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Ethereum and Solana Tokenomics Under Review

Ethereum and Solana—two of the largest blockchain networks powering stablecoins and tokenized assets—are considering changes to their tokenomics. The networks’ native tokens, ETH and SOL, are digital commodities priced through supply and demand. Both may introduce code changes that cut annual inflation and therefore reduce future token supply. All else being equal, lower supply growth may support higher prices.

In both cases, the changes are highly technical (see here for details), but the bottom line is that both ETH and SOL are becoming relatively scarce, and the proposals under discussion would result in lower inflation and even more scarcity.

Exhibit 1 compares estimated annual token supply inflation for Bitcoin (BTC), ETH, and SOL over the next five years, assuming the new changes are implemented. By the end of 2031, inflation for both BTC and ETH would be just ~0.4% per year, and for SOL just ~1.1% per year. This compares to annual supply inflation of 1.8% for gold1 and 3.3% for US CPI inflation.2

The proposed changes are currently being debated by their respective communities. The Solana proposals seem to have broader agreement and have a better chance of being implemented.

If the changes go through, token holders who stake would receive fewer tokens, because staking rewards are paid through new token inflation. However, with fewer tokens in circulation, scarcity value may increase, putting upward pressure on prices. Holders of unstaked ETH and SOL could be better off. Whether stakers are better off depends on the net effect of lower token rewards and potentially higher token prices.

Key Takeaway: ETH and SOL are digital commodities powering two of the leading blockchains for stablecoins and tokenized assets. Changes under consideration would increase the scarcity of both assets and could put upward pressure on prices.

Exhibit 1: Changes to Ethereum and Solana would reduce token inflation

Source: World Gold Council, Grayscale Investments. Estimate is annualized percent change in above ground gold stock from 2015-2025. Data as of August 2026.

Source: BLS, Grayscale Investments. Estimate is annualized percent change in US CPI in the ten years ending June 2026. Data as of August 2026.

Three Reasons Why Bitcoin Adoption Will Keep Rising

Bitcoin’s price has begun to stabilize, and we may be nearing the end of the latest bear market. Regardless of how the short-term price action plays out, we see a few key reasons why Bitcoin adoption can continue rising over the medium- and longer-terms (Exhibit 1):

1. Unchecked government deficits: continued unsustainable government debt growth raises the risk of persistent inflation and currency debasement, and could drive increasing numbers of investors of all types to scarce assets and alternative stores of value.

2. Adoption of blockchain technology: stablecoins and tokenization will make blockchains ubiquitous across financial services, in our view. As the spread of the technology continues, many more intermediaries will have the necessary infrastructure (and regulatory clarity) to transact and store balances in Bitcoin—it will no longer be structurally apart from the rest of the financial system.

3. Generational change in portfolio construction: younger investors have a much bigger appetite for digital assets, and alternatives are now a standard part of portfolios. We expect institutions, wealth management platforms, and individuals to continue incorporating Bitcoin into diversified portfolios through exchange-traded products (ETPs) and other vehicles—a process already well underway.

Key Takeaway: The Bitcoin bear market has not changed our expectation for rising Bitcoin adoption over time. We believe that adoption will be driven by more demand for scarce assets, greater adoption of blockchain technology, and generational change in portfolio construction.

Exhibit 1: The number of Bitcoin holders continues to rise

Why AI Needs Blockchain Technology

Artificial intelligence and public blockchains are complementary. As AI creates demands that traditional systems were not designed to meet, public blockchains offer new solutions (Exhibit 1). We have identified three areas where we believe the adoption of AI will create the most demand for blockchain technology: agentic finance, record keeping for computation and reputation, and decentralized AI alternatives.

Payments and finance provide the clearest examples. To act on our behalf, AI agents will need programmable wallets that can hold and deploy capital without intermediaries. Their activity will drive demand for micropayments, instant cross-border settlement, and automated trading and risk management. Public blockchains like Ethereum and Solana enable exactly this.

AI agents also create the need for verifiable records of computation, online human identity, and agent reputation. As enterprises delegate more decisions to AI, they will need to verify how those decisions were produced—including which models, data, and rules an agent used. Users, meanwhile, must be able to distinguish humans from agents online; for example, a social network may need to verify that an account represents a unique person without requiring that person to reveal their identity. Agents will also need trusted records of reputation before performing high-stakes tasks such as making investments or purchasing goods on a user’s behalf. Public blockchains—and applications built on them, such as Worldcoin's identity service—can anchor these records in transparent, neutral infrastructure rather than place them under the control of a single corporation or government.

Finally, decentralized networks offer an alternative to centralized AI ownership and governance. AI is concentrating capital, compute, and control among a handful of frontier labs and hyperscalers, raising concerns about governance, bias, and censorship. Decentralized networks like Bittensor offer a fundamentally different approach: global, open AI ecosystems that anyone can access, contribute to, and own a stake in.

Key Takeaway: AI adoption will increase demand for public blockchains as programmable financial infrastructure; a verifiable record layer for computation, identity, and reputation; and a foundation for open, user-owned AI ecosystems.

Exhibit 1: Public blockchains can meet the emerging needs of the AI economy

How Crypto Can Move Forward Without CLARITY

An agreement on the CLARITY Act, the bipartisan crypto market structure bill, is technically still possible. But the realities of the Senate calendar and of election year politics mean the chances of passage this year now appear low.

Fortunately, CLARITY not passing won’t have an immediate impact on the functioning of major blockchains, the demand for Bitcoin as a store of value, or on the growth of stablecoin payments. The legislation would have provided a more comprehensive rulebook for digital assets in the US, but the industry has moved forward for almost 17 years without it.

However, the lack of comprehensive market structure legislation could hold back new investment activity in the United States. The CLARITY Act created a new path for capital formation using blockchain technology, included measures to support the growth and development of tokenized securities markets, and created a comprehensive oversight framework for digital asset intermediaries. It also offered a long list of other protections for consumers, investors, and software developers. The legislation was a sensible, tradfi-like rulebook for digital asset markets in the US, and this looks like a missed opportunity.

Under the current administration, regulatory guidance has already supported the digital assets industry in many ways, including through new rules around institutional custody, improved access to banking, clear policies around staking, and a framework that has stimulated growth in crypto exchange-traded products (ETPs). This will continue without the law, and investors should expect the SEC and other regulators to fill in the blanks with rulemaking over the coming months, especially around tokenized securities. The SEC’s interpretative guidance on the application of Federal securities laws to crypto assets was already a big step forward for the industry.

Even with more agency rulemaking, the lack of fulsome market structure regulation in the US may drive entrepreneurial activity overseas on the margin—due to friendlier token issuance rules, developer protections, and other factors. This trend, already in place, had partly reversed at the start of the Trump Administration but could resume (Exhibit 1).

Key Takeaway: Crypto will move forward without CLARITY, supported by expected rulemaking by the SEC and other regulators. However, without comprehensive market structure rules, a greater share of new investment may occur overseas, in our view.

Exhibit 1: Developer activity had shifted overseas before the Trump Administration

Younger Investors Are Looking Beyond Stocks and Bonds

The global alternatives market has grown nearly seven-fold since the 2008 Global Financial Crisis, as investors increasingly look beyond traditional public equities and fixed income.1 Private equity, private credit, hedge funds, real assets, and crypto continue to represent a larger share of global portfolios (Exhibit 1).

Generational allocation preferences suggest this trend could strengthen as wealth changes hands. A BofA survey of high-net-worth individuals found that investors ages 21 to 43 allocate 53% of their portfolios outside traditional stocks and bonds, compared with 26% among those over age 44.2 With more than $100 trillion expected to transfer to younger generations over the coming years, this stronger preference for alternatives could create a durable tailwind for crypto.

One explanation for the shift is that alternatives have become easier to access. New products and platforms allow investors to invest in the asset class without the specialized infrastructure or expertise historically required. Crypto has followed a similar path, as regulated investment products like Bitcoin exchange traded products (ETPs) and institutional market infrastructure have introduced more streamlined and familiar ways to gain exposure. Combined with strong historic returns, these lower barriers have helped attract more capital to alternative assets.

Key Takeaway: Rising allocations to alternatives – particularly among younger investors – may support continued growth of the crypto asset class.

Exhibit 1: Alternative assets have become a larger part of global markets

Preqin, based on 2025 estimates.

https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/06/bofa-private-bank-study-of-wealthy-americans-finds-generational-.html

Assessing the Impact of Recent Bitcoin Self-Custody Losses

Users of the Bitcoin self-custody wallet Coldcard suffered losses in recent days as hacker groups discovered and exploited a vulnerability in the wallet’s software.¹ Estimates suggest hackers have so far drained ~1,400 BTC (~$90mn) from user wallets. The incident is an unfortunate setback for Bitcoin self-custody, which is critical to the healthy functioning of the Bitcoin network in the longer-term, in our view.

However, there are several mitigating factors investors should keep in mind:

Bitcoin itself was not hacked. The security vulnerability affected one specific Bitcoin wallet provider, not the Bitcoin blockchain. To date, Bitcoin’s cryptography and consensus layer have never suffered a lasting successful security compromise.

Cybersecurity losses have trended lower. Crypto cybersecurity losses are on track to total roughly $1.7 billion this year. While a large number in absolute terms, this is the lowest level in nine years and just ~0.1% of aggregate crypto market capitalization (Exhibit 1).²

Bitcoin ETPs provide alternative custody options. Bitcoin exchange-traded products (ETPs) use institutional custody arrangements, which typically include segregated offline storage, multi-signature wallets, SOC attestations, and insurance policies. These vehicles may be attractive to institutional investors and/or individuals who prefer to avoid the complexity of Bitcoin self-custody.

Key Takeaway: Recent security incidents are an unfortunate setback for Bitcoin self-custody, but they did not affect a) the blockchain itself, or b) any BTC held in commingled vehicles (such as ETPs and ETFs). Cybersecurity losses have also trended lower over time, and other robust custody options are available for investors.

Exhibit 1: Crypto cybersecurity losses are in long-term decline

The vulnerability related to insufficient randomness or “entropy” in the creation of seeds and therefore private keys. See the report from Square Engineering for technical detail.

The Coldcard exploit was the third largest crypto cybersecurity exploit this year (after KelpDAO and Drift), and roughly the 30th largest of all time. Source: https://rekt.news/leaderboard

Onchain Vaults: The Next Evolution in Managed Credit

Innovations from the crypto industry are arriving in traditional finance, including stablecoins, tokenized assets, and perpetual futures. In our view, the next innovation to break through to the mainstream will be onchain vaults.

Vaults are a vehicle for onchain asset management. The vault structure is highly flexible, but many vaults operate with specific investment parameters and hold yield-generating assets. In the context of traditional finance, vaults closely resemble CLOs (collateralized loan obligations). Like CLOs, vaults pool investor capital into professionally managed portfolios designed to maximize risk-adjusted returns and distribute cash flows generated by the underlying assets (Exhibit 1).

The difference is that vaults are fully onchain. They use smart contracts rather than trustees and custodians, and settle transactions natively on blockchain networks like Ethereum, Base, and Solana. This means that vaults can offer full transparency, operational efficiencies, and potentially higher liquidity.

There are currently about $7 billion in assets invested in more than 3,000 vaults managed by 57 curators, 79% of which are focused on stablecoins (Exhibit 1).1 By comparison, the CLO market totals roughly $1.5 trillion across thousands of vehicles managed by more than 250 firms.2

As onchain credit markets mature, vaults are emerging as a foundational investment vehicle for digital assets, serving a role similar to CLOs and other actively managed credit products in traditional finance. However, US securities regulation remains a key source of uncertainty, particularly where investors might rely on a curator to actively manage the vault.

Key Takeaway: Vaults, a structure for onchain asset management, may be the next crypto innovation to break through to the mainstream.

Exhibit 1: Onchain vaults are similar to – but different from – CLOs

Blockworks, Vault Dashboard. As of July 23, 2026.

CLO Premium, Manager Concentration in US BSL, MM and EU CLO Markets. As of February 14, 2026.

Hyperliquid is Still Cheap versus its Fintech Peers

Hyperliquid, the breakout success story in perpetual futures, is not a traditional business and does not issue shares. However, trading activity on the platform accrues value to the HYPE token and, like many other crypto assets, the token can be valued with cash flows. On that basis, we think it looks cheap.

Traditional equities can be valued based on earnings per share (EPS). Blockchain protocols like Hyperliquid can be valued based on “earnings per token” (EPT).

For earnings, we assume the platform will make ~$1bn in 2027, up ~20% from 2025 on the back of an expected recovery in crypto trading volume and a new stablecoin partnership.1

The supply of HYPE tokens is dynamic and depends on network activity. Staking emissions and contributor unlocks (i.e., vesting) add to HYPE supply, while fee burns reduce HYPE supply. There are currently about 270 million HYPE tokens in circulation. We project that circulating supply will total between 270 and 310 million tokens by the end of 2027, based on our baseline expectations for earnings and a range of assumptions for team unlocks.2

Together these estimates equate to roughly $3.25 to $3.75 in EPT, and, at the current HYPE price of $54, a forward “earnings multiple” for HYPE of roughly 15 to 18x, suggesting the token may be undervalued compared to fintech equities (Exhibit 1). Risks to our forecasts include lower than expected network revenue growth and/or higher than expected token supply growth.

Key Takeaway: Despite the gains in Hyperliquid’s HYPE token this year, it still looks cheap compared to fintech equities.

Exhibit 1: HYPE multiple can be compared to traditional fintechs

1. A portion of stablecoin reserve income will be directed to the protocol under Hyperliquid’s Aligned Quote Asset version 2 (AQAv2) infrastructure. The median public equity in Exhibit 1 is expected to grow earnings by ~80% between 2025 and 2027, based on Bloomberg consensus earnings estimates.

2. Hyperliquid core contributors have been unlocking HYPE tokens at a rate of ~550k per month. We assume a range of 550k (the current run rate) to 2,750k (5x the current run rate) in our projected supply estimates. Estimated emissions are based on current staked HYPE supply and the current staking reward rate.

CLARITY Act Coming Down to the Wire

The CLARITY Act, bipartisan legislation creating a comprehensive rulebook for crypto capital markets, is coming down to the wire. The bill needs to clear the US Senate in the next two weeks (before the August recess), or it will likely get drowned out by midterm election politics.

On July 22, Senate Republicans released a complete draft text for the bill for the first time.1 Grayscale supports passage of the CLARITY Act and believes it will create a solid legal foundation for software developers, token issuers, investors, and other market participants, helping drive growth of public blockchain adoption.

The key sticking point is around the so-called “ethics” provisions—limits on public officials from issuing or sponsoring digital assets while in office. The Republican draft includes those limits but press reports suggest Democrats would like to see revisions.

Other key elements of the bill are less contentious. The legislation includes protections for non-custodial software developers—key for ensuring continued growth in decentralized finance (DeFi)—as well as rigorous requirements around KYC/AML and other protections against illicit finance.

Prediction markets put the probability of passage close to a toss-up (Exhibit 1). If the bill does not become law, public blockchain technology will continue to make inroads into the mainstream financial system, in our view, with use cases like stablecoins and tokenized assets. But investors and developers would need to continue to rely on guidance from regulatory agencies, without the long-term certainty offered by legislation.

Key Takeaway: The CLARITY Act may soon clear the Senate if bipartisan negotiators can make progress on a few remaining issues. The bill would create long-term regulatory certainty for crypto investors, developers and market participants and help drive the adoption of public blockchain technology.

Exhibit 1: Prediction markets suggest passage of CLARITY Act is a close call

The bill includes elements from both the Senate Banking Committee and the Senate Agricultural Committee. The new draft text combines material from both.

Bitcoin: Four-Year Cycle or Macro Asset?

When will the Bitcoin bear market end? Among market participants, there are two common perspectives.

Believers in the “four-year cycle” theory see Bitcoin halving events as the key driver of price movements and expect the current bear market to play out like those in the past. Historically, Bitcoin’s price has bottomed about a year after the cyclical peak and roughly 2.5 years after the halving event. Cumulative drawdowns have averaged ~80%.1 The four-year cycle theory implies that Bitcoin’s price could fall further, with a bottom in September or October.

The alternative perspective is that Bitcoin has “grown up” as an asset, and its price will henceforth be influenced by shifts in the macro backdrop, like virtually all major asset classes. For example, Bitcoin bear markets in the past have corresponded with slowing economic growth and/or rising real interest rates (Exhibit 1). The current bear market has also featured a major shift in Fed policy expectations and rising real interest rates. Naturally, if macro factors are in the driver’s seat, Bitcoin’s price could bottom when these macro factors turn around.

We subscribe to the latter view. If the Fed forgoes rate hikes and economic growth holds up well, Bitcoin’s price may already have bottomed.

Key Takeaway: The “four-year cycle” view predicts lower lows for Bitcoin’s price, but a macro perspective suggests the bottom may already be in.

Exhibit 1: Bitcoin price cycles have corresponded to shifts in macro backdrop

Based on median magnitude and duration of past drawdowns. Source: Coin Metrics, Grayscale Investments. Data as of July 21, 2026.