December was slower than usual, largely due to the holiday season. Even so, there were several notable developments, with much of the progress concentrated in the Ethereum and Solana ecosystems as both advanced meaningfully at the protocol layer.
At the infrastructure level, Jump Crypto announced at Breakpoint that its Firedancer client is live on Solana mainnet, a major milestone in Solana’s multi-client efforts. Firedancer supports Solana’s motto, “IRBL” (Increase Bandwidth, Reduce Latency), with an expected capability of reaching 100.000 transactions per second. More importantly, it reduces the ecosystem’s dependency on the Agave/Jito client lineage, improving network resilience against correlated bugs and making it harder for a single issue to halt Solana’s liveness. Another relevant Breakpoint announcement was the introduction of the C-SPL concept. This brings encrypted balances and transfer amounts to the SPL token standard without breaking composability or bypassing safety requirements. Overall, this signals Solana’s push toward greater product diversity rather than focusing strictly on the “IRBL” mantra.
On Ethereum, the most important update was the formal introduction of the Fusaka upgrade. Fusaka represents the second part of Ethereum’s twice-per-year hard fork cadence, which the network is aiming to maintain. Like prior major upgrades, Fusaka is positioned as historically significant. Its focus is primarily on rollup scalability and changes to fee structures. The centerpiece is PeerDAS (Data Availability Sampling), which allows validators to verify blob data by sampling rather than downloading full blobs. This unlocks materially higher blob throughput without increasing node bandwidth, since validators ultimately digest less data. Current estimates expect blob capacity to increase by up to 8 times, compressing L2 data costs and making rollup fees more predictable through a set of blob pricing adjustments. Fusaka also introduces UX-oriented changes that enable device-native signing and passkey-style flows, alongside a wide range of smaller EVM changes aimed at improving efficiency and future-proofing.
Across crypto-native projects, governance remains active and sometimes contentious. Uniswap governance, also covered in the previous newsletter, passed its major “UNIfication” proposal. This sets in motion a 100 million UNI token burn and formally aligns protocol economics, sequencer revenue, and governance incentives. The vote is one of the most consequential changes in Uniswap’s history and marks a clear shift toward explicit value accrual and stronger alignment with token holders.
In contrast, Aave’s recent governance process sparked public turmoil. Aave Labs faced backlash after advancing a proposal related to brand rights and protocol usage, which many community members characterized as a hostile takeover attempt. Aave Labs pushed for a decision that would redirect frontend fees away from the Aave DAO and toward Aave Labs. This episode reignited long-standing tensions between core development teams and decentralized governance structures, particularly around intellectual property and control. Following the backlash, recently Aave Labs moved to de-escalate governance tensions by proposing a framework that explicitly separates protocol level economics from non protocol revenue streams. In response to community concerns, Aave Labs clarified that revenues generated from licensing, branding, and off-protocol services would not be automatically captured by the Aave DAO. Instead, the proposal outlines voluntary revenue sharing mechanisms, positioning Aave Labs as a service provider rather than a rent extracting entity. While this eased immediate concerns around unilateral control, the episode exposed structural ambiguities around the relationship between protocol DAOs and their core development companies, a dynamic that continues to resurface across DeFi ecosystems. These episodes further fuel a recent narrative that has formed around token ownership, a narrative where MetaDAO has been at the forefront. We partially discussed this in our previous November Newsletter.
On the regulatory front, the U.S. Federal Reserve announced a material overhaul of previously established supervisory guidance for banks engaging with digital assets. Several crypto restrictions introduced earlier have been rolled back, including heightened approval requirements and enhanced scrutiny around custody and settlement services. This shift signals a continuation of a more neutral stance that aligns with recent policy changes across other U.S. agencies and regulatory bodies. It is a positive development because it streamlines banks’ ability to explore stablecoins, tokenized deposits, and blockchain settlement. It also alleviates a key overhang that may have discouraged regulated institutions from engaging at all.
Digital asset treasury (DAT) strategies continued to evolve, with a notable divergence between accumulation and deleveraging. For example, BitMine disclosed the purchase of approximately $300 million worth of ETH, pushing its holdings beyond 4 million ETH. By contrast, ETHZilla sold roughly $74.5 million worth of ETH as part of a broader effort to reduce outstanding debt and to accommodate purchases of its own stock as it trades below mNAV. This bifurcation raises the question of whether major DATs will be able to keep accumulating, while smaller DATs may be forced to sell. A growing expectation is that less established DATs, along with their holdings, will eventually be absorbed by more successful DATs. Beyond that, the next question is whether the stronger DATs ultimately run into the same problems that weaker DATs are facing today.
Looking at the largest DAT, Strategy, the situation becomes even more interesting. The company added $1 billion worth of BTC, highlighting its continued ability to accumulate. At the same time, it disclosed a renewed focus on growing its cash reserves to cover dividend obligations. To address market concerns, Strategy also stated that its dollar reserve has sufficient liquidity to cover the next two years of dividend obligations, materially reducing near-term liquidity risk. This cash buffer is designed to insulate the company from prolonged drawdowns without requiring forced asset sales that could trigger liquidation cascades. It is a notable pivot for Strategy, which previously maintained a more aggressive posture.
Coinbase remained active across multiple fronts. It announced plans to acquire prediction market The Clearing Company, continuing its M&A-driven push to expand product offerings. This is also an interesting decision because Coinbase’s L2, Base, has positioned Limitless as its go-to prediction market platform on Base. That could imply Coinbase intends to take The Clearing Company in a different direction, or that it wants to separate Base and Coinbase operations to avoid any convergence of interests. At the same time, Coinbase introduced new assets that will settle on Solana, further blending centralized interfaces with crypto-native infrastructure. This is a natural progression following Base's rollout of the Chainlink CCIP (Cross-Chain Interoperability Protocol), which bridges Solana's assets to Base. This development allows users to trade Solana's assets on Base and utilize those same assets across Base's applications. Consequently, both communities gain access to liquidity across Base and Solana. While many viewed this as a positive step, the Solana community primarily perceived it as a threat. Specifically, some in the Solana community saw this as a clear "vampire attack" designed to capitalize on Solana's recent successes. This perspective sparked a significant and unresolved debate between the Base and Solana communities.
Visa launched stablecoin settlement in the U.S. using Circle’s USDC on Solana, extending its existing stablecoin program beyond sandbox and pilot environments. Alongside Visa, JPMorgan continued its push into on-chain finance by launching its first tokenized money market fund, “My OnChain Net Yield Fund” (MONY), on Ethereum. JPMorgan is also issuing tokenized debt on Solana in partnership with Galaxy. Taken together, these initiatives highlight how institutions are increasingly chain-agnostic, selecting networks based on asset type, latency requirements, and distribution rather than ideology, which crypto-native participants often emphasize. Lastly, on the credit and risk side, Moody’s introduced a formal stablecoin ratings framework centered on reserve quality, asset liquidity, and transparency. While still conceptual, it represents a meaningful step toward standardized risk assessment for stablecoins, and a step in the right direction.
Kinetiq completed its TGE, launching the KNTQ token, which is expected to have utility across future Kinetiq products. One such product is Kinetiq Markets, described as the world’s first decentralized exchange liquid staking token, kmHYPE. Markets is positioned to become the first HIP-3 DEX created by Kinetiq Launch. It has a fixed maximum supply of 888,888 kmHYPE, and kmHYPE minting is exclusively reserved for KNTQ holders. Under the base HIP-3 revenue distribution, kmHYPE holders can collectively expect to earn at least 10% of gross revenue from all Markets activity in perpetuity, proportional to their share. Kinetiq initially launched solely as Hyperliquid staking infrastructure. Thanks to Hyperliquid’s HIP-3 design, where market deployers must first stake a substantial amount of HYPE tokens, Kinetiq has expanded into HIP-3 markets and has become one of the market deployers itself.
Beyond DeFi infrastructure, the intersection of AI and crypto also saw meaningful activity. Gensyn conducted an ICO in December, structured as an English auction with a $1 billion fully diluted valuation (FDV) cap, where 3% of supply was sold. This valuation cap was intentionally matched to the valuation of its latest venture round led by a16z. The ICO ultimately cleared at a final price implying an FDV of $473 million.
Prediction markets and their associated applications also advanced. Gondor launched its private beta and announced their $2.5 million fundraise. Gondor aims to become the default DeFi lending platform for prediction markets. Finally, bridging traditional finance and DeFi, institutional solutions continued to emerge. Axis announced a $5 million raise, which it will use to build a multi-asset institutional yield hub across USD, Bitcoin, and Gold. Axis aims to deliver a transparent return stream that is diversified, delta-neutral by design, and weather-resistant across market conditions.
