skip to content

Weekly Stories - 6/14

Weekly Top Stories 06-14-24 - Galaxy Research

This week in the newsletter, we write about Fmr. Pres. Trump’s Bitcoin mining policy statement, the long-awaited launch of fraud proofs on Optimism, and Lido embracing an Eigenlayer competitor.

Subscribe here and receive Galaxy's Weekly Top Stories, and more, directly to your inbox.

Trump Loves Bitcoin Mining Now

Trump backs Bitcoin mining following meeting with top U.S. mining executives. Fmr. President Donald Trump met Tuesday evening at Mar-a-Lago with key executives from U.S.-based Bitcoin mining firms including representatives from Riot, Marathon, Cleanspark, and others in a roundtable discussion organized by BTC Inc.’s David Bailey and Fabiano Consulting’s Amanda Fabiano.

Following the meeting, Trump posted on Truth Social: “VOTE FOR TRUMP! Bitcoin mining may be our last line of defense against a CBDC. Biden’s hatred of Bitcoin only helps China, Russia, and the Radical Communist Left. We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us be ENERGY DOMINANT!!!”

Punchbowl reported Thursday that several attendees including Riot, Marathon, and Cleanspark have formed a new bitcoin-focused voter engagement entity called the Bitcoin Voter Project with Riot’s Brian Morgenstern serving as its president. The goal of the organization, according to Morgenstern, is to identify voters who care about Bitcoin and explain “how to take action to protect Bitcoiners’ long-term interests.”


The Bitcoin community continues to put effort into courting the former president and steering him towards a Bitcoin-friendly message. The mining roundtable at Mar-a-Lago resulted in near-immediate support from Trump, with the former president positioning his pro-mining stance as anti-CBDC, anti-Russia & anti-China, and supportive of energy dominance.

Crypto is playing a significant role now in campaign politics. It’s not just the votes in Congress on overturning SAB 121 or passing FIT 21 in the house (which we’ve written about extensively), or the money being raised by pro-crypto PACs, or executives regularly visiting Capitol Hill to meet with bipartisan members and staffs, or the grilling of SEC Chairman Gary Gensler in the Senate Appropriations Committee today. Despite the White House’s veto of the SAB 121 overturn, this week The Block reported that now President Biden will also accept campaign donations in crypto via Coinbase Commerce. Obviously, the prospect of pro-crypto votes and donations is driving a lot of interest among politicians seeking election (or re-election). Whether their political statements turn into durable policies or law of course remains to be seen.

Nonetheless, we are witnessing a core thesis of many bitcoiners play out in real time: the game theory of competition will lead to greater adoption. Trump’s call for “all the remaining bitcoin to be made in the USA” is obviously not going to happen – the U.S. has about ~40-45% of global hashrate. But it is the support and challenge to competitors and allies alike that could help spur other nations to do the same. It does not really matter whether this or that president or candidate is knowingly participating in this game – the bitcoin movement is growing worldwide and as nations (particularly the U.S.) incorporate Bitcoin into national priorities, geopolitical competition will accelerate and entrench global bitcoin adoption. Regardless of your views of Trump, the likelihood of Bitcoin’s inevitability has never been clearer. -Alex Thorn

Optimism Reaches Stage 1 of Decentralization

Optimism implements fraud proofs, moving to next stage of rollup decentralization. Permissionless fraud proofs are now live on Optimism as of June 10. As a safeguard mechanism for ensuring the validity of transactions and blocks, fraud proofs are core to the security of optimistic rollups. They enable bridged assets from Ethereum to be withdrawn from rollups back to the base layer without reliance on trusted parties. Anyone can spin up a validator node and challenge any fraudulent assertions by submitting a fraud proof with the correct state of the chain.

Fraud proofs help push Optimism from 'Stage 0' to 'Stage 1' decentralization (based on Vitalik's and L2Beat's 3-stage framework to measure the level of centralized control held by rollup operators). Aside from having a fully functional proof system, other Stage 1 characteristics include having a provision for user exits without operator coordination and having a Security Council in place with admin controls to address potential bugs.

Looking ahead, Optimism's fraud proof system will be implemented across other OP Stack chains included in the 'Superchain', starting with Base, Metal, Mode, and Zora. Optimism is also currently working towards rolling out additional proof systems, including ZK proofs, for the OP Stack to provide greater redundancies for security. Eventually, the Optimism team hopes to achieve 'Stage 2' decentralization where the rollup becomes fully managed by smart contracts.


At long last, Optimism has (re)-enabled fraud proofs. This is certainly a milestone worth celebrating, however, the new Cannon fraud proof system comes to OP Mainnet over two and a half years after the original fraud proof system had been disabled after vulnerabilities were discovered in November 2021. In our view, it has been irresponsible for the Optimism team to be pushing adoption of the OP Stack without having working fraud proofs while maintaining a centralized operator setup.

Yet, in defense of the Optimism team, their decentralization goals are not viewed independently of cross-chain interoperability aspirations with the Superchain. They view the proof system as the global communication layer to connect all OP Stack chains. And with their open-source policy, they have been able to outsource research to third parties for viable solutions with other various proof mechanisms (e.g., ZK-based systems by RISC Zero and O(1) Labs) that could be adopted into the OP Stack in the future.

Still, no matter how ambitious the end goals are for the protocol, it is important that the protocol meets some basic security requirements, especially if the technology is seeing rapid adoption like in the case of Optimism with the OP Stack. L2Beat’s framework maps out some of goals that all rollups should strive for and highlights some of the shortcomings with the current implementations of different protocols to help keep the core development teams accountable. The path for rollups to decentralize is long and difficult, but it is a journey that all should strive for. - Charles Yu

Lido DAO Partners with New Liquid Restaking Provider Mellow Finance

Ethereum’s largest liquid staking pool, Lido, is taking an active stance to promote various restaking strategies using its liquid staking token (LST), stETH. On Tuesday, June 11, Lido announced that it is partnering with Mellow Finance, a liquid restaking token (LRT) infrastructure provider, to promote four decentralized finance (DeFi) strategies through which stETH holders can earn additional rewards from their LST in the form of points and eventually restaking yields. The strategies require stETH holders to lock up their assets in a restaking vault on Mellow. These funds are then managed by the vault curator who reallocates the assets for restaking yields through Symbiotic, a new competitor restaking protocol to EigenLayer. Notably, these vaults only allow deposits of stETH, wrapped stETH, wrapped ETH, and native ETH. The initial set of vault curators that stETH holders can initially choose from directly on Lido’s main webpage include Steakhouse Financial, a crypto native advisory firm, P2P, a staking as a service provider, MEV Capital, a crypto investment firm, and Re7 Labs, another crypto investment firm.

This development is the first stage of the Lido Alliance, a broader initiative by the Lido DAO to endorse “Lido-aligned” projects and use cases for stETH. In the words of Steakhouse Financial, the firm that initially proposed the idea of the Lido Alliance to LDO token holders, the Lido Alliance is “a governance process for [the] Lido DAO to identify and recognize projects that share the same values and mission, and have a way to positively contribute to the stETH ecosystem.” So far, the Lido Alliance is made up of two protocols. The first is Mellow Finance and the other is Drop, a liquid staking protocol that is set to expand use-cases for wstETH in the Cosmos ecosystem.

Also, on Tuesday, cyberFund, the VC fund started by the co-founders of Lido, announced an investment in Symbiotic. “By investing in Symbiotic, we not only accelerate the transition to cybereconomy, but also drive the acceleration towards a healthy and more sustainable competitive equilibrium. We are thrilled to partner with Symbiotic on their journey to transform the restaking market,” the cyberFund team wrote in a blog post.


For the first time, the Lido DAO is making explicit endorsements of liquid restaking protocols and strategies in an attempt to preserve the dominance of its own liquid staking token (LST) stETH on Ethereum. Rather than issuing its own LRT token to compete with a growing market of LRTs siphoning the liquidity of stETH from DeFi markets, the Lido DAO has launched the Lido Alliance, a new mechanism through which LDO holders can endorse and support certain restaking solutions that are more “Lido-aligned” than others. Notably, the only LSTs that can be used for the DeFi strategies promoted on the Lido homepage are the LSTs issued by Lido.

Though it is unclear what exactly makes a protocol “Lido-aligned,” it is clear that as the governing body controlling Ethereum’s largest staking pool, Lido’s new strategy for handing out endorsements is one that is likely to be influential and powerful in determining how the restaking and liquid restaking landscape on Ethereum evolves. The vast majority of tokens locked in EigenLayer, the leading restaking protocol on Ethereum, are LSTs. As the leading LST provider, Lido is signaling clear support of a competitor restaking protocol to EigenLayer through their endorsement of Mellow Finance, as Mellow Finance is an LRT provider for Symbiotic. In doing so, Lido may be setting the groundwork for further collaboration with the Symbiotic team to support a restaking landscape mostly capitalized with stETH. This would not be surprising as one of the strategic objectives laid out for Lido in a revamped proposal in May from “Hasu”, a strategic advisor to the LidoDAO, was to “make stETH the #1 collateral in the restaking market.”

Lido appears all-in on this vision and the first stages of the Lido Alliance illustrate how the protocol may be seeking to choose the winners and losers of the restaking market early on in its evolution. - Christine Kim

Charts of the Week

On June 9, the supply of stablecoins on Ethereum L2s reached an all-time high of $9 billion. Arbitrum, Base, and OP Mainnet combine to capture 93% of stablecoin liquidity of the observed L2s at a combined value of $8.38 billion. Among the L2s, Base has experienced the fastest growth in stablecoin supply, which is up 14.4% over the last 30 days and up 75% over the last 60 days, largely driven by growth in USDC. This Dune query highlights the change in supply.

Stablecoin Supply by Layer 2 - Chart

With the new highs in stablecoin market cap on these networks also comes an all-time high in their aggregate share relative to that of Ethereum mainnet. Ethereum has $80.2 billion worth of stablecoins on the chain, putting the L2 share of stablecoin market cap at 11.26%.

Layer 2 Stablecoin Supply Share of Ethereum Stablecoin Supply - Chart

Other News

  • Paradigm raises $850 million for a third investment fund

  • Curve Finance founder, Michael Egorov, liquidated for $140 million in CRV

  • Terraform agrees to pay $4.47bn in proposed judgment with the SEC

  • FriendTech to move to new Friendchain blockchain in move away from Base

  • Tether expects to invest over $1bn in deals in the next year

  • MicroStrategy announces proposed private offering of $500m of convertible senior notes

  • ZKsync to airdrop 3.6 billion ZK tokens next week