0xResearch | June 20th, 2025

This episode of 0xResearch Live unpacks the strategic shifts of centralized exchanges moving on-chain, the critical need for token transparency, and the burgeoning intersection of AI verification systems like Worldcoin with major social platforms.

Permissionless Conference Preview & Team Banter

• The 0xResearch team, including Bacio, Carlos, and Dan Reverend Smith, kicks off with palpable excitement for the upcoming Permissionless conference. They anticipate a strong team presence and look forward to engaging with their Telegram community.
• The "0x Arena" at Permissionless will feature attractions like a Dunk Tank and an arcade basketball game, promising a lively atmosphere.
• Dan Reverend Smith highlights the value of in-person team interaction, given their largely remote work setup. He describes the talent density and high-agency environment at 0xResearch as a significant motivator, contrasting it with his "Big Four accounting world" experience where one is "truly a cog in the machine."
• Bacio expresses anticipation for Jacob Sharpel's talk on DEX activity and Westy's presentation on active addresses, humorously noting his usual aversion to data-heavy topics unless they involve Hyperliquid.
• The host, Danny, shares his excitement for his first crypto conference and meeting the team in person, echoing Dan's sentiment about the unique startup culture.

Strategic Implications:

• Crypto AI investors and researchers should note the informal networking and idea-sharing opportunities at conferences like Permissionless, which can offer early insights into emerging trends and team dynamics within key organizations.

Centralized Exchanges (CEXs) Embracing On-Chain Strategies

• Dan Reverend Smith leads a discussion on the evolving strategies of CEXs moving their operations on-chain, noting a historical progression from heavy infrastructure to more lightweight solutions.
• Binance (2019): Launched BNB Chain as an L1 (Layer 1 - a foundational blockchain like Ethereum or Bitcoin) using Proof of Authority, aiming to build a full-stack, integrated ecosystem around the BNB token. Dan notes, "their motive here again was to create this vertically integrated ecosystem around this token."
• Coinbase (2023/2024): Opted for Base, an L2 (Layer 2 - a scaling solution built on top of an L1, like Ethereum, to improve transaction speed and reduce costs), generating revenue via sequencer profits and focusing on product integration (e.g., USDC deposits, CBBTC on Base, Morpho loans). Their chain primarily accelerates the exchange's product roadmap.
• Bybit (Recent): Announced plans to deploy smart contracts (self-executing code on a blockchain) on Solana for a DEX (Decentralized Exchange - a peer-to-peer trading platform). This is the most lightweight approach, focusing on asset listing and liquidity without building proprietary chain tech.
• Dan suggests this trend indicates the "battle moved up the stack getting closer to the user." The initial need for Binance to build its own L1 stemmed from a less mature ecosystem, whereas Bybit can now leverage Solana's developed infrastructure.
• The host, Danny, adds OKX Wallet to the list, which is integrating on-chain trading infrastructure and partnering with platforms like Phantom. This signals a realization that building a proprietary chain for a high FDV (Fully Diluted Valuation - the total value of a crypto project if all its tokens were in circulation) token is less crucial than building profitable products directly.

Strategic Implications:

• Investors should monitor how CEXs are leveraging existing L1s/L2s versus building their own, as this impacts capital expenditure, time-to-market, and potential token ecosystems.
• The shift towards app-level development on established chains suggests opportunities in protocols that facilitate CEX integration or offer superior user experience, potentially drawing CEX-driven volume.
• Researchers should analyze the value accrual mechanisms of these CEX on-chain initiatives – whether through native tokens, sequencer fees, or direct trading revenue.

The Future of On-Chain Finance: Banks, Fintechs, and DEX Architecture

• The conversation explores whether traditional financial institutions will follow the CEX playbook and how DEX architectures are evolving.
• Dan questions if giants like Bank of America or Robinhood will launch their own chains or adopt Bybit's lightweight model. He notes JP Morgan's JPM Coin, a stablecoin, launched on Base rather than their private Onyx/Kexus chain, suggesting a pragmatic approach to tap into existing ecosystems.
• Bacio observes a market shift: previously, launching a chain offered significant valuation boosts. Now, applications like Pump.fun (a platform for easily launching memecoins on Solana) and Telegram bots demonstrate high revenue potential without lengthy vesting cycles, influencing VC focus towards apps over L1s.
• Carlos inquires about Bybit's DEX architecture. Dan anticipates a "prop style AMM" (Automated Market Maker - a smart contract that facilitates token swaps using liquidity pools, with "prop style" referring to more sophisticated, often oracle-driven, models used by professional trading firms) leveraging Bybit's market maker relationships for tighter spreads, similar to Solflare's Sulfi.
• OKX Wallet's aggregator is gaining market share on Solana, taking about 18% of DEX aggregator volume from Jupiter (which still holds ~75%). Bacio attributes some of this to mobile-first users.

Strategic Implications:

• The potential entry of traditional banks and fintechs onto public blockchains could significantly alter the competitive landscape. Investors should watch for early partnerships or infrastructure choices.
• The evolution of AMM models towards prop-style or RFQ (Request for Quote - a system where market makers provide quotes for a trade) systems on high-throughput chains like Solana indicates a demand for capital efficiency and tighter spreads, favoring platforms that can attract sophisticated market-making talent.

Deep Dive into Kamino Finance

• Carlos presents a bullish case for Kamino (KMNO), a Solana-based lending and liquidity protocol.
• Valuation & Growth: Kamino trades at a low price-to-sales multiple. Its V2, launched a month ago, features a modular architecture akin to Morpho (a lending protocol optimizing rates by matching lenders and borrowers directly) and Aave/Euler (prominent lending protocols), enabling rapid new market additions (12 new markets, 8 curated lending vaults).
• New Avenues: Kamino has integrated PT (Principal Token - a token representing the principal amount in a yield-bearing asset) markets from Exponent (over $40M deposits) and on-chain private credit via Maple Finance.
• Dan's "Left Curve" Thesis: The meta trend is stablecoins, leading to growth in lending markets. As equities come on-chain (e.g., Superstate's Soul Strategies on Solana), lending markets will be crucial due to transfer restrictions on tokenized securities. Kamino, as Solana's premier money market, is well-positioned.
• Tokenomics Concern: A key challenge is the lack of clarity around KMNO's value accrual. Carlos notes, "people are discounting Kamino because they are... just not sure like what's the... use of the token." Improving this could lead to a repricing.
• The team agrees that uncertainty around token utility is a major headwind, and providing clarity is more effective than expensive buybacks to signal legitimacy.

Strategic Implications:

• Investors should assess Kamino's ability to execute on its V2 roadmap and attract diverse assets, especially in the nascent on-chain private credit and tokenized equity spaces.
• The KMNO token's future performance heavily depends on the team clarifying its utility and value accrual. Progress here could be a significant catalyst.
• Researchers should compare Kamino's modular architecture and risk management with established players like Aave and Morpho to gauge its competitive advantages on Solana.

Introducing the 0xResearch Token Transparency Framework

• Dan Reverend Smith unveils 0xResearch's new Token Transparency Framework, designed to standardize disclosures and combat ambiguity in the crypto space.
• The Problem: Lack of a disclosure regime allows bad actors to profit from ambiguity, harming retail investors and hindering institutional adoption. Dan references Felipe's talk on "lemon markets," where information asymmetry devalues the entire market.
• The Framework: Comprises four categories (Project and Team, Token Supply and Allocation, Market Structure, Financial Disclosure) with 18 criteria. The template is open-source.
• Industry Reception: Overwhelmingly positive, with 99% support, contrary to initial expectations of a mixed response. Jason Yanowitz, Blockworks co-founder, had anticipated a "50-50 split."
• Brian from Jito (First Cohort): Joins to share his experience. Coming from traditional public market investing, he emphasizes the difficulty of finding basic token information and how the framework can standardize this. "Changing project incentives and making crypto more accessible to people that want to invest in high quality projects is something that we really need," Brian states. His wishlist for V2 includes tracking insider token sales.
• Future Iterations (V1 and Beyond): Dan acknowledges this is a V1 and will evolve. Potential improvements include criteria refinement, audit consistency, defining who completes submissions for DAOs (Decentralized Autonomous Organization - an organization represented by rules encoded as a computer program), and rolling submission windows (e.g., semi-annually).
• The goal is to provide meaningful utility without overburdening small project teams, moving the industry's disclosure standard from a "negative 2 to a 3 or 4" on a 0-10 scale.
• A key success metric for Dan: "Do we see when a new token is launching and if they've completed this do we see people arguing about what was said in this standardized form instead of like screenshotting something from discord...?"

Strategic Implications:

• Crypto AI investors should leverage the Token Transparency Framework for enhanced due diligence on projects, particularly new launches.
• Researchers can use the standardized data to conduct comparative analyses of tokenomics, governance, and financial health across projects.
• The framework's adoption could lead to a "flight to quality," benefiting projects with strong fundamentals and transparent operations, potentially impacting token valuations.

Worldcoin, AI, and the Future of Online Identity

• The discussion shifts to Worldcoin (WLD), an identity project that scans irises to create unique digital IDs, and its potential role in an AI-driven internet.
• Reddit Integration: Worldcoin is reportedly in talks with Reddit to integrate its identity verification, aiming to combat the platform's AI bot problem.
• Privacy vs. Utility: Concerns about eyeball scanning are weighed against the growing problem of "slop" (low-quality, often AI-generated content) online. Ryan Connor notes 50 million people have already been scanned, with data encrypted and keys split, held on the user's device.
• Ryan's Bull Case for Worldcoin:
  1. Combating Slop: AI-generated content threatens the usability of internet platforms (e.g., doctored real estate photos, fake reviews). Worldcoin offers a Sybil resistance mechanism.
  2. A16Z Influence: As a major investor in Worldcoin and numerous Silicon Valley companies, A16Z can facilitate adoption.
• AI's Trajectory: Sam Altman (OpenAI CEO) aims to abstract away AI model selection for users. Ryan emphasizes the urgency due to AI's predictable scaling laws, similar to Moore's Law for semiconductors. "We know where this is going and that's why things like [Worldcoin] are going to be so so important," Ryan asserts.
• The potential for Worldcoin to be integrated into dating apps or other platforms requiring proof-of-humanity is explored.

Strategic Implications:

• Investors in AI and crypto should monitor Worldcoin's partnerships and adoption rates as a bellwether for decentralized identity solutions tackling AI-related challenges.
• Researchers can explore the technical and ethical implications of biometric-based digital identity systems, including data privacy, security, and accessibility.
• The success of projects like Worldcoin could create new markets for verified human interaction and data, impacting social media, e-commerce, and online content platforms.

Market Pulse: "Trench Talk" and PancakeSwap's Volume Surge

• The team briefly touches on the state of memecoin trading ("the trenches") and unusual DEX volume.
• Memecoin Activity: Bacio feels the "trenches" aren't fully back compared to the Nov-Jan peak. Dan notes that Pump.fun activity (volume, revenue) has stabilized at a "new normal" since February, with the market cap of launched tokens slightly elevated.
• PancakeSwap Volume Anomaly: PancakeSwap is reportedly handling over 50% of all DEX volume. Dan explains this is due to a Binance Alpha program on BNB Chain incentivizing trading volume on PancakeSwap with points, significantly skewing metrics. An example is the Bedrock token, doing billions in volume on minimal liquidity.
• Despite the artificial nature of this volume, Carlos points out PancakeSwap ranked third in revenue across all crypto projects in the past week, after Hyperliquid and Solana, though the market appears to be discounting the quality of this revenue.

Strategic Implications:

• Investors should be cautious of volume metrics on DEXs that may be inflated by short-term incentive programs, focusing instead on sustainable user activity and organic growth.
• Researchers analyzing DEX data need to identify and potentially filter out such incentivized volume to get a clearer picture of genuine market trends and platform usage.

X (Twitter) Eyes Trading and Financial Services

• The potential for X (formerly Twitter) to integrate trading and financial services is discussed.
• Elon Musk's Super App Vision: Ryan Connor recalls Elon Musk's long-standing ambition to create a "super app" with payments and social features, dating back to his PayPal days. X's US-centric, wealthier user base is seen as a more natural fit for financial products than messaging apps like Telegram.
• Credibility and Execution: While X employees were rumored to be working on financial features last summer, the actual implementation remains uncertain. Regulatory hurdles have historically blocked similar moves by large tech companies (e.g., Walmart, Meta).
• Partnership Model: Dan suggests the PolyMarket integration with X (for prediction markets) could be a template: X provides distribution, partners provide the product, and X takes a cut.
• User Experience: The host, Danny, questions whether X's current live content features are robust enough and how trading could be seamlessly integrated. He expresses skepticism about tweet-based trading commands, preferring simpler app interfaces. Ryan envisions a future with Neuralink enabling thought-based trading.

Strategic Implications:

• If X successfully integrates trading, it could onboard a massive new user base to crypto and other financial assets, significantly impacting existing exchanges and brokerage platforms.
• Investors should watch for X's approach: direct build, acquisition, or partnerships. The choice will influence the types of assets and services offered.
• Researchers can analyze how social sentiment and activity on X correlate with trading behavior if such integrations occur, potentially creating new data sources for market analysis.

Kraken's Ink (INC) Token and L2 Strategy

• The announcement of Kraken's INC token for its L2, Ink, prompts a discussion on CEX chain strategies.
• A Contrasting Approach: While some CEXs (Bybit, OKX) are building apps on existing chains, Kraken is launching its own L2, Ink, and an associated token. The host, Danny, initially expresses low expectations for Ink's activity.
• Kraken's Momentum: Ryan Connor is more optimistic, citing Kraken's recent improvements in listings and partnerships, and its less ideological stance. He believes the power of the Kraken brand could drive Ink's success, similar to Coinbase and Base.
• Token Utility Questions: Dan Smith raises concerns if INC is merely an incentive tool, especially since Ink is part of the Optimism Collective, meaning INC won't govern the chain itself. "If it doesn't have a governance rights value accrual like it feels like an incentive token," Dan remarks.
• Distribution Tool: Carlos views the INC token primarily as a distribution mechanism to attract attention and users to the Ink chain.
• The team notes Kraken is pursuing multiple strategies, including tokenized equities on Solana via a partnership with Backed Finance, and the Ink L2 on Ethereum.

Strategic Implications:

• Investors should scrutinize the utility and value accrual mechanisms of CEX-launched L2 tokens like INC. A lack of clear governance or revenue share could limit long-term value.
• Kraken's multi-pronged approach (Solana for tokenized assets, its own L2) suggests CEXs are still experimenting to find the optimal on-chain strategy. Success will depend on attracting genuine developer and user activity.
• Researchers should compare the technical capabilities and ecosystem development of CEX-specific L2s like Ink and Base against general-purpose L2s.

Conclusion: Navigating On-Chain Evolution and the Imperative of Transparency

This 0xResearch episode highlights CEXs' strategic pivots to on-chain activity and the critical role of transparency initiatives in maturing the crypto market. Investors and researchers must track these evolving CEX strategies and leverage new disclosure frameworks to identify sustainable value in an increasingly complex ecosystem.