Weekly Top Stories - 10/24/25

In this week's newsletter, Alex Thorn discusses the recent meetings between key U.S. Senators and crypto executives about the pending market structure bill; Zack Pokorny unpacks the existential hand-wringing in the Ethereum community following a long-time researcher’s departure for greener (corporate) pastures; and Thad Pinakiewicz offers a postmortem on Kadena, one of the few blockchains to officially call it quits.  

Crypto Market Structure Bill: Off Life Support?

Crypto execs meet with Senators to push for market structure bill. On Wednesday, 12 Democratic Senators hosted crypto executives from at least 10 companies for a meeting at the Capitol to discuss the passage of the crypto market structure bill. The group of Senate Democrats is considered to be generally supportive of pro-crypto legislative reforms, but the meeting followed significant industry backlash to a Democrat crypto policy document that was leaked two weeks ago. The meeting was organized by Senator Kirsten Gillibrand (D-NY), and the lawmakers were joined by executives from firms including Coinbase, Galaxy, a16z, Kraken, Uniswap, Circle, Ripple, Paradigm, Solana, Consensys, Jito Labs, and Chainlink. Republican Senators held their own similar roundtable in the afternoon on Wednesday, which was attended by some of the same crypto executives. 

The House passed the CLARITY Act, its own version of crypto market structure reform, on July 17 during Washington’s “Crypto Week,” which also saw the GENIUS Act and Anti-CBDC Surveillance Act passed. Now the Senate needs to pass a version that can be reconciled with the House’s CLARITY so Congress can send a bill to the White House for signing into law. 

The primary issue dividing the parties and delaying movement on the bill in the Senate centers on how to regulate decentralized finance (DeFi), if at all. Republicans have included the Blockchain Regulatory Certainty Act (BRCA) in the drafts of their crypto market structure bill (the Responsible Financial Innovation Act). BRCA would provide robust protections for developers of open-source software, but the Republicans have largely left other questions about DeFi out of their bill. Democrats have called for limited developer exemptions and tighter oversight and registration requirements for decentralized finance applications. This debate flared up briefly during the negotiations over the GENIUS Act in June, but ultimately, Senators succeeded in keeping DeFi out of that bill (which later passed both houses of Congress with veto-proof bipartisan majorities). 

Some in Washington want all DeFi applications to mostly be regulated like money transmitters, subjecting them to registration with FinCEN and strict KYC/AML obligations under the Bank Secrecy Act. The crypto industry views this as unworkable, unenforceable, possibly unconstitutional, and definitely stifling to innovation. Among those Democrats and Republicans who are proactively working toward a deal on market structure, it appears both sides could agree on something much more palatable than the anti-crypto position. It could include some registration requirements for DeFi applications, but with carveouts exempting those that are sufficiently decentralized. What constitutes “decentralized” will be a key negotiation point going forward. 

OUR TAKE:

We wrote in July that the House’s passage of CLARITY raised the odds of crypto market structure being signed into law before the 2026 midterm elections from 25% to 35%. Our general skepticism then was born from a fear that the complexity of the issues and a lack of sufficient Congressional floor time presented significant headwinds. However, we are now raising our assessment of the likelihood that a bill hits the President’s desk for signature before the summer recess next year to 60%. 

Our more optimistic view is largely driven by the meetings held in Washington this week. First, it appears to us that the Republicans and supportive Democrats are closer together on the controversial questions than many believe.  

No doubt, there are issues with the Democrats’ leaked policy position from two weeks ago. It frames the issues in a more aggressive tone than necessary, which raised the industry’s ire. It delegated the key decision-making power over which applications and developers are regulated and how to the Treasury Department, rather than codifying such decisions in statute, creating a significant risk that a future, hostile executive branch could take a much more restrictive interpretation. It was yet another “principles” document that didn’t contain any actual legislative language. And the policy position doesn’t go far enough to protect developers (“Writing or publishing open-source code is not a violation, absent deployment, control, or profit from the protocol”). While the Democrats did signal that they wanted to include some sort of developer protections, we need to see legislative language from them to understand what they’re actually proposing beyond principles and concepts. 

All that being said, both sides could agree that a DeFi application that is materially not decentralized, such as one where a small number of individuals possess and exert ongoing control of the application (through multisigs and admin keys, for example), probably would not be able to avoid certain compliance requirements. Both sides could also agree that developers who publish open-source code should not be liable for the uses of that code or should otherwise be exempted from being treated as money transmitters. Republicans have the excellent BRCA in their draft bill, and it seems like Democrats can mostly get pretty close to the BRCA, if not all the way there.  

The second thing that gives us more optimism is that the Senate Democrat roundtable was, frankly, pretty historic. Outside of perhaps an occasional banking crisis 😊, we aren’t aware of other industry meetings (not hearings) that garnered undivided attention from 12 sitting Senators. These sitting Senate Democrats came to a meeting with industry officials and, though a lot of the meeting focused on process grievances and timeline discussions, the Democrats largely came prepared and well-read on the key technological and regulatory issues. Several Senate Democrats in the room stood out as particularly informed on the issue of DeFi and money transmission laws, much more so than in the past. The Senate Democrats heard the industry’s concerns and came in force and with preparation, which is a strong bullish indicator for crypto gaining broader bipartisan standing in Washington. Whether that can translate into a workable compromise remains to be seen, but as we wrote above, we don’t view the distance between the two sides as particularly large.  

For our part, we believe developers must be protected (we favor the language in the BRCA) and that any attempt to regulate truly decentralized applications or blockchains themselves is unworkable and would only create an unenforceable prohibition. The result would push developers, businesses, and companies offshore in a way that fails to accomplish the stated policy goal while criminalizing behavior that is widespread and stifling innovation.  

Assuming a deal can be worked out on the DeFi issue, we think it’s possible that a bipartisan product could emerge out of the Senate Banking Committee before the end of the year (though Q1 might be more reasonable), with a final vote happening on the Senate floor sometime before the summer recess. The timeline afterward becomes extremely tight with other must-pass legislation, the August recess, and ultimately the midterm elections. But we now think it’s more likely than not that the Senate will vote on something next year.  

Of course, it’s Congress, so there’s still plenty of time for someone or some issue to rug the whole thing.  – Alex Thorn 

Ethereum Community Rattled by Longtime Researcher's Departure

Last Friday, long-time Ethereum researcher Dankrad Feist announced he will be joining Tempo, the Paradigm-developed, payments-focused layer-1 (L1) chain. Dankrad had been with the Ethereum Foundation (EF) full-time since 2019. (Six years is a lifetime in crypto.) He was a prominent voice in Ethereum’s scalability debate in the spring of this year and contributed to PeerDAS (EIP-7594), a key component of Ethereum’s plan to achieve scalability through layer-2s (L2). Feist’s exit sparked another round of introspection and criticism of the EF and its leadership, of venture capital (VC) investors in the Ethereum ecosystem, and of the Ethereum community as a whole. There were three core communications around these points, from Péter Szilágyi (former leader of the Geth client), Sandeep Nailwal (founder and CEO of the Polygon Foundation), and Joseph Lubin (co-founder of Ethereum and the founder of Consensys). 

Szilágyi’s comments were especially significant because he open-sourced a private letter he had sent to EF leadership in May 2024. The message was cutting in tone and leveled heavy accusations against the EF leadership, its treatment of employees, and the “cabal” guiding Ethereum’s direction. Szilágyi began by detailing the stark pay disparity between EF contributors and what he called the ecosystem’s “high rollers.” He revealed that during his first six years working full-time on Geth (Ethereum’s most used execution client), he earned a total of $625,000 before taxes, with no incentives, even as Ethereum’s market capitalization rose from zero to $450 billion. He argued that the foundation’s chronic under-compensation of its most committed contributors had bred perverse incentives, forcing technically talented but underpaid developers to seek outside consulting or advisory positions for financial stability. In his words, “the Foundation set the protocol up for capture” by making financial dependence on external groups a necessity. He also critiqued the EF’s internal culture, describing a deep dissonance between public image and private reality. Officially, the EF presented him as a respected leader and the face of the client-diversity effort. Privately, he claimed, he was treated as a nuisance whose influence was tolerated only when convenient. He claimed that Feist had once privately described Szilágyi’s position as a merely “perceived leadership role,” a characterization the developer found apt: celebrated in public, dismissed in private. He called himself a “useful fool,” used to demonstrate the foundation’s openness to internal dissent while being steadily marginalized behind closed doors. Every time he spoke out against “power players,” he said, his credibility eroded, turning each act of conscience into a reputational cost.  

Beyond pay and governance, Szilágyi alleged that Ethereum had quietly developed an entrenched social hierarchy. He claimed that success within the ecosystem depended less on merit and more on proximity to a small network of roughly “five-to-ten high-profile researchers and investors” and the “one-to-three venture funds” backing them. This group, whose members are often personally close to Etherem creator Vitalik Buterin, effectively acted as a gatekeeper deciding which projects gained legitimacy, visibility, or funding, Szilágyi stated. He argued that “Ethereum may be decentralized, but Vitalik absolutely has complete indirect control over it,” because his endorsements (direct or indirect) still determined which projects thrived. The culture that had once prided itself on permissionless innovation had, in Szilágyi’s view, devolved into a “ruling elite” of friends, researchers, and investors whose alignment with Vitalik dictated success. 

Tying these claims together, Szilágyi warned that the foundation’s structural failures had turned Ethereum into fertile ground for protocol capture. By starving internal talent of meaningful compensation while tolerating advisory entanglements between EF researchers and venture-backed projects, he said, the organization effectively ceded influence to external financial actors. What began as an open-source, idealistic movement had become, in his words, a place where “we set out to build something great, but we will readily shed all our principles the moment there’s (enough) money on the table.” For him, this dynamic represented Ethereum’s moral decline toward a system whose original mission of open participation and decentralization was being supplanted by financial and political incentives managed by a few insiders. Szilágyi ended by saying, “So, where does this all lead us. I have no clue, really. Do I find Ethereum fixable? No, not really.” 

Polygon’s Nailwal echoed Szilágyi’s frustration, saying reading the letter made him “question my loyalty toward Ethereum.” He expressed deep respect for Buterin but lamented years of neglect from the Ethereum Foundation and hostility from parts of the community that “trolled projects like Polygon” despite their contributions. Nailwal argued that Ethereum’s culture had become exclusionary by refusing to recognize Polygon as a legitimate L2 and denying it the market’s perceived “Ethereum beta” status, even as Polygon’s ecosystem remained anchored to Ethereum. He said this dynamic had grown so warped that people were questioning his fiduciary duty to Polygon, claiming that if Polygon branded itself an L1, it might be valued “two to five times higher.” Still, he said he would “give it one final push,” urging the community to reflect on why so many major contributors now question their allegiance to Ethereum. Within six hours of Nailwal’s post, Buterin followed up in a separate post by expressing gratitude for the contributions the Polygon CEO made to the ecosystem. He also acknowledged the significance of Polygon housing Polymarket, which, in Buterin’s words, “is probably the single most successful example of a 'not just boring finance' app that has actually been successful and provided value.” 

Joe Lubin, the founder of ConsenSys and one of Ethereum’s original architects, weighed in with a tempered defense of the project and its direction. He acknowledged that “Paradigm and many other VCs aim to suck as much value as possible from the Ethereum and broader ecosystem, while also adding value to the ecosystem in the service of maximizing their own gains” and that “Paradigm is particular[ly] good at this,” but argued that such behavior was “natural and inevitable.” Lubin framed VC participation as a necessary bridge for global capital to enter decentralized markets while expressing hope that future on-chain investment platforms could eventually replace them. While he admitted preferring that Feist and other researchers stay with Ethereum, he portrayed their departures as part of a healthy cycle of evolution rather than a crisis. His statement stood in sharp contrast to Szilágyi’s and Nailwal’s, emphasizing long-term inevitability and pragmatic acceptance over moral outrage. 

Feist’s is one of several high-profile departures from the Ethereum Foundation or its ecosystem over the last couple of years. Notably, Danny Ryan left the foundation to start Etherealize, Barnabé Monnot left the EF to start Defipunk Labs, and Max Resnick left the ecosystem for Solana. Feist's move was especially sensitive because of his significant contribution to “Danksharding” and because he moved to a project associated with “corporate blockchains.” 

OUR TAKE:

On the surface, the conversations triggered by Feist’s departure from the EF look like standard crypto Twitter drama. However, there are deeper revelations about the organizational structure of groups developing open–source software (OSS) and about the implications for Ethereum and the EF of having what were once whispered grievances discussed in the community square. 

Szilágyi’s note emphasized that Ethereum protocol contributors, in his view, are not receiving fair compensation. OSS developer compensation has been a hotly debated topic for decades.  Inherently, OSS carried an internal contradiction. It was built on the philosophical ideals of freedom, transparency, and public good creation. Those ideals often conflict with the economic realities of sustaining the people who maintain the software. This tension persists today, especially in blockchain ecosystems that position themselves as decentralized, open protocols. The question in these cases then extends beyond simply how much developers should be paid to what kind of work should be incentivized and who decides that allocation.  

Ethereum's structural ambiguity compounds this challenge. With broad, aspirational goals (e.g., building the "world computer") and loose direction from leadership, it becomes difficult to establish clear criteria for prioritization and compensation. Without explicit strategic direction, allocation decisions can default to informal factors, such as social capital, proximity to influential figures, or access to external funding. When the protocol's priorities remain open to interpretation, so do questions of compensation, making it harder to distinguish between legitimate disagreement and arbitrary decision-making. The result is a system where individual contributors have to meet unclear expectations, leadership has uncertain authority to set them and allocate resources, and the community has unclear grounds to evaluate either. The compensation complaints are about more than just paying people fairly. They’re about whether the organization can function coherently when its mission and management structure are vague. 

Despite the acrimonious tone of the conversations, their emergence in a public forum marks meaningful progress. What were once closed-door grievances are now open debates. This is an uncomfortable but necessary step for the community that better sets up Ethereum leadership for accountability and maturity. – Zack Pokorny 

Kadena Is Kaput

The core development team for Kadena, the self-styled “blockchain for business” from 2016, became the first major team to explicitly abandon its own network. The project’s core group, including founders Stuart Popejoy and Will Martino, announced that the Kadena Foundation will cease operations, leaving the blockchain to “transition to community governance.” KDA, the network’s native token, already down 98% from its 2021 peak, fell another 60% as exchanges began delisting it. Hashrate dropped by over 40% to a multi-year low, and dapp builders cried out in outrage. 

But what is Kadena? Founded in 2016, it positioned itself as the enterprise-grade alternative to Ethereum, a proof-of-work network with a patented(?) braided-chain design meant to scale linearly without sacrificing security. The idea was an elegant early version of sharding: parallel chains that increased throughput while preserving consensus integrity. By 2021, the project had raised tens of millions through several funding rounds and a public ICO. But Pact, Kadena’s Turing-incomplete programming language, never gained momentum, and TVL on the chain never breached $15m. In April of this year, the Kadena team rolled out Ethereum Virtual Machine (EVM) compatibility to lure DeFi developers, but it didn’t change the network’s fate. TVL never materialized, dApp activity remained negligible, and their “business blockchain” implementation aged like a Beyond Meat burger. 

The unraveling was abrupt. Just five months ago, Kadena announced a $50 million grants program for projects building on its new Chainweb EVM and “AI integrations.” Today, that web page reads like a relic. The team’s statement on X framed the exit as a natural transition, noting that mining rewards will continue until 2139 and that 83.7 million KDA remain under vesting until 2029. Translation: the code will keep producing blocks, but there’s no one left to maintain the bureaucracy. Roughly 80 million tokens, about 8% of supply, remain undistributed, with no clear plan for how they’ll be handled. 

Naturally, the conspiracy-minded traders on X wondered whether insiders had front-run their own funeral. Some pointed to a doubling of open interest on Kadena perpetuals in the 24 hours before the announcement. But zooming out, the data doesn’t suggest massive insider shorting. Open interest had been depressed after the Oct. 10 sell-off, and while OI did double before the news, it exploded after the announcement as the token became a meme-short playground. 

With many KDA markets shutting down, there’s now scant liquidity left for traders. Without the ability to move capital between venues, the market is increasingly perp-driven and synthetic. While the price has crashed, it has yet to dislocate massively between the remaining open venues, signaling that, at least, arbitrageurs have not yet considered the token too risky to hold. 

While exchanges rush to delist KDA, the real turmoil is inside the Kadena ecosystem. Since the announcement, the testnet has gone offline, moderators have disappeared amid violent threats in the Discord server, and miners have begun openly coordinating to determine whether they can still operate profitably or should fork the chain entirely. 

OUR TAKE:

The Kadena team exit is a rare detonation in a space that usually prefers quiet decay. Most failed chains don’t shut down; they just fade into the background. Namecoin still ticks along in Bitcoin’s shadow, an undead relic of 2011 producing mostly empty blocks. Kadena is different because its team explicitly walked away rather than quietly letting the project die. The result is an unowned chain with a treasury, emissions, and no stewardship — a public good few want to maintain. 

There is still room for a different ending. Namecoin limps on not because of a vibrant community, but because it can be merge-mined with Bitcoin; it’s more economical for miners to do it than not. Kadena, on the other hand, is the only blockchain using the Blake2s hash function (apparently aside from TAJ). No other cryptocurrency can be productively merge-mined alongside it. Kadena’s economics must stand on their own for mining the chain to remain viable. Unlike generic CPU- or GPU-friendly hashing algorithms that anyone can mine, Kadena has a dedicated ASIC market, and those machines can’t be repurposed. It may still be worth it for ASIC miners to continue as an option on future price recovery, given the sunk cost of hardware, but unless operators can buy electricity below $0.005 per kWh, the economics look grim. If conditions worsen and miners can’t rely on ultra-cheap power, even those with efficient ASICs will likely shut down.  

And if the ASIC miners leave Kadena, will it survive? Could it limp along with a few full nodes maintaining the chain for posterity, but with the details lost? Or might we witness the first true death of a blockchain? – Thad Pinakiewicz 

Charts of the Week

On-chain dollar funding costs have held surprisingly steady. Despite growth in activity and periodic leverage buildups, the market keeps pricing stablecoin borrowing close to the U.S. Federal Reserve’s effective federal funds rate, which acts as a de facto floor. 

Through the cycle, we observe a familiar pattern. The weighted borrow rate for stablecoins has gravitated toward the mid-single digits for long stretches, punctuated by short surges into double digits during demand spikes or liquidity shortages. Those episodes have been brief. Competition among lenders, rapid supply responses, and capital mobility across protocols pull pricing back down quickly. 

Core funding benchmarks on-chain tell the same story. Collateralized debt position (CDP) stability fees and lending application borrow APRs have tracked the path of fed funds, rising during the hiking phase and easing as policy softened. The spread over fed funds has usually been thin, reflecting stiff competition with off-chain cash yields and an increasingly efficient stablecoin credit market. 

The takeaway is straightforward. With fed funds setting the floor, on-chain borrowing costs should drift lower if monetary policy continues to ease. Sustained double-digit yields would likely require a meaningful rise in leverage demand or a constraint on stablecoin liquidity. In the absence of those conditions, expect narrow spreads and a funding environment guided by the policy rate. — Christopher Rosa 

Other News

• 🇺🇸Trump Pardons Binance Founder CZ; Exchange’s BNB Token Rallies  

• 🔮Polymarket Token Plan Confirmed by CMO During AMA

• 🤝 FalconX to Acquire 21Shares for Undisclosed Price 

• 📺 Coinbase Snaps up Cobie’s Echo and ‘Up Only’ NFT for $375m 

• 🎯 DraftKings Buys Railbird, Teams up With Polymarket on Prediction Markets 

• 🏒 NHL Partners with Kalshi and Polymarket on Prediction Markets 

• 👔Fidelity Adds SOL Support, Extending Crypto Lineup Beyond BTC, ETH, and LTC 

• 🇬🇧 BlackRock’s U.K. Bitcoin ETP Starts Trading in London  

• 🇭🇰 Hong Kong Approves First Spot Solana ETF 

• 🏦 T. Rowe Price Plans Active Crypto ETF Launch