$30B Shifts to Ethereum Liquid Restaking

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Good Morning.

Ethereum validators have shifted $30B into liquid restaking, signaling that native staking is losing its primacy. What began as a niche experiment is now the core play for ETH holders seeking both liquidity and higher yields.

In Today's Email:

• What Matters: $30B Shifts to Ethereum Liquid Restaking 👀 

• Founders Highlight: Sam Kazemian of Frax Finance 👨 

• Deal Flows: M0 Secures $40M Series B 💰️ 

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WHAT MATTERS

$30B Shifts to Ethereum Liquid Restaking

State of play: Ethereum is seeing a major capital shift, with $30B now locked in liquid restaking protocols like EtherFi and Eigenpie.

• Validators are increasingly withdrawing from native ETH staking, not out of bearish sentiment, but to reallocate toward higher-yield DeFi opportunities.

• Liquid restaking lets holders earn staking rewards while maintaining liquidity through tradeable tokens, offering more flexibility and yield optimization.

• This marks a broader evolution in Ethereum’s ecosystem, where users are adopting more sophisticated yield strategies beyond traditional staking.

Why it matters: Native staking is no longer the default, liquid restaking protocols are emerging as the preferred vehicle for capital efficiency and higher returns.

Our take: Validator withdrawals aren’t a bearish signal. They show confidence in DeFi’s resilience and a willingness among ETH holders to embrace more complex yield strategies.

For builders and investors: We should view this trend as a structural shift in Ethereum economics, where capital rotation into liquid restaking could drive both protocol growth and new layers of composability.

BUILDER-INVESTOR HIGHLIGHT

Sam Kazemian of Frax Finance

Intro: Sam Kazemian is the Founder of Frax Finance, a DeFi protocol that creates and manages various stablecoins, including FRAX (pegged to the US dollar) and frxETH (pegged to Ethereum).

• Recently, Sam announced that he is joing Stable’s leadership team.

Previous background: Sam studied at UCLA, where he co-founded Everipedia in 2014 as a modern alternative to Wikipedia. He later pivoted to crypto, launching Frax in 2019, which quickly became one of the largest stablecoins.

The big idea: Sam’s vision with Frax is to reinvent stablecoins through innovative models like fractional reserves and flatcoins pegged to inflation indexes, offering more resilient and adaptive monetary assets for DeFi.

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INSIGHTS

$50M in Crypto Scam Funds Frozen

Chainalysis, Tether, Binance, and OKX worked with Asia-Pacific law enforcement to freeze nearly $50M in USDT linked to a large-scale “pig butchering” scam.

• Investigators traced funds from dozens of victims through intermediary wallets before consolidation, using Chainalysis’ blockchain tools.

• Tether froze the funds in June 2024, preventing conversion to fiat.

• The case underscores how public-private collaboration can disrupt crypto scams, which caused over $5.8B in losses in 2024.

DEAL FLOWS

M0 Secures $40M Series B

Deal flows soared this week - we saw $197M in deals 💼 

Stablecoin startup M0 has raised $40M in Series B funding, bringing its total capital raised to nearly $100M.

• The round was led by Polychain and Ribbit Capital, with participation from Endeavor Catalyst, Pantera, and Bain Capital Crypto.

• M0 is building infrastructure for stablecoin issuers to deploy tokens across chains without developing their own transfer or swap systems,

• M0 is aiming to become the “layer zero of money.”

Deal flows in the past week:

• Trepa, $420K Pre-Seed Round

• Splendor Labs, $4.5M Seed Round

• The Clearing Company, $15M Seed Round

• M0, $40M Series B Round

• Rain, $58M Series B Round

• Hyperbot, $6.75M Strategic Round

• MAGNE.AI, $10M Strategic Round

• aPriori, $20M Strategic Round

• Superfluid, $2M Public Token Sale

• Lombard, $6.75M Public Token Sale

• Hemi Labs, $15M Growth Round

• NVT, $13.9M Equity Round

• fly.trade, $40K Unknown Round

• Metafyed, $5.5M Unknown Round

QUICK BITES

• Pump.fun buys back $15M $PUMP over past two weeks.

• New Solana launchpad Heaven grabs 15% market share.

• IREN on track to $1B in annualized bitcoin mining revenue.

• CFTC provides clarity on US access to foreign crypto exchanges.

• DeFi Development purchases 407,247 SOL following equity raise.

• Spot Ethereum ETFs see $307M in daily inflows, beating Bitcoin ETFs.

• HK crypto exchange OSL posts 58% YoY revenue increase in H1 2025.

• Fed Governor Lisa Cook sues Trump as he tries to fire her amid tensions.

• US gov begins distributing key macroeconomic data on public blockchains.

• Validator withdrawals fuel $30B migration into ETH liquid restaking protocols.

NOTEWORTHY READS & MEME

• Jakob’s read on The Yield Gap.

• Coinmetrics’s read on Layer-1s Vertical Analysis.

• Trepa’s thread on Making Predictions the Smart Way.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.