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5 August 2026 | 10:49 Ethereum researchers are considering a new reward-burn mechanism that would let validator issuance decline at high staking levels, aiming to reduce dilution and weaken incentives for excessive concentration.

Key Takeaways Draft requires approval and a future hard fork. Burn reaches 100% at 60.25 million ETH. Issuance peaks near 20% staking participation. Largest operators face weaker incentives to expand. Idealised deductions preserve validator performance incentives. Lower issuance may reduce unstaked holders’ dilution. Under draft EIP-8363, called Tapered Issuance Burn, a growing share of validator rewards would be burned as staking participation rises.

At 60.25 million ETH in active stake—a saturation balance designed to represent approximately half of ETH’s supply at activation, the burn would offset 100% of the idealised consensus rewards covered by the mechanism.

The proposal remains a Core EIP draft rather than an approved Ethereum upgrade. It would require a hard fork because it changes Ethereum’s consensus-layer state transition, although no changes to the execution layer or existing smart contracts would be needed. Its technical and economic details may still change, and discussion is continuing on the Ethereum Magicians forum.

The Proposal Would Let Yield Limit Staking Growth Ethereum’s current issuance curve reduces the return earned by individual validators as more ETH enters staking. However, it never completely removes the financial incentive to add more stake.

According to the proposal, the existing curve retains a yield floor of roughly 1.5% even at extremely high participation. The market can therefore reach an equilibrium only if the return demanded by the next potential validator remains above that floor.

That required return may continue falling as institutional custodians, liquid-staking protocols and professional infrastructure providers reduce the operational, liquidity and technical costs that previously discouraged holders from staking. The trend is already visible in proposed institutional products: Morgan Stanley’s planned Ether trust intends to stake between 50% and 80% of its ETH through external providers if the product launches.

Unstaked holders are also diluted when the protocol creates new ETH for validators. As staking becomes easier, accepting that dilution may become less attractive than moving ETH into a staking service or yield-bearing derivative.

EIP-8363 would allow net consensus yield to keep declining rather than stopping at a protocol-defined minimum. After rewards are calculated through the existing system, a growing portion would be deducted and burned.

Annual consensus issuance would stop rising continuously with the staking ratio. It would peak when approximately 19.8% of ETH is staked and decline as participation moved beyond that level.

60.25 Million ETH Is Not a Staking Cap The saturation balance is an economic reference point rather than a hard limit. The proposal would not reject new validators, force existing participants to exit or prevent more than 60.25 million ETH from entering staking.

At that balance, the consensus issuance earned by a correctly performing validator from the duties covered by the mechanism would be fully offset by the burn. Validators could still receive execution-layer income from priority fees and maximal extractable value, or MEV.

The proposed burn rises with staking participation and reaches 100% at the 60.25 million ETH saturation balance. Source: Draft EIP-8363. The authors do not expect the market to reach saturation under ordinary conditions. Validators generally require a positive return to compensate for infrastructure, maintenance, downtime, liquidity restrictions and slashing exposure.

As net yield declines, some participants would stop entering while others could exit. The expected equilibrium would therefore sit below 50%, where the remaining return matches the compensation demanded by the next validator.

High Staking Can Increase Concentration Risks More stake raises the nominal value exposed to slashing during an attack, but the proposal argues that the additional security benefit becomes progressively smaller as staking participation rises.

A high staking ratio can also move more ETH into exchanges, custodians, liquid-staking protocols and institutional products because many holders cannot or do not want to operate validators directly. Validator power may consequently become concentrated among a limited number of professional operators.

Concentration creates an operational risk beyond the issuance debate. If more than one-third of validators go offline together, Ethereum loses finality until the required two-thirds majority is restored. That makes the network’s 33.3% threshold especially important when validators cluster around the same clients, hosting providers or jurisdictions.

The authors are particularly concerned that a dominant provider could become systemically difficult to slash. If a large operator suffered a major slashing event, its customers could have enough financial and political influence to seek intervention rather than accept the losses.

High participation could also weaken Ethereum’s ability to coordinate against a colluding validator group. Social slashing depends on the wider economy supporting an alternative chain, which becomes harder when a large percentage of ETH is controlled through custodians and staking intermediaries.

The Curve Turns Scale Against Large Operators The current issuance system continually rewards expansion: an operator that adds validators increases its share of active stake while total issuance also grows with network participation. There is no operator size or staking ratio at which another validator reduces that operator’s consensus income. The tapered burn would change that relationship because, once issuance peaks near a 20% staking ratio, an expanding operator would claim a larger share of a shrinking reward pool.

For the largest operators, the decline in the total reward pool could eventually outweigh the benefit of controlling more validators. The EIP calculates that an operator holding half of all active stake would stop increasing its consensus income through expansion once approximately 31% of the ETH supply is staked.

Smaller operators would reach the same turning point closer to the 50% saturation balance. The mechanism would therefore weaken consensus-layer economies of scale sooner for entities that already control the largest share of stake.

The mechanism would not eliminate every advantage enjoyed by large operators because it would not affect MEV or priority-fee income.

Solo Stakers Face a Different Tax Equation The proposal’s authors argue that the existing curve creates a separate disadvantage for solo validators. Dilution reduces the real return earned by every staker, while individuals in jurisdictions that tax staking rewards as income may still owe tax on their full nominal rewards.

Some institutional investors and holders using accumulating exchange-traded products, non-rebasing liquid-staking tokens or wrapped tokens may not face the same immediate tax burden. Solo participants could therefore reach negative dilution-adjusted returns sooner, encouraging them to close validators or move their ETH into an intermediary and potentially increasing concentration.

By limiting issuance growth, EIP-8363 attempts to reduce that disadvantage. It would not change tax law or remove the operational benefits enjoyed by professional providers, but it could lower the dilution component that affects solo stakers earlier.

Critics See the Opposite Risk for Solo Stakers Not everyone accepts the proposal’s argument that lower issuance would reduce the disadvantages faced by solo stakers. Mike Silagadze, co-founder and CEO of ether.fi, argues that the mechanism could produce the opposite result.

In an August 4 post, Silagadze criticised what he described as a 48-hour comment window for a major change to Ethereum’s network economics. He argued that lower rewards could push independent validators out while leaving large centralised operators with lower capital and operating costs in a stronger position.

This is so disappointing on every level.

EIP released with 48 hours notice for comments. Realistically 4 months before it goes live. For a major network economics change with far reaching implications for all of DeFi.

Every builder on Ethereum opposes this. Why is this a focus?… https://t.co/qQbCui8aju

— Mike Silagadze🛡 (@MikeSilagadze) August 4, 2026

Silagadze also warned that declining staking returns could drive capital away from DeFi protocols built around staking and potentially encourage large amounts of ETH to be withdrawn. In his view, that could increase the amount of ETH available to enter the market rather than support its price through lower issuance.

Silagadze’s predictions remain unproven, but they expose the key question facing the proposal: whether lower rewards would weaken large staking operators or leave independent validators unable to compete with them.

Why the Burn Uses Idealised Rewards The deduction would be based on the reward attached to an assigned duty, regardless of whether the validator completed it successfully. An offline validator would therefore pay the burn alongside the normal penalty for failing to participate, preventing operators from avoiding the deduction by switching off.

If Ethereum instead burned only part of the reward actually earned, the financial difference between completing and missing a duty would shrink as the burn increased. At a burn fraction represented by b, the marginal reward for correct performance would fall to 1-b of its current level.

EIP-8363 avoids that problem by calculating the deduction from what a perfectly performing validator would have earned under the network’s actual participation conditions. Correct performance therefore retains the same advantage over failure.

The mechanism includes an exception for an inactivity leak, Ethereum’s recovery mode when the chain has failed to finalise for more than four epochs. Because attestation rewards are withheld during an inactivity leak, EIP-8363 would suspend the attestation portion of the burn, while proposer and sync committee deductions could continue where the corresponding rewards are still paid.

Lower Dilution Could Support ETH as Neutral Money By reducing net issuance, EIP-8363 would lessen the pressure to stake merely to preserve a holder’s share of the ETH supply. The proposal’s authors argue that this could support ETH’s role as neutral collateral, a settlement asset and a unit of account.

At high staking participation, liquid-staking tokens and other yield-bearing derivatives can become more attractive than unstaked ETH for savings, collateral and payments. Applications adopting them also inherit the smart-contract, governance and counterparty risks associated with their issuers.

Greater use of competing derivatives could fragment liquidity and increase the influence of the organisations that issue and govern them. Lower dilution would allow unstaked ETH to compete without requiring holders and applications to adopt an intermediated substitute.

The Transition Would Take About 18 Months Applying the permanent burn curve immediately would sharply reduce returns at the staking ratio used in the draft’s calculations.

At the roughly 34% staking level shown by ValidatorQueue, the draft’s model indicates that an immediate transition could cut net consensus yield from around 2.6% to 1.2%. A sudden decline of that size could trigger a substantial validator exit.

To reduce the shock, the effective base reward factor would begin at 128, twice its current value of 64, and gradually return to 64 over 123,300 epochs, or approximately 18 months.

The temporary increase would scale rewards, penalties and the burn together, allowing net yield to begin near its existing level before moving toward the permanent curve.

The reduction would occur through 65 small steps, with each level lasting approximately 1,927 epochs, or 8.6 days.

The transition would give validators approximately 18 months to reassess their costs and exit through the normal process before the permanent reward curve took full effect.

MEV Remains but Issuance Still Dominates Yield Execution-layer income from priority fees and maximal extractable value, or MEV, would remain outside EIP-8363. As consensus issuance declined, these rewards would account for a larger share of validator income.

According to the EIP authors’ calculation, payments to proposers recorded through MEV-Boost relays totalled approximately 72,600 ETH across 2.42 million blocks during the year ending July 31, 2026. That equals an average of roughly 0.030 ETH per block.

The authors then applied the same average to approximately 190,000 locally built blocks. They describe this as an upper-bound assumption because locally built blocks generally receive lower execution-layer rewards. The calculation places total execution-layer rewards below 78,300 ETH for the period.

Using approximately 40 million staked ETH as the calculation base, the proposal estimates that these execution-layer rewards represented a return of no more than 0.20%. Consensus issuance was substantially larger at approximately 1.054 million ETH annually, equivalent to a return of around 2.62%.

Based on those estimates, consensus issuance accounted for at least 93% of total staking yield. Even if the staking ratio settled at 40% under the proposed curve, the authors calculate that issuance would still represent at least 80% of validator yield.

MEV would nevertheless continue rewarding operator expansion because expected execution-layer income grows with an operator’s share of block proposals. EIP-8363 does not directly remove that incentive, which is why the draft presents MEV burn research as a complementary approach that could reduce validator income and shift equilibrium toward a lower staking ratio.

Lower Issuance Would Not Guarantee Deflation EIP-8363 would reduce net consensus issuance and permanently destroy ETH deducted from validators, but it would not automatically cause the total supply to decline.

The mechanism would complement the fee burn introduced by EIP-1559. EIP-1559 removes Ethereum’s base transaction fee from circulation, while EIP-8363 would burn part of the ETH calculated as consensus-layer rewards.

If staking settled below the saturation balance, validators would continue receiving positive consensus issuance. Whether Ethereum became inflationary or deflationary would depend on whether transaction-fee burning exceeded that remaining issuance.

Supply could therefore continue growing during periods of low network activity and contract when transaction demand was stronger. The proposal aims to limit consensus issuance, not guarantee permanent deflation.

The Proposal Still Has to Pass Review The authors have completed a draft implementation for the Prysm consensus client, although formal test vectors had not yet been included in the reviewed draft. Client code demonstrates technical progress but does not determine whether the EIP will enter a future hard fork.

The outcome would depend not only on technical review but also on validator operating costs, tax treatment, MEV income, liquidity preferences and the return investors demand for staking risk. Rather than selecting a fixed staking target, EIP-8363 attempts to remove the permanent yield floor and let those market conditions determine where participation settles.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, legal or tax advice. EIP-8363 remains a draft proposal and has not been approved for inclusion in an Ethereum upgrade. Its design, parameters, calculations and implementation may change during technical and community review. Methodology: This article is based primarily on the draft EIP-8363 specification, its Ethereum EIPs pull request and the related Ethereum Magicians discussion. Supporting information comes from official Ethereum and Flashbots documentation, the draft Prysm implementation, published MEV burn research, current staking data, public information on proposed institutional staking products and statements from industry participants, including ether.fi co-founder Mike Silagadze. Issuance, staking-yield and execution-layer reward estimates are attributed to the EIP authors and were not independently reconstructed from on-chain data. Author

Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.

Leading cryptocurrencies edged higher on Tuesday as investors weighed the prospects of a U.S.-Iran peace agreement after weeks of fighting.

From ‘Extreme Fear’ to ‘Fear’Bitcoin moved back and forth between the early $63,000s and mid-$64,000s, with trading volume easing significantly.

Ethereum bulls struggled to push the cryptocurrency above $1,800, while XRP and Dogecoin traded in the red.

Over $200 million was liquidated from the cryptocurrency market in the last 24 hours, with bearish shorts making up $137 million, according to Coinglass data

Bitcoin’s open interest fell 0.25% over the last 24 hours. A drop in open interest alongside an increase in spot price typically indicates that short sellers are buying back their positions.

The market sentiment improved from "Extreme Fear" to “Fear,” according to the Crypto Fear & Greed Index.

Top Gainers (24 Hours) 

The global cryptocurrency market capitalization stood at $2.19 trillion, following an increase of 0.71% over the last 24 hours.

Stocks on a TearThe stock market extended its winning streak on Tuesday. The Dow Jones Industrial Average surged 907.47 points, or 1.71%, to end at 54,085.88. The S&P 500 rallied 1.79% to close at 7,736.52, while the tech-focused Nasdaq Composite jumped 2.59% to settle at 26,584.99. The S&P 500 and the Dow closed at all-time highs.

The rally coincided with Treasury Secretary Scott Bessent signalling the U.S. and Iran could reach an agreement as early as Wednesday to reopen the Strait of Hormuz, restoring free passage for commercial shipping.

Analyst Predicts Big BTC Rally Before Limited CorrectionsAli Martinez, popular cryptocurrency chartist and trader, identified $64,300 as the “key level to watch” for bullish confirmation.

“A 4-hour close above $64,300 could confirm the breakout and open the door to a rally toward $65,500 or even $66,500,” the analyst projected.

Michaël van de Poppe, another popular cryptocurrency commentator, forecast Bitcoin’s next upward leg to $85,000, where the 50-week moving average sits as key resistance on the weekly chart.

“I don’t think we’ll dive deeper as much for #Bitcoin as of yet, as most of the pain [90-95%] of the bear market is already in,” Van De Poppe added.

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A fresh Ethereum proposal aimed at capping how much new ETH gets created through staking has kicked off a heated debate among developers, with Aave founder Stani Kulechov warning it could quietly weaken demand for the asset itself.

What the Proposal Actually Does

Developer Jerome de Tychey submitted the draft as EIP-8361, calling it “Tapered Issuance Burn.” The proposal, EIP-8361, would reduce Ethereum’s staking issuance to zero at 50%, meaning once staked ETH reaches half of the total supply, validators would stop earning new issuance rewards entirely.

The change wouldn’t hit all at once. The yield reduction would phase in over about 18 months total, per the proposal, with an additional six months of lead time built in before the network fork activates, giving the ecosystem roughly two years to adjust. Under the plan, issuance would peak at around 0.5% of supply annually, near a 20% staking ratio, then gradually taper down to nothing as the 50% threshold approaches.

De Tychey argues the current system is actually worse for stakers long term, since it offers no built-in limit on dilution and provides no natural mechanism to slow rewards as more ETH gets staked. He also noted the proposal builds on years of research and public debate among core Ethereum contributors, including input from Vitalik Buterin and several other longtime researchers in the space.

Why Kulechov Is Pushing Back

Kulechov argues the plan solves the wrong problem. In a lengthy post, he said capping rewards to zero above 50% staked introduces exactly the kind of unpredictability that scares off serious capital. “This uncertainty has a significant adoption cost,” he wrote, arguing institutions generally prefer assets with predictable yield over ones where returns could vanish based on a supply threshold.

He raised a similar concern for solo stakers, who he said tend to be more sensitive to pricing changes than large institutional players.

The DeFi Angle Kulechov Is Most Worried About

Kulechov’s sharpest criticism centered on lending markets. If staking rewards fall to zero, he argued, most reasons to borrow ETH within DeFi effectively disappear, since there would be little upside left to justify the cost of borrowing it. “The only reason to borrow ETH ironically would be to short it,” he wrote.

He also floated a broader risk: investors comfortable holding ETH purely for its yield exposure might rotate into other yield-bearing assets instead, including stablecoins, a shift he compared to capital moving between asset classes in traditional finance when interest rates change, just running in the opposite direction from what’s typically expected.

Not Everyone Agrees With Either Side

Reaction beyond the two camps has been mixed. One community member questioned whether the proposal should move forward at all before a separate mechanism exists to reward solo and home stakers more generously, potentially scaling rewards based on how small a staker’s share of the network is.

For now, the proposal remains a draft without an assigned final EIP number, and discussion continues on Ethereum’s public forums as the community weighs whether tapering issuance protects the network’s long-term health or undercuts the very asset it’s meant to secure.

Combined with existing fee burns, ETH’s total supply could start shrinking more, according to supporters of the plan, who argue it moves Ethereum’s monetary policy toward the kind of predictability large investors have been asking for. Kulechov, for his part, remains unconvinced. “Ethereum should not be punished for its growth,” he wrote.

Story Ends Here

Trust with CoinPedia:CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.

Investment Disclaimer:All opinions and insights shared represent the author's own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.

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Spot ETFs for Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) experienced notable net inflows on August 4, according to Cointelegraph. Bitcoin spot ETFs reported inflows of $211.49 million, while Ethereum and Solana saw inflows of $53.75 million and $1 million respectively. This development comes at a time when the Bitcoin market is closely watched, with market participants observing these inflows as indicative of increased investor interest. Other reports indicate that spot Bitcoin ETFs had previously seen $170.1 million in inflows on the prior day, highlighting variability in data across sources.

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Key Takeaways Market activity appears to suggest increased investor interest in Bitcoin, Ethereum, and Solana spot ETFs, with significant net inflows reported. The inflows are consistent with scenarios that could lead to a moderate upward movement in Bitcoin price expectations. Market pricing implies robust confidence that Bitcoin’s price will remain above key thresholds, with a current 99.9% YES pricing for Bitcoin to be above $56,000 on August 5. What to Watch Observers should monitor any continued trend in net inflows into these spot ETFs, as sustained interest could further influence market expectations. Attention will also be on any regulatory developments or macroeconomic indicators that could impact crypto markets, such as statements from the Federal Reserve or significant corporate actions. As such, these factors may provide further insights into whether investor sentiment continues to align with a YES outcome for Bitcoin’s price above current thresholds.

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Term Structure

Contract Odds Δ since publish Volume 24h August 5 2026 99.9% — — View market → August 5 2026 99.9% — — View market → August 5 2026 99.8% — — View market → August 5 2026 1.8% — — View market → August 5 2026 99% — — View market → August 5 2026 0.1% — — View market → August 5 2026 0.1% — — View market → August 5 2026 67.5% — — View market → August 5 2026 0.1% — — View market → August 5 2026 99.9% — — View market →

Jim Cramer To Sell Bitcoin After IBM Quantum Warning: Will Traders Fade Him?

A group of Ethereum researchers has submitted EIP-8361, a draft proposal that would gradually reduce validator rewards as the amount of staked ETH increases.

🚨 New EIP: Tapered Issuance Burn
We just submitted an EIP to ethereum/EIPs: a minimal, market-driven fix to Ethereum's issuance policy removing the incentive for stake growth beyond 50% of ETH supply.
EIP-8361 by @pintail_xyz, @jdetychey, @dapplion, @pa7x1, @ladislaus0x &… pic.twitter.com/g1uzWPycQ4

— Jerome de Tychey 🦇🔊 (@jdetychey) August 4, 2026

The proposal, called Tapered Issuance Burn, was submitted by researchers including Jérôme de Tychey, Justin Drake, dapplion, pintail, pa7x1 and Ladislaus von Daniels. It remains a draft Core EIP awaiting review and editor consensus.

Under the proposal, Ethereum would deduct and burn a portion of the rewards assigned to validators for attestations, block proposals and sync committee participation.

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The burn rate would increase alongside Ethereum’s staking ratio and reach 100% when the network has approximately 60.25 million ETH actively staked, an amount set to represent roughly half of the current supply. Net staking yield would therefore decline as more ETH enters the validator set.

The authors said the current issuance curve continues offering a yield of around 1.5% even if nearly all ETH is staked. They argue that the remaining yield floor provides no point at which issuance stops encouraging additional staking.

Ethereum’s staking ratio surpassed one third of the supply in April, according to the proposal’s authors. They estimate that more than 70 million ETH could be staked by January 2028 if the validator entry queue remains near its maximum rate and exits remain limited.

EIP-8361 would preserve the existing differences between performing and nonperforming validators. Validators that complete their assigned duties would continue receiving more than validators that miss them, but a portion of the ideal reward would be burned regardless.

The permanent reward curve would not take effect immediately. The proposal includes an 18 month transition that would initially double Ethereum’s base reward factor from 64 to 128 before gradually returning it to its current level. The authors said this would allow net yields to begin near existing levels before moving toward the new curve.

The proposal would take effect across the full staking curve from activation, meaning issuance would no longer provide an incentive for staking growth beyond the 50% threshold from the first day.

The authors said issuance would peak at approximately 0.5% of the ETH supply annually near a 20% staking ratio before declining to zero at 50%.

Early responses to the proposal have raised concerns about its potential effect on solo validators and Ethereum’s economic security. Participants in the Ethereum Magicians discussion questioned whether lower yields could favor large operators with lower costs and reduce the number of independent validators.

The authors are seeking to have EIP-8361 considered for the proposed Hegotá network upgrade. De Tychey said consideration would begin a period of community review and would not guarantee that the proposal is included in the upgrade.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.

Ethereum’s staking success may have created a new problem, at least according to the authors behind newly submitted EIP-8361. The proposal introduces a Tapered Issuance Burn mechanism designed to remove incentives for staking beyond 50% of Ethereum’s total supply, arguing that the network’s current issuance curve encourages unlimited validator growth instead of allowing market forces to determine equilibrium.

Ethereum Staking Debate Intensifies AgainThe proposal claims Ethereum crossed a one-third staking ratio in April 2026 and has continued climbing each month. Under the existing issuance model, staking yield reportedly never falls below roughly 1.5% even if the entire ETH supply were staked.

According to the proposal, the validator entry queue is currently operating at maximum churn, adding around 1.75 million ETH per month. Based on what its authors describe as conservative assumptions, more than 70 million ETH could be staked by January 1, 2028, representing over 55% of total supply if nothing changes.

Burn Mechanism Replaces Artificial Yield FloorRather than changing validator rewards directly, EIP-8361 proposes deducting and burning a portion of each validator’s idealized duty rewards every epoch. The burn rate would gradually increase until reaching 100% once staking approaches a predefined saturation balance of roughly half the ETH supply.

That would allow net staking yield to taper linearly toward zero at a 50% staking ratio, removing what the proposal calls the artificial yield floor. The authors argue this would let staking settle naturally where returns match the market’s required risk premium instead of remaining fixed by a reward curve introduced in 2030.

Gradual Rollout Aims To Avoid DisruptionThe proposal emphasizes a slow implementation. Yield reductions would phase in over approximately 18 months, alongside an estimated six-month fork lead time, giving validators nearly two years to adjust. It also introduces only one permanent protocol constant while leaving validator duty incentives unchanged.

Supporters argue EIP-8361 strengthens Ethereum’s monetary neutrality by limiting long-term dilution and discouraging excessive staking concentration. Whether the proposal gains broader community backing, however, remains another debate entirely.

Story Ends Here

Trust with CoinPedia:CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.

Investment Disclaimer:All opinions and insights shared represent the author's own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.

Sponsored and Advertisements:Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.

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20h05 ▪ 5 min read ▪ by Ariela R.

Summarize this article with:

The numbers are conclusive! According to its latest 13F filing submitted on July 31, 2026, to the SEC, Intesa Sanpaolo has significantly reduced its exposure to bitcoin in the second quarter. Even more interestingly, Italy’s largest bank has strengthened its position in the Ethereum crypto ETF beforehand. A brutal repositioning that can only raise questions about institutional investors’ strategy on digital assets.

In brief Intesa Sanpaolo reduces its shares in BlackRock’s IBIT Bitcoin ETF by 93.7% in Q2 2026. Its call options linked to this crypto ETF drop by 99.3%, while a new put of 500,000 shares appears. Conversely, its stake in the staked Ethereum ETF triples (from 116,200 to 349,600 shares). The SEC document does not allow knowing the Italian bank’s actual net exposure. Intesa Sanpaolo Dumps Almost 94% of Its Bitcoin ETF According to the filing submitted to the SEC, Intesa Sanpaolo has reduced its position in BlackRock’s IBIT Bitcoin ETF from 646,809 shares to only 40,723. This represents a drop of 93.7%. That’s not all! The bank also crushed its calls on the Bitcoin ETF. The underlying amount decreased from several million to 18,000 shares, a drop of 99.3%.

Meanwhile, a new line of put options equivalent to 500,000 IBIT shares appears in the second quarter filing. This detail intrigues, as it did not appear in the first quarter report. However, Form 13F documents do not specify the strike price, maturity, or premium paid. It is therefore impossible to know if this position aims to cover an existing risk or to explicitly bet on a decrease in the bitcoin price.

Still in the same context, Intesa Sanpaolo holds 3.47 million shares of the ARK 21Shares Bitcoin ETF. This represents about 67.6 million dollars. Analysis: the bank’s bitcoin exposure now seems limited to the bare minimum. The exit remains targeted on BlackRock’s flagship crypto product.

Ethereum in Pole Position: Crypto Staking Attracts Institutional Investors While the Bitcoin ETF retreats, the world’s second cryptocurrency advances. Still according to the Form 13F document, Intesa Sanpaolo increased its holdings of the iShares Staked Ethereum Trust from 116,200 to 349,600 shares. This equates to nearly 7.1 million dollars. The bank thus tripled its position in this BlackRock Ethereum ETF.

According to crypto analysts, this choice reveals a strong preference for yield-generating products. Indeed, crypto staking allows locking ETH to secure the network and earn rewards. Unlike a simple spot ETF, this approach offers a stream of passive income. For a commercial bank, this is a significant argument.

Moreover, Intesa Sanpaolo is not the only one exploring this path. Other Italian and European institutions are already strengthening their crypto portfolios through regulated products. Staking, in particular, is becoming a favored lever to diversify a crypto portfolio without touching the direct custody of private keys.

Hedging Strategy or Change of Conviction? A Market Signal Not to Ignore Crypto analysts emphasize an important point: the SEC filing does not tell the whole story. Form 13F captures the shares held but not the full structure of derivatives. In other words, the 500,000 puts on the Bitcoin ETF may mask a net position different from what the raw numbers suggest.

However, the size of the movement is striking. Reducing the Bitcoin ETF by 94% while tripling the crypto Ethereum sends a clear signal. The bank reallocates within its digital asset basket, not just to protect itself. Furthermore, it has also almost liquidated its position in the Bitwise Solana Staking ETF. This one fell from 2,817 to 7 shares.

For investors, this type of rotation can weigh on sentiment. If an institution of this size reduces IBIT and strengthens the Ethereum crypto ETF, it could signal a relative vote of confidence.

In any case, Intesa Sanpaolo’s turn proves that crypto investment strategies are becoming increasingly complex. Will other European banks adopt the same approach? Story to follow…

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Ariela R.

My name is Ariela, and I am 31 years old. I have been working in the field of web writing for 7 years now. I only discovered trading and cryptocurrency a few years ago, but it is a universe that greatly interests me. The topics covered on the platform allow me to learn more. A singer in my spare time, I also cultivate a great passion for music and reading (and animals!)

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

Ethereum developers have submitted a new proposal that would gradually reduce validator rewards as more ETH enters staking. The draft, known as EIP-8361, introduces a reward burn mechanism designed to remove staking incentives once about half of Ethereum’s supply is actively staked. The proposal is now awaiting community review before any decision on future network inclusion.

EIP-8361 Proposes New Validator Reward Model A group of Ethereum researchers, including Jérôme de Tychey, Justin Drake, dapplion, pintail, pa7x1, and Ladislaus von Daniels, submitted the draft Core EIP for review.

The proposal, called Tapered Issuance Burn, would burn part of the rewards earned by validators for attestations, block proposals, and sync committee participation.

Under the proposed model, the burn rate would increase as Ethereum’s staking ratio rises. The burn would eventually reach 100% when approximately 60.25 million ETH is actively staked, a level representing about half of the current ETH supply.

As staking grows, validator yields would gradually decline instead of remaining at a fixed minimum level.

The authors wrote that “the current issuance curve continues offering a yield of around 1.5% even if nearly all ETH is staked.” They added that “the remaining yield floor provides no point at which issuance stops encouraging additional staking.”

Transition Plan and Community Discussion The proposal includes an 18-month transition period instead of introducing the permanent reward curve immediately. During the initial stage, Ethereum’s base reward factor would increase from 64 to 128 before gradually returning to its current level.

The authors said this approach would keep validator yields close to existing levels before shifting toward the new issuance model.

The draft would apply the revised reward curve from the day of activation. Annual issuance would peak at around 0.5% of the ETH supply when staking reaches roughly 20%, before declining to zero as staking approaches the proposed 50% threshold.

Ethereum’s staking ratio passed one-third of the total supply earlier this year. The proposal estimates that more than 70 million ETH could be staked by January 2028 if validator demand remains strong.

If you are looking to maximize staking rewards under the current system, comparing the best crypto staking platforms can help identify competitive yield opportunities.

THE BLOCK: Ethereum researchers propose burning validator rewards to cap staking at 50%

Over a third of all Ethereum in existence is now locked up in staking contracts. The staking ratio has climbed to 34.4% of total ETH supply, the highest level ever recorded for the network.

Ethereum completed its transition from proof-of-work to proof-of-stake on September 15, 2022, in what the community called the Merge. Instead of miners burning electricity to validate transactions, the network shifted to validators who lock up ETH as collateral.

Since that transition, the amount of ETH flowing into staking contracts has climbed steadily. The 34.4% figure represents the cumulative result of that trend, now nearly three years in the making.

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One of the biggest accelerants has been liquid staking. Protocols like Lido allow users to stake their ETH while receiving a liquid token in return, meaning they don’t have to choose between earning staking rewards and maintaining access to their capital.

Previously, staking meant locking up a minimum of 32 ETH with no ability to use it elsewhere. Liquid staking lowered that threshold to essentially zero and opened the door to retail users and institutions alike.

What a 34.4% staking ratio actually means for supply Staked ETH isn’t sitting on exchanges ready to be sold. It’s committed to securing the network, earning rewards, and generally staying put. The total number of ETH tokens doesn’t change dramatically day to day, but the number available for trading shrinks as more gets staked.

Network security and the validator equation Higher staking participation directly translates to stronger network security. More validators means more distributed consensus, which makes the network harder to attack. As the staking ratio climbs, the cost of such an attack grows proportionally.

What investors should actually watch from here Other proof-of-stake networks have staking ratios well above 50%, and some exceed 70%.

There’s also the question of what happens when staking becomes so popular that it starts to concentrate risk. If too much ETH flows into a small number of liquid staking protocols, the decentralization benefits of proof-of-stake could erode. Ethereum’s community has debated potential caps on staking participation for exactly this reason.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

A draft Ethereum Improvement Proposal published on August 4 could fundamentally reshape how the network rewards its validators, reigniting a long-running debate over ETH monetary policy and the risks of unchecked staking growth.

What EIP-8361 Proposes Ethereum researchers Jérôme de Tychey, Justin Drake (@drakefjustin), dapplion, pintail, pa7x1, and Ladislaus von Daniels submitted EIP-8361 as a draft Core Ethereum Improvement Proposal. The proposal introduces a gradual supply burn mechanism: during each epoch, a portion of theoretical validator rewards would be removed and destroyed, with the burn share rising from 0% toward 100% as the staking ratio climbs. Rewards would reach zero near 60.25 million staked ETH, equal to roughly half the current supply, with an 18-month transition period proposed to limit abrupt changes in validator yields.

The proposal attacks the one property of Ethereum's issuance curve that no previous reduction plan removed: there is no staking ratio at which the incentive to stake more switches off. The proposal notes that Ethereum crossed a one-third staking ratio in April 2026 and has continued climbing each month. The validator entry queue is currently operating at maximum churn, adding around 1.75 million ETH per month, and based on conservative assumptions, more than 70 million ETH could be staked by January 1, 2028, representing over 55% of total supply if nothing changes.

Supporters say unchecked issuance dilutes non-stakers and may encourage custody concentration, while opponents warn that lower rewards could weaken participation and increase reliance on transaction-ordering revenue. EIP-8361 remains under community review and has not been approved for an Ethereum upgrade.

The Pushback and the Bull Case The reaction from the DeFi community was swift. Aave founder and CEO Stani Kulechov (@StaniKulechov) criticized EIP-8361, arguing that the proposed changes to Ethereum's staking issuance policy could weaken the network rather than achieve their stated goals. He argued the proposal would make staking rewards unpredictable and less attractive for institutions and solo stakers, and warned it could reduce the viability of ETH borrowing strategies in DeFi, pushing investors toward alternative yield-bearing assets.

Grayscale's Zach Pandl (@LowBeta) offered a contrasting view, calling the potential supply reduction a first-order implication for the $ETH price and noting that ETH pays its cash flows via inflation. The divide illustrates how the same mechanism can look very different depending on whether the lens is DeFi yield or macro asset valuation.

Reward changes can move capital quickly, as the record validator exit queue of 2025 demonstrated, making the design's incentive effects a central debate for clients considering implementation. With no formal upgrade approval yet, the proposal faces a lengthy path through community consensus before it could affect any validator's returns.

Sources:
The Defiant: New Ethereum Proposal Would Burn Validator Rewards
Crypto.news: Ethereum proposal could end staking rewards at 50%
Crypto Times: Aave Founder Questions Ethereum Staking Proposal EIP-8361

Bitcoin traded around the $64,000 level on Tuesday, continuing its low-volatility sideways movement.

Notable Statistics:

Coinglass data shows 61,746 traders were liquidated in the past 24 hours for $164.57 million.        SoSoValue data shows net inflows of $170.09 million from spot Bitcoin ETFs on Monday. Spot Ethereum ETFs saw net outflows of $11.4 million. In the past 24 hours, top losers include Audiera, ether.fi and Flare. Notable Developments:

Trader Notes:

Crypto chart analyst Ali Martinez noted Bitcoin is testing the upper boundary of a descending channel, with $64,300 as the key breakout level. A four-hour close above that could confirm bullish momentum and pave the way for a move toward $65,500–$66,500.

Trader KillaXBT pointed out that Bitcoin’s next key date is Aug. 14, a period that has historically coincided with major directional moves. BTC has posted a negative reaction around that date in 8 of the last 10 instances, making a test of $60,000 a likely scenario.

The strategy is to fade market sentiment, look for long opportunities if BTC sells off and consider shorts if it rallies.

Ted Pillows highlighted that large sell orders have emerged in the $64,000–$65,000 range, creating a significant resistance zone for Bitcoin.

This heavy sell wall is likely to make it difficult for BTC to break above $65,000 unless buying pressure strengthens.

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Aave founder and CEO Stani Kulechov has spoken out against the EIP proposal, which has surfaced within the Ethereum community and aims to limit staking returns. Kulechov argued that the regulation would not deliver the intended results and could instead harm the Ethereum ecosystem and ETH’s attractiveness as an investment asset.

The proposal envisages reducing the staking return to 0% if the staked ETH ratio exceeds 50% of the total supply. According to Kulechov, this structure could make staking revenues unpredictable, rendering the activity uneconomical for many participants.

Aave CEO Kulechov stated that institutional investors, in particular, value predictable cash flows when building ETH positions. He noted that if returns become uncertain, these investors might turn to alternative blockchain networks offering more stable income, which could create a significant adoption cost for Ethereum.

Kulechov also argued that reducing staking yields to zero would render lending and yield strategies conducted via ETH largely ineffective. In such a scenario, he stated, the primary use case for ETH borrowing might be limited to short selling.

Kulechov stated that investors using ETH-linked yield products might turn to stablecoins or other interest-bearing assets, suggesting that the proposal could significantly shrink Ethereum-based lending and yield markets.

In his personal assessment, Kulechov stated that the proposal would weaken ETH’s viability as an asset and limit its long-term potential. Expressing his hope that the proposal would not proceed, the Aave CEO said that otherwise, many market participants might shift their interest to other blockchain networks.

Kulechov argued that Ethereum should not be penalized for its growth, noting that any changes to the network’s economic incentive structure should be carefully considered in terms of their impact on DeFi, staking, and institutional adoption.

*This is not investment advice.

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Perhaps the large portion of BTC's price recovery was fueled by the impressive ETF numbers.

After a painful end to the previous week (and month), the spot Bitcoin ETFs began August with a bang, attracting over $170 million in net inflows.

This made them the best-performing exchange-traded funds tracking any cryptocurrency on Monday, which has not always been the case lately.

The fresh capital that entered the BTC funds on Monday is almost the same as the entire net positive for July, which was $172.42 million. At the same time, the underlying asset rebounded from another dip to $62,200, and jumped to $64,000 in midday trading.

In contrast, the Ethereum ETFs far outperformed in July, attracting more than $365 million last month. However, SoSoValue data shows that the financial vehicles tracking the largest altcoin were actually in the red on Monday, losing $11.42 million.

The XRP ETFs gained a modest $1.15 million, but extended their non-red streak, as the last day with more withdrawals was July 8.

The Solana funds saw no reportable action, similar to those tracking Dogecoin, but that’s no surprise since they have rarely seen any actual inflows.

The spot HYPE ETFs, which were once the top-performing crypto funds, are on a painful streak. The last time they were in the green was July 15. On Monday, the ETFs lost nearly $1 million again.

You may also like: Ripple (XRP) ETF Monthly Recap: The Good, The Bad, and the Ugly Ripple (XRP) ETF Inflows Set Another Record, but One Problem Remains Crypto ETF Recap: Ethereum Still Outpaces Bitcoin, but Cracks Are Emerging Tags:

About the author

Jordan got into crypto in 2016 by trading and investing. He began writing about blockchain technology in 2017 and now serves as CryptoPotato's Assistant Editor-in-Chief. He has managed numerous crypto-related projects and is passionate about all things blockchain.

Bitcoin (BTC) advances above $63,000 on Tuesday, buoyed by increasing investor risk appetite. Ethereum (ETH) continues to trade under pressure below the supply range at $1,900 and above the short-term $1,800 support. At the same time, Ripple’s (XRP) upside is constrained under the pivotal $1.10 level while support at $1.00 remains intact.

Bitcoin, XRP ETFs attract inflowsInstitutions renewed their appetite for Bitcoin spot Exchange-Traded Funds (ETFs), which recorded a total of $170 million in inflows on Monday, following roughly $265 million in outflows on Friday. Should the demand for US-listed ETFs increase, it will raise the odds of an extended recovery.

Bitcoin ETF flows | Source: SoSoValueEthereum ETF experienced renewed outflows of approximately $11.42 million on Monday, snapping two consecutive days of inflows, including $13.29 million on Thursday and $9.03 million on Friday. The return of ETH ETF outflows while Bitcoin records inflows suggests capital rotation within the crypto market.

Ethereum ETF flows | Source: SoSoValueAs for XRP spot ETFs, inflows extended for the fourth consecutive day, totaling $1.15 million on Monday. This marks a significant drop from the $7.69 million recorded last Friday. According to SoSoValue data, cumulative inflows hold steady at $1.15 billion, with net assets under management at $1.01 billion.

ETH ETF flows | Source: SoSoValueTechnical analysis: Bitcoin holds short-term supportBitcoin trades at $63,588, with a bearish near-term bias as the price remains below the 50-day, 100-day and 200-day Exponential Moving Averages (EMAs). The pair is capped first by the 50-day EMA around $64,644, with the longer-term 100-day EMA near $67,132 and the 200-day EMA around $72,673 reinforcing a broader downside tone.

The Moving Average Convergence Divergence (MACD) indicator holds in negative territory with a weak profile on the daily chart, while the Relative Strength Index (RSI) around 48 stays near neutral, hinting that bearish pressure persists but without extreme selling conditions.

BTC/USDT daily chartOn the downside, immediate support lies at the SuperTrend level around $61,034, which marks the nearest structural floor before deeper losses could open the way toward lower psychological levels. On the topside, bulls would need to reclaim the 50-day EMA at $64,644 to ease immediate downside pressure, with subsequent resistance at the 100-day EMA near $67,132 and the 200-day EMA around $72,673, where a sustained break would be needed to shift the broader outlook back toward a more constructive trajectory.s

Altcoins technical outlook: Ethereum and XRP sell-off persistEthereum trades around $1,857, holding in a neutral near-term stance as price sits above the 50-day Exponential Moving Average (EMA) at $1,851 but remains capped well below the 100-day EMA at $1,928. The SuperTrend indicator at $1,741 continues to underpin the broader rebound structure, yet downside momentum is hinted at by the MACD histogram slipping further below zero, while the RSI fluctuates around the 50 mark, signaling a lack of clear directional conviction.

ETH/USDT daily chartOn the topside, initial resistance emerges at the 100-day EMA near $1,928, with the 200-day EMA around $2,153 forming a more substantial barrier that would need to be reclaimed to revive a stronger bullish phase. On the downside, immediate support is defined by the nearby 50-day EMA around $1,851, with a deeper cushion at the SuperTrend line near $1,741, where a break lower would likely shift the bias decisively in favor of sellers.

XRP, on the other hand, trades at $1.07 while remaining under clear downside pressure, holding below the 50-day, 100-day and 200-day EMAs clustered at $1.12, $1.20 and $1.39, respectively, which reinforces a bearish near-term bias.

The spot Price also trades beneath the Bollinger Bands middle layer at $1.09, keeping the action confined to the lower half of the volatility envelope, while the RSI hovering around 45 and a slightly negative MACD reading hint that momentum remains fragile and rallies are likely to be sold.

XRP/USDT daily chartOn the topside, initial resistance emerges at the Bollinger midline near $1.09, ahead of the 50-day EMA around $1.12 and the upper Bollinger Band near $1.14, with further recovery capped by the 100-day EMA at $1.2 and the 200-day EMA up at $1.39. On the downside, immediate support aligns with the lower Bollinger Band around $1.05, and a clear break beneath this band would open the door to deeper losses as sellers extend control within the current bearish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Crypto ETF FAQs An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Yes. The SEC approved in January 2024 the listing and trading of several Bitcoin spot Exchange-Traded Funds, opening the door to institutional capital and mainstream investors to trade the main crypto currency. The decision was hailed by the industry as a game changer.

The main advantage of crypto ETFs is the possibility of gaining exposure to a cryptocurrency without ownership, reducing the risk and cost of holding the asset. Other pros are a lower learning curve and higher security for investors since ETFs take charge of securing the underlying asset holdings. As for the main drawbacks, the main one is that as an investor you can’t have direct ownership of the asset, or, as they say in crypto, “not your keys, not your coins.” Other disadvantages are higher costs associated with holding crypto since ETFs charge fees for active management. Finally, even though investing in ETFs reduces the risk of holding an asset, price swings in the underlying cryptocurrency are likely to be reflected in the investment vehicle too.

Flare’s FXRP token has been approved as collateral in an institutionally curated Morpho vault on Ethereum, letting XRP holders borrow Ripple’s RLUSD stablecoin without selling. It is the first time an XRP-based asset has been accepted in a major on-chain lending market.

Summary

Flare’s FXRP, a bridged version of XRP on Ethereum, has been approved as collateral in Sentora’s RLUSD Main vault on Morpho, allowing XRP holders to borrow Ripple’s RLUSD stablecoin without selling their tokens. The integration is the first time an XRP-based asset has been accepted as collateral in an institutionally curated Ethereum lending market, a milestone for an asset that has been almost entirely absent from DeFi. XRP is the fourth largest cryptocurrency by market capitalization at approximately $70 billion, yet its utilization in on-chain lending, borrowing, and liquidity provision has been negligible compared to assets like ETH, WBTC, and stablecoins. Ripple has been building RLUSD as an enterprise-focused stablecoin since August 2024, securing NYDFS approval in December 2024 and a Mastercard settlement integration in July 2026. The Morpho Blue lending protocol uses isolated markets designed to contain risk if problems arise with a specific collateral asset, a structure that makes it possible to onboard newer assets like FXRP without exposing the broader protocol to systemic risk. Introduction XRP is one of the most widely held cryptocurrencies in the world. At roughly $70 billion in market capitalization, it trails only bitcoin, ether, and Tether’s USDT. It has millions of holders, deep liquidity on centralized exchanges, and a history that predates most of the DeFi ecosystem. And yet, until this week, there was no major lending market on Ethereum where XRP holders could borrow against their position.

The reason is infrastructure, not demand. XRP runs on the XRP Ledger, a separate blockchain with its own consensus mechanism and token standard. Ethereum-based DeFi protocols cannot natively interact with XRP. To use XRP in Ethereum lending markets, someone needs to build a bridge, create a wrapped token, and convince a risk team to underwrite it. That process took years for bitcoin (resulting in WBTC), and it has now happened for XRP through Flare’s FXRP token.

On August 3, Flare announced that FXRP has been approved as collateral in Sentora’s RLUSD Main vault on Morpho. XRP holders can now convert their tokens to FXRP, bridge to Ethereum, deposit as collateral, and borrow Ripple’s RLUSD stablecoin. This is not just a technical milestone. It is a test of whether XRP can become a productive DeFi asset after years of sitting idle in wallets.

How the FXRP to RLUSD lending flow works The process involves four steps, each handled by a different protocol.

Step one: XRP to FXRP conversion. XRP holders convert their native XRP tokens into FXRP, Flare’s bridged representation of XRP. Flare is a layer 1 blockchain that has built cross-chain data infrastructure, including the ability to create asset representations that can move between chains.

Step two: bridge FXRP to Ethereum. The FXRP token is bridged from Flare to Ethereum, where it becomes an ERC-20 token that Ethereum-based protocols can recognize and interact with.

Step three: deposit FXRP as collateral on Morpho. The Ethereum-native FXRP is deposited into Sentora’s RLUSD Main vault on Morpho Blue. Sentora, formerly known as IntoTheBlock, serves as the vault curator, meaning it reviews and approves which assets can be used as collateral. Sentora reviewed FXRP’s market behavior, oracle design, liquidity, and liquidation mechanics before granting approval.

Step four: borrow RLUSD. With FXRP deposited as collateral, the user borrows RLUSD, Ripple’s dollar-pegged stablecoin. The loan is overcollateralized, meaning the value of the FXRP deposit must exceed the value of the RLUSD borrowed. Because this is a loan against collateral and not a sale, the borrower retains exposure to XRP’s price movements.

Flare CEO Hugo Philion described the significance in terms of institutional credibility: “XRP is now collateral that an institutional risk team underwrites on Ethereum mainnet, which is a stronger form of recognition than another bridge listing.”

Why XRP has been absent from DeFi XRP’s absence from DeFi is not accidental. It reflects three structural factors that have kept the asset isolated from the composable lending and borrowing ecosystem that Ethereum-based tokens take for granted.

Separate blockchain architecture. The XRP Ledger uses a different consensus mechanism (the XRP Ledger Consensus Protocol) and token standard than Ethereum. Unlike ERC-20 tokens, which can be natively deposited into any Ethereum smart contract, XRP requires a bridge and a wrapped representation to interact with Ethereum DeFi. Building that bridge securely takes time and auditing resources. The XRP Ledger was designed for payments, not for programmable smart contracts, which means the tooling and standards that Ethereum DeFi relies on do not exist natively on XRPL.

Regulatory uncertainty. The SEC’s lawsuit against Ripple, filed in December 2020 and not fully resolved until 2024, created a chilling effect on DeFi integration. Protocol teams and vault curators were reluctant to add XRP-based collateral when the token’s regulatory status was unclear. DeFi protocols have their own compliance considerations, and adding a token that the SEC claimed was an unregistered security was a risk most teams chose to avoid. The resolution of that case removed the legal overhang but did not immediately produce DeFi infrastructure.

Limited DeFi ecosystem on XRPL. The XRP Ledger has a built-in decentralized exchange and an automated market maker, but its DeFi ecosystem is small compared to Ethereum, Solana, or even newer L2 networks. Most DeFi activity, lending, borrowing, yield farming, and derivatives, happens on Ethereum and its rollups. For XRP holders to participate, they need to leave the XRPL, which until FXRP was not straightforward. The result is that a $70 billion asset has been almost entirely absent from on-chain credit markets, a gap that is disproportionate to its size and liquidity on centralized venues.

The WBTC parallel The closest analogy to what Flare is doing with FXRP is Wrapped Bitcoin (WBTC), which has been operating on Ethereum since 2019. WBTC lets bitcoin holders wrap their BTC into an ERC-20 token, deposit it as collateral on Aave, Compound, and MakerDAO, and borrow stablecoins against it.

WBTC demonstrated that non-native assets can become productive DeFi collateral if the bridge is trustworthy and the lending market is deep enough. At its peak, WBTC had over $15 billion in total value locked. It proved that bitcoin holders wanted to borrow against their positions rather than sell.

FXRP aims to replicate this model for XRP. The key differences are scale (WBTC had years of liquidity building, FXRP is just launching) and custody model (WBTC relies on a centralized custodian, BitGo, while Flare uses a decentralized bridge). Whether FXRP achieves WBTC-level adoption depends on whether XRP holders are willing to bridge their tokens and whether additional lending vaults beyond Sentora add FXRP as collateral. The bridging step is a genuine friction point: WBTC holders only needed to interact with a single custodian, while FXRP holders must navigate Flare’s cross-chain infrastructure before reaching Ethereum. Reducing that friction through improved tooling and wallet integrations is as important to adoption as the lending market itself.

What RLUSD is and why it matters here RLUSD is Ripple’s dollar-pegged stablecoin, designed for enterprise use cases including cross-border payments and institutional settlement. Ripple began testing RLUSD on Ethereum and the XRP Ledger in August 2024 and received approval from the New York Department of Financial Services in December 2024.

RLUSD is not trying to be USDC or USDT. Ripple has positioned it as a compliance-first stablecoin for regulated financial institutions. The Mastercard settlement integration announced in July 2026 is an example: Mastercard will support settlement of regulated stablecoins including RLUSD, USDC, and SoFi’s SoFiUSD. Zand Bank in the UAE began using RLUSD for cross-border payments in early 2026. Ripple has also expanded into Latin America, bringing Bitso’s Mexican peso-backed stablecoin MXNB onto the XRP Ledger in June 2026.

The FXRP/RLUSD lending integration adds a new use case: on-chain borrowing. XRP holders who want dollar liquidity without selling can now borrow RLUSD against their position. If RLUSD is accepted at more venues and payment rails, the utility of borrowing it increases. This creates a flywheel where RLUSD adoption in payments makes RLUSD borrowing more attractive, which drives more FXRP deposits, which deepens the lending market.

The stablecoin landscape itself is shifting rapidly. Circle recently brought USDC to the XRP Ledger, meaning XRPL now supports both RLUSD and USDC natively. This multi-stablecoin approach on XRPL means XRP holders have more options for accessing dollar liquidity, and the FXRP/RLUSD lending market on Ethereum adds yet another path. For Ripple, the strategic play is to make RLUSD the default borrowing currency for XRP-collateralized loans, creating a use case that USDC does not serve.

BREAKING: XRP Ledger sustains over 140 TPS and blocks with up to 987 transactions during today’s big activity wave, maintaining cent-level fees and 3-4 second settlement pic.twitter.com/yaAyCH4wGy

— crypto.news (@cryptodotnews) April 10, 2026 Why Morpho Blue’s isolated market design matters Morpho Blue is a lending protocol that uses isolated markets instead of the shared pool model used by Aave and Compound. In a shared pool, all depositors share risk: if one collateral asset fails, losses can spread across the entire protocol. In Morpho Blue’s isolated markets, each collateral-borrow pair operates independently. A problem with FXRP would affect only the FXRP/RLUSD market, not other lending pairs on the protocol.

This design is what made it possible for Sentora to approve FXRP as collateral. A shared pool protocol would likely have rejected a newly bridged token with limited on-chain history. Morpho Blue’s isolation means the risk is contained, and the vault curator (Sentora) bears the responsibility for evaluating it.

Sentora’s CTO Jesus Rodriguez described the approval as a deliberate expansion of on-chain credit: “XRP is one of crypto’s largest and most liquid assets. Yet it remains surprisingly underused in onchain credit. That changes today.” The framing is significant: this is not a DeFi experiment. It is an institutional risk team making a calculated underwriting decision.

The isolation model also creates a natural price discovery mechanism for FXRP risk. Because each vault has its own interest rate curve determined by utilization, lenders are effectively pricing the specific risk of FXRP collateral rather than having that risk diluted across a shared pool. If the market perceives FXRP bridge risk as elevated, rates in FXRP-collateralized vaults will rise relative to vaults backed by native Ethereum assets. This transparency gives both lenders and borrowers real-time information about how the market values the bridge and custody mechanisms that underpin FXRP.

The $70 billion question XRP has roughly $70 billion in market capitalization. If even 5% of that value migrates into DeFi collateral positions (as happened with bitcoin through WBTC), the result would be $3.5 billion in new collateral available for borrowing. At 10%, it would be $7 billion.

For context, Morpho Blue’s total value locked across all markets is roughly $4 billion. A meaningful flow of XRP into the protocol would make it one of the largest collateral assets on the platform. Whether this happens depends on XRP holder behavior, FXRP bridge trust, and RLUSD utility. But the infrastructure is now in place for the first time.

The peso-backed stablecoin integration on XRPL through Bitso and the USDC expansion to XRP Ledger through Circle show that Ripple is building a multi-stablecoin ecosystem around XRP. The FXRP/RLUSD lending market extends this ecosystem into Ethereum DeFi, bridging two worlds that have historically operated separately.

The comparison to Ethereum’s DeFi trajectory is instructive. When WETH first became available as collateral on Aave and Compound, it took approximately 18 months before the cumulative value locked in ETH-collateralized lending exceeded 5% of ETH’s market capitalization. XRP faces a steeper adoption curve because its holder base skews more retail, with a lower proportion of technically sophisticated users who are comfortable with bridge mechanics and vault management. The institutional channel through Sentora’s curated vaults could accelerate adoption, but institutional allocators typically require six to twelve months of live market data before committing significant capital.

What scale adoption would look like The WBTC adoption curve provides a template for projecting what FXRP could achieve over a multiyear period. When WBTC launched in January 2019, it began with a few million dollars in total value locked. It took roughly 18 months to reach $1 billion, and another year to reach $10 billion as DeFi activity surged through 2020 and 2021. At its peak in late 2021, WBTC held over $15 billion in total value locked across Aave, Compound, and MakerDAO, representing roughly 1.5% of bitcoin’s market cap at the time.

FXRP starts from a different baseline. XRP has no DeFi history to build on, while WBTC launched when bitcoin holders already understood the concept of using cryptocurrency as collateral and had watched earlier DeFi protocols develop lending markets. But XRP’s size, $70 billion in market capitalization, means even a small adoption rate translates to significant absolute TVL. If FXRP captures 0.5% of XRP market cap in collateral, that is $350 million. At 1%, $700 million. At the WBTC peak rate of roughly 1.5%, it would be more than $1 billion.

For Morpho Blue, these numbers are material. The protocol’s total value locked across all markets is roughly $4 billion. A $500 million FXRP collateral pool would represent more than 10% of Morpho’s total market size, making FXRP a top-tier collateral asset and attracting market makers, liquidation bots, and additional vault curators who see FXRP liquidity as worth their infrastructure investment.

The institutional framing matters here. Sentora’s approval is not just a permission to participate; it is a credentialing signal. DeFi protocols are understandably skeptical of bridged assets because bridge exploits have caused billions in losses. An institutional risk team reviewing oracle design, liquidity profiles, and liquidation mechanics before granting approval lowers the barrier for the second and third curator approvals. Morpho’s isolated market architecture means curators can observe how the FXRP/RLUSD market behaves before committing their own vaults, using Sentora’s early data as evidence.

Ripple’s existing institutional relationships give FXRP a distribution channel that WBTC did not have at launch. RLUSD is already integrated with Mastercard settlement, live in Zand Bank UAE, and present on the XRP Ledger alongside USDC. If Ripple’s enterprise payment partners begin borrowing RLUSD against FXRP positions for working capital or treasury management, the institutional use case extends beyond retail speculation. A $10 million working capital facility backed by XRP collateral, accessed through the FXRP bridge and Morpho, is precisely the kind of product that Ripple’s enterprise sales network can take to existing RLUSD clients. That commercial distribution path distinguishes FXRP from purely retail-driven bridged tokens and gives the collateral market a demand source that does not depend on DeFi sentiment cycles.

The risk of bridge-based DeFi collateral The FXRP model introduces risks that native Ethereum tokens do not carry. Every step in the flow, XRP to FXRP conversion, bridging from Flare to Ethereum, oracle pricing, and Morpho vault liquidation, represents a potential failure point.

Bridge exploits are the most expensive category of smart contract hacks in crypto history. Cross-chain bridges have caused over $4 billion in losses since 2021, including the Ronin ($624 million), Wormhole ($326 million), and Nomad ($190 million) exploits. Each of these hacks targeted the trust assumptions that allow assets to move between chains. The FXRP bridge uses Flare’s decentralized infrastructure, which is architecturally different from the compromised bridges, but the risk category is the same: any vulnerability in the bridge could result in unbacked FXRP tokens on Ethereum, which would make the Morpho collateral worthless.

Oracle risk is the second concern. The Morpho vault needs an accurate, manipulation-resistant price feed for FXRP to trigger liquidations at the right time. If the oracle diverges from the true market price of XRP, two outcomes are possible: premature liquidations that harm borrowers, or delayed liquidations that leave lenders with bad debt. Sentora reviewed the oracle design before approving FXRP, but the limited on-chain history of the token means the oracle has not been tested under extreme market conditions.

Liquidity risk is the third factor. If a borrower’s FXRP collateral needs to be liquidated, there must be sufficient FXRP liquidity on Ethereum for liquidators to sell the seized tokens. A thin FXRP market could result in liquidators being unable to recover the full value of the loan, creating losses for RLUSD lenders. This is a bootstrapping problem: liquidity improves as adoption grows, but adoption depends on liquidity being sufficient from the start.

Historical precedent suggests bridge exploits follow a pattern. The Ronin bridge lost $625 million in March 2022 when attackers compromised validator keys. The Wormhole bridge lost $320 million a month earlier through a signature verification bypass. In both cases, the underlying assets on the source chain were unaffected, but the wrapped representations on the destination chain became worthless. For FXRP holders using Morpho vaults, a Flare bridge compromise would mean their collateral evaporates while their loan obligations remain. The asymmetry between borrower and lender risk in a bridge failure scenario is one of the least discussed aspects of cross-chain DeFi collateral.

What would invalidate this thesis The bullish read is that FXRP opens a new chapter for XRP in DeFi. The bearish read is that XRP holders have shown little interest in DeFi historically, and a bridged token on an unfamiliar protocol will not change that behavior.

If FXRP deposits remain below $50 million after six months, the integration was a technical success but a commercial failure. If the FXRP bridge suffers a security incident, trust in the model collapses. If RLUSD itself fails to gain traction beyond a few institutional partnerships, the borrowing side of the market dies. And if XRP’s price drops significantly, FXRP collateral positions get liquidated, creating negative feedback loops that discourage further deposits.

Regulatory risk adds another dimension. If regulators classify FXRP as a derivative or synthetic asset rather than a direct representation of XRP, the compliance burden on institutional vaults could make the product uneconomical. The SEC has not issued guidance on wrapped or bridged tokens as a distinct category, and enforcement actions in adjacent areas suggest the regulatory framework remains uncertain. A single enforcement action against a bridged asset product could freeze institutional participation across the entire category.

What to watch FXRP total value deposited on Morpho. The single most important metric. If deposits reach $500 million within six months, XRP holders are adopting DeFi collateral use cases. If deposits stall below $100 million, adoption has failed.

RLUSD circulating supply growth. Track whether the lending integration drives new RLUSD minting. If borrowing demand increases RLUSD supply, the flywheel is working.

Additional vault curators adding FXRP. Sentora is the first. If other curators like Gauntlet, Block Analitica, or Steakhouse Financial add FXRP vaults, the collateral is gaining broader institutional acceptance.

Flare bridge security. Any exploit or significant downtime on the FXRP bridge would damage trust in the model. Track audit reports, bridge volume, and incident history.

XRP DeFi TVL relative to market cap. Currently near zero. Bitcoin’s WBTC TVL as a percentage of BTC market cap reached roughly 1.5% at peak. If FXRP reaches even 0.5% of XRP market cap ($350 million), it would represent meaningful DeFi adoption.

Frequently asked questions What is FXRP? FXRP is Flare’s bridged version of XRP that operates as an ERC-20 token on Ethereum. It allows XRP holders to use their tokens in Ethereum-based DeFi protocols without selling the underlying XRP.

What is RLUSD? RLUSD is Ripple’s dollar-pegged stablecoin, designed for enterprise use cases including cross-border payments and institutional settlement. It was approved by the New York Department of Financial Services in December 2024 and launched on Ethereum and the XRP Ledger.

How does XRP lending on Morpho work? XRP holders convert XRP to FXRP on Flare, bridge FXRP to Ethereum, deposit it as collateral in Sentora’s RLUSD vault on Morpho Blue, and borrow RLUSD against their position. The loan is overcollateralized and retains the borrower’s exposure to XRP price movements.

Why has XRP been absent from Ethereum DeFi? XRP runs on a separate blockchain (the XRP Ledger) that cannot natively interact with Ethereum smart contracts. The SEC lawsuit against Ripple also discouraged DeFi protocol teams from integrating XRP-based assets until the case was resolved.

What is Morpho Blue? Morpho Blue is a lending protocol that uses isolated markets instead of shared pools. Each collateral-borrow pair operates independently, containing risk and making it possible to onboard newer assets like FXRP without exposing the broader protocol.

How is FXRP different from WBTC? Both are bridged representations of non-Ethereum assets. WBTC uses a centralized custodian (BitGo) to hold the underlying bitcoin, while FXRP uses Flare’s decentralized bridge. WBTC has years of liquidity history and widespread DeFi integration; FXRP is just launching.

What is Sentora’s role? Sentora (formerly IntoTheBlock) is the vault curator that reviewed and approved FXRP as collateral for the RLUSD lending market on Morpho. Curators evaluate collateral assets for market behavior, oracle design, liquidity, and liquidation mechanics before granting approval.

Could this model expand to other assets? Yes. The FXRP/Morpho model could be replicated for other non-Ethereum assets that have large market capitalizations but limited DeFi presence. The success or failure of the FXRP integration will likely influence whether curators approve similar bridged tokens in the future.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The information presented is based on publicly available reports and announcements as of August 3, 2026. Always conduct your own research before making investment decisions.

BlackRock has expanded tokenized money market funds to Europe with Ethereum share classes covering $311 billion in institutional liquidity assets.

Summary

BlackRock has launched tokenized share classes for European institutional money market funds managing $311 billion in assets. The Ethereum based rollout lets approved investors transfer fund shares between eligible wallets while keeping traditional fund records in place. The launch follows BlackRock’s introduction of two tokenized money market products for institutional investors in the United States. The tokenized share classes will be available across 15 markets and are intended for treasury management, digital collateral and other institutional use cases. According to a recent announcement, BlackRock has introduced its first tokenized access to institutional money market funds in Europe by launching blockchain-based share classes on Ethereum in partnership with Kinexys by JPMorgan. 

The rollout covers selected BlackRock Institutional Cash Series (ICS) money market funds that managed a combined $311 billion in assets as of June 30, according to the asset manager.

The launch extends BlackRock’s tokenization efforts beyond the U.S. after the firm introduced two blockchain-based money market products earlier this week. While those products focused on stablecoin reserves and U.S. Treasury liquidity, the latest rollout brings tokenized access to existing institutional cash funds across multiple European and international markets.

BlackRock has tokenized 12 institutional fund share classes According to BlackRock, the initiative includes 12 tokenized share classes across its ICS Euro Government Liquidity, Sterling Government Liquidity, U.S. Treasury, Euro Liquidity, Sterling Liquidity, and U.S. Dollar Liquidity funds.

The company said Kinexys by JPMorgan provides the tokenization platform that links blockchain activity with the existing fund register. Each on-chain token represents ownership of an underlying ICS fund share, while the official shareholder register continues to be maintained through the fund’s transfer agent infrastructure instead of on the blockchain itself.

Approved institutional investors will be able to transfer tokenized shares directly between eligible wallets at any time through smart contracts. BlackRock said the structure combines yield-bearing money market fund exposure with near real-time on-chain visibility while keeping the compliance controls used in regulated investment products.

Hannah Winter, Head of Digital Cash at BlackRock, said tokenized money market funds allow the firm to deliver high-quality short-duration investment exposure in digital form without changing its standards for capital preservation, liquidity, and risk management.

The asset manager added that the tokenized share classes are intended for institutional uses including corporate treasury operations, digital collateral management, bank distribution networks and integration with tokenized financial systems.

European rollout follows BlackRock’s recent tokenization push The latest launch comes one day after BlackRock introduced two tokenized money market products in the United States.

One product, BSTBL, places tokenized share classes of BlackRock’s existing Select Treasury Based Liquidity Fund on Ethereum, while BRSRV is designed as a stablecoin reserve vehicle for institutional users with multi-chain support. Both products invest primarily in cash, short-term U.S. Treasury securities and overnight Treasury-backed repurchase agreements.

Unlike a stablecoin, BSTBL gives investors ownership of fund shares whose returns depend on income generated by the underlying portfolio rather than maintaining a fixed redemption value. BRSRV, meanwhile, is intended for stablecoin reserve management and reinvests dividends daily.

The European launch expands the same strategy into existing institutional liquidity products instead of creating new investment vehicles. According to BlackRock, the on-chain share classes will initially be available in Bermuda, Estonia, France, Germany, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Spain, Sweden, Singapore and the United Kingdom.

BlackRock continues building digital asset infrastructure BlackRock has continued adding blockchain-based products alongside its regulated cryptocurrency business over recent months.

In July, the company joined a Depository Trust & Clearing Corporation (DTCC) pilot that allows financial institutions to test tokenized representations of stocks and U.S. Treasuries while the underlying assets remain within traditional market infrastructure. JPMorgan, Goldman Sachs, Vanguard, the New York Stock Exchange and dozens of other financial firms are participating in the initiative.

Separately, the U.S. Securities and Exchange Commission approved an increase in the options position limit tied to BlackRock’s iShares Bitcoin Trust (IBIT) from 250,000 to one million contracts, allowing larger institutional trading and hedging positions under NYSE Arca rules.

BlackRock has indicated that tokenized funds form a separate part of its digital asset strategy from its cryptocurrency exchange-traded products. During the company’s second-quarter earnings call last month, Chief Financial Officer Martin Small said the long-term plan is to allow investors to access tokenized Treasury funds, iShares ETFs and private market investments through digital wallets alongside crypto assets and stablecoins.

A separate essay published by Chief Executive Larry Fink and Chief Operating Officer Rob Goldstein in The Economist in December 2025 also described tokenization as a way to reduce settlement delays, improve private market operations and record ownership of financial assets using blockchain-based ledgers.

Over the last week, Bitmine Immersion Technologies, Inc., owned by Tom Lee, added 10,399 ETH. This has increased its total Ethereum [ETH] holdings to 5,797,813 ETH, which is approximately $10.9 billion in value.

Additionally, the company owns 209 Bitcoin [BTC], $173 million in cash and marketable securities, and more than $240 million in strategic equity stakes. 

That said, by now, Bitmine is by far the biggest corporate holder of Ether, holding 4.8% of the total amount of Ethereum in circulation (120.7 million ETH). 

This occurs as Ethereum’s price surged by 1.24% in the past 24 hours to $1,856.54 at the time of writing. 

Tom Lee applauds Ethereum’s performance  Adding more weight, Lee cited historical evidence that Bitmine’s stock frequently outperforms Ethereum itself after periods in which Ethereum substantially outperforms the Nasdaq.

In July, ETH outperformed the Nasdaq 100 by 2,500 bp (or 25 percentage points). This is the largest outperformance since July 2025, and we believe it is reflective of the strengthening fundamentals of crypto. Last July (2025), ETH rose from $2,375 to $4,057 by the end of August.

Validating his theory, the stock price of BMNR was trading at $17.42 at the time of writing after a hike of 0.81%. However, the year-to-date stock price drop of over 44% raises eyebrows.

Bitmine’s staked ETH and more Meanwhile, its institutional staking platform, MAVAN (Made in American VAlidator Network), already has about 4.9 million ETH staked, or 85% of its total ETH holdings.

Bitmine estimates that it can make about $247 million in staking revenue annually, with that amount increasing to $291 million if all of its Ethereum is eventually staked. For context, this is based on its current staking yield of 2.67%.

Furthermore, as part of its $4 billion buyback program, the company has bought back 16.1 million shares since the 1st of July, including 4.5 million shares in the last week alone. 

This occurs while the Ethereum ETF space recorded $11.9 million in outflows on the 3rd of August. Nevertheless, according to SoSo value data, the month of July saw inflows outpacing outflows totaling $365.17 million. 

Source: SoSo Value Is ETH’s staking ecosystem acting as a catalyst? Meanwhile, Ethereum’s validator queue indicates that, despite cooling from previous peaks, staking demand was strong throughout July and the first part of August.

Source: Validator Queue Although at a slower rate, new validators continued to join the network, as evidenced by the entry queue’s gradual decline from nearly 2.9 million ETH in early July to about 2.5 million ETH by early August. There were only slight spikes in the exit queue, which stayed near zero, indicating that not many validators were opting to unstake.

The historical chart demonstrates that, despite being below the 4 million+ Ethereum peak observed earlier in 2026, the current entry queue is still historically high, indicating strong long-term confidence in Ethereum and ongoing staking demand.

Final Summary Bitmine’s Ethereum holdings reach 5,797,813 ETH, with about 4.9 million ETH already staked. The Ethereum validator queue further confirms that, despite cooling from previous peaks, staking demand was strong. 

Not financial or tax advice. PANews content is strictly educational and informational and is not investment advice, financial advice, tax advice, legal advice, or a solicitation to buy or sell any digital asset, security, or financial product. Do your own research and consult qualified advisers.

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The three major U.S. stock indexes all opened higher.

According to market data from BIT (bit.com), US stocks opened with the Dow Jones Industrial Average up 1.17%, the S&P 500 rising 0.4%, and the Nasdaq gaining 0.78%. Palantir (PLTR.N) surged 14.7% after the company significantly lifted its full-year revenue forecast. SpaceX (SPCX.O) and AMD (AMD.O) are scheduled to release their earnings reports post-market, with their shares climbing 2.8% and 3.7% respectively. Micron Technology (MU.O) rose 4%, while Corning (GLW.N) advanced 5.6%.

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Liquidity has become the defining battleground for Layer 1 networks.

Notably, BlackRock’s launch of two tokenized money market funds (BSTBL on Ethereum and BRSRV on Solana) is the latest example.

Built to serve as reserve assets for stablecoins, the funds show how institutions are increasingly optimizing blockchain rails to attract and manage liquidity.

Naturally, the numbers support the trend.

Stablecoins now account for over 14% of the total crypto market, representing $305 billion in capital against a $2.26 trillion market cap. With that liquidity pool, L1 networks are clearly competing to attract stablecoin reserves, and BlackRock’s latest move reinforces that narrative. 

Source: TradingView (STABLE.D) Here’s a simpler way to think about it. 

Think of BSTBL and BRSRV like digital accounts.

So, instead of keeping stablecoin reserves in traditional bank accounts, issuers can hold them in BlackRock’s tokenized funds on Ethereum or Solana. That keeps liquidity native to the network, making it easier to deploy, settle, and move capital across the ecosystem.

Why is BlackRock betting on Ethereum and Solana? Against this backdrop, it’s easy to see why BlackRock’s launch sparked a frenzy. From a macro lens, the move reinforces the growing institutional focus on stablecoins as the next major source of on-chain liquidity.

More importantly, though, it puts the long-running Solana vs. Ethereum debate back in the spotlight.

The real question now is whether “liquidity” is the factor that finally puts the debate to rest.

BlackRock’s Ethereum and Solana launch reignites the race for liquidity The growing stablecoin market is only one part of why BlackRock’s move matters.

As discussed earlier, the launch provides stablecoin issuers with a regulated method to hold reserves on Ethereum and Solana through BlackRock’s tokenized money market funds. As more issuers adopt these funds, more capital flows on-chain, expanding liquidity across both Layer 1 networks.

Why does this matter?

Liquidity is the backbone of DeFi. With DeFi TVL already up over 8% in Q3, fresh stablecoin liquidity could further deepen on-chain activity across both Ethereum [ETH] and Solana [SOL].

Notably, the timing makes the move even more interesting. According to CryptoQuant, altcoins now account for 60% of Binance’s trading volume, suggesting capital is increasingly rotating beyond Bitcoin.

Source: CryptoQuant Against this backdrop, BlackRock’s tokenized funds could amplify that trend by bringing more institutional liquidity on-chain. 

Is SOL gaining ground against ETH? From a technical perspective, too, the timing stands out.

The SOL/ETH ratio has traded below the 0.05 level since the October crash, spending months in a tight consolidation range. If liquidity emerges as the next major catalyst, that consolidation could finally break. 

In turn, the breakout could offer a clearer signal on whether SOL or ETH is winning the race for capital, with BlackRock’s tokenized money market funds adding fresh momentum to that narrative.

Final Summary

TLDR BlackRock launched a new tokenized money market fund called BRSRV for stablecoin reserve management. The fund records ownership on Solana, Ethereum, and Tempo blockchains. BlackRock also launched on chain shares of its existing BSTBL Treasury liquidity fund. The fund invests only in cash, short term Treasuries, and repurchase agreements, not digital assets. The product is built to qualify as a reserve asset under the GENIUS Act. BlackRock has launched a new tokenized fund aimed at companies that manage stablecoin reserves. The fund is called the BlackRock Daily Reinvestment Stablecoin Reserve Vehicle, or BRSRV.

The asset manager announced the launch on Monday. It also introduced tokenized shares of an existing fund, the BlackRock Select Treasury Based Liquidity Fund, known as BSTBL.

This marks BlackRock’s first use of Solana for a tokenized fund. The firm had already been using Ethereum for similar products.

Ownership Recorded Across Three Blockchains According to a prospectus filed with the SEC, ownership of the new fund is recorded on Solana, Ethereum, and Tempo. Tempo is a blockchain built for payments and stablecoins.

Investors will hold their shares through wallets approved by Securitize, which acts as the transfer agent for the fund.

BlackRock said the system is permissioned. This means wallets must be verified and whitelisted before an investor can hold shares.

The transfer agent can restrict transfers if needed. In some cases, it can freeze, revoke, or reissue shares.

Jon Steel, who leads BlackRock’s cash management product and platform team, said cash remains a basic building block for investors and financial institutions. He said the new funds give clients more ways to access money market investments across both traditional and digital markets.

Fund Holds Only Cash and Treasuries Despite using blockchain technology, the fund does not touch cryptocurrency directly. BlackRock said it invests only in cash, short term U.S. Treasury securities, and overnight repurchase agreements backed by Treasuries.

The company stated clearly in its filing that the fund will not invest in any digital assets, including virtual currencies.

The fund also has a minimum initial investment of three million dollars. This suggests the product is aimed at institutions rather than individual investors.

BlackRock said the fund is structured to qualify as an eligible reserve asset under the GENIUS Act. That law sets rules for how payment stablecoins must be backed in the United States.

The filing noted some risks. Future regulatory changes could affect whether stablecoin issuers can keep using the fund as a reserve asset.

Blockchain outages or flaws in smart contracts could also disrupt transactions, according to the filing.

This launch builds on BlackRock’s earlier tokenization work. The firm’s BUIDL fund, launched in March 2024, now manages more than 2.6 billion dollars in assets.

Other large financial firms have introduced similar products. Morgan Stanley and Fidelity have both rolled out offerings aimed at stablecoin reserve management since the GENIUS Act passed.

The move shows how major asset managers are building infrastructure around stablecoin regulation. Reserve funds like BRSRV are designed to meet the specific requirements stablecoin issuers now face under U.S. law.

BlackRock has not said whether it plans to add more blockchains to the fund in the future. The prospectus does note that other supported networks may be added later.

The Italian giant bank, which has increased its investment in cryptocurrencies since last year, has now switched almost entirely to Ethereum.

Accordingly, Italy’s largest banking group, Intesa Sanpaolo, made a noteworthy move.

While the bank sold a large portion of its BlackRock spot Bitcoin ETF holdings, it significantly increased its position in Ethereum.

In this context, the bank tripled its position in BlackRock’s iShares Staked Ethereum Trust ETF while closing almost its entire position in the Solana ETF.

According to the announcement, as of June 30, the bank reduced its position in BlackRock’s iShares Bitcoin Trust (IBIT) fund by 93.7% compared to the previous quarter, falling to 40,723 shares.

The bank also significantly reduced its investment in the Bitwise Solana Staking ETF. Its position in the SOL fund fell from 2,817 shares to just 7 shares.

In contrast, Intesa Sanpaolo significantly increased its position in Ethereum. The bank nearly tripled its iShares Staked Ethereum Trust ETF position, increasing it from 116,200 shares to 349,600 shares.

According to the data reported at this point, Intesa Sanpaolo is significantly reducing its holdings in Bitcoin and Solana, while substantially increasing its holdings in Ethereum, indicating a significant shift in the bank’s portfolio allocation towards cryptocurrency ETFs.

*This is not investment advice.

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Elon Musk's net worth shrank by $363 billion in July.

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