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💥An Elegant Approach to Consensus💥
Stefan Thomas @justmoon CEO and founder of Coil, co-creator of Interledger, and former CTO of Ripple
December 16, 2022
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It’s the age-old debate between Proof of Work and Proof of Stake, brought back to the forefront of people’s minds by Ethereum's successful merge back in September.

The critiques of both are well documented. One side will point to the fact that Bitcoin consumes energy at a significant scale. Others will highlight Ethereum’s new realities when it comes to concentration of power. Post merge, Lido plus three of the largest exchanges control over 50% of staked ETH.

Neither solves for governance, evidenced by the fact that both Bitcoin and Ethereum manage governance off-chain.

In this piece, I’ll argue that there’s a more direct solution; one that holds advantages over Proof of Work and Proof of Stake in terms of energy use and governance controls.

What’s neat is that this solution is based on the already existing, informal process that underlies both Proof of Work and Proof of Stake—and any other consensus mechanism for that matter.

That’s because consensus is something that humans do naturally and intuitively all the time. We can formalize that process and automate some of the more tedious parts. This is how we get to a foundational form of consensus without a lot of extra steps.

Proof of Work: How we got here

Decentralized, anonymous ledgers all face the same challenge. In designing a system that allows anyone to participate, you need a way to decide between equally valid ledgers to ensure that everyone stays in agreement. The obvious answer is some kind of voting mechanism. But as with any fair and equitable voting mechanism, you need to prevent any single person or entity from having more votes than they should.

One way to frame this is that the problem we’re trying to solve is a form of digital democracy.

Proof of Work’s approach requires participants to contribute computing power or hashing to the system. We can think of miners "voting" with their computing power by choosing one of the valid blockchains and attempting to extend it. After all, you can’t fake computing power. And as the value of the system grows and competition for computing power intensifies, the cost of outvoting the rest of the system goes up along with it.

That’s how we achieve consensus anonymously—Proof of Work in a nutshell.

Of course, computational power is essentially a proxy for energy consumption, and the last thing the world needs at the moment is wasted energy. We can minimize waste by using stranded or surplus energy but there is no way around the fact that any computer doing proof-of-work could always be doing useful calculations instead.

The last point I’ll make here is on governance. In the early days of Bitcoin, some protocol changes were indeed voted on and decided by miners. But that approach came to a head during the debate around block size and scalability, what Coindesk, at the time, described as a “constitutional crisis.” In some contexts, miners’ incentives aren’t aligned with the rest of the network. In the context of block size for example, miners prefer smaller blocks to force users to pay them higher fees.

Naturally, the community didn’t take that lying down and turned to extra-protocol forms of governance as a response as well as hard forks. Eventually, this put enough pressure on miners such that a compromise was reached. The point is that Bitcoin isn't governed purely by proof-of-work. Important strategic decisions are made through a political process outside of the protocol and not simply by the majority of miners.

Given these limitations, there has always been interest in potential alternatives to Proof of Work.

Proof of Stake: The popular alternative

If we think about consensus mechanisms as forms of democracy, then Proof of Stake would be a plutocracy. You might call it Proof of Wealth.

Instead of computing power, votes in a Proof of Stake system are counted proportional to the number of tokens a person or entity stakes. Assuming tokens have been broadly distributed among many unaffiliated participants, decentralization is achieved without the energy needs of Proof of Work.

Just as you can’t fake computing power, you also can’t create tokens out of thin air. Sure, a well-capitalized organization could buy up tokens to increase their voting power but that’s by design. As a rule, Proof of Stake is a consensus mechanism typically dominated by aggregators of tokens such as exchanges or DeFi platforms.

When those staked tokens are also tied to governance of the ledger itself, it creates a feedback loop, which tends toward inequality and power concentration. The more tokens you have, the more votes you have. If you can turn that power into greater profits, you can turn those profits back into greater power. Keep doing this and you will eventually fully control the system.

This is less of an issue if the system is still in competition with other Layer 1s. We’re generally fine with corporations being governed by insiders such as shareholders or—in the case of co-ops—workers, as long as consumers still have a choice. If the company makes a bad product, you can buy a different one, and if they're an awful employer you can work someplace else. If an evil dictator takes over a corporation, it will lose customers and employees, a natural form of checks and balances.

Problems start when corporations become too entrenched and consumers lose that choice, which is when we typically see unchecked bad behavior. The same applies to a consensus system. While it still competes with other systems, those checks and balances continue to exist. But if it becomes universal, then unchecked concentration of power becomes everyone’s problem.

(It’s one reason why I’m so passionate about Interledger. With cross-blockchain interoperability, you get persistent competition between consensus systems, which serves as an additional layer of checks and balances. We’ll get into that more in a future post.)

Ethereum solves for this by taking governance off-chain, including, as they describe, both “social and technical processes.” But when power transitions from votes and well-defined rules within the system to more informal processes outside the system, it's difficult to guarantee transparency and fair representation. 

Just like Proof of Work, Proof of Stake defers the issue of governance.

Beyond questions around governance, a more common criticism highlights the circular logic inherent in any Proof of Stake system:

In order to know how many tokens each person has, you need to know the status of the current ledger.

In order to know the status of the current ledger, you need to know how the majority of the staked tokens has voted.

Any Proof of Stake system has this problem. Anyone who has access to the keys of previous validators could create an alternative ledger history that’s completely and equally valid. There are workarounds, such as creating regular ledger checkpoints, but this raises further questions—e.g. what is the next checkpoint, how are checkpoints determined, etc. An already nebulous off-chain governance system now must make even more arbitrary decisions.

Consequently, Proof of Stake requires myriad features that account for flaws and potential attack vectors that are inherent in its design. (Lyn Alden has a great writeup on this subject.)

There are potential regulatory hurdles as well. Hours after the Merge, SEC chief Gary Gensler told reporters that he thought Proof of Stake tokens looked like securities due to staking rewards.

All roads lead to Rome

So where does that leave us?

Proof of Work is simple, relatively reliable, and expends a ton of energy.

Proof of Stake is complex, logically awkward, and plutocratic.

Neither solves the question of governance.

Surely, there’s a better way.

In fact, there is—one that’s already working in the real world—but first, let’s take a step back and take a look at how we choose a consensus mechanism in the first place.

Think of it this way: Most people don’t consider the consensus mechanism itself when deciding who they want to be in consensus with. Maybe you heard about a cool gaming NFT project that you want to support. It happens to be on the Ethereum ledger, which is Proof of Stake.

Or maybe you’re looking for alternative assets as part of a diversified investment portfolio. You choose Bitcoin, which is Proof of Work. Or maybe you chose it because it’s the most popular and longest running.

In deciding what chain to participate in, you’ve made the decision based on your particular use case, needs, or target community.

In other words, the first choice you make isn’t about the consensus mechanism itself. Instead, it’s: Who do you want to be in consensus with?

Understanding consensus

Now that we’ve established this central choice that any participant needs to make, let’s take another step back.

What is consensus, anyway?

Here’s my definition: Consensus is a process of voluntary agreement.

In society, consensus establishes the ground rules for cooperation, enabling us to efficiently interact and transact with one another.

For example, I’m able to go to the grocery store to buy food and supplies because of consensus. There’s consensus on things like the monetary system, the legal system, languages, and certain social norms. If we can’t agree on how to make payment, how to settle disputes, or how to communicate, it’s going to be a tough time at the supermarket. Most likely, I won’t be able to buy my groceries and my grocer won’t be able to sell their products.

You and I might have different opinions on how our country should be run. We might be on the opposite sides of a political issue. But if my side loses the vote, I’ll still voluntarily agree to follow your rule so that we can collectively move forward. Despite our disagreements, we find a way to reach consensus such that progress can be made and peace maintained.

Part of it is because not coming to consensus comes with huge costs. Ideally, we’d like to avoid a revolution or civil war. Or in blockchain parlance, a fork.

The key point, again, is that consensus is voluntary. You can claim that you’re actually Napoleon—no one can stop you. But you won’t be in consensus with the rest of society, which will create friction and increase your social and economic interaction costs. Because of this, it’s rare in practice to run into someone who strays too far from the norms of social consensus. The benefits of consensus outweigh the cost of not being Napoleon for most people most of the time.

We want to agree on transactions that have occurred. We might disagree on the exact order of when those transactions came in—this could be simply due to being located at different distances on the globe from where a transaction originated. But we seek agreement anyway because any order—as long as it is universally accepted—allows us to transact.

Proof of Association: A more direct approach

Here’s what we’ve established so far:

First, Proof of Work, Proof of Stake, and so on are consensus systems designed to achieve voluntary agreement.

Second, before we even get to the "how" of consensus, we first need to choose who we want to be in consensus with, which, in turn, is based on who we want to interact and transact with.

Third, consensus is voluntary—people reach consensus because it serves as a foundation for transacting with each other.

Given that, what if I could just describe who I want to be in consensus with and have an algorithm that keeps me in sync with the people I’ve selected?

Spoiler alert: You can—which brings us to the concept behind Proof of Association.

Instinctively, if we knew who we want to be in consensus with, all we would need to do is look at their ledger and make sure that ours is the same. If it is, we’re in sync; we’re in consensus. It is a little bit more complicated in practice, but not much.

The first step is to write down a list of those people or entities you’d like to be in consensus with.

Once you write down that list, you hand it over to a software program that will scan the network and listen for people on your list. When enough of those people vote for a particular ledger—a quorum—consensus is achieved. (Honest nodes commit to never changing their vote.)

Since you’re writing your own list, you don’t need to worry about voting spam. If someone joins the ledger with 10,000 nodes that nobody cares about, they'll simply be ignored.

And because everyone participating—voluntarily, of course—is incentivized to maintain and improve consensus, the system will naturally evolve toward a more robust and decentralized structure. That could mean:

  • Adding more reliable people or entities to your list
  • Removing unreliable people or entities
  • Aligning your list to be similar to the lists of other participants
  • Changing your list toward having a more diverse set of validators across people, organizations, and geographical locations

As a result, such a system will naturally iterate to create ever more trustworthy states. Just like our real-life interactions, trust is developed and strengthened over time. Someone might have a lot of influence over the network because they are included in a lot of other people's lists, but if, for any reason, they break bad and lose the trust of other participants, they can be quickly dropped by the rest of the network in a way that isn't typically possible with Proof of Work or Proof of Stake.

Here, the age-old adage applies—it takes a lifetime to build a good reputation, but it can be lost in an instant. In that sense, the power of even the most important node is always limited. Just as a media outlet which consistently offers unreliable information might lose subscribers, so too will a bad validator. In a system based on voluntary association, there is always a choice.

What's more, if a validator has too much influence, others may proactively diversify their list even if that validator is perfectly honest and reliable. Over time, there is an incentive toward greater and greater decentralization. Or, more precisely, the level of decentralization that most participants think of as optimal.

It's important to note that we're only talking about a single consensus system so long as there is enough overlap between different lists. The overlap doesn't need to be perfect—in fact, the slight differences are what allows for improvements over time. Generally, participants don't want the network to split so everyone is incentivized to try to keep their lists relatively in sync through communication and discourse. If there are irreconcilable differences between groups, their overlap might decrease and they might eventually split into separate networks. This sounds bad, but is actually just a reflection of the preferences of the members of both groups choosing to separate from each other. Consensus is voluntary and can only be maintained as long as people want it to be.

In general, the network and community will ultimately determine for itself the best inclusions for their lists, which will continuously optimize over time—a form of fluid, iterative democracy. You have your chosen representatives in your list. If the times change, you can vote for new ones at any time. Others who transact with you may notice your choice and change their selection in turn.

Writing lists doesn’t use a lot of energy nor does it concentrate power.

And this isn’t just theory. A consensus system based on this process has been operating for the last 10 years—the XRP Ledger.

What’s cool is that over those 10 years, the network has evolved precisely in the ways I just described. Natural incentives mean that the XRP Ledger is consistently becoming more robust and decentralized.

Today, most participants follow 35 validators spanning geographies around the world, including individual participants, exchanges, universities, and companies building on the network, like my own company, Coil. No entity controls more than two validators, or 5.7% of the vote.

Unlike Bitcoin and Ethereum, the governance process is formal and voting happens in-protocol using the same consensus process that is used to confirm transactions.

Over the years, validators have successfully passed 45 amendments to improve the system, including new features such as multisign, escrow, and most recently, NFT support. New amendments are constantly being voted on.

But this is not just about XRP Ledger. If blockchains are to serve important functions in our society, advocates must have better answers to questions around energy usage and governance. Such were the weight of those questions when Ethereum made the bold step of actually switching their consensus system.

I hope that, ultimately, this will lead more people toward Proof of Association. It would not only solve the problems of energy consumption and concentration of power, but also serve as a simpler, more robust, and transparent method of governance for blockchains.

What started as a first principles observation of the consensus process becomes the mechanism itself. The beauty here is that in making the principles of consensus explicit, the consensus mechanism becomes obvious.

 

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Understanding the Crypto Alt Season

The next altcoin season is poised to ignite the crypto market, promising to turn savvy investors' portfolios into goldmines. As Bitcoin's dominance wanes, a new era of blockchain innovation is dawning—are you ready to ride the wave?

Market behavior often exhibits distinct patterns and cycles. One such phenomenon that has captured the attention of traders and investors alike is the "Alt Season"—a period when alternative cryptocurrencies, or "altcoins," outperform Bitcoin and experience significant price surges.

The concept of market cycles and seasonality is not unique to crypto; it's a well-established principle in traditional financial markets. However, in volatile crypto space, these cycles can be more pronounced and occur with greater frequency.  

In this article, we’ll try to cover these and other topics: 

  1. The nature and characteristics of Alt Seasons
  2. The importance of recognizing market cycles in cryptocurrency trading
  3. Alt Season indicators and how to interpret them
  4. Predictions and speculatins about the next potential Alt Season

What Is Crypto Alt Season?

Crypto Alt Season, short for "Alternative Cryptocurrency Season," refers to a period in the cryptocurrency market when alternative cryptocurrencies (altcoins) significantly outperform Bitcoin in terms of price appreciation. During an Alt Season:

  1. Many altcoins experience rapid price increases.
  2. The market share of altcoins grows relative to Bitcoin.
  3. Trading volume for altcoins typically increases.
  4. Investor attention shifts from Bitcoin to various altcoin projects.

An Alt Season can last anywhere from a few weeks to several months. It's often characterized by increased risk appetite among investors, who are willing to allocate more capital to smaller, potentially higher-risk crypto projects in search of higher returns.

Is Crypto Season the Same As Crypto Alt Season?

While related, Crypto Season and Crypto Alt Season are not exactly the same:

  1. Crypto Season:
    • Refers to a broader bullish period in the entire cryptocurrency market.
    • Typically includes price appreciation for both Bitcoin and altcoins.
    • Can be longer in duration, sometimes lasting for many months or even a year or more.
    • Often starts with a Bitcoin rally, followed by increased interest in the broader crypto market.
  2. Crypto Alt Season:
    • Specifically focuses on the outperformance of altcoins compared to Bitcoin.
    • Can occur within a broader Crypto Season but is more narrowly defined.
    • Generally shorter in duration than a full Crypto Season.
    • May happen towards the latter part of a broader Crypto Season, as investors seek higher returns in smaller cap coins.

Key Differences:

  • Scope: Crypto Season encompasses the entire market, while Alt Season focuses on altcoins.
  • Duration: Crypto Seasons are generally longer than Alt Seasons.
  • Market Dynamics: In a Crypto Season, Bitcoin often leads the rally, while in an Alt Season, altcoins outperform Bitcoin.

It's important to note that these terms are not officially defined and can be subject to different interpretations within the cryptocurrency community. However, understanding the distinction can help investors and traders better analyze market trends and potential opportunities in different segments of the crypto market.

What Is Alt Season Indicator?

The Alt Season Indicator is a tool used by cryptocurrency traders and investors to gauge whether the market is entering or currently in an "Alt Season" — a period when altcoins are outperforming Bitcoin. While there isn't a single, universally accepted Alt Season Indicator, several metrics and tools are commonly used to assess the likelihood of an Alt Season. Here are some key aspects of Alt Season Indicators:

Bitcoin Dominance

One of the most widely used indicators is Bitcoin Dominance, which measures Bitcoin's market capitalization as a percentage of the total cryptocurrency market cap.

  • Calculation: (Bitcoin Market Cap / Total Crypto Market Cap) * 100
  • Interpretation: A declining Bitcoin Dominance often signals a potential Alt Season, as it indicates that capital is flowing from Bitcoin into altcoins.
  • Threshold: Some traders consider Bitcoin Dominance below 50% as a potential indicator of an Alt Season.

Altcoin Market Cap Ratio

This indicator compares the total market capitalization of altcoins to Bitcoin's market cap.

  • Calculation: Total Altcoin Market Cap / Bitcoin Market Cap
  • Interpretation: An increasing ratio suggests growing strength in the altcoin market relative to Bitcoin.

Top 10 Altcoins Performance

This indicator tracks the performance of the top 10 altcoins by market cap (excluding Bitcoin) compared to Bitcoin over a specific period.

  • Calculation: Average percentage gain of top 10 altcoins vs. Bitcoin's percentage gain
  • Interpretation: When a majority of top altcoins consistently outperform Bitcoin, it may indicate an Alt Season.

Alt Season Index

Some crypto data platforms offer a proprietary Alt Season Index, which combines various metrics to provide a single score indicating the likelihood of an Alt Season.

  • Scale: Often presented as a percentage or a 0-100 score
  • Interpretation: Higher scores (e.g., above 75%) suggest a higher probability of an ongoing Alt Season

Trading Volume Ratios

This indicator compares the trading volumes of altcoins to Bitcoin's trading volume.

  • Calculation: Total Altcoin Trading Volume / Bitcoin Trading Volume
  • Interpretation: An increase in this ratio may indicate growing interest in altcoins, potentially signaling an Alt Season.

Important Considerations:

  1. No single indicator is foolproof. Traders often use a combination of indicators for a more comprehensive analysis.
  2. Market conditions can change rapidly, and past patterns don't guarantee future results.
  3. Different traders may use different thresholds or interpretations of these indicators.
  4. The crypto market's evolving nature means that indicators may need to be adjusted over time to remain relevant.

Understanding and effectively using Alt Season Indicators can help traders and investors make more informed decisions about allocating their resources between Bitcoin and altcoins. However, it's crucial to combine these indicators with broader market analysis and risk management strategies.

Alt Seasons: Historical Perspective, Current Situation, and Future Predictions

Previous Altcoin Seasons

In crypto, two periods stand out as particularly significant for altcoins. These "alt seasons" saw unprecedented growth and interest in cryptocurrencies beyond Bitcoin, reshaping the landscape of digital assets.

The 2017-2018 Alt Season

Duration: December 2017 to January 2018

Context:

  • Bitcoin (BTC) experienced its most remarkable bull run to date, reaching nearly $20,000 in December 2017.
  • This surge in Bitcoin's price and public interest created a ripple effect throughout the crypto market.

Key Developments:

  1. Proliferation of New Coins: The success of Bitcoin catalyzed the launch of numerous new cryptocurrencies.
  2. Investor Frenzy: Buoyed by Bitcoin's success, investors eagerly sought the "next Bitcoin," pouring capital into various altcoins.
  3. ICO Boom: This period saw a surge in Initial Coin Offerings (ICOs), with many projects raising millions in a matter of hours or days.
  4. Market Expansion: The total cryptocurrency market cap reached unprecedented levels, briefly surpassing $800 billion in January 2018.

Notable Altcoins: Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) saw significant price increases during this period.

The 2020-2021 Alt Season

Duration: December 2020 to April 2021

Context:

  • Bitcoin broke its previous all-time high, surpassing $60,000 in March 2021.
  • The COVID-19 pandemic had accelerated digital adoption and increased interest in alternative investments.

Key Developments:

  1. DeFi Explosion: Decentralized Finance (DeFi) projects gained massive traction, with many tokens seeing exponential growth.
  2. NFT Boom: Non-Fungible Tokens (NFTs) entered the mainstream, driving interest in blockchain-based digital assets.
  3. Institutional Adoption: Major companies and institutional investors began adding cryptocurrencies to their balance sheets.
  4. Technological Advancements: Many altcoins introduced innovative features, scaling solutions, and use cases.

Notable Altcoins: Ethereum (ETH) reached new highs, while projects like Binance Coin (BNB), Cardano (ADA), and Polkadot (DOT) saw remarkable growth.

Comparative Analysis: Both alt seasons shared some common characteristics:

  • They were preceded by significant Bitcoin price rallies.
  • New projects and tokens gained rapid popularity and valuation.
  • Retail investor participation increased dramatically.
  • The overall cryptocurrency market capitalization reached new heights.

However, the 2020-2021 alt season was marked by greater institutional involvement and a broader range of technological innovations, particularly in DeFi and NFTs.

Is It Alt Season?

Based on the indicators discussed above, it's not currently an altcoin season. The Altcoin Season Index at 41 and Bitcoin's market dominance at 61.3% both suggest that Bitcoin is still the dominant force in the crypto market at this time.

When Is Alt Season?

Based on the information we could gather from various experts, we can analyze the predictions for the next altcoin season as follows:

  • Based on the latest analysis from experts and on-chain data, here’s what we know about the next altcoin season:

     

    Current Status (August 2025):

     

    • The altcoin season index—a metric that signals how many altcoins outperform Bitcoin—currently sits around 37. For a “full-blown” alt season, it typically needs to rise above 75.

    • Bitcoin dominance is approximately 61-62%. Historically, dropping below 60% often coincides with a rapid rotation into altcoins and the start of alt season.

     

    Key Indicators to Watch:

     

    • Altcoin Season Index (ASI): Above 75 signals a true altcoin season.

    • Bitcoin Dominance: A move below 60% usually marks the transition; sub-50% dominance is associated with peak alt season inflows.

    • Market Activity: Increasing volumes in major altcoins and Layer 1s, meme coin rallies, and spikes in DeFi activity are early warning signs.

    • Ethereum Outperformance: When ETH surges relative to BTC, this historically precedes broader altcoin rallies.

     

    Expert Predictions for 2025:

     

    • Analysts point to a pivotal window for alt season starting as early as August 2025 and extending through the fall, with many expecting true acceleration of altcoin gains if Bitcoin’s price consolidates and capital rotates further into alts.

    • There is strong consensus that macroeconomic catalysts, such as potential U.S. interest rate cuts and ongoing Bitcoin ETF momentum, could fuel a major altcoin rally in late 2025 if positive conditions persist.

    Summary Table: Key Factors & Targets

    SignalAlt Season TriggerStatus (Aug 2025)
    Altcoin Season Index (ASI)>75 ~37
    Bitcoin dominance<60% ~61–62% (near trigger)
    Altcoin trading volumeSustained surge across many alts Rising, but not explosive
    Ethereum outperformanceETH/ BTC breakout, >$3,700 Near, ETH ~$3,500
    Market narrativesAI, DeFi, meme coins, new L1 inflows Strengthening
     

    Bottom Line:
    Most analysts agree the groundwork for altcoin season in 2025 is building. We are currently in a transition phase: if Bitcoin dominance continues to fall and the Altcoin Season Index rises above 75, a full-fledged alt season could ignite during the second half of 2025. Monitor these key indicators to stay ahead as market momentum shifts from Bitcoin into a broader range of altltcoins.

Key Factors to Consider

  • Technology: Look for coins with innovative solutions to existing blockchain challenges.
  • Adoption: Consider projects with growing partnerships and real-world use cases.
  • Market Position: Established coins with room for growth may offer a balance of stability and potential returns.
  • Tokenomics: Understanding supply dynamics can help predict potential price movements.

It's crucial to conduct thorough research before investing. The cryptocurrency market is highly volatile, and past performance doesn't guarantee future results. Always invest responsibly and within your risk tolerance.

How to Win in Next Alt Season?

Capitalizing on the next altcoin season requires a strategic approach. Here's how to maximize potential gains:

  • Research and Diversification: Thoroughly research potential investments, analyzing both fundamentals and technical aspects to identify promising altcoins. Diversify your holdings across different projects to mitigate risk and maximize potential returns. Don't put all your eggs in one basket.
  • Strategic Timing: Utilize technical analysis tools like support/resistance levels and RSI to pinpoint optimal entry and exit points. Monitor market sentiment and price trends to make informed decisions. A clear entry and exit strategy is crucial for managing risk and maximizing profits during volatile periods.
  • Newer Projects: Consider participating in newer altcoin projects. This provides early access to potentially high-growth projects at discounted prices. Research upcoming defi projects with use cases, focusing on innovative projects with strong potential. Investing early can yield substantial returns as the project develops.

Conclusion

In summary, an altcoin season, marked by significant price increases in non-Bitcoin cryptocurrencies, may be on the horizon.  This potential surge could be driven by investors seeking higher returns in smaller-cap cryptocurrencies, technological advancements in altcoin projects, increased blockchain adoption, and the transition of projects from speculative ventures to real-world applications

Remember, while the potential for significant gains exists during an altcoin season, the cryptocurrency market remains highly volatile. Always invest responsibly.

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PYTH: We'll Always Have Coldplay

Welcome back to The Epicenter, where crypto chaos meets corporate cringe.

But surprisingly, crypto has not been the most chaotic corner of the internet as of late.

That honor goes to the startup Astronomer, whose CEO’s cheating scandal broke the web in a glorious meme-fueled media frenzy. The company’s damage control? Hiring Gwyneth Paltrow as a “temporary spokesperson.” Do we think they’re grasping at straws or setting a new standard for PR?

Meanwhile, the markets didn’t blink. BTC is still flexing near its all-time highs. Michael Saylor’s bringing a bitcoin-adjacent money-market product to Wall Street. A pharma company just earmarked $700M to stack BNB, and analysts are calling time of death on the four-year crypto cycle. It’s a steady boom now, kittens.

A few things that are also worth noting: Winklevoss vs. JPMorgan, Visa’s take on stablecoins, and Robinhood’s Euro drama that defies the chillness of eurosummer.

Let’s get into it 👇

⛓️ The On-Chain Pulse: What’s Happening on the Front Lines of Finance

This week’s biggest news in crypto and all things digital assets

🗣️ Word on the Street: What the Experts are Saying

Stuff you should repost (or maybe even cough reword and take credit for)

Meme of the Week

🏦 Kiss my SaaS: What’s Changing the Game for Fintech

Things you should care about if you want to impress your coworkers

Closing Thoughts

From meme-fueled PR stunts to Bitcoin-backed money-market funds, this week reminded us that markets move fast—and headlines move faster. With Wall Street automating itself, fintechs beefing with banks, and even your smartphone becoming a miner, anything is possible. Stay curious, stay cynical, and as always—stay sharp and stay liquid. We’ll see you back here in two weeks.

— The Epicenter, powered by Pyth Network

 

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4 Fintech Companies 💸& Things To Know About 🤔

The fintech revolution is reshaping the way we manage, invest, and move money, breaking down traditional barriers and empowering individuals worldwide. As financial technology continues to evolve at a rapid pace, a select group of innovative companies are leading the charge by offering groundbreaking solutions that redefine banking, payments, and digital assets. Whether you’re a savvy investor, an industry professional, or simply curious about the future of finance, discovering these trailblazing fintech companies is essential to understanding today’s dynamic financial landscape.

 

  1.  Alina Invest - The AI Wealth Manager for GenZ Women

Alina is aimed at women under 25 who identify as beginner investors. They're an SEC-registered investment advisor that charges $120/year for membership. The service "buys and sells for you" and gives up notification updates of recent transactions like a wealth manager would.

👉 Getting people to invest early is crucial to building long-term wealth. One thing that holds them back is a lack of confidence and experience. Being targetted "for beginners" and people who live on TikTok should appeal. I love the sense of "we're buying and selling for you." Funds always do that, but making it an engagement mechanic is very smart. The risk here is that building a wealth business will take decades for the AUM to compound. But the next generations, Wealthfront or Betterment, will look something like Alina.

2. Blue layer - The Carbon project funding platform

Bluelayer allows Carbon project developers to take from feasibility studies to issuing credits, tracking inventory, and managing orders. Developers of reforestation, conservation, direct air capture, and other projects can also directly report to industry registries. 

👉 Carbon investing and tax credits are heavily incentivized but need transparent data. By focusing on the developers, Bluelayer can ensure the data, reporting, and credits lifecycle is all managed at the source. This is smart.

3. Akirolabs - Modern Procurement for enterprise

Akiro is a "strategic" procurement platform aiming to help enterprise customers identify risks, value drivers, and strategic levers before issuing an RFP. It aims to bring in multiple stakeholders for complex purchasing decisions at multinationals. 

👉 Procurement is a great wedge for multinational corporate transformation. Buying anything in an enterprise that uses large-scale ERPs is a nightmare of committees and spreadsheets. Turning an oil tanker-sized organization around is difficult, but the right suppliers can have a meaningful impact in the short term. That only works if you can buy from them. Getting people on the same page with a single platform is a great start.

4. NeoTax - Automated Tax R&D Credits

NeoTax allows companies to connect their engineering tools to calculate available tax advantages automatically. Once calculated, the tax fillings are clearly labeled with supporting evidence for the IRS.

👉 AWS and GCP log files and data are a goldmine. Last week, I covered Bilanc, which uses log files to figure out per-account unit economics. Now, we calculate R&D tax credits. The unlock here is LLM's ability to understand unstructured data. The hard part is understanding the moat, but time will tell.

In an era where technology and finance are increasingly intertwined, these four fintech companies stand out as catalysts for positive change. By driving progress in digital payments, asset management, lending, and decentralized finance, they are not only making financial services more accessible and efficient—they are also paving the way for a more inclusive and empowered global economy. Staying informed about their innovations can help you seize new opportunities and take part in the future of finance.

 

👀Things to know 👀

 

PayPal issued low guidance and warned of a “transition year.” The stock is down 8% in extended trading despite PayPal reporting a 9% growth in revenue and 23% EBITDA. Gross profit is down 4% YoY. PayPal's total revenues were $29Bn for the year

Adyen reported 22% revenue growth and an EBITDA margin of 46% for the full year. Adyen's total revenues were $1.75bn for the full year. The margin was down from 55% the previous year, impacted by hiring ahead of growth.

🤔 PayPal’s Braintree (unbranded) is losing market share in the US, while Adyen is winning it. eCommerce is growing ~9 to 10% YoY, and PayPal’s transaction revenue grew by 6.7%. The higher interest rate environment meant interest on balances dragged up the total revenue figure. Their core business is losing market share. Adyen is outgrowing the market by ~12%.

🤔 The PayPal button (branded) is losing to SHOP Pay and Apple Pay. The branded experience from Apple and Shopify is delightful for users; it’s fast and helps with small details like delivery tracking. That experience translates to higher conversion (and more revenue) for merchants.

🤔 The lack of a single global platform hurts PayPal, but it helps Adyen. In the earnings call, the new CEO admitted their mix of platforms like Venmo, PayPal, and Braintree are holding them back. They aim to combine and simplify, but that’s easier said than done.

🤔 Making a single platform from PayPal, Venmo, and Braintree won’t be easy. There’s a graveyard of payment company CEOs who tried to make “one platform” from things they acquired years ago. It’s crucial if they’re going to grow that they get their innovation edge back. Adyen has one platform in every market.

🤔 PayPal’s UK and European acquiring business is a bright spot. The UK and EU delivered 20% of overall revenue, growing 11% YoY. Square and Toast don’t have market share here, while iZettle, which PayPal acquired in 2018, is a strong market player. Overall though, it’s yet another tech stack and business that’s not part of a single global platform.

The two banks provided accounts to UK front companies secretly owned by an Iranian petrochemicals company. PCC has used these entities to receive funds from Iranian entities in China, concealed with trustee agreements and nominee directors. 

🤔 This is the headline every bank CEO fears. Oof. Shares of both banks have been down since the news broke, but this will no doubt involve crisis calls, committees, appearing in front of the regulator, and, finally, some sort of fine.

🤔 The "risk-based approach" has been arbitraged. A UK company with relatively low annual revenue would look "low risk" at onboarding. One business the FT covered looked like a small company at a residential address to compliance staff. They'd likely apply branch-level controls instead of the enterprise-grade controls you'd see for a large corporation. 

🤔 Hiring more staff won't fix this problem; it's a mindset and technology challenge. In theory, all of the skill and technology that exists to manage risks with large corporate customers (in the transaction banking divisions) are available to the other parts of a bank. In practice, they're not. Most banks lack a single data set and the ability for compliance officers in one team to see data from another part of the org. Getting the basics right with data and tooling is incredibly hard and will involve a multi-year effort. 

🤔 These things are rarely the failure of an individual or department; the issue is systemic. While two banks are named in this headline, the issue is everywhere. Banks need more data and better data to train better AI and machine learning. That all needs to happen in real-time as a compliment to the human staff. Throwing bodies at this won't solve the visibility issue teams have.

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