Data & Insights: Believe in Something; ETH DEX Traders Are Back

Believing in Something

• The daily amount of tips paid to Jito validators on Solana saw a notable spike over the past week, averaging 20.9K SOL per day, equivalent to $3.63 million.
  • This is ~57% higher than the 13.7K SOL ($2.06 million) daily average throughout the previous 4 weeks
  • Spikes in Jito validator tips are often an indicator of heightened on-chain activity on Solana, and this time has been no different
• Interestingly, despite the recent spike in on-chain activity on Solana and Jito validator tips, the fees generated by pump.fun has actually declined by -27.5% week-over-week.
  • From Monday, May 5, 2025, to Saturday, May 10, 2025, pump.fun generated $18.2 million in fees
  • The following week, from Monday, May 12 to Saturday, May 17, pump.fun fees fell to $13.2 million.
  • This discrepancy is likely explained by the rise of the Believe ecosystem, which appears to be gaining traction at pump.fun’s expense and eating into its market share over the past week.
• Over the past week, the Solana on-chain environment has seen a new wave of “internet capital markets” coins, fueled by the early success of Believe, a project founded by Ben Pasternak.
  • Believe is a token launchpad on Solana that allows anyone to create a token simply by replying to X (Twitter) posts with “@launchcoin + TICKER”.
  • Tokens are deployed via a bonding-curve pool and “graduate” to a Meteora AMM pool once the coin’s market cap surpasses $100K.
  • Every token launched on Believe also has a 2% fee or “tax” on every buy and sell transaction.
  • Trading fees are split 50/50 between Believe and a token’s creator, providing a continuous revenue share model for both the platform and creators.
  • Unlike pump.fun, which has historically catered to memecoins, Believe positions itself as a launchpad for startups and utility-focused projects, even if many of the tokens being launched lack utility in nature.
  • This is because the mechanism and terms & conditions (T&C) outlined in Believe’s documentation explicitly state that tokens “must never represent equity,” which has raised concerns over long-term project legitimacy and token viability.
• Since Monday, May 12, the Believe platform’s token $LAUNCHCOIN (formerly $PASTERNAK) has surged from a $12 million market cap to a peak of $344 million by Thursday, May 15.
  • This represents a 2,766% increase in just 4 days.
  • At the same time, several other ecosystem tokens have achieved relatively notable valuations, including multiple eight-figure caps, with the top performer crossing $70 million.
  • On the other hand, two tokens called $GOONC and $STARTUP, which are memecoins launched on Believe without any active underlying projects or utilities, also managed to reach peak market caps of $70 million and $42 million, respectively.
• It’s worth noting, however, that at the time of writing, the majority of these tokens have declined by over 70%, and $LAUNCHCOIN itself is down more than 40% from its local high.
  • Concerns over the long-term utility and value of the tokens being launched through Believe have ignited significant skepticism and doubt over the ecosystem as a whole.
  • Still, as with prior skepticism toward on-chain AI projects earlier this year, many of which went on to reach multi-billion dollar valuations at their peaks, it may be worth keeping a close eye on the Believe ecosystem as it matures, or if its T&Cs are altered to allow for token utility and representation of equity later down the line.

Everybody gets a loan

• Aave's total value locked (TVL) on Ethereum has surged to approximately $30 billion, rebounding impressively from its year-to-date low of $20 billion, supporting its position as the largest lending protocol on the blockchain and the second-largest dApp by TVL.
  • This 50% growth in locked capital represents a significant vote of confidence in Ethereum's DeFi ecosystem, which had experienced a notable period of reduced activity earlier in the year.
• For perspective, Aave is generating over $1 million in fees daily at the time of writing, demonstrating robust protocol utilization beyond mere capital deposits.
  • The resurgence in Aave's popularity coincides with improved market conditions for Ethereum, which has created a positive feedback loop for DeFi protocols built on the network.
• Ethereum's price stabilization and growth have encouraged users to unlock previously dormant assets and redirect them toward productive yield opportunities within the ecosystem.
  • This renewed activity signals the potential start of another DeFi expansion cycle after months of consolidation, with Aave positioned at the forefront of this trend.
• Outstanding debt on Aave has grown proportionally with TVL, now sitting at approximately $10 billion, indicating healthy utilization of the platform's liquidity.
  • This debt-to-TVL ratio of roughly 33% suggests a balanced approach to capital efficiency, high enough to generate meaningful yield for depositors but maintaining sufficient liquidity buffers for the protocol.
  • The steady growth in borrowing activity highlights the persistent product-market fit for decentralized lending, even as the broader crypto market evolves beyond the initial DeFi boom.

ETH is cool again

• Ethereum's decentralized exchange (DEX) landscape is experiencing a notable resurgence in trader activity, with daily active traders climbing to approximately 64,000 and hovering near its three-month high.
  • This represents a 73% increase from just earlier this month when the metric bottomed at around 37,000 traders on May 4th.
  • The swift recovery in trader count signals renewed retail interest in Ethereum's trading ecosystem, coinciding with general improvements in overall market conditions and Ethereum price action.
• Despite this influx of traders, total DEX volume on Ethereum has not risen proportionately, currently sitting at approximately $15 billion for the month.
  • This disconnect between trader count and volume suggests the return is primarily driven by smaller retail participants making lower-value trades rather than institutional or whale activity.
  • Historically, periods of retail-driven trading have often preceded broader market participation, potentially foreshadowing increased engagement in the coming weeks.
• Uniswap continues its unchallenged reign as Ethereum's dominant decentralized exchange, commanding an overwhelming $13 billion of the $15 billion in monthly volume.
  • The protocol's user dominance is even more pronounced, with approximately 62,000 of the ecosystem's 64,000 traders utilizing Uniswap, a staggering 97% user capture rate.
  • This long-standing market leadership has persisted through multiple market cycles, though it remains an open question whether any emerging protocols can challenge this dominance as the ecosystem evolves.
• As we head further into the year, we’re watching to see if traders will become more volatile or if this period of discipline will continue. 

Reflipping a COIN

• In last week’s newsletter, we mistakenly referenced Coinbase’s Q4 2024 earnings figures instead of the intended Q1 2025 data, an editorial lapse on our part.
  • Despite this, the broader conclusions we drew remain valid, and the updated Q1 2025 results presented in this week’s newsletter only serve to further reinforce them.
• In its latest financial reports for Q1 2025, Coinbase reported $2.03 billion in revenue
  • This represents a 24% year-over-year (YoY) increase from the $1.64 billion in Q1 2024
  • However, it falls slightly short of the $2.09 billion consensus estimate.
• Coinbase also facilitated over $393 billion in trading volume during Q1 2025, up 25% YoY compared to the $312 billion reported in Q1 2024.
  • Of this, $315 billion or 80% originated from Coinbase’s institutional clients, while the remaining $78 billion or 20% came from what the firm categorizes as “retail” users.
  • As discussed last week, despite representing a minority of total volume, the retail segment contributes the bulk of Coinbase’s fee revenue.
  • This is due to Coinbase’s significantly higher retail maker/taker fees (up to 0.40%/0.60%) compared to institutional rates (typically 0.00–0.05%).
  • This fee spread remains unchanged from Q4 2024 and continues to highlight why retail activity remains the core driver of Coinbase’s revenue generation.
• On the more positive side, Coinbase’s quarterly transacting user count rose to 9.7 million in Q1 2025.
  • This figure marks the second-highest in the company’s history, trailing only Q4 2021’s peak of 11.4 million.
• Meanwhile, total assets held on the platform were valued at $327 billion at the end of the quarter, representing a 19% quarter-over-quarter (QoQ) decline.
  • This drawdown was largely due to broader crypto market weakness. Bitcoin, for example, declined by 11% from the end of Q4 2024 to the end of Q1 2025.
  • As a result, the fair value of the crypto assets on Coinbase’s balance sheet depreciated accordingly.
• As of Sunday, 18 May 2025, Coinbase’s stock (ticker: COIN) is up approximately 3.9% year-to-date (YTD), following an impressive 30% gain last week.
  • It is worth noting that in the days following the release of its Q1 2025 financial reports, COIN had at one point traded roughly 20% lower YTD.
  • At that time, Robinhood (ticker: HOOD) was up about 30% YTD, underscoring the intensifying competition from Robinhood, which has been rapidly expanding its crypto footprint, notably against Coinbase’s retail segment.
• That said, Coinbase’s ~$2.8 billion acquisition of Deribit, structured as 70% newly issued COIN shares and 30% cash, positions it to bring the industry’s largest crypto options exchange under its umbrella.
  • With this acquisition, Coinbase stands to significantly expand its high-margin options fee stream, bolster derivatives liquidity for institutional clients and potentially broaden its appeal beyond its core offshore competitors.

Institutional Longs

• Bitcoin spot ETF assets under management have surged to a new all-time high of $109 billion, demonstrating the remarkable success of these investment vehicles in broadening institutional access to digital assets.
  • We’ve seen a steady growth trajectory since launch, with BlackRock's IBIT quickly commanding the largest market share among the approved ETFs.
  • This milestone validates the long-held thesis that regulatory-compliant investment vehicles would unlock significant capital flows into Bitcoin from previously sidelined institutional investors.
  • Prior to the ETFs, investors needed to navigate custody, a significant hurdle, as crypto asset custody differs significantly from equities or other investments. 
• IBIT recently recorded its largest single-day inflow in three months, attracting an impressive $970 million on April 28th alone.
  • This surge suggests that institutional appetite remains robust even months after the initial launch excitement, indicating sustained rather than merely speculative interest.
  • These consistent inflows demonstrate that Bitcoin ETFs have transitioned from novelty financial products to established allocation vehicles for sophisticated investors.
• The diversity of major allocators entering the space signals a profound shift in Bitcoin's institutional acceptance globally.
  • Hong Kong investment firm Avenir has established a substantial position with nearly $700 million in exposure, illustrating that adoption extends well beyond U.S. institutions.
  • Perhaps more telling is the $408.5 million allocation from Mubadala, Abu Dhabi's sovereign wealth fund, representing a significant vote of confidence from traditionally conservative state-backed investment vehicles.
  • Even traditional academic endowments are joining the fray, with Brown University holding nearly $5 million in exposure, a modest but symbolically important allocation from the academic institution.