Authors: Edgy, Yayya

Translated by: TechFlow

Deep Flow Introduction: The Ethereum Foundation is shrinking due to financial issues, but holding companies like Bitmine and SharpLink are taking over development funding. These companies hold nearly 5% of circulating ETH and are now covering protocol development with staking yields. Unlike MicroStrategy, which only hoards Bitcoin, ETH holding companies are reinvesting profits back into protocol development—this could allow all ETH holders to benefit for free.

Key Points

• 80% of JTX platform fees go to the DAO; all the shares obtained by the DAO will be used for public market buybacks and destruction of JTO, executed at least until Q4 2027, at which point token holders will vote again to decide whether to continue.
• The real difference between Jito and Venice is the "pipeline": who the income goes to, who can shut down the destruction mechanism, whether governance can replace the executor, and whether the project parties have genuinely sent company income to the tokens in the past.
• After the mNAV of ETH treasury companies fell below 1 and positions were deeply underwater, the old flywheel of buying coins by issuing stocks became ineffective, leading companies like Bitmine and SharpLink to directly fund protocol development; this increased the consistency of interests and exposed development funds to coin price and company vulnerabilities.

The crypto world has come full circle, back to TradFi

Crypto traders have spent years urging everyone to flee the traditional financial system.

The HIP-3 market of Hyperliquid—stocks, commodities, and indices—recently saw a trading volume of $3 billion over the last 7 days; the platform's native crypto perpetual contracts had a trading volume of $3.1 billion, nearly flat.

We fled TradFi, only to trade TradFi with 20x leverage, laughable.

Content of this issue:

• The latest proposal from Jito and why JTO holders should be pleased.
• A new direction for ETH development funding: treasury companies taking over investments, is it really a good thing?
• Network dynamics: Polymarket launches combo betting, Plasma One releases an Android version, Jito's JTX goes live, etc.

JIP-38: Making Jito a "token-centric" network

"We have equity, but we will direct value toward tokens."

When Venice said this two weeks ago, it got heavily criticized on crypto Twitter (CT); when Jito said the same this week, CT cheered.

Here are the real differences between the two projects. (We discussed Venice on July 2, so we won't repeat the background.)

What happened?

On July 13, Jito DAO released JIP-38, officially defining Jito as a "token-centric network": all major project revenues flow to the DAO and are governed by tokens; tokens have hard economic rights over the use of these revenues.

The specific commitment is that 100% of the revenue share brought to the DAO by JTX will be used to buy and destroy JTO on the public market. JTX is Jito's new self-custodial trading application aimed at professional traders, with the proposal opening to waiting list users the day after its release. This arrangement will be executed for at least one year, continuing until Q4 2027.

What JTO holders get:

• 80% of JTX platform fees go to the DAO; the remaining 20% is retained but can only be reinvested into the platform generating this revenue.
• All shares obtained by the DAO are used to buy and destroy JTO. The result is a decrease in supply, rather than leaving money in the treasury for digital games.
• Execution is handled by a "revenue distributor" (Rev Splitter): it collects fees and executes buybacks, with each epoch's fees, purchases, and destruction records disclosed on-chain.
• In Q4 2027, token holders will re-vote on the entire arrangement based on at least a year's real data.

Sounds familiar, right? This is almost the defense that Erik Voorhees wrote for Venice. Venice sold $65 million in equity and promised to increase destruction; Jito raised $50 million from a16z last October, and its cash reportedly "far exceeds $100 million." Both are companies with equity layers claiming they will direct income to tokens.

Why do I evaluate the two differently? There are three reasons.

1. Revenue ends up in different pockets

Venice's revenue belongs to the Venice team. Aside from a small portion of automatic destruction—about $166,000 in April—the remaining destruction amount is decided monthly by the board, which has fiduciary responsibility to shareholders, not to token holders.

Jito's fees go on-chain into the DAO treasury. JIP-38 explicitly states that tokens have "hard economic rights" over fund deployment. When money enters an address governed by token holders, destruction is no longer an act of goodwill by the project party but is institutionalized.

2. Token holders can replace treasury executors

I checked who is controlling Jito's buyback machinery. The honest answer is: it is still operated by people.

The revenue distributor is actively managed by the development committee. This is a small committee authorized by the DAO; the proposal only promises gradual automation and decentralization in the future, with no specific plan as of yet.

But this "leash" is real. The committee's authority is constrained by the revocable power structure outlined in JIP-36: a governance vote plus a 12-hour time lock can remove its authority.

If the Venice board reduces destruction to zero, VVV holders can only complain on Twitter; if the Jito committee misbehaves, JTO holders can remove them within 12 hours.

3. Money has already flowed from the company to tokens twice

Before August 2025, 6% of Jito's block engine fees were split equally between Jito Labs and the DAO, with each receiving 3%. JIP-24 subsequently directed the full 6% "permanently" to the DAO, with Labs voluntarily giving up its income source.

JIP-38 extends the same model to JTX from the first day of the new product launch. Venice's Series A added an additional layer of equity claims on top of token holders; Jito's equity layer continuously reduces its claims.

This history makes Jito more credible. If Venice wants similar credibility, it should set up an automatic buyback for ongoing subscription business income.

But the problems remain

JTX has just opened to 1,000 users, so its cash flow rounds off to nearly zero. It currently signals "where future value will flow," rather than existing value. The proposal does not indicate who will eventually receive that 20% development portion; clearly, it is highly likely to flow to Jito Labs, responsible for developing JTX.

One year is not a long time. Forum members have already requested to extend the period to five years. Labs, foundations, and their investors also hold a large amount of JTO, so "token holders decide" means part of it is actually "insiders decide."

To be fair, revenue from existing products like JitoSOL and BAM has already entered the DAO, which is a strong positive signal.

Why is this not just about Jito?

Because most crypto projects have both equity and token layers. Everyone will say "value will accrue to tokens," but you cannot take it at face value.

Don't score the presentation, score the funding pipeline. Just ask three questions:

1. Legally, where does the revenue ultimately land: company accounts or addresses governed by tokens?
2. Who can turn off the destruction mechanism? Can token holders replace this person?
3. Has money ever actually flowed from the company’s pocket to tokens?

Venice fails on the first two questions, and CT has noticed. Jito passes all three but still needs an asterisk on the "controlled by people" point.

Sponsorship Content | stBTC: Bitcoin Now Has Liquid Staking

Liquid staking is one of the most validated tracks in the crypto market. Lido alone has a TVL exceeding $17 billion; for years, ETH holders could earn staking yields without giving up liquidity.

Bitcoin holders have not had a corresponding version because Bitcoin has historically lacked a reliable, encapsulated native staking mechanism.

The situation is changing now. Stacks is about to launch Bitcoin Staking, and StackingDAO's stBTC is a liquidity token built on top of it: BTC can earn staking yields while still flowing freely within the Stacks ecosystem.

The expected base yield at launch is about 2.6%. This isn't exaggerated, but it's better than the 0% native yield that BTC has had since 2009.

This is not a new team taking your BTC to take risks. StackingDAO has operated the STX staking infrastructure for over two years, peak management of staked capital exceeding $150 million, serving over 40,000 stakers with zero security incidents.

stBTC has not launched yet; it will debut shortly before Stacks releases Bitcoin Staking.

ETH has a new "management team"

Due to concerns over the sustainability of the treasury, the Ethereum Foundation is stepping back.

Meanwhile, new players are stepping in. Treasury companies are beginning to fund the next phase of Ethereum, which could be the best thing to happen to ETH in years.

What happened?

First, let's look at the timeline:

• June 22: ETH Labs is established. This is a non-profit R&D organization made up of five former Ethereum Foundation researchers; they had participated in finality, scalability, and protocol economics research.
• June 23: The Ethereum Foundation cuts 20% of its staff, reduces the 2026 budget by 40%, and restructures into five work clusters.
• July 1: Ethereum Institutional is established as a non-profit "front-end entry" for banks and asset management institutions to enter Ethereum; its focus also includes ecosystem marketing and ETH asset marketing. Yes, directly marketing this asset.
• July 14: EthSystems is established. This is a for-profit company focused on building confidential trading systems for banks, operated by the original team of the Foundation's "Institutional Privacy Working Group."

In one month, three institutions emerged, and behind each press release are the same three names: Bitmine (NYSE: BMNR), SharpLink (Nasdaq: SBET), and Joe Lubin.

Who are these funders?

Bitmine is Tom Lee's digital asset treasury (DAT) company, holding 5.77 million ETH, which is about 4.8% of the total circulating supply. This means that for every 21 ETH in the world, one is on this company's balance sheet, and its public goal is to hold 5% of the total supply.

SharpLink holds about 876,000 ETH, making it the second-largest corporate holder. Company chairman Joe Lubin is also the founder of Consensys (MetaMask, Linea) and a co-founder of Ethereum.

The issue thus is not whether these companies are important, but why they suddenly started writing checks for protocol research.

Why has DAT become Ethereum's venture capital arm?

To be frank: because their old ways have run out.

The life and death of treasury companies rely on one number—mNAV, which is the multiple of the company's stock price relative to its net asset value in cryptocurrency. When the market capitalization is higher than the value of ETH held, the company can issue more shares and continue to buy ETH, thereby increasing the underlying asset per share. This is how Bitmine built its massive positions.

Now the flywheel is frozen. The entire ETH treasury sector's mNAV has fallen below 1, meaning the market values these companies lower than their holdings themselves. Issuing additional shares below net value would dilute and harm existing shareholders, thus there are no new stocks, no new ETH, and consequently no flywheel.

Moreover, existing holdings themselves are also deeply underwater. Bitmine's average acquisition price is around $3,883; at the time mentioned, the ETH price was less than half of that average. SharpLink's average cost is about $3,609, having previously faced unrealized losses exceeding $1 billion during the last round of corrections.

Waiting for the Ethereum Foundation to lift ETH has not worked, so these companies have decided to take action themselves.

This is not blind donations; they are building a system that can raise the value of their balance sheets again.

Bullish Logic: Finally, Someone is Paying for the Roadmap

From this perspective, ETH holders can enjoy the spillover benefits of the whole input for free.

The foundation is proactively shrinking. Vitalik described the budget cuts as a deliberate transition to a "donation fund model": the foundation's annual spending proportion will drop from about 15% to 5% by 2030 to survive during any winter. The intention is noble, but as Wall Street prepares to enter, it has also left a funding gap.

Treasury companies filled that gap with self-sustaining money. According to predictions, Bitmine's annual staking yield of $284 million equates to a recurring R&D budget that does not require selling any tokens. Tom Lee's statement is: corporate stakers will provide funding assurance for Ethereum's future development.

If it works, the flywheel will turn in the right direction: institutional roadmaps land, banks bring real funding flows, ETH demand gets repriced, and developers gain long-term funding.

Strategy only holds Bitcoin but does not fund Bitcoin development; ETH treasury companies reinvest staking yields back into the protocol. This is a significant positive for ETH.

Bearish Logic

But the other side must also be considered.

No specific amounts are disclosed anywhere. As of writing, we do not know how much funding is actually allocated to ETH development. Perhaps the market overestimates the impact of these funds, and actual investments could be very limited.

DAT companies themselves are quite fragile. Pantera warns that by 2026 crypto treasury companies may face a round of "brutal eliminations." If ETH continues to fall, the dollar value of staking yields will shrink, mNAV will compress further, and these companies will stop funding ETH.

My conclusion is: the Ethereum Foundation stepping back does not mean the death of Ethereum development, but a passing of the baton.

New funders hold more ETH than almost anyone on Earth. They cannot crash the market without hurting themselves. This is not perfect governance, but it does create real alignment of interests.

DeFi Catalysts

Polymarket: Bringing "parlay" into the prediction market through Combos: users can combine multiple sports outcomes into a position to win or lose all, with prices offered by market makers through RFQ auctions.

Aave: Launching Stable Vaults that convert floating lending rates into fixed-rate stablecoin yields that any enterprise can embed; the saving function on the Aave mobile app is already in use.

Plasma One: Its new banking app is now live on Android. Downloading before July 18 grants free access for six months to the Core level.

Ethena: Coin minting users can now use USDC to mint and redeem USDe for free. Instant liquidity is expected to reduce value leakage in the secondary market.

Jito: The trading platform JTX has opened to some waiting list users, providing meme coins, tokenized stocks, and mainstream asset spot markets on Solana.

Lido: wstETH is live on Robinhood Chain, bringing Ethereum staking yields to a new ecosystem.

Maple: After launching syrupUSDG on Robinhood Chain, the scale of managed assets surpassed $200 million; Steakhouse has approved it as collateral for the Robinhood Earn treasury.

Jupiter: The new product Gacha brings rated Pokémon and One Piece collectible cards on-chain; the draw value could exceed the amount paid several times, with a maximum reward of $100,000.

Tempo: Allowing accounts to refuse unwanted tokens and limit senders through Receive Policies; rules are enforced at the protocol level rather than the application layer.

RHEA Finance: Launched Perp Confidential Deposit on July 15, allowing users to continue trading with Hyperliquid liquidity while keeping deposit information hidden.

Jito JIP-38: Commits to allocating 100% of the JTX revenue share acquired by the DAO for programmatic buybacks and destruction of JTO until at least Q4 2027; DAO's share accounts for 80% of platform fees.

Hyperliquid: The HIP-3 market's share of platform perpetual contract trading volume rose from about 2% in January to nearly 50%; on-chain stock perpetual contracts are approaching the scale of crypto asset trading.

Securitize: Tokenized $295 million SECZ stock while listing on the New York Stock Exchange, becoming the first US publicly listed company to complete this during its IPO.

Galaxy: Launched Galaxy Onchain Financing Rate (GOFR), providing DeFi credit to institutions with a single, continuously rebalanced rate without managing wallets or private keys; minimum loan amount is $1 million, and native BTC can be used as collateral.

Airdrop Alpha

Lighter: Invested $11 million worth of LIT into Robinhood Chain traders. Perpetual contract trading can earn points redeemable for LIT, with double multipliers available via Robinhood Wallet participation.

Kamino: Launched a $300,000 rewards campaign around three-month USDG deposits, with partners including Steakhouse and Global Dollar Network.

GRVT: Airdrop registration closes on July 17, with TGE scheduled for July 21. Users can claim at TGE or delay to receive up to 4x multipliers; selection is not changeable.

Jupiter: Stakers can receive 50 million JUP from the second quarter Active Staking Rewards. Eligibility requires an average staking of 50 JUP for the quarter; the claim window closes on October 8.

Industry News

Transatlantic working group: The US Treasury and UK Treasury released a joint ten-point roadmap to promote coordination of tokenized assets and cross-border stablecoin regulations.

Swift: Announced that its blockchain ledger is now available for preliminary use; 17 banks from six continents are preparing to use tokenized deposits for real transaction pilots.

Kaito: Kaito Pro launched stock data, allowing tracking of sentiment, prices, and investment logic for over 3,000 global stocks in one interface.

SBI Holdings: Collaborating with the Solana Foundation to build Japan's first on-chain financial market, including the yen stablecoin JPYSC, tokenized RWAs from corporate bonds to real estate, and cross-border settlement infrastructure.

Bonzo Lend: The largest lending protocol on Hedera was attacked due to a vulnerability in the Supra oracle validator, suffering losses of about $9.05 million; the protocol has been suspended, and TVL has dropped by 77%.

Circle: Received final approval from the Office of the Comptroller of the Currency (OCC) to set up First National Digital Currency Bank, N.A.; USDC custody and future reserve management will fall under direct federal oversight.

Meme

Text in the image: Above—"I sold off"; Below—"I increased my dollar reserves."

See you next time,

Edgy