Just a flesh wound • letter 144

You fight with the strength of many men, dear friends, and I am Colton, CEO of Hedgehog, the app that helps you buy baskets of cryptocurrency and automate your digital asset exposure wherever you custody funds. Don’t forget we also support an on-chain TBILL token for those of you who want highly liquid, Aaa-rated US government debt, and now you can even open a self-custody MPC wallet where Hedgehog can invest on-chain on your behalf without knowing your private key!

It’s been a bloody week for crypto with many coins down over 10% despite the hot anticipation of the Bitcoin halvening slated to occur this weekend. It could also be related to the increasing strength of the US Dollar relative to the beginning of the year, but for us, we believe this is just the market shaking out weak hands before the liquidity in Bitcoin is naturally squeezed, with miners receiving half as many coins as previous for solving a block. But, there are no guarantees in this world, and we have no crystal ball, so hang on tight either way!

ETFs approved–in Hong Kong!

While a big headline on paper, it’s a drop in the bucket due to restrictions on Chinese capital that can flow into the ETFs, but every dollar, yen, and yuan counts so we’re celebrating! We can only hope that we get so lucky with the SEC’s consideration of the ETH ETFs in the US. Regardless, Blackrock has floated signals that they’ll stay true even if the SEC manages to classify ETH as a security.

Sensible regulation

For me, the Lummis-Gillibrand joint legislation proposal for the Responsible Financial Innovation Act is a clear highlight from the week: finally a reasonable proposal that explicitly defines the difference between security tokens, commodity tokens, debt tokens, and stablecoins! It’s past time that we put some reasonable boundaries in place on individual regulators’ jurisdictions, and this bill takes a sensible approach that neatly carves the industry along pre-existing lines and provides carve outs for new experiments that don’t quite fit in the classification.

The most compelling aspect here is the two-year amnesty for projects that are defining what they are, but I think there are hidden dangers in the outright ban of algorithmic stablecoins. It’s a fine line that would make well-behaved protocols like Maker illegal. But hopefully these are wrinkles that can get ironed out in the process.

Weekly feature

Today we’re featuring Optimism (OP), the L2 stack behind Base and Worldcoin’s new proposed L2 chain, Worldchain. Optimism has seen much success for its high transaction throughput and being one of the first L2s to offer full EVM compatibility: if it’s deployable on Ethereum mainnet it’s deployable on Optimism.

There’s a whole industry of EVM compatible L2s out there now, but it wasn’t always so. OP’s Superchain concept is very similar to Arbitrum Orbit or Cosmos IBC or Polkadot Substrate or Avalanche MOVE, but the key differentiator for any of them is the ease of swapping and bridging between ecosystem partners. Consider packaging these together if you believe one ecosystem is likely to become dominant.


What’s a comedy film that you enjoyed recently? My brother brought up the proposition that international box offices are harder to access with a culturally specific comedy, and so studios have largely stopped making them. I realized I haven’t seen one in awhile!

Keep hedging,
— Colton