Market Watch
Random Musing This Week (May 19 - May 24)
ETH Supply Turns Negative Again
Over the past two weeks, Ethereum has quietly re-entered deflationary territory.
The Pectra upgrade, launched on May 7, delivered critical infrastructure improvements, most notably raising validator caps from 32 ETH to 2,048 ETH via EIP-7251, and enabling faster exits.
These changes have made staking operations more efficient and scalable, allowing institutions to consolidate validator nodes, reduce slashing risk, and streamline infrastructure overhead.
The chart above shows an inflection point in early May 2025, where ETH supply begins to decline, signaling that burn rates have started outpacing issuance again, even though the Pectra upgrade didn’t directly modify Ethereum’s burn mechanics. Recent on-chain data shows recovery in total value locked (TVL) across the Ethereum ecosystem since early May.
Notably, lending protocols (red) and liquid staking platforms (yellow) have attracted the largest capital inflows. This increased activity likely pushed gas usage high enough for ETH burn to consistently exceed issuance, accelerating Ethereum’s return to deflation.
Ethereum’s return to deflation is not driven by hype, but by meaningful utility and infrastructure upgrades — a sign of a structurally healthier and more institutionally attractive network moving forward.
Recap of Top Stories (May 12 – May 16)
Interesting
BlackRock’s sBUIDL launches 'first direct DeFi protocol integration' with Euler on Avalanche
Commentary: BlackRock's BUIDL has its "first direct DeFi protocol integration" following an implementation on Euler on Avalanche, according to an announcement on Thursday. The launch builds on the sToken framework developed by Securitize, which enables tokenized products like BUIDL to expand further onchain.
Thursday’s integration, developed by Re7 Labs, will enable the use of sBUIDL as collateral on Euler. Users will also be able to earn AVAX rewards when borrowing USDC or AUSD against sBUIDL, as well as the underlying yield generated by the BUIDL fund.
FTX to begin $5 billion in creditor payouts May 30 under bankruptcy plan
Commentary: FTX Trading Ltd., the parent company of the bankrupt crypto exchange, will begin distributing more than $5 billion to creditors beginning on May 30 as part of the second phase of its Chapter 11 reorganization plan.
The estate is paying users the dollar-value of their former exchange account balances at the time FTX declared bankruptcy in November 2022, during a market low.
eToro debuts on Nasdaq with 29% surge after upsized IPO pricing
Commentary: Trading platform eToro debuted on the Nasdaq on Wednesday with a 29% jump in its share price, following an upsized initial public offering that priced shares at $52 each.
eToro had originally filed for an IPO in March, but then paused its plans as President Donald Trump's tariff announcements caused market volatility, according to CNBC. Other companies with interests in crypto, like Circle and Animoca Brands, are also aiming to go public this year.
JPMorgan, Chainlink and Ondo Finance test cross-chain settlement of tokenized treasury fund
Commentary: JPMorgan's blockchain unit Kinexys, Chainlink, and Ondo Finance have completed a test transaction that settled a tokenized U.S. Treasuries fund across a public and a permissioned blockchain network. The trial showed how different blockchain systems can work together to move real-world assets.
The transaction took place on the test network of Ondo Chain — a new blockchain built by Ondo Finance for tokenizing real-world assets — and used a method called "Delivery versus Payment," or DvP. In this setup, the asset and payment move simultaneously, reducing the risk that one side fails to deliver.
CFTC commissioner will step down to become Blockchain Association CEO
Commentary: Summer Mersinger, one of four commissioners currently serving at the US financial regulatory body Commodity Futures Trading Commission (CFTC), will become the next CEO of the digital asset advocacy group the Blockchain Association (BA).
In a May 14 notice, the Blockchain Association said its current CEO, Kristin Smith, would step down for Mersinger on May 16, allowing an interim head of the group to work until the CFTC commissioner assumes the role on June 2. Though her term at the CFTC was expected to last until April 2028, the BA said Mersinger is set to leave the agency on May 30.
Commentary: The U.S. Securities and Exchange Commission has pushed back its deadline for whether to allow in-kind redemptions for BlackRock's bitcoin exchange-traded fund.
The SEC is now asking for public comments on that proposal, according to a filing made on Tuesday. Nasdaq posted an amended rule filing in January that would allow for redemptions and creations in kind for the iShares Bitcoin Trust.
VanEck to launch its first RWA tokenization fund
Commenrary: Investment firm VanEck is launching a tokenized real-world asset (RWA) fund that offers exposure to US Treasury bills, developed in partnership with tokenization platform Securitize. The initiative places VanEck among a growing number of traditional finance firms entering the RWA tokenization space.
The fund, called VBILL, will be initially available on Avalanche, BNB Chain, Ethereum and Solana blockchains, VanEck said in a May 13 statement. The fund's minimum subscriptions start at $100,000 for investments running on Avalanche, BNB Chain, and Solana, while the minimum subscription on Ethereum is $1 million.
COIN jumps 8% on news Coinbase will become the first pure-play crypto firm to join S&P 500 index
Commentary: Coinbase (ticker COIN), the largest crypto exchange in the U.S., is set to join the S&P 500, the stock market index tracking the financial performance of 500 leading companies, according to CNBC. COIN will replace Discover Financial Services in the benchmark index.
Addition to the S&P 500 requires positive earnings in the most recent quarter and the sum of the prior four quarters. Coinbase’s earnings have been inconsistent due to the volatility of the cryptocurrency market.
Anchorage Digital acquires Mountain Protocol as stablecoin issuer sunsets USDM
Commentary: Crypto financial services firm Anchorage Digital is expanding into the stablecoin trade with its acquisition of Mountain Protocol, according to an announcement on Monday. The move coincides with Mountain’s decision to “commence the orderly winddown of USDM.”
“By acquiring Mountain Protocol, we are taking a significant step forward in supporting institutional stablecoin adoption and advancing a new era of safety, security, and regulatory compliance in the global digital asset ecosystem,” McCauley said in a statement.
SEC Chair Paul Atkins unveils his vision for crypto regulation as the agency charts a friendlier approach to digital assets
Commentary: New U.S. Securities and Exchange Commission Chair Paul Atkins announced a significant change in the agency's approach to cryptocurrency regulation on Monday and outlined details involving issuance and custody as the agency takes on a "new day."
"Policymaking will no longer result from ad hoc enforcement actions. Instead, the Commission will utilize its existing rulemaking, interpretive, and exemptive authorities to set fit-for-purpose standards for market participants."
Lido 'secure' after oracle compromise sparks emergency DAO vote
Commentary: A protocol reporting oracle for Ethereum staking protocol Lido was compromised on Saturday, sparking a Lido DAO vote to rotate the address. Only about 1.5 ETH was lost in the attack, which oracle operator Chorus One called an “isolated incident. The protocol remains secure and fully operational,” Lido said.
Upcoming Market Events
May 30 - BTC CME May (BTCK25) Options Expiry
June 11 - U.S. CPI (May)
June 17 - U.S. Retail Sales (May)
June 18 - U.S. FOMC Interest Rate Decision