopular ethos doesn’t drive the masses to adopt a radical product. Even less so when that product could wipe away their life’s savings overnight without a warning.

Every niche product needs a familiar face to market it. Crypto, too, found its familiar marketer in the very thing the enthusiasts expected it to topple - the traditional finance industry.

In today’s piece, I explore how crypto and traditional finance feed off each other’s moats to build successful business models that don’t care a dime about the radical ethos on which enthusiasts expected crypto to be built.

On to the story…

Warming-up Masses to Crypto

What made crypto legible to Wall Street, my parents, your friends, and a layperson who never understood a private key was the financial instruments they were already using for other investments.

Bitcoin and Ether have been around as cryptoassets for 18 and 11 years, respectively. Yet they reached a broader base of holders only when the traditional finance industry wrapped them in an exchange-traded fund (ETF). The familiar traditional finance products have existed for almost four decades and are sold through the same brokerages that everyone already trusts. Think of BlackRock, Grayscale and Fidelity.

Those who bought a spot Bitcoin ETF did so because they believed bitcoin is an aspirational and emerging asset class. Few would have done so because they believed in permissionless money or to beat the centralised banking system. The ETF wrapper gave them exposure through the same brokerage account that routed their index funds and other investments. The wrapper also handled custody, since the underlying bitcoin was held by reputable names like Fidelity and Coinbase.

Familiarity was the marketing win that bitcoin needed. Once that part was taken care of by a trusted player, the underlying product didn’t matter whether it was crypto or otherwise.

The world’s largest asset manager, BlackRock, generated over $160 million in annualised fee revenue through its crypto ETFs in Q1 2026. In October last year, its spot Bitcoin ETF also became the company’s most profitable fund with $244.5 million in annualised fee revenue, surpassing an S&P 500 tracker that has been collecting fees for a quarter of a century.

Traditional finance learnt quickly that if it can borrow crypto’s products and wrap them in its existing, familiar instruments like ETFs, then its loyal customer base will be indifferent to the asset class being offered. Even those who barely understood how bitcoin worked and derived its value from, happily lapped it up.

Once BlackRock learnt that it had a native audience who was seeking exposure to the emerging asset class, its own chief had to walk back his words. After famously dismissing bitcoin in 2017 as an “index for money laundering”, CEO Larry Fink went on to build a $100-million ARR crypto fund within two years of its inception.

Traditional financial institutions no longer gain just passive price exposure. When Morgan Stanley listed a Solana Trust ETF in July, it charged 0.14% as a management fee but also staked that Solana to earn yield. It now passes roughly 95% of the staking yield straight through to holders.

The trend of traditional finance businesses profiteering off crypto derivatives and products also holds true the other way round.

Crypto Infra, TradFi Distribution

On July 1, Robinhood launched its own blockchain and allowed more than 30 million of its funded users to buy exposure to tokenised US stocks via blockchain infrastructure most of them had never heard of.

Within eight days of its launch, Robinhood Chain was doing $500 million in daily volume on Uniswap, the largest decentralised exchange in crypto. That was a 10-time jump from the day before, making it Uniswap’s second-busiest network after Ethereum mainnet.

Cumulative swap volume crossed $6 billion in ten days.

Since its launch on July 1, Robinhood Chain generated over $36 million of Uniswap’s $61 million in cumulative fees as of August 3. That’s about 60% of the protocol’s total fee revenue from July 1 to August 3. Ethereum mainnet and Base each made $8 million.

Since the launch of its chain, Robinhood has become the single largest contributor to Uniswap’s fee, beating crypto’s most established venues like Ethereum and Base chains by more than fourfold.

Here, Robinhood capitalises on the distribution muscle it has built with customers through its app, brand, and retail relationships over a decade. Although Uniswap runs the infrastructure, it was Robinhood’s chain that facilitated the trading activity. Early volume on the chain was dominated by memecoins, the kind of speculative retail flow that Robinhood has historically attracted.

Uniswap routed these protocol fees into buying back and burning its native token, UNI, and putting a share of its profits back into the hands of its holders.

Uniswap has bought back and burnt more than 1.36 million UNI tokens in the last 30 days. Out of that, fees generated from Robinhood Chain accounted for buyback and burning of 510,000 UNI tokens. Out of all the $UNI burns since July 27, Robinhood Chain contributed to over 50% of them.

Ironically, in Q2 2026, Robinhood’s own crypto trading revenue fell 38% year-on-year to $100 million — barely 13% of its transaction revenue, down from 53% two years earlier. Even as the fees Robinhood earns from its customers trading crypto on its app was shrinking, its chain was making a crypto DEX richer.

Meanwhile there’s a crypto protocol that now earns most of its revenue off oil and equity derivatives.

Hyperliquid’s perpetual futures, or perps, began trading on everything crypto. One could put a leveraged bet on the direction of bitcoin and Ether. But ever since October 2025, after the launch of deployer-run markets under HIP-3, perp contracts on non-crypto markets have been gradually picking up pace. Traders started listing perps on assets unrelated to crypto, from commodities like oil, gold, and silver to equity indices like the S&P 500 and Nasdaq, to foreign currencies and individual stocks like Nvidia and Tesla.

Real-world assets were 1.8% of Hyperliquid’s volume in the last quarter of 2025. By the second quarter of 2026, they accounted for 32.2%. In July, non-crypto trading crossed 52% of all volume across Hyperliquid.

Hyperliquid charges the same fee whether you trade a bitcoin perp or a crude-oil perp. Hyperliquid’s blended take rate on trading is 3.3 basis points, or 0.033% of volume. Every dollar made in fees flows back into buying and burning its native token, HYPE, via the Assistance Fund.

Although under HIP-3, Hyperliquid parts with half the fees, the protocol wouldn’t mind it, considering that deployer-run markets now make up the majority of Hyperliquid’s revenue.

Crypto rails, in short, have stopped caring where their revenue comes from. Hyperliquid doesn’t care whether its traders trade more traditional or crypto assets, or whether markets are up or down; as long as they trade, it keeps filling its coffers.

The Fintech Evolution

The pattern of decoupling revenue from the asset class isn’t unique to crypto and traditional finance. It’s recurred at every pivotal point in the evolution of financial markets.

Netflix began by mailing DVDs to a niche set of film buffs who were patient enough to receive a disc on rental by post to watch things that local stores didn’t have. Once Netflix built subscriber relationships and billing habits, and collected data on what people actually watched, it helped them expand their revenue by enabling streaming videos over the same infrastructure for a much larger audience. It then used the same distribution moat it had built to start making native content.

This is what happened on Hyperliquid, too.

Crypto perps appealed to a narrow, cyclical audience of leveraged traders. Once the platform proved its utility to that audience, it used the same infrastructure and interface to start perp contracts for something that was less cyclical than crypto. Oil, gold, FX, and pre-IPO stocks followed.

Robinhood followed the same playbook by using its initial commission-free stock trading as a wedge to build massive distribution. Now that it commands the attention of 30 million funded users, it can now sell options, prediction market contracts, and tokenised equities to the same audience and make money off it. Even if revenue from crypto trading falls, the same platform can keep making money off selling tokenised stocks and event contracts.

Both crypto and traditional institutions have now begun to acknowledge that the core question is “Where does the value accrue?” The answer is a common moat that has been a proven ingredient in building a successful business: distribution.

As long as there is massive distribution, any business - crypto or traditional - can cross-sell adjacent products, whether traditional or crypto, to their loyal user base. In all of this, crypto’s blockchain infrastructure does offer a cost-effective and faster rail to move money and assets. So whichever businesses use it can reduce their operational and logistics costs over time and pass some of that on to their customers for a better competitive edge.

Although this convergence of crypto and traditional finance is not the one crypto enthusiasts hoped for, it’s still the one that makes the most money. It’s also the one route that is in line with the trajectory of historical evolution. The efficiency of moving assets has always been the biggest motivator of every financial innovation. It matters much more than any other ideological principles. It always will.

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.

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

— John Maynard Keynes, 1936

Hello,

The crypto industry receives a lot of flak for being heavily driven by speculation. Some call it a casino devoid of any fundamentals. But what they don’t realise is that speculation often precedes market evolution. A room full of speculating people that respectable people disapprove of often assembles the liquidity that respectable things later get built on.

In today’s piece, I explore how this pipeline is evident in what we’re seeing in the crypto markets lately: a memecoin launchpad on a chain built for stocks, a perps venue turning into commodities infrastructure, a broker whose frog tokens might be funding its equity rails.

On to the story…

Speculation has many names in crypto: noise, froth and casino are some of them. What speculation is almost never considered is its role as a foundation for what gets built on top of it in a maturing industry.

But let’s be clear: I don’t think all froth becomes foundation. Froth that stays froth for an extended period dies fast. But the froth that finds products that can feed consistent activity can become a floor on top of which other things are built.

This is not a recent phenomenon. We have seen it happen in the evolutionary journey of finance.

Take the case of Chicago grains from the 1840s. The Chicago Board of Trade’s futures market was built so that farmers exposed to an unpredictable harvest could lock in a price months ahead and minimise losses. But for every farmer wanting to sell their crop forward, you also needed someone willing to buy it forward and carry the risk. Speculators filled that gap. The risk-transfer market only worked because speculative capital showed up to absorb the risk these farmers wanted to offload.

It’s the delinking of grain, a physical object, from the grain, a saleable commodity, that made the futures market possible. American historian William Cronon called this the abstraction of grain. Once the trade involving grains was reduced to a receipt, it could change hands easily and made speculators trade it ubiquitously. Their trading made the market liquid enough for a farmer to find a counterparty. The deep liquidity turned Chicago into the price-setting capital of wheat.

What’s interesting is that many hated and resisted this at the time. The Granger movement campaigned against Board of Trade speculators as parasites profiting off the farmer’s labour. Yet that mechanism became the price-discovery infrastructure the entire global agricultural economy now runs on. Without the speculators becoming the counterparties in 1870, the global wheat prices wouldn’t have a pricing infrastructure today.

English economist John Maynard Keynes is often credited for his thoughts on speculation. But his comprehensive thoughts further establish the role of speculation. Keynes split market activity into two parts: enterprise, which forecasts the yield of an asset over its life, and speculation, which forecasts what the crowd will do next. He feared that liquid markets let the second swamp the first.

But when you read deeper into his arguments, they expose a dual nature of speculation.

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Speculation could be dangerous when it floats free of any underlying, but the same speculation can become useful when it’s tethered to interesting underlying assets.

Even in Joseph de la Vega’s Confusión de Confusiones (1688), the first book ever written about a stock market, the author credited the Amsterdam exchange with drawing both investors and gamblers in equal measure. Most exchanges that exist today began the same way, but the story got diluted with time in a way that the serious purpose - purportedly investing - seemed like it came first. Except that it didn’t.

Back to the Future

On August 5, Uniswap, the largest decentralised exchange in crypto, shipped ‘Pools’ launchpad. The platform allowed people to launch and trade memecoins on Robinhood Chain. The namesake brokerage had primarily built the blockchain for its 30 million funded accounts to trade tokenised stocks.

That’s not all. The story gets more interesting when you realise that even before the launchpad officially opened, traders found the unreleased smart contracts and pushed more than $150 million through them. This forced Uniswap to support both the test and final versions at once and delay the launch. The top token, FRONG, which was named after the title of the frog video Uniswap used to tease the product, was minted six days early by the same contracts and carried 12,141 holders by opening day.

Make of all this what you can: About $150 million dollars moved through infrastructure that did not officially exist yet, to trade a token about a frog, on rails built for equities. Today, FRONG is the unofficial mascot for Pools. It’s difficult not to read the move as planned, to drive liquidity onto Uniswap’s newest v4 infrastructure. Even if it wasn’t planned, the volume on Uniswap v4 on the chain almost tripled from $86.2 million to $228.3 million in a single day.

But as I said at the beginning of this piece, I don’t think all froth and speculation help in building something sustainable. Instead, whether a speculative business survives depends on what it speculates about. Consider the case of pump.fun.

Over the years, pump.fun has sold speculation as its main product. Today it is the largest platform to launch memecoins. About 7 in 10 memecoins launched on its platform don’t last more than a day. Only one lasts longer than a month.

Its protocol fees between January and July 2026 almost halved from $420 million in the same period last year. Yet, it is one of the largest revenue-making protocols in crypto. It made $620 million in revenue and $584 million in earnings last year.

Another one from that league is Hyperliquid. It began as a platform that allowed crypto trading at high leverage. If you wanted to place directional bets, this was the venue that let you do it. Then it latched that leverage to assets that trade continuously and had nothing to do with crypto. Through its HIP-3 framework, it now runs perpetual markets on Nvidia, Tesla, a Nasdaq tracker, gold, oil, silver, stock indices and more. A trader can take a position in crude oil the moment news breaks on a Sunday, while the traditional market sits closed until Monday.

Read: Hyperliquid: House of Finance 🏦

In early July, real-world-asset perps out-traded crypto on the platform for the first time ever with 52% of volume.

Although Hyperliquid’s overall volume roughly halved from its 2025 peak, the RWA growth offset the decline in crypto pairs. This is what speculation can create. Hyperliquid translated the speculative leverage that fuelled crypto natives and redirected it onto gold, pre-IPO stocks and equity indices. What it created is a 24/7 pricing layer that traditional venues are now imitating.

We see Robinhood Chain follow the same strategy in real time.

Although the leadership team had dubbed the chain as the foundation for trading on-chain stocks, CEO Vlad Tenev embraced the attention the chain was getting from memecoin traders.

The chain then overtook Base on daily active users three weeks after launch, driven by memecoin trading. The memecoin volume is the seed capital that will eventually graduate into the equity rails.

None of this means speculation always graduates upward. Graduation is a direction the venue chooses.

Robinhood’s distribution powerhouse of 30 million funded users and more than a dozen businesses can help it graduate the traction it is witnessing in memecoin trading into equity rails. We saw how its prediction-markets revenue surged more than tenfold year over year in the second quarter to $156 million, 20% of its trading revenue.

Read: Robinhood’s Bigger Baskets

The Shape of Speculation

This is the part about speculation that many don’t understand. Speculation isn’t good or bad. When you strip it to its bare principles, speculation is just one of humans’ oldest impulses.

Speculation is the natural outcome when humans financialise their opinions.

Read: Built for Humans 🎰

In its rawest form, it is liquidity that is looking for something to price, and it will price whatever you point it at. It could be a bag of wheat, an Nvidia share, a frog video titled frog.mp4, the outcome of a football game or the odds of a presidential candidate.

It’s nature of the underlying asset that disciplines and directs the speculation’s trajectory. Once you take the underlying away, the same money can lead to nothing substantial or sustained. This trend has been recurring across the evolution of finance. Crypto is now part of that journey too.

Hyperliquid tethered leverage to gold and built a pricing layer in less than two years. Robinhood is capitalising on the unexpected traction it is witnessing for speculation on memecoins while it builds on-chain rails for trading equity wrappers.

Speculation will continue to build whatever the ground underneath will support.

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.

A few weeks ago, I called Robinhood a financial supermarket because of the single roof that caters to every financial need of an American. In Building a Financial Supermarket, I wrote how its newly launched chain doesn’t have to earn significant revenue on its own as long as it can connect its more than dozen businesses and cross-sell its various products to its 28+ million funded users.

I still think that thesis is directionally right, but falls short in terms of magnitude.

When I watched Robinhood’s Q2 earnings call sitting halfway across the globe this morning, it made me feel that the ‘financial supermarket’ framing undersells what could follow for the company. A supermarket thrives by getting more people to walk through the door. Robinhood’s second quarter shows it is thriving by getting the same people who came to buy A on the Robinhood app to buy more of A, buy it more often, and increasingly get them interested in buying products B, C and D on Robinhood, too.

And because the company is able to pull this off, it is thriving lately without even making significantly more people walk through its door for the first time.

In today’s piece, I will tell you about the machine underneath Robinhood’s supermarket that turns each customer into a denser revenue node over time, and why the two least profitable things Robinhood launched (or will launch) this year — its chain and its social feed — could become the most important pieces of it.

On to the story…

The Rubric

In just five years since its public listing and 11 years since the app launch, Robinhood has crossed $5 billion in annualised revenue. It took the brokerage giant Charles Schwab almost 30 years since it opened its doors in 1971 to cross $5 billion in annual revenue. One of the biggest drivers of Robinhood’s revenue has been its vast distribution of 30 million funded accounts. It has the entire breadth of product line-up, from memecoin trading to gold and retirement accounts, catering to every demographic. For most businesses, these metrics scream of distribution might. Yet, the company doesn’t want to judge its own progress using these metrics.

Early in the earnings call, Robinhood CFO Shiv Verma told investors to judge the company on three metrics: net deposits, the Rule of 40, and the count of business lines doing $100 million or more in annualised revenue rate (ARR).

In Q2 2026, Legend - Robinhood’s desktop trading and analysis platform - and Credit Card became the latest business lines to join the $100-million ARR club. It now has 13 business lines on that list.

But let’s set aside those metrics and look at something more granular.

At the end of Q2 2026, Robinhood’s funded customers grew 7% year-on-year, from 26.5 million to 28.4 million. Over the same period, average revenue per user (ARPU) climbed 24%, from $151 to $187.

Revenue per customer grew more than three times faster than the customer base.

The trading data also reflects this. Robinhood’s Q2 trading volume on a per-customer basis shows that the equity notional volume per trader rose 56% year-over-year, while Options contracts per trader rose 43%. Yet the number of customers placing equity trades grew just 13%, and those trading options grew 3%.

Robinhood’s event contracts business, which didn’t exist 15 months ago, did $156 million in revenue, up 50% quarter-on-quarter. None of this required Robinhood to acquire a new set of users.

In May this year, I wrote how Robinhood’s ability to package equity, options, and perps trading along with event contracts allows it to offer a much better information-pricing platform than its competitors.

Read: Why Robinhood Might Eat Kalshi’s Lunch

All these suggest that the accurate rubric to assess a company like Robinhood is to look at how much more the financial supermarket sells per basket. That is the growth in its ARPU.

The Gold Ignition

Although Robinhood has more than a dozen businesses, one of the most crucial drivers of its engine is its gold membership subscription. In just the last two years, Robinhood Gold subscription adoption rate has almost doubled from 8.2% to 17% of the total funded customer base.

In Q2 2026, the Gold subscription business generated $216 million in annualised subscription revenue. That’s just about 4% of the total revenue. But there’s a bigger benefit from what every Gold subscriber adds to the overall business. Compared to the average funded customer, a Gold member carries about 4.2x the assets under custody and adopts retirement products at roughly 3.1x the rate.

On the earnings call, CFO Verma noted that 40 to 50% of Robinhood’s new customers sign up for Gold regardless of which product first brought them in.

This shows the cross-selling moat Robinhood has. Even if a customer arrives for commission-free equities, a prediction market on the World Cup, or a 3% cash-back credit card, 1 in 2 of those customers convert to Gold. Once they purchase the $5 per month subscription, they join an exclusive community of 4.8 million members who get access to cheaper options contracts, a 3% IRA match from your employer, 3.5% APY on banking cash, the credit card and more.

The cross-adoption is measurable. Verma pointed out that a prediction-markets customer is more likely to also hold a retirement account with Robinhood. So a person betting on a football match through Robinhood’s prediction markets is also using Robinhood’s retirement accounts to compound their IRA.

Robinhood’s supermarket of financial products doesn’t segment its customers into “gamblers” and “serious investors”. It sells its products to the same customer, and every product the customer uses raises the probability of them using another one.

Despite all this distribution moat, I feel Robinhood is yet to make its most exciting move.

The Two Catalysts

In Building a Financial Supermarket, I argued the chain barely makes money and doesn’t need to. I instead framed Robinhood Chain as a connective layer that makes the other businesses stickier. Having watched Q2 earnings, I would slightly modify the outlook for Robinhood. Its chain and, soon, Robinhood Social, will become two of the biggest catalysts that cut horizontally across its entire suite of products and drive cross-selling across more than a dozen of its businesses.

Consider what the chain enables. A customer buys a tokenised stock. That token becomes collateral on a lending market. The loan funds a perpetual futures position. One dollar has now been used across three products in a single session without ever leaving the app. In the old, fragmented brokerage ecosystem, those three actions happened in three disconnected places. Each of those places had its onboarding frictions and required customers to make a fresh decision. Composability removes that friction.

The chain wires cross-selling into the infrastructure so that the customer can cross-sell themselves across products with minimal or no friction.

Robinhood CEO Vlad Tenev said that the company is set to make its Social feed available for the general audience by the end of Q3. Tenev expects the internal feed to add more credibility to the trade ideas by backing content with verifiable portfolios on the Robinhood trading platform in the same universe. Typically, trade ideas currently come from different worlds. A trader may consume content about prospective trades from Twitter, a podcast, or a friend. The customer would then form intent and arrive at Robinhood only to execute. Robinhood Social could pull that step inside its walls.

This is the most underrated aspect of its social feed. The trust it could add for its 30 million funded users will be unmatched by screenshots or podcasts from any other external platform. When the feed goes live for the masses, Robinhood’s last externally-sourced step in the funnel where the intent to trade is born will also move in-house.

Read: Culturally Crypto, Practically TradFi

I don’t see Robinhood Chain and Social as separate business lines for the company. Instead, I count them as catalysts that drive activity across all its other businesses. A community of 30 million people talking about the latest event contract, the kind of life they built using discipline via the Retirement Accounts and the latest Stock Tokens giving them pre-IPO exposure to Anthropic will drive more aspiration among other users than any user-acquisition marketing campaign.

The Loyalty Playbook

Robinhood’s value-capturing strategy is similar to what we saw with Costco. Most of the third-largest retailer’s margin came entirely from the membership, while their shopping aisles ran near cost to keep members walking in. The neutral layer is not where the profit sits. But often these neutral layers generate adjacent capacities where value accrues. Just as Costco’s aisles and inventory collection made people shop its subscriptions.

Robinhood Chain and Social are akin to such neutral layers that create value-accruing layers. Both of them give reasons to investors or traders to shop for Robinhood’s Gold subscription and shop multiple products across the aisles of the financial supermarket.

Over the years, one of the biggest question marks for Robinhood was the problem of cyclicality. Even as Robinhood registered record equity and options trading volumes in Q2, its crypto trading volume has slipped for three straight quarters. Even on Robinhood Chain, more than 80% of the volume is still driven by memecoin speculation.

A sceptic might see a problem in all this. But I beg to differ.

Robinhood’s diverse and deep ($100 million ARR) business lines ensure that the consolidated business is no longer at the mercy of market cycles. When trading volumes fall, interest-earning assets don’t necessarily fall. The margin book grew 127% YoY to $21.6 billion.

Prediction markets that were primarily driven by sports and elections take a different shape inside a platform like Robinhood. The Rothera joint venture with Susquehanna International Group gives Robinhood a CFTC-regulated prediction markets exchange licence, letting it create its own event contracts. This allows the company to eliminate cyclicality in seasonal categories like sports and elections and offer year-round event contracts tied to macroeconomic and S&P 500-related announcements.

Gold subscription revenue is a flat monthly income that doesn’t care how the markets are performing each month. Robinhood has spent five years assembling businesses whose revenues peak at different times, making the whole company far less cyclical than any single line inside it.

This is reflected in the ARPU number. It climbed 24% because the average customer is now plugged into more businesses at once, and a customer wired into five uncorrelated revenue streams is a fundamentally more durable asset than one wired into a single volatile one.

The more products each customer touches, the more consistent Robinhood’s own revenue curve becomes. Each trough in one business line gets filled by the peak of another, often driven by the same person’s account.

Coinbase reshuffles crypto capital that already exists across consumers and institutions. The legacy brokers hold assets but can’t manufacture engagement. Robinhood stands at a unique position to turn a single customer relationship into a compounding, self-diversifying revenue node across traditional and crypto businesses, both of which can be connected and amplified by its native blockchain.

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.

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 🙌

📩 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 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 🙌

📩 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.

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

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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

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.