While @celestia's recent update reduced inflation by 33%, a new proposal has been introduced on their governance forum to cut an additional 50% from 5% to 2.5% These are our high-level takeaways: • Issuance Implications: Halving base inflation from 5% to 2.5% removes ~29m of new TIA tokens each year and trims eight-year issuance by ~220m TIA, bringing the 1.5% terminal inflation rate forward by a full decade. • Validator economics: Raising the commission floor to 10% lifts the stake-weighted fee from 14.2% to 16.5% 54 validators (~55% of stake) must adjust, shifting about 0.7m TIA per year from delegators to operators, small on a network-wide basis, but meaningful as rewards shrink. • PoG Remains the Optimal Economic Path: In our opinion while this is a directionally correct move for issuance policy, PoG’s 0.25% inflation track still dominates on long-term scarcity. Over eight years it mints about eight-times fewer TIA than the newly proposed schedule, pushing the network close to neutral issuance while leaving headroom for DA-fee growth and other potential product offerings to do the heavy lifting. We believe PoG remains the clearest path to durable, value-accretive token economics. --------------------------------------------------------- Disclaimer: The information provided by Kairos Research, including but not limited to research, analysis, data, or other content, is offered solely for informational purposes and does not constitute investment advice, financial advice, trading advice, or any other type of advice. Kairos Research does not recommend the purchase, sale, or holding of any cryptocurrency or other investment.

We’re currently up for a seat on @ethena_labs risk committee. We’ve been closely following Ethena since launch and want to ensure they dominate DeFi over the long haul while ensuring proper token value capture. Vote for Kairos Research here:

July has been good to @ethena_labs USDe has posted its fastest growth on record, hitting an all-time high total supply of $7.54bn This month set new records in supply increases across 1, 3, 5, 7, 10, and 15-day windows, marking the most aggressive expansion phase in the asset’s history

The @PlasmaFDN XPL public sale concluded 7.46x over-subscribed average over-commit was 15,364x median over-commit was 1.86x Follow the team for official updates at @PlasmaFDN

The @PlasmaFDN XPL public sale is closing in on 3x oversubscription, with $147.5m of committed capital. In our note from last week, we shared our prediction around seeing an influx of capital commitments in the final few hours of the sale. With the sale ending in less than 12 hours, it appears we were correct. The @PlasmaFDN sale is now 2.95x over-subbed, with 1.75m of remaining allocation yet to be claimed. The current average oversubscription is 4,477x, and the median is 1.86x the average over-sub amount appears to be skewed by opportunistic addresses that were able to get literal pennies into the Plasma vault on time. For example, 0x76899a7D611Bf9e6D26176cEae61301FCA8ebEff was able to get $0.01 USDT into one of the Plasma vaults. While their reserved amount is far less than 1 cent, they have committed $1,820, a 13,194,492x over-sub multiple. Could turn out to be a beautiful, capital efficient story for them. /every_cent_counts

Yesterday @babylonlabs_io Co-founder & CTO @baby_fisherman introduced a governance proposal for Programatic Deflation of $BABY via an auction mechanism. In the proposed mechanism, BSN rewards sent to Babylon Genesis will not be distributed to BABY stakers. Instead, they’ll be auctioned off onchain. Bidders use BABY to buy the rewards, and the BABY used in winning bids is burned. We believe that this is an important move for Babylon's token-economics, and will create structural demand for the native token, which is also crucial for Staked BTC APY, and also for attracting additional BTC to the protocol. The most analogous example of a similar mechanism working is @eulerfinance's Fee-Flow model. Their elegant mechanism is proof that this model works, and helps the token capture value. As a validator in the Babylon network, we support this proposal, and will continue to be supportive of proposals that maximize token value accrual via robust mechanisms for long-term sustainability and growth of the network.

Fogo delivers: -40ms blocks - Firedancer's full potential - The fastest SVM experience possible This creates world-class trading infrastructure We're excited to be partnering with @firstset_ as a validator on @FogoChain 🔥

The @PlasmaFDN public sale via @echodotxyz is currently ongoing and will conclude in roughly 6 days, on Monday, July 28 at 9:00 AM ET So far, the $50m public sale is 1.17x over-committed in total, even with 36.6% of reserved allocation remaining unclaimed. The average committed amount by users is 51x their reserved amount, while the median committed amount is 1.8x. According to Plasma's blog post: "Depositors who (i) secured an allocation during the deposit period and (ii) successfully completed onboarding through Sonar are guaranteed an XPL allocation during the public sale and can commit their funds at any point during the sale window. Additionally, overcommitments are permitted to secure any allocated, but unpurchased XPL. At the conclusion of the sale, any unpurchased XPL from reserved allocations will be sold proportionally to participants who commit additional funds, based on their share of total committed funds. To be eligible, you must include the additional funds as part of your commitment during the sale window. This mechanism ensures unused allocation is efficiently reallocated to long-term aligned participants. Over-committed capital will be returned to participants after the token sale is completed." We predict there will be an influx of reserved allocations purchased in the last few hours, and we'll post an update once the sale has completed where we unpack the data.

100% of Jito Protocol Revenue Will Go To the DAO Jito just unveiled their most important product to date, and while there is lots to unpack from the product standpoint - an important market catalyst was revealed: "Jito Foundation and Jito Labs are collaborating on a JIP to direct *all fees* collected by Jito from BAM and the Jito Block Engine to the DAO Treasury." Currently, the DAO and Jito Labs split a collective 6% take rate on tips 50/50 (3% each), but this upcoming proposal would change that, directing all value towards the DAO. Using the current 30, 60, and 90 day moving averages, along with the median daily tip amount over the last year, the 6% take rate on Tips annualizes to the following: 30-D: $27,820,634 60-D: $25,876,009 90-D: $35,457,431 Median 1-Y: $39,912,695 In addition, the median weekly JitoSOL staking reward fee annualizes to an additional $9.3m for the DAO. Add in interceptor, a lesser known product, and the DAO is looking at approximately $45m-$50m in annual revenue for the DAO. Directing 100% of take rates on fees are set to bolster Jito's strongest existing revenue stream. On BAM: We will share some deeper thoughts within an upcoming research report, but our high level takeaway is that Jito's success has always come from obsessing over improving the user experience on Solana, and this is continued progress in that direction. They made a controversial decision in the past to deprecate their mempool, only to see that decision lead to a surge of activity on the network. And while moving away from an incumbent solution with a dominant market share is bold, we believe the continued desire to improve overall network functionality will, in hindsight, once again prove obvious for driving increased user activity. With BAM Jito is offering protocols an opportunity to enable more efficient, transparent, and decentralized block-building via plug-ins. We believe this will boost revenue and unlock a new wave of value creation for all stakeholders. In Summary, we several postiive tailwinds for Jito right now - Staked SOL ETFs - SubDAO on Token-Economics funded - 100% of Revenue going to the DAO (full alignment) - and now the Block Assembly Marketplace (BAM) We are excited to share more of our thoughts on all these topics in our upcoming research report. Be sure to follow and subscribe to our substack so you can get it first!

Ethena's $ENA is up 47% over the last 7 days, but what is driving the rally? Aside from positive market tailwinds with crypto asset prices rising across the board, ENA's rally stands out for one key reason: Speculation on Fee-Switch Activation ENA is unique, where the fee switch parameters have already been established, but require certain thresholds to be met or exceeded for It to be formally activated, in which case sENA holders would be the fee recipients. These fees are primarily generated via 10 bip mint fees on USDe, but other protocol revenue streams exist as well. The parameters are: ✅ USDe circulating supply: $6.08bn (threshold: >$6bn) ✅ Cumulative protocol revenue: $431.31m (threshold: >$250m) ❌ CEX adoption: USDe CEX adoption: 3 (threshold: 4 of the top 5 CEX by derivatives volume) ✅ Reserve Fund ≥ 1% of USDe supply ❌ sUSDe APY spread vs benchmark: (threshold: 5.0-7.5%) While the last parameter is not yet within range, the current spreads for sUSDe vs other benchmarks are as follow: Spread vs AAVE USDC: 3.03% Spread vs T-Bill: 2.48% Spread vs sUSDS: 2.05% The avg 30d apy for sUSDe is 5.59% and the current apy is 9.74% at the time of writing. Additionally, the influx of staked sUSDe vs other key benchmarks like Maker/Sky's sUSDS signal that capital allocators expect the spread to widen in Ethena's favor, as seen in the chart below