Coinbase, Kraken and dYdX are adopting Pyth’s new indexes, which provide continuous pricing for US stocks, gold and oil outside market hours.
- Hayes exited ZEC after an Orchard privacy bug raised supply doubts.
- He also liquidated HYPE and NEAR while rotating his portfolio.
- The Zcash flaw was patched, but future exploitation cannot be ruled out.
Arthur Hayes, co-founder of BitMEX, has fully exited his positions in Zcash (ZEC), Hyperliquid (HYPE), and NEAR Protocol (NEAR).
The decision comes at a time when the crypto market is still digesting the implications of a flaw found in the Orchard shielded pool, a core component of Zcash’s privacy system.
The move has drawn attention across the digital asset space, not only because of Hayes’ profile as a macro investor, but also due to the nature of the vulnerability, which raised questions about the integrity of ZEC’s supply mechanics inside its shielded environment.
Orchard vulnerability triggers uncertainty in Zcash
The trigger for the sell-off was a vulnerability discovered in the Orchard shielded pool, which is designed to enable private transactions on the Zcash network using zero-knowledge proofs.
The issue raised concerns that, under certain conditions, it may have been theoretically possible to create counterfeit ZEC within the shielded system without immediate detection.
While Zcash developers moved quickly to deploy an emergency patch, the core concern was not just the existence of the bug itself, but the inability to verify whether it had ever been exploited before it was fixed.
Because shielded transactions are designed to be private, there is no straightforward way to retroactively audit all activity in a way that could definitively rule out past abuse.
Market reaction was immediate and sharp.
ZEC experienced a heavy sell-off, with its price falling by over 45% during the height of the reaction.
Liquidity thinned quickly as traders rushed to reduce exposure to an asset suddenly carrying uncertainty around its supply integrity.
The incident reignited a long-running debate around privacy-focused blockchain systems.
While zero-knowledge proofs are widely regarded as one of the strongest cryptographic tools available for privacy, they also introduce complexity that can make historical verification of state changes significantly more difficult compared to transparent blockchains.
Arthur Hayes exits ZEC, HYPE, and NEAR positions
Against this backdrop, Arthur Hayes confirmed that he had fully liquidated his ZEC holdings.
Hayes also closed positions in HYPE and NEAR, signaling a broader portfolio adjustment rather than a single-asset reaction.
Hayes described the situation in blunt terms, stating that what he previously referred to as his “Holy Trinity” thesis no longer held.
The key issue for Hayes was not confirmed exploitation. Instead, it was the presence of unresolved uncertainty.
Even with a patch in place, the inability to definitively prove whether counterfeit issuance had occurred prior to the fix created a level of risk he was no longer willing to carry in a privacy asset.
The Holy Trinity is dead. Sadly due to the Orchard Pool exploit, I had to dump our entire $ZEC bag.
– While I think it’s extremely unlikely of any minting, it cannot be formally cryptographically proved impossible
– The privacy from AI, govt, big tech narrative demands perfection…— Arthur Hayes (@CryptoHayes) June 5, 2026
Alongside the ZEC exit, Hayes also liquidated positions in HYPE and NEAR.
While no direct technical link was identified between those assets and the Zcash vulnerability, the simultaneous sell-off suggests a broader repositioning of capital rather than an isolated reaction.
Alvin Lang
Jun 05, 2026 10:09
Solana (SOL)’s ecosystem saw growth in RWAs, ETFs, and stablecoins in May 2026. Despite SOL trading at $66.59, tokenized equities and DeFi volumes hit records.
May 2026 was a pivotal month for Solana (SOL) as it continued its shift toward institutional adoption. The ecosystem saw record-breaking growth in tokenized assets, ETFs, and stablecoins, highlighting its expanding role in decentralized finance and real-world asset (RWA) tokenization. However, SOL is trading at $66.59 as of June 5, down 2.08% in 24 hours, reflecting broader market softness.
Ecosystem Growth by the Numbers
Solana’s RWA ecosystem reached an all-time high of $2.8 billion in total value, with tokenized equities dominating 97% of cumulative on-chain trading volume. The network’s stablecoin supply also grew to $16.4 billion, while perpetual derivatives trading hit $64.6 billion in volume—a monthly record, according to DeFiLlama.
U.S. spot Solana ETFs saw $115.3 million in net inflows, with zero outflow days, pushing total assets under management to $1.13 billion by the end of May. Institutional players like Amundi and Spiko Finance expanded their UCITS funds to Solana, while Kraken Custody introduced regulated SPL token custody for institutional clients.
Key Developments and Tokenized Assets
Solana saw a surge in tokenized real-world assets beyond equities, including reinsurance, EV batteries, physical silver, and more. Dominion Market launched asset-backed silver tokens, while Evoracharge tokenized EV batteries after delivering 300,000 kilometers of energy via mobile services.
Meanwhile, consumer-facing RWAs gained traction, with Collector Crypt surpassing $1 billion in platform volume and PSG and AFC fan tokens launching on Solana. This diversification underscores the network’s growing appeal across industries.
DeFi Expands, But SOL Price Faces Pressure
DeFi activity on Solana broadened with new fixed-rate markets and yield infrastructure. Kamino’s Ethena market reached $400 million in size within 24 hours of launch, while Jupiter Offerbook introduced borrowing against NFTs and trading cards. However, SOL’s price momentum has weakened as analysts warn of a potential 30% downside after failing to break past $90 in early June.
Additionally, token unlocks scheduled for June 2026, including 624,666 SOL around June 7, are contributing to bearish sentiment. Broader industry-wide token unlocks exceeding $1 billion this month could further weigh on prices.
Institutional Adoption and Stablecoin Integration
Institutional adoption progressed with the launch of the first stablecoin issued by a U.S. national bank. SoFi’s SoFiUSD (SoFiD) became available within its app, giving 15 million members direct access. Western Union began rolling out USDPT, its Solana-based stablecoin, while Cash App added USDC support for eligible customers.
These developments reflect Solana’s growing role in payments, with networks like MoonPay and WalletConnect integrating Solana-native infrastructure for merchant and consumer use cases.
Broader Market Context
Despite strong ecosystem metrics, Solana has faced challenges in 2026. Monthly active users fell to 34.1 million, total value locked (TVL) dropped to $5.5 billion—down 56% from its August 2025 peak—and fees have halved year-to-date. However, the network’s ongoing technical upgrades, such as the ‘Alpenglow’ consensus protocol tested in May, aim to improve finality and throughput, potentially attracting more developers and institutional users.
Looking Ahead
Solana’s May performance underscores a shift from retail-driven speculation to institutional-grade infrastructure. The record RWA value, robust ETF inflows, and expanding stablecoin ecosystem point to sustained growth. However, SOL’s near-term price outlook remains uncertain amid token unlocks and declining DEX volumes. June 2026 could be a volatile month for traders, with potential catalysts including the Alpenglow upgrade rollout later this year and broader macro trends.
Image source: Shutterstock
Bitcoin’s in trouble. Not a crash, not a panic — just a slow, grinding bleed that’s wearing down anyone still holding from the spring rally.
That’s basically the picture Bitfinex painted in its latest market analysis. The firm called it a “slow bleed regime,” and it’s hard to argue with the label. Volatility is falling. Open interest is shrinking. Sellers are running the show, and buyers — institutional or otherwise — are pretty much nowhere to be found right now.
May’s Rally Faded Fast
Bitcoin did manage to push above $82,000 early in May. That mattered for about a week. By the time the month closed, it had given back 12.5% from that peak — a sharp reminder that early-month strength doesn’t always stick. The rally didn’t have the structural backing to hold. Spot demand was thin. Institutional desks stayed quiet. And the options market, which can sometimes act as a pressure valve, wasn’t offering much either.
Per Bitfinex, sellers of volatility took control during May. When that happens, big price swings in either direction become less likely. It’s not the kind of market that wipes out positions overnight — it’s the kind that just slowly erodes them. Day after day. Small candles. Grinding lower.
And the ETF numbers made it worse. Spot Bitcoin ETFs saw roughly $3 billion in outflows over just three weeks. That’s a meaningful number. Those products were supposed to be one of the main structural pillars keeping demand steady, and watching $3 billion walk out the door in less than a month sent a clear signal about where institutional appetite actually sits right now.
Options Traders Pulling Back Too
It’s not just spot buyers sitting on their hands. Options traders have pulled back too. Implied volatility has been dropping, and when that happens, traders don’t want to pay elevated premiums for protective hedging. Why buy insurance when the market feels flat? The problem is that this behavior feeds on itself — less hedging activity, less volatility, less reason for big players to engage, and the cycle continues.
Short-term holders made things worse by taking profits into whatever strength appeared. That selling pressure, layered on top of the distribution-driven dynamics Bitfinex flagged, stripped away some of the supports that had helped Bitcoin recover earlier in the year. Without those supports, the market’s sitting in a vulnerable spot.
Geopolitical noise hasn’t helped either. The Iran conflict specifically got a mention in the Bitfinex analysis as a factor disrupting typical seasonal patterns. Historically, May tends to close with positive returns for Bitcoin — data going back to 2013 backs that up. But geopolitical uncertainty has a way of scrambling those patterns, and this year was no exception.
What Could Actually Turn Things Around
So what flips it? Bitfinex sees a few scenarios. A strong wave of ETF inflows would help — not a trickle, but a genuine structural shift in institutional participation. Aggressive spot buying could do it too. If buyers step in with conviction at current levels, the distribution pressure eases and the dynamic changes pretty quickly.
But none of that has materialized yet. And until it does, the market stays in this uncomfortable middle ground — not collapsing, not recovering, just bleeding.
The internal dynamics are probably the bigger story here. It’d be easy to blame macro conditions or geopolitical headlines, but Bitfinex’s read is that the primary drivers are coming from inside the market itself. Distribution-led selling. Reduced demand across spot and institutional channels. Options traders sitting out. Short-term holders cashing in. All of it adds up to a market that can’t find its footing.
Institutional investors specifically took a hit in the analysis. Their absence removed what Bitfinex called a crucial pillar of support. When the big money isn’t showing up, Bitcoin’s price movements get choppier and the market’s resilience gets tested in ways it can’t always pass.
June could break differently if something changes. It probably won’t look like May if ETF flows reverse or a major structural buyer enters the picture. But “could” and “probably” are doing a lot of work in that sentence. Right now, the distribution dynamics are still in charge, the demand side is still weak, and the $3 billion ETF outflow number is still sitting there as a reminder of how fast sentiment can shift.
Spot Bitcoin ETFs recorded roughly $3 billion in net outflows over three weeks in May.
Frequently Asked Questions
What is Bitcoin’s “slow bleed regime” according to Bitfinex?
Bitfinex used the term to describe a market environment where declining volatility and open interest combine with distribution-driven selling pressure, producing a slow, grinding price decline rather than a sharp crash.
What would reverse Bitcoin’s current negative trend?
Per Bitfinex, a strong inflow from ETFs and institutional investors, or aggressive spot buying, could potentially reverse the current trajectory and break the distribution-led selling pressure.
XRP slid to its weakest level in more than three months as heavy selling overpowered signs of exchange outflows, leaving the market stuck between two competing signals. Tokens moving off exchanges usually point to accumulation, but price action is saying sellers still have control whenever XRP tries to recover.
News Background
• More than 25 million XRP left exchanges after a large inflow earlier in the week, suggesting some investors used the drop to move tokens into longer-term storage.
• Spot XRP ETFs recorded fresh inflows, bringing cumulative flows to about $1.42 billion, though that demand has not yet been enough to reverse the downtrend.
• Leverage was heavily flushed during May, with most high-risk long positions already liquidated as XRP bounced from the $1.28 area.
Price Action Summary
• XRP dropped from $1.3384 to $1.3208, hitting a 15-week low during the session.
• The key breakdown came on 55.03 million in volume, which pushed price through support near $1.3320.
• Selling later extended toward $1.314 before a modest bounce brought XRP back toward $1.32.
Technical Analysis
• The key issue is that accumulation signals are not yet showing up in price. Exchange outflows are constructive, but XRP continues to get sold into recovery attempts.
• The breakdown below $1.3320 keeps the short-term structure weak, with $1.34 now acting as the first level buyers need to reclaim.
• A large short-liquidation cluster sits between $1.34 and $1.40, meaning a sharp move higher is possible if XRP can break back into that range.
• Until then, the tape remains defensive, with sellers still controlling the lower highs.
What traders should watch
• $1.31 is the immediate support. Losing it would put $1.28 and then $1.20 back in play.
• $1.34 is the first recovery level. A reclaim could trigger momentum toward $1.37 and $1.40.
• The setup is unstable because exchange outflows point one way while price action points the other. One side will have to give.
The US Commodity Futures Trading Commission (CFTC) took positions on cryptocurrency perpetual futures contracts and how the industry may be more suited for “24/7 trading, clearing, and settlement.”
In a Friday notice, the CFTC said it had approved perpetual futures contracts tied to the spot price of Bitcoin for prediction markets platform Kalshi. The company announced at about the same time that it would launch the perpetual futures contracts on its platform in a move closer to a derivatives exchange.
“The Order was based on representations and submissions made by Kalshi in support of its request for Commission approval, including its explanation and analysis of the BTCPERP Contract’s terms and conditions, the nature of the underlying commodity market, and the BTCPERP Contract’s compliance with applicable provisions of the Commodity Exchange Act and the Commission’s regulations thereunder, including the Core Principles applicable to [Designated Contract Markets],” said the CFTC.
Source: CFTC
The perpetual futures contracts, or “perp” products, would allow Coinbase and Kalshi users to speculate on crypto prices without owning the underlying assets. The CFTC no-action position for Coinbase and approval for Kalshi represented the US agency being more open to crypto derivatives.
Coinbase chief legal officer Paul Grewal called the CFTC decision a “massive first for the industry” in a Friday X post. The exchange launched stock perpetual futures for non-US traders in March.
Related: CFTC seeks to reverse settlement deal with Gemini
In a separate notice, the CFTC distinguished between the suitability of traditional markets and crypto markets for 24/7 trading. According to the agency, “derivatives referencing crypto assets may be well-suited for 24/7 trading due to their digital infrastructure and global reach” while others, like agricultural markets, may not be based on their “unique customer bases, regional nature” and other factors.
CME Group also announces 24/7 crypto futures trading, pending regulatory review. Source: CME Group
Trump touts CFTC’s authority, with no additional commissioner nominations
On Tuesday, US President Donald Trump posted to social media, in a statement supporting Michael Selig and the CFTC in their fight for jurisdiction over prediction markets. The post came amid several state-level lawsuits attempting to restrict or ban the platforms, while Selig claims the agency has “exclusive jurisdiction” under the Commodity Exchange Act.
Selig remains the chair and sole commissioner at the federal commodities regulator in a panel intended to consist of a bipartisan group of five people. As of Friday, Trump had not announced any nominations to fill the seats.
Magazine: HYPE chases $100 target, ETH could dump below $1800: Market Moves
- South Korean prosecutors charge 5 people in a CATFI memecoin rug pull case.
- About 256 investors lost roughly $650K after the CATFI token crashed.
- CATFI token surged 1,000x before liquidity was drained and the price collapsed.
South Korean prosecutors have arrested and charged a group of individuals linked to the Solana-based CATFI memecoin over an alleged decentralised exchange (DEX) rug pull.
The case marks the country’s first formal criminal action targeting a memecoin scam that unfolded entirely through a decentralised trading environment.
According to a local news outlet, authorities say the operation affected hundreds of retail investors and generated substantial illicit gains before collapsing after a rapid price spike and liquidity drain.
How the CATFI memecoin scheme unfolded
The CATFI token was launched on Solana and traded primarily through decentralised platforms, including Pump.fun.
Investigators allege that the operators positioned the token as a high-potential memecoin and used aggressive online promotion to attract early buyers.
A key figure in the promotion reportedly used the alias “Eth Father,” presenting themselves as a credible community leader.
This identity was used across social channels to build trust and encourage early participation in the token.
Once liquidity and trading activity increased, prosecutors say the operators engaged in coordinated trading behaviour designed to simulate organic demand.
This included wallet splitting and wash trading patterns that created the appearance of active market interest.
At its peak, CATFI experienced a dramatic surge, reportedly increasing by more than 1,000 times in value within a short period.
That rapid rise was followed by a sudden collapse after liquidity was withdrawn and large holdings were sold off, a structure consistent with what authorities describe as a classic rug pull.
Arrests, charges, and financial impact
The Seoul Southern District Prosecutors’ Office Virtual Asset Crime unit led the investigation.
Officials confirmed that two primary suspects were arrested, while five individuals in total were charged in connection with the scheme.
Additional suspects are also being investigated for allegedly helping key figures evade arrest during the inquiry.
The case is being prosecuted under South Korea’s Virtual Asset User Protection Act, which was recently introduced to address fraud and manipulation in the digital asset market.
Authorities estimate that around 256 investors were directly affected by the CATFI collapse.
Total losses are reported at approximately 900 million won, which is about 650,000 US dollars based on prevailing exchange rates.
Investigators also identified roughly 400 million won, or about 260,000 US dollars, in illicit profits linked to the scheme.
The investigation suggests that the operators extracted value through early liquidity positions and coordinated sell-offs, leaving late participants exposed to the sharp price reversal.
Why this case is significant for South Korea’s crypto enforcement
This is the first known case in South Korea where prosecutors have pursued criminal charges specifically tied to a DEX-based memecoin rug pull.
Unlike earlier enforcement actions that focused mainly on centralised exchanges or structured investment fraud, this case extends legal scrutiny directly into decentralised trading environments.
The prosecution has made it clear that the use of decentralised platforms does not shield individuals from criminal responsibility.
By applying the Virtual Asset User Protection Act to on-chain activity, authorities are signalling that token creators and promoters can be held accountable even when no centralised intermediary is involved.
The CATFI memecoin case also highlights how quickly memecoin ecosystems can amplify both gains and losses.
The token’s reported 1,000x surge drew in a large number of retail traders, but the subsequent collapse wiped out those gains almost immediately after liquidity was removed.
With 256 confirmed victims and losses reaching hundreds of millions of won, regulators appear to be treating the incident as more than a simple market failure.
Instead, it is being positioned as a coordinated financial fraud operation built around token manipulation and misleading promotion.
The outcome of this case is likely to influence how future memecoin projects are launched and monitored in South Korea.
Prosecutors are now actively tracing wallet activity, promotional networks, and liquidity movements tied to token launches on decentralised exchanges.
Peter Zhang
May 24, 2026 08:42
AAVE faces technical pressure at current levels, with charts pointing toward a test of $80 support before any meaningful recovery toward $95 can materialize.
Technical Pressure Builds
AAVE is trading in a precarious position as technical indicators align to suggest downward pressure in the near term. The token sits below key moving averages while momentum oscillators show neutral to weak readings, creating an environment where sellers maintain the upper hand. This positioning comes after AAVE has retreated from higher levels, leaving the market searching for a floor where buyers might step in with conviction.
The current price action reflects broader weakness in the DeFi sector, where tokens have struggled to maintain upward momentum despite periodic recovery attempts. Blockchain.news analysis shows this pattern has become increasingly common as institutional flows shift between different crypto sectors.
Critical Support Zone Ahead
The technical landscape points toward $80 as the key support level that will determine AAVE’s next directional move. This zone represents a confluence of previous support levels and technical indicators that typically attract buying interest when tested. A successful hold at this level could provide the foundation for a recovery move, while a break below would signal deeper correction potential.
Resistance overhead remains substantial, with the $95 area representing the primary target for any recovery scenario. This level aligns with moving average resistance and previous price action that created selling pressure. The path between current levels and $95 includes multiple resistance points that will challenge any upward movement.
Market Positioning and Strategy
The derivatives market shows mixed signals with retail traders maintaining relatively balanced positioning while larger participants appear to be preparing for potential reversals. This positioning suggests smart money is waiting for clearer technical signals before committing significant capital in either direction.
For traders considering positions, the risk-reward setup favors waiting for the $80 support test before establishing long positions. This approach allows for better entry prices while maintaining clear risk parameters below the support zone. Blockchain.news technical frameworks suggest patience during these consolidation phases typically produces better outcomes than premature entries.
The probability matrix indicates a high likelihood of testing lower support levels before any sustainable recovery begins. Should $80 support hold firm, the resulting bounce could target the $95 resistance zone, representing meaningful upside potential from oversold levels. Stop-loss levels below major support zones remain essential for capital preservation if the bearish scenario accelerates beyond current expectations.
Blockchain.news Crypto Market
Image source: Shutterstock
Canada’s first regulated dollar stablecoin just got a serious institutional upgrade. Tetra Digital Group’s CADD is now available for custody through Anchorage Digital, a federally chartered digital asset platform, starting May 22.
CADD isn’t just another stablecoin claiming regulatory credibility — it’s actually the first Canadian dollar stablecoin issued by a regulated financial institution in Canada. That’s a pretty meaningful distinction in a market where most stablecoins are issued by non-bank entities operating in murky jurisdictions. Tetra Digital Group built CADD specifically to meet the kind of compliance bar that institutional money desks actually care about. And now, with Anchorage Digital handling custody, institutions can hold CADD without the usual headaches around counterparty risk and regulatory exposure. The federally chartered status of Anchorage Digital isn’t window dressing — it’s basically the gold standard for digital asset custody in the United States, and it carries real weight with compliance teams at banks, asset managers, and family offices.
Not a small deal.
Why Anchorage Digital Changes the Calculus
Anchorage Digital’s decision to add CADD to its custody platform fits into a broader push to serve institutional clients who want regulated, fiat-backed digital assets. The platform has been expanding its offerings steadily, and CADD slots in as a Canadian dollar option for clients who need currency diversification beyond USD-pegged stablecoins. For institutions already using Anchorage Digital’s infrastructure, adding CADD exposure is now operationally straightforward — no new custodian relationships, no fresh compliance reviews from scratch, just a new asset on a trusted platform.
There’s real demand here. Institutional appetite for stablecoins has grown sharply across global markets, driven partly by the need for faster settlement, partly by treasury diversification strategies, and partly by the broader normalization of digital assets in professional finance. But most of that demand has been funneled into USD stablecoins. A regulated Canadian dollar option, backed by a financial institution and held through a federally chartered custodian, fills a gap that’s been sitting open for a while.
Unclear how many institutional clients are lined up already. No details on that from either side.
Tetra Digital’s Play for Institutional Credibility
For Tetra Digital Group, the Anchorage Digital partnership is probably the most credibility-building move available right now. You can issue a regulated stablecoin, but if institutions can’t hold it through a custodian they already trust, adoption stalls. The custody piece was the missing link, and Anchorage Digital’s federally chartered status essentially validates CADD for the institutional audience Tetra Digital is targeting.
The logic is straightforward. Institutional investors don’t take custody risk lightly. Security standards, regulatory compliance, insurance frameworks — these aren’t nice-to-haves, they’re hard requirements. Anchorage Digital meets those requirements. So CADD, by extension, now meets them too. That’s the reputational transfer Tetra Digital was probably looking for.
And it’s not just about today’s institutional clients. Other stablecoin issuers are watching. If CADD gains traction through Anchorage Digital’s platform, it sets a template — regulated issuance plus federally chartered custody — that other non-USD stablecoin projects will likely try to replicate. Canadian dollar, Australian dollar, Singapore dollar — there’s a whole universe of fiat-backed stablecoin projects that haven’t cracked institutional distribution yet.
Whether CADD actually breaks through depends on factors that aren’t fully visible yet. Liquidity depth, integration with trading desks, DeFi compatibility — none of that was specified. What’s clear is that the custody infrastructure is now in place.
Anchorage Digital, for its part, seems to be positioning itself as the go-to custodian for exactly this kind of regulated, compliance-first digital asset. Adding CADD builds out a multi-currency stablecoin custody offering that USD-only platforms can’t match. That’s a competitive differentiator as institutional clients increasingly want exposure across currency zones, not just dollar-denominated assets.
The stablecoin market has matured fast. Regulators in multiple jurisdictions have moved from skepticism to active framework-building, and institutional demand has followed. CADD landing Anchorage Digital custody on May 22 is a concrete step in that direction — a Canadian dollar stablecoin, issued by a regulated financial institution, now sitting inside the most credentialed custody platform in the space.
Tetra Digital Group’s next move probably involves pushing CADD into active use cases — payments, settlement, treasury management — where the regulated, custodied structure actually generates transaction volume rather than just sitting as a held asset.
Frequently Asked Questions
What is CADD and who issues it?
CADD is the first regulated Canadian dollar stablecoin issued by a financial institution in Canada, created by Tetra Digital Group.
What does Anchorage Digital’s custody of CADD mean for institutions?
Institutional clients can now securely hold CADD through Anchorage Digital, a federally chartered digital asset platform, giving them a compliant and trusted pathway to access the Canadian dollar stablecoin.
Ethereum co-founder Vitalik Buterin on Wednesday outlined near-term steps the network is taking to bring privacy onchain, a feature institutions highlighted at Consensus Hong Kong as necessary for widespread institutional adoption of the blockchain technology.
Buterin’s X post was technically dense but pointed to a simple fact: the world’s largest smart contract blockchain is moving to make private transactions a feature of the network, not a workaround provided by third-party tools.
The post comes as the Ethereum Foundation, the non-profit organization that supports the blockchain’s network and ecosystem, faces a wave of high-profile departures amid an internal transition tied to a new organizational mandate to redefine its role within Ethereum.
The three new short-term initiatives are: Account abstraction (AA) and FOCIL, Keyed nonces and access layer work. Each of the three adds a different layer of privacy to Ethereum.
Here is what each one actually does:
Uncensorable private transactions
As of now, if a user sends a private transaction on Ethereum via crypto mixers such as Tornado Cash, it first goes into the public memory pool (mempool), a sort of waiting area visible to everyone on the network. Imagine dropping a letter into a post office where every worker can read the address before finalizing which one to move for delivery.
Similarly, Ethereum entities that decide which transactions make it into each block can see those transactions and exclude them, which amounts to censorship.
FOCIL, or fork-choice enforced inclusion lists, makes censorship harder by allowing a committee of validators to propose a list of transactions that block builders are expected to include. Ignoring these transactions can lead to the block being rejected by the network. This way, it becomes difficult to censor transactions.
Meanwhile, account abstraction upgrades how Ethereum accounts work. Today, most Ethereum users rely on externally owned accounts (EOAs) via apps like a basic MetaMask, Trust Wallet, or Coinbase Wallet, each controlled by a single private key. If a user loses that key, they lose access to their funds.
Account abstraction enables all accounts to behave like programmable smart contracts, providing features such as multi-signature approvals and social recovery. It also lets apps or friends pay a user’s transaction fees.
Keyed ‘nonces’
Every Ethereum account has a nonce, a number used once. It acts as a running tally of all proposed transactions, increasing by 1 with each new transaction sent. This setup helps prevent the same transaction from being repeated on the network.
It’s like getting a sequentially numbered ticket at a food counter. But it comes with a problem. Even if an order is private, anyone watching can see that ticket #5 and ticket #6 came from the same person. On Ethereum, this sequential nonce allows observers to link transactions to the same account, even if the transactions are private and their contents are hidden.
The fix for that is keyed nonces. This replaces the single counter with a structure that comprises a nonce key and a nonce sequence, giving each account multiple separate ticket counters for different types of activities. This makes it harder to track the transaction trail and correlate them onchain.
“This replaces the single sender nonce with (nonce_key, nonce_seq), giving frame transactions independent replay domains,” pseudonymous researcher soispoke.eth said.
Access-layer work: private reads and Kohaku
The third proposed measure addresses the issue that even if transactions are private, users’ browsing behavior on the network is not. Imagine making a private phone call. Nobody heard the conversation, but the telecommunications firm knows who made the call and to whom.
Similarly, every time a user queries the blockchain to check a balance or read a smart contract, their wallet relies on third-party RPC node providers, exposing their IP address, physical location, and complete wallet identity to corporate servers that log this data.
Central to this effort is Kohaku, an open-source privacy toolkit introduced in 2025. Rather than eliminating reliance on RPC node providers entirely, Kohaku gives wallet developers tools to query blockchain data privately, using techniques such as private information retrieval, so nodes can answer queries without learning which specific data the user requested.
‘ETH’s utility value’
Ethereum has long had privacy as a goal, but it has not been a native feature. The new initiatives, if they go live, could serve as a positive catalyst for ether (ETH), the native token of Ethereum.
The plan for the new privacy initiatives isn’t just a narrative; the market is validating it too.
Valuations of established privacy-focused projects have surged, reflecting genuine demand. For example, Zcash (ZEC) has rallied more than 800% since early last year, pushing its market capitalization to roughly $9.85 billion. Meanwhile, Monero (XMR), despite frequent criticism for its use by bad actors on darknet markets and for terror funding, has also rallied by more than 100% in the same timeframe.
Bitcoin
One X user explained Ethereum’s need for privacy best: “Ethereum’s missing component at this point is some form of native privacy. ETH’s utility value would literally jump overnight. Privacy is the type of feature that can give an asset true moneyness qualities. L1 privacy could also drive a surge in mainnet fees.”
None of these changes is live yet, but Tuesday’s post is a meaningful signal about where things are headed next.
