Weekly Top Stories - 01/02/26

In this week’s newsletter, Will Owens covers the highly anticipated Lighter airdrop; Zack Pokorny writes about Uniswap passing its Unification proposal; and Lucas Tcheyan notes recent pushback received by the tokenized content market.

🕯️ Lighter Airdrops $LIT

After months of speculation, Lighter airdropped 25% of its native token, $LIT, on December 30. This was another one of the most anticipated token launches of the year, alongside Monad’s $MON (which we covered several weeks ago). The team chose to launch right before 2026, capping off a period of rapid growth and rising mindshare around the perp DEX.

Lighter is a decentralized perpetual futures exchange that uses zero-knowledge proof technology to enable zero-fee perps trading, positioning itself as a direct competitor to Hyperliquid. Ahead of the airdrop, Hyperliquid listed $LIT hyperps on December 22, allowing for limited pre-market price discovery prior to TGE.

The airdrop was also heavily traded on prediction markets. On Polymarket, traders actively speculated on Lighter’s fully diluted valuation one day after launch, with the market ultimately resolving above $2 billion but below $3 billion. Separate markets also tracked the timing of the airdrop itself. December 29 was the heavy favorite for a while, but odds shifted sharply in the final hours as the team launched in the early morning of December 30.

$LIT has a maximum supply of 1 billion tokens, with 250 million circulating at TGE, so a day-one float of 25%. The airdrop distribution rewarded early traders and ecosystem participants, as it was funded through Season 1 and Season 2 user points.

As of January 1, Lighter reported approximately $1.46 billion in open interest, compared to $7.56 billion on Hyperliquid. Post-launch, Coinbase announced plans to enable spot trading for $LIT once liquidity conditions are met, expanding the token’s potential retail distribution.

OUR TAKE:

Lighter’s airdrop executed cleanly and delivered meaningful value to early users, particularly when compared to more conservative distributions like Monad’s ~3.3% airdrop. A 25% airdrop is aggressive by recent standards, but it aligns with Lighter’s strategy of prioritizing user incentives in a highly competitive perps landscape.

The more difficult phase begins now. Perp DEXs live and die by sustained open interest and execution quality, not by token launches. Zooming out, the onchain CLOB market may increasingly begin to resemble the CEX landscape, where two dominant venues capture the majority of organic flow while the rest compete for the long tail.

One of the clearest distinctions between Hyperliquid and Lighter is how each protocol approaches revenue allocation and token value accrual. Hyperliquid has committed to a buyback-centric model, while Lighter announced that revenue will be allocated “between growth and buybacks depending on market conditions.”

Over the past year, buybacks emerged as the default playbook for mature protocols seeking to return value to tokenholders. However, it’s possible that solely using buybacks as a revenue tie to the tokens is not the optimal strategy. Pump.fun has repurchased over 14% of $PUMP token supply yet it still trades below its ICO price.

LIT_USD 1h

At the time of publication, $LIT is currently trading around $2.74, down from pre-market highs near $4.5, so post-airdrop price discovery is still underway. As we’ve written about previously, the perps landscape is intensely competitive, with Hyperliquid, Lighter, Aster, EdgeX, and others all competing for essentially the same traders and market makers.

Hyperliquid and Lighter are running two experiments in parallel. If history is any guide, the market will reward the venues that best balance capital efficiency with sustained adoption.

Beyond competition between perp DEXs themselves, both platforms are reliant on a grow-the-pie expansion of the perps market. As perps trading reaches beyond just crypto-native traders, Lighter is not only competing with Hyperliquid, but also with established retail platforms like Robinhood and Coinbase. Success will depend on whether crypto-native advantages (such as token incentives and the strength of its underlying community) can translate into durable retail adoption against the juggernauts of centralized exchanges with big direction advantages. – Will Owens

🦄 Uniswap’s Unification Proposal Passes, Fee Switch is Activated, and 100m UNI is Burned

Voting on Uniswap’s Unification proposal concluded on December 25, with the vote passing by a massive margin. The Unification proposal activates Uniswap's protocol fee switch, directing a portion of trading fees to burn UNI tokens while establishing a new operational model for the DAO. Building on the DUNI legal framework, a Wyoming Decentralized Unincorporated Nonprofit Association (DUNA) that gives Uniswap Governance formal legal recognition and liability protections, the proposal unifies Uniswap Labs and the Uniswap Foundation under shared leadership. It also provides Labs with a 20 million UNI annual growth budget and includes a retroactive burn of 100 million UNI from the treasury to compensate for years without fees.

After the proposal was formally passed, Uniswap executed the burn of 100m UNI tokens worth $570 million at current market prices. In addition to the retroactive treasury burn, 32,000 UNI have been burned through the fee switch mechanism. Protocol fees are collected in an immutable contract called the TokenJar, where they accumulate across different fee sources, including v2 and v3 pools, Unichain sequencer fees, and future mechanisms like Protocol Fee Discount Auctions. Fees can only be withdrawn from the TokenJar by burning UNI tokens in a separate contract called the Firepit, creating a direct link between protocol usage and deflationary pressure on the UNI token supply. Anyone can trigger the burn mechanism when the fees in the TokenJar are worth more than the UNI tokens required to release them, profiting from the difference through the protocol’s incentive design, and ensuring the system operates continuously through market incentives rather than trusted operators.

OUR TAKE:

The passing of Uniswap's Unification proposal is a monumental step for one of the longest-standing DeFi applications and the industry as a whole. The proposal embodies how the industry has changed under a positive regulatory environment and how the demands from investors along the lines of sustainable tokenomics, economic alignment, and protections have evolved. What makes this achievement particularly impressive is that Uniswap managed to execute on such a complex governance proposal and drag it across the finish line, a feat requiring significant human and monetary resources while risking disruption to the moat of the OG DeFi application.

Uniswap’s successful execution sets an important precedent as favorable regulatory environments give existing DAOs an avenue to retrofit themselves with updated legal structures like the DUNA. However, the reality is that many existing DAOs simply won't be able to replicate this success, whether due to monetary constraints or an inability to align all parties and execute on something this challenging. The Unification proposal demonstrates both what's possible and how difficult it is to fundamentally restructure a major decentralized protocol.

Despite this milestone, the question of whether liquidity providers (LPs) will leave due to reduced fee shares remains open-ended and will only be answered over time. For Uniswap v2, LP fees decreased from 0.3% to 0.25% with the protocol capturing 0.05%, while the total fee paid by swappers remains unchanged at 0.3%. On Uniswap v3, protocol fees are set at 1/4th of LP fees for 0.01% and 0.05% pools, and 1/6th of LP fees for 0.30% and 1% pools. In both cases, the total swap fee stays the same, but the protocol takes a portion of what previously went entirely to LPs. Whether this reduction in LP compensation will drive liquidity elsewhere or be offset by increased volume and Protocol Fee Discount Auctions remains to be seen. – Zack Pokorny

📷 Base Tokenized Content Push Sparks Backlash

Coinbase’s Layer 2 network Base became the focus of renewed debate this week following the launch of a creator-linked token associated with investigative journalist Nick Shirley. The token, launched via Zora, was tied to Shirley’s viral exposé of alleged childcare fraud in Minnesota, a video that reached hundreds of millions of viewers and drew attention from prominent figures across technology and politics.

Coinbase CEO Brian Armstrong publicly highlighted the launch, framing it as an example of how on-chain creator monetization could outperform traditional platforms like YouTube. The token quickly rose to ~$9 million fully diluted valuation before declining sharply shortly thereafter.

The episode reignited broader criticism around SocialFi and “Creator Capital Markets.” Builders and traders questioned whether creator-linked tokens meaningfully improve content distribution or creator economics. Some Base ecosystem participants also expressed frustration that social and creator-facing initiatives appear to be prioritized over core infrastructure and DeFi development. Armstrong later addressed the criticism directly in a response on X, emphasizing the experimental nature of these efforts.

The controversy comes just weeks after Coinbase’s annual product event, where Base Ecosystem lead Jesse Pollak announced an updated version of the Base app that features a social feed where “everything is tokenized and tradeable.”

OUR TAKE:

Coinbase may be the latest target of backlash, but this is a familiar outcome. Repeated attempts to make “creator coins” or “creator capital markets” viable have followed the same trajectory, and this episode highlights a broader, unresolved problem with crypto’s approach to SocialFi.

First, content delivery has not materially improved relative to incumbent platforms like Instagram, TikTok, X, etc... Most crypto SocialFi products are just re-skinned versions of existing social networks rather than meaningfully better places to create or consume content. Second, tokens are rarely additive. In practice, they often detract from the underlying product by functioning primarily as speculative vehicles, pulling attention away from content and undermining the creators they are meant to support.

This pattern is not new. Since the launch of BitClout in 2021, which labeled its product as “decentralized social,” SocialFi models have consistently struggled. In 2023, FriendTech saw early traction by experimenting with creator monetization via premium access but failed to build a sustainable model and ultimately collapsed. Creator meme coins, perhaps best exemplified by the Hawk Tuah launch, represented another short-lived iteration. More recently, Pump.fun’s Creator Capital Markets has shown similar limitations, with even its most successful launch from the Bagworks team maintaining relevance for less than a month.

It's not that SocialFi can’t succeed, just that the current instantiations are unlikely to be the right path forward. A more credible approach requires building social platforms that are genuinely better than what exists today by offering features users cannot access elsewhere. Potential directions, though far from proven, could include greater control over feed algorithms, marketplaces for custom algorithms, or new approaches to data and social graph ownership and portability. Tokens may play a role, but only when tied to real functionality or enforceable rights. Simply placing assets on-chain does not obviate basic economic realities.

That said, not all SocialFi experiments are failing. FOMO offers a useful counterexample, where social features are used to enhance the trading experience by allowing users to see each other’s activity in real time, rather than centering the product around tokenized content. Instead of financializing the social layer itself, FOMO applies social primitives to a product with existing user demand. Its early traction suggests that SocialFi may be more effective when it augments products people already want to use, rather than serving as a standalone monetization or issuance model. – Lucas Tcheyan

Charts of the Week

Ethereum’s validator entry queue (validators waiting to have their stake activated on the network) has experienced a surge above 15.5 days after a steady decline between November 1 and December 26. In tandem, the network’s exit queue (validators waiting to unstake their ETH) continues to fall and is now below five days after reaching an all-time high of 46.4 days in September. The spike in the exit queue was fueled by a combination of unwinding leveraged looping trades and Kiln, a large staker of ETH, rotating their validator keys.

Other News

📈 Senators set January markup for crypto market structure bill

💵 Fed pushing ahead with 'Skinny' master account plan for crypto banks

🏛️ FTX, Alameda execs will be barred from Wall Street roles for up to 10 years

⚖️ Terraform bankruptcy admin sues Jump Trading for $4b over TerraUSD collapse

🟦 Coinbase sues three states over prediction market regulation