First of all: Happy Bitcoin all-time high! 🥳 

At the time of sending out this edition, Bitcoin sits at $110k, crossing this number for the first time ever.

And with that, we welcome you to this month's investor briefing featuring our latest analysis, findings and strategic insights from the Web3 ecosystem.

TL;DR

• Macro analysis, market updates and views on mass adoption with Julius from w3.wave, exploring a divergence between strong crypto markets and muted mainstream attention.

• Insights into the agent economy with Henrik from w3.ventures, exploring how AI and Web3 are converging to create autonomous financial systems with DeFAI leading the way.

• Comprehensive Ethereum 2.5 overview with Tom from w3.labs, providing insights on the Pectra upgrade that's reshaping validator economics and benefiting small and big stakers alike.

When Price Leads, but the Crowd Lags

In recent weeks, we’ve observed a fascinating disconnect: crypto markets have shown a strong recovery, yet mainstream interest, measured by search trends, media buzz, and retail participation, remains relatively muted. This divergence reminds us that price action often precedes narrative shifts, not the other way around.

It’s a pattern we’ve seen over and over: investor interest surges with the hype, not the opportunity.

This behavioral trend is one of the core reasons we opened our fund. We help investors cut through the noise and take advantage of market volatility, rather than being at the mercy of it.

A Barbell Market: Majors and Memes

As momentum returned to markets over the past weeks, one thing became abundantly clear: risk appetite didn’t return gradually - it snapped back. Investors went straight to the extremes of the risk curve, flooding into narrative-driven memes and AI tokens. It’s an interesting behavior, especially given how many participants had hoped for a fundamentals-led rally after the meme bubble popped in Q1 of this year.

Instead, we saw a "barbell" market structure emerge, on one end, solid majors like BTC and ETH, on the other, high-risk altcoins with strong community momentum. The middle, the so-called quality mid-cap, remained somewhat muted and provided very dispersed returns.

Mass Adoption: From OMR to Stripe and Mastercard

Earlier this month, I had the pleasure of hosting a panel on crypto and the mass market at the OMR conference. The big question we tackled: Is crypto already mainstream?

Recent developments suggest the answer might be yes, at least when it comes to stablecoin adoption.

Stripe recently unveiled stablecoin financial accounts, now live in 101 countries, following its $1.1B acquisition of Bridge. These accounts allow businesses, especially in volatile currency regions, to hold and transact in stablecoins like USDC and Bridge’s own USDB, without the complexities of custody or crypto exchanges.

Meanwhile, Mastercard announced a strategic partnership with MoonPay to roll out stablecoin-linked cards across its global network. Users will be able to spend stablecoins at over 150 million locations worldwide, with seamless fiat conversion. The integration aims to make crypto wallets functionally equivalent to digital bank accounts, especially powerful for businesses and creators operating across borders.

Together, these moves mark a significant unlock for global stablecoin usage, transforming them from a trading instrument into a real-world payments layer.

So irrespective of public attention and “hype” around blockchain technology we are slowly moving towards broader crypto adoption while prices are slowly moving back towards the highs. It will be interesting to watch the latest developments on price action going forward!

Chart of the Month:

This week’s chart highlights the explosive growth of Hyperliquid, a fully on-chain perpetual DEX that’s been quietly eating into the market share of centralized exchanges. Over the past six months, it has become one of DeFi’s biggest success stories, proving that with the right design and performance, on-chain trading can truly compete with the centralized incumbents.

The data speaks for itself: traders are increasingly moving towards platforms that offer transparency, control, and self-custody—without compromising on speed or depth.

Agent economy: How AI x Web3 will reshape our future

According to VanEck's 2025 predictions, we'll see 1 million new AI agents in 2025 alone. We're witnessing the birth of an economy where autonomous agents directly exchange value, which presents a use case where crypto's infrastructure becomes not just useful, but essential, as it is creating entirely new paradigms for how we interact with financial services and digital assets.

DeFAI: The leading intersection

The most promising intersection between AI agents and Web3 is undoubtedly DeFAI, the fusion of decentralized finance with artificial intelligence. With a market cap already approaching $1.5 billion according to CoinGecko, this sector becomes the proving ground for agent-based systems that can autonomously manage capital, analyze markets, and execute complex financial strategies.

The DeFAI landscape is evolving into distinct categories, each addressing different financial use cases. Abstraction protocols like Griffain and HeyAnon are making DeFi accessible through natural language interfaces, allowing users to simply tell their agents what they want ("Stake 5 ETH for the highest yield") rather than navigating complex protocols. Autonomous portfolio managers such as Fungi are optimizing yields and managing risk across multiple chains and protocols, often outperforming human traders in both returns and reaction time. Meanwhile, market analysis agents like AIXBT are providing real-time insights by processing vast amounts of on-chain and off-chain data.

DeFi represents the perfect initial use case for AI agents because financial operations are data-rich, rules-based, and benefit immediately from automation. The quantitative nature of finance makes it particularly suitable for AI-driven decision-making, while the composability of DeFi protocols creates an environment for agents to discover novel strategies and optimizations that humans might miss.

Why crypto is essential for AI agents

The digital economy is on the verge of a fundamental shift in how value is captured and exchanged. Today's internet monetizes human attention through advertising: The more eyeballs on a page, the more revenue generated. But in an agent-driven economy, this model breaks down entirely. AI agents don't browse websites or view ads; they interact directly with services through APIs and programmatic interfaces.

This shift requires a new economic model where value is exchanged directly between services and the agents that access them. We're already seeing this shift as platforms offer free access to humans while charging for API usage – a clear distinction between human and agent access. As agents become the primary interface through which we interact with digital systems, direct micropayments between agents will become the dominant economic model.

Crypto and stablecoin infrastructure provides the ideal foundation for this agent economy. Traditional payment rails weren't designed for the high-frequency, low-value, conditional transactions that agent interactions require. Blockchain technology enables programmable money that can be transferred instantly, in microscopic amounts, with built-in conditions that ensure service delivery. Smart contracts create trustless environments where agents can transact with unknown counterparties, while verifiable computation ensures that services are delivered as promised before payment is released.

Without these capabilities, a truly autonomous agent economy would be impossible: The friction and trust requirements of traditional financial systems would create bottlenecks that prevent the instantaneous value exchange that agent-to-agent interactions demand.

Impact on future generations

For the next generation of users, the combination of AI agents and Web3 infrastructure will completely transform everyday financial life. Imagine personal AI financial advisors that not only provide guidance but can autonomously execute complex financial strategies across traditional and decentralized finance. These agents will democratize access to sophisticated wealth management techniques that were previously available only to the wealthy, helping close the gap through technology. A great example is Robinhood Cortex, an AI investment tool which will soon be available to Robinhood Gold subscribers. It "is designed to provide real-time analysis and insights that help you better navigate the markets, identify opportunities, and stay up to date on the latest market moving news."

Perhaps most transformatively, we'll see the emergence of autonomous commerce where agents negotiate and transact on our behalf across every aspect of digital life. Your personal agent might manage subscriptions, negotiate service terms, and even invest your idle capital, all while operating within parameters you've defined but without requiring your constant attention.

These changes won't happen overnight, but the foundations are being built now. We expect to see mainstream adoption of basic agent-based financial services within 2-3 years, with more sophisticated autonomous systems becoming commonplace by the end of the decade as both the technology and regulatory frameworks mature.

To sum it up, DeFAI takes the lead of a broader transformation where AI agents and Web3 infrastructure combine to create more efficient, accessible, and user-centric digital systems. While finance is the first frontier, we're already seeing early applications in gaming, identity management, and data marketplaces that hint at what's to come. What makes this intersection particularly exciting is how it addresses the limitations of each technology independently. AI agents need trustless infrastructure to operate autonomously at scale, while Web3 needs intuitive interfaces to achieve mainstream adoption.

Ethereum 2.5: The Pectra revolution and its economic transformation

The Ethereum ecosystem has just underwent its most significant upgrade since “The Merge” with the successful implementation of Pectra on May 7, 2025. This upgrade that combines the Prague execution layer and Electra consensus layer updates, represents such a substantial leap forward that we are referring to as "Ethereum 2.5" internally, a fitting name for an upgrade that reshapes Ethereum's economic model and technical capabilities.

Pectra introduces 11 Ethereum Improvement Proposals (EIPs), with the most impactful being EIP-7251 and EIP-7002, which revolutionize staking economics and validator operations. These changes establish a new financial infrastructure paradigm that will benefit both institutional and retail participants in the Ethereum ecosystem, by allowing them to optimize their operations and use their capital more efficiently.

At w3.labs, we've been preparing for this upgrade for a while to ensure that our staking infrastructure is fully optimized to leverage these new capabilities from day one. We're excited to share how these changes will benefit our clients and how our platform is positioned to capture the advantages of this upgrade.

Pectra's economic benefits - the financial infrastructure upgrade

Important for institutions

Pectra transforms Ethereum staking into an institutional-grade financial service by raising the maximum validator balance from 32 ETH to 2,048 ETH with EIP-7251. This allows large-scale stakers to consolidate operations, dramatically reducing overhead costs while maintaining network participation. For institutions, this eliminates the need to manage dozens or hundreds of separate validators, creating a more capital-efficient ecosystem that aligns with traditional financial custody models where scale and efficiency are paramount. The network maintains the same level of economic security with fewer active validators, reducing overhead while preserving protection against potential attacks.

Important for everyone

Pectra significantly enhances capital efficiency for all stakers, including those with single validators. Before the upgrade, rewards were only earned on your initial 32 ETH stake, requiring you to accumulate another full 32 ETH in rewards before running an additional validator. Now, with validator balances ranging from 32 to 2,048 ETH, rewards automatically compound as they're earned (in 1 ETH increments). This allows you to immediately stake and earn on your entire balance, maximizing returns without waiting to reach the previous 32 ETH threshold.

The "Pectra effect" - early network impact

The Pectra upgrade has already demonstrated measurable improvements in network performance. Transaction throughput has increased by approximately 15% in the first week following the upgrade, primarily due to optimizations in the execution layer and the increased efficiency of validator operations.

Layer 2 solutions have been among the biggest beneficiaries of the upgrade, especially through a significant reduction of data availability costs for rollups. Major L2s like Arbitrum and Optimism have reported fee reductions of 30-40%, making these scaling solutions even more attractive for users and developers.

Also, the market reaction to the upgrade has been overall positive. The ETH price has reacted with a jump from 1,800$ to around 2,500$ and we've seen a notable increase in staking participation. This suggests growing confidence in Ethereum's long-term prospects among holders.

Adoption metrics for the new features have exceeded expectations. Bigger players are increasingly upgrading to the new withdrawal credentials that enable the higher staking limits. This rapid adoption indicates strong demand for the efficiency improvements offered by Pectra.

w3.labs and Pectra: Our readiness and offerings

At w3.labs, we've been preparing for the Pectra upgrade for months, ensuring our infrastructure is fully optimized to leverage the new capabilities from day one. Our technical team has thoroughly tested all aspects of the upgrade on testnets, and our architecture has been updated to support the new features seamlessly.

Our staking platform will fully support the enhanced staking efficiency with up to 2,048 ETH per validator. We've also further advanced our monitoring tools that provide real-time insights into validator performance and network conditions to optimize operations continuously.

What this means for our clients

The capital efficiency improvements enabled by Pectra translate directly to better rewards and a leaner set-up for our clients.

But, the operational benefits extend beyond simple cost savings. Our clients now enjoy enhanced control over their staking operations, with more flexible withdrawal options and improved transparency. Additionally, stakers with one validator are able to compound rewards by staking them again without waiting for 32 ETH increments.

Get started with w3.labs

Ready to experience the benefits of Ethereum staking in the post-Pectra era? Getting started with w3.labs is simple. Visit our website at w3labs.xyz/stake-with-us to learn more about our staking services and how we can help you maximize your returns while minimizing risk and complexity.

Watch this short Loom video to see how easy it is to stake with us:

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