Kunal Doshi
@Kunallegendd
Research @blockworksres | prev @thespartangroup | Views are my own
2K Following 1.2K Followers
Disruptive technology almost always faces intense regulatory scrutiny and incumbent backlash before becoming mainstream.
History is full of examples:
(1) Taxi unions spent years trying to regulate Uber out of existence through lawsuits, protests, and city-wide bans. Uber went from a controversial startup to a ~$150B company doing ~$40B+ annual gross bookings.
(2) Hotel lobbies pushed cities worldwide to crack down on Airbnb over “unfair competition” and regulatory arbitrage. Airbnb now does ~$11B+ annual revenue and completely changed global travel behavior.
(3) Legacy media and Hollywood viewed Netflix as a threat to the entertainment industry, while regulators scrutinized streaming licensing and distribution models. Netflix grew from a DVD-by-mail disruptor into one of the largest media platforms in the world.
(4) Record labels initially fought Spotify aggressively over royalties and fears that streaming would destroy music economics. Today Spotify has ~700M users globally and became the dominant music distribution platform.
(5) Regulators and legacy finance recently called 0DTE options “dangerous speculation” and pushed for tighter restrictions. Now 0DTEs account for a massive share of SPX options volume and became one of the most important liquidity products in modern markets.
The pattern is consistent:
new technology compresses friction and challenges incumbents → incumbents call it dangerous → adoption compounds anyway.
Things are just getting started from here
Hyperliquid
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[ ZOOMER ]
CME AND NYSE ARE PUSHING THE US TO REGULATE HYPERLIQUID, DUE TO CONCERNS ABOUT MARKET MANIPULATION AND SANCTIONS EVASION: BBG
Not to be faded
“What can be said now is that 11.4% of circulating HPL was staked within thirteen days of program launch. Adoption at that rate, against a balance sheet of $658.7M and a loan book that grew more than 23% in a contracting sector, is a directional signal worth taking seriously.”
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I have seen that one before!
Loopscale + @Collector_Crypt
Submit your collectibles today and borrow fixed-rate USDC against your collection at launch.
→
Strong fundamentals. Compressed multiple.
@kamino's revenue profile has held up far better than its valuation would suggest. Historically, these kinds of dislocations don’t last forever.
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Most @Collector_Crypt users are playing it wrong
Players are down about -2.6% on average from spinning the gacha
Meanwhile the average graded card is up around 50% to 100% at least since the start of the year
But only 35% of users actually keep their cards
The rest sell instantly
The people treating it like a game are losing
The ones treating it like collecting are winning
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Stablecoin protocols tapping into @MicroStrategy's STRC’s yield are seeing explosive growth. TVL across these strategies has increased 2.5x over the past month, making them one of the fastest growing segments in DeFi right now. This growth is tracking closely with STRC itself, whose market cap has risen 73% from $4.9B to $8.5B over the same period, signaling strong demand for Saylor’s latest product across multiple market participants.
@apyx_fi and @saturn_credit are the primary beneficiaries so far. What makes this strategy particularly compelling is its scalability. STRC consistently sees $100M–$250M in daily trading volume, allowing these protocols to efficiently scale exposure in response to deposits and redemptions without major liquidity constraints.
With the right risk safeguards in place, the next phase of this trade is likely to be looping yield-bearing stablecoins. PTs on these assets are currently offering 16% and 13% yields respectively, and importantly, these yields are sustainable even as TVL grows. Early signs of demand are already visible, with Morpho’s listing of PT-apyUSD reaching $23.2M supplied within just 10 days.
Looking ahead, the key metrics to watch are continued TVL growth and capital efficiency across these strategies. Secondary beneficiaries are @pendle_fi and @Morpho, which are becoming the primary venues for structuring and leveraging these trades.
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Despite Covenant’s departure a few weeks ago and the questions raised around @bittensor's decentralization, fundamentals continue to improve. The proportion of TAO staked in alpha subnets has steadily increased and now sits at 28%.
Subnets across the Bittensor ecosystem have continued to ship performance upgrades and reaffirm their commitment to the network, signaling continued alignment despite recent concerns.
The potential introduction of locked stake, which would require subnet owners to lock TAO for a defined period, should further strengthen this alignment. It creates a more credible signal of long-term commitment and reduces the risk of short-term opportunistic exits, as seen with Covenant.
TAO and subnet tokens were among the strongest performers prior to this incident and remain one of the clearest ways for crypto funds to gain exposure to the AI narrative. Price action also suggests that momentum may be starting to build again.
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Polymarket continues to roll out new upgrades to make the short-duration 5-minute and 15-minute market trading experience smoother.
This is not surprising, given that these markets have been generating close to 40% of Polymarket’s daily fees despite only contributing around 17% of volume.
5-minute markets have already surpassed 15-minute markets in both volume and fees generated, despite only launching in February. The appeal lies in the high volatility these markets create, which in turn attracts two kinds of traders.
The first is the informed institutional trader, who places multiple small trades within each window to execute one of the following three strategies:
(1) Pair harvesting: using volatility to accumulate both Yes + No < $1 and arbitrage the difference
(2) Directional trading: using faster external price feeds (Binance, Coinbase) to front-run lags in the Polymarket order book, taking asymmetric positions on which side will win
(3) Active trading: trading in and out within the market window, riding momentum on 5-minute markets (trend-following) or fading sharp moves on 15-minute markets (mean reversion)
Sophisticated traders focus on consistency rather than hitting outsized wins, achieving a high win rate despite low PnL margins of around 1.2%–1.5%. While margins are small, they compound steadily given the short duration of these markets.
The other side of this trade is the average retail participant. While they contribute close to 63% of volume in these markets, less than 40% have emerged profitable, and their average margin is negative.
Winning in these markets is not very different from flipping a coin, yet the dopamine effect of potential large short-term wins keeps users engaged. Winning four windows in a row would likely result in a ~16x return in just 20 minutes. The appeal is strong enough to keep volumes flowing.
With a similar product for stocks on the roadmap, along with the improved trading experience from the v2 upgrade, this dynamic will likely become even more attractive for retail participants. This, in turn, creates greater opportunities for sophisticated algorithmic traders.
I expect short-term markets to generate close to 60%–70% of Polymarket’s fees over the next year.
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one tap trading is live on 5M & 15M crypto markets 😛
dm me with any feedback
Amazing milestone with the best in the industry!
1/ Blockworks has raised a Series A extension at a $192M valuation.
This allows us to double down on our mission to build trust in onchain markets.
Thank you to all of our customers, we couldn’t have done this without you.
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Dug into some @Polymarket data over the weekend to understand how much wash trading there is and what that actually means for prediction markets.
Key finding: Polymarket has rampant low-value wash trading, but the trades that truly matter i.e. high-value trade volumes, are taking genuine directional bets.
Using @Dune, I pulled all trade data from its 3 main 2028 political markets: Presidential Election Winner, Democratic Nominee, Republican Nominee (~$500M USDC, 8.8 million trades, Jul 2025-Apr 2026).
To estimate wash trading activity, I used a basic “round-tripping” filter i.e. wallets that simply bought and sold equal number of shares — netting out to zero. In other words: did this wallet take a directional position, or just bounced in and out?
The blue bars in chart below shows an alarmingly high 60-65% of volumes on Polymarket’s top political markets are wash-traded.
But there is noise in that signal because legitimate market makers on Polymarket also quote tight spreads and get filled on both sides, similar to wash traders. So I applied another filter to exclude transactions below $500 and $1000, which is where market makers typically trade at. The outcome is wash trading vols dramatically falls to 1–4% (see orange and grey bars).
If you believe large trades = “smart money”, then I think Polymarket as a “global truth machine” is intact. Would love to hear different takes.
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Got lucky with the timing of my previous article and it is great to see the team acknowledging the problem and laying out a roadmap to address it.
Surprised to see that @0xPolygon hasn't sold off on this news given their reliance on Polymarket.
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This is my 3rd week as VP of Engineering DeFi at @Polymarket , and I'm going to be straight: the traction @Polymarket has seen has massively outpaced our infrastructure, and we haven't done nearly enough to scale to keep up. I hear you, and fixing this is our entire focus. We're a major company now, and we need to engineer like one. Here's exactly what we're doing:
- Onchain data latency. We're working on making this near-instant so the experience is incredible.
- Chain migration. We need more block space, cheaper gas and much smaller block times so settlement is instant.
- Transactions are getting cancelled. We understand this is one of the most frustrating issues right now, and we have a complete fix coming very soon.
- Massive focus on the website to make it faster, more responsive, and with better UX.
- We added observability everywhere. Proper alerting so we catch issues ourselves, market makers should not be the ones telling us something is down. That's been unacceptable, and we know it.
- E2e tests throughout, starting with the CLOB, so issues get caught in CI before anything ships.
- CLOBv2 is not a rewrite. It won't improve performance or stability on its own; it's an upgrade that unlocks us to move fast right after. We'll do better with communication next time.
- We are rebuilding the CLOB from the ground up. Most important thing we're doing. Without it, we can't be the best DeFi exchange in the world. We know it, we're on it, it's mission critical.
- Unified TypeScript SDK for all APIs, which is shipping soon.
- Unified API. One WS connection for everything, with a schema that's actually readable.
- New Polymarket contract in the works that unlocks things that are simply impossible on the current protocol.
- New hires: Head of QA Automation, Head of Dev Tooling, Head of Internal Tooling, Head of Data Engineering.
- Smaller, dedicated teams. Fewer focus points per person, clearer ownership. People do what they're good at and are accountable for it.
- Working closely with customer support to give them real debugging tools so any user issue gets properly diagnosed, not lost.
- Proper communication with marketing and market makers so everyone knows what's coming and when, and MM can submit feature requests with a clear path to get them into engineering and shipped.
- Working with 4 security teams daily to ensure we're super secure and that funds are always safe.
- Perps incoming. Brand new contracts and a backend built from scratch in Rust. We're proud of this one.
- A lot of other fixes are running in parallel right now.
Starting next Friday, I will be posting weekly engineering updates.
I joined because I genuinely believe in what @Polymarket is trying to do. @shayne_coplan built this so the world has somewhere to go to find out what's actually going to happen, not what the media thinks, not what a pundit says, but what thousands of people are willing to put money on. But right now, our engineering isn't living up to that. We've let people down, and I'm not going to dress that up. I came here to fix it, and that's exactly what we're going to do. The next few months are going to speak for themselves. Stay with us.
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