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Personal update: Been taking a break from crypto (been grinding since 2017) and I’ve never really taken a break. The last few months have been extremely difficult for me. It’s been a lot of ups and downs and it’s been disappointing to see crypto utility plays underperforming. This asset class is still the best asset class in the world in terms of retail participation and the ability to invest in startups with instant liquidity. The problem is the structure is broken and this space is filled with scams, vapor, and memes. I was one of the early investors of $Luna and even though it collapsed, at least push at forefront of innovation. Payments, savings, and investments were all revolutionized by $Luna. We have an incentive problem in crypto. There just aren’t many great entrepreneurs willing to put in the work to push crypto innovation to the masses. And VC’s are investing at crazy valuations in crypto startups that don’t support retail participation. Thats why memecoins became so popular because VC’s pushed retail to invest in memecoins instead of their low float, high FDV shitcoin. Not too mention, crypto startups gets too high of valuation in too short of a time which gives founders no incentive to push innovation since they already became millionaires once token gets listed on exchanges. I still believe in this space and I see hard working teams in the crypto x AI space pushing for adoption. Right now, I’m focused on my mental and physical health and not eager to invest in new projects until we see a new narrative or more innovation. Right now, im hoping the market is cleansing the filth in this industry. Crypto projects needs to start generating revenue and pass that revenue to token holders in order to survive this cleanse. Thank you for all the support for the last 4 years! Crypto is still undergoing growing pains. But the #1 rule in crypto is to survive. Take healthy breaks if you need to, don’t lose all your money, invest in real estate. Gonna come back stronger from this! Love you all, Alpha Out ✌️

Words: arndxt Compilation: Block unicorn preface Over the past six months, more than 63% of the Bitcoin supply has remained unchanged. Chart source: @cryptoquant_com This is a huge pool of idle funds. Such a high holding rate shows a strong sense of confidence in the asset, but it is also indicative of inefficiencies. Bitcoin shares these two characteristics with gold, another traditional store of value. When I wrote about BTCfi earlier, it was pointed out that Bitcoin, like gold, struggles to support an ecosystem built on top of itself. Their argument is that value storage instruments are meant to be held, not used. As a result, BTCfi will hit a bottleneck and demand will drop significantly. Despite gold's long history, its liquidity has remained largely unchanged. Most of the gold is held by central banks and institutions, sitting idle in vaults with extremely low yields. In addition, access to the gold market is often limited to large players, and the gold itself is expensive to store, transfer and verify. Gold is a physical asset that is expensive to move and lacks the combinability required by the modern digital economy. In contrast, Bitcoin is inherently digital and programmable. It can be instantly verified, transferred, or locked on-chain with full transparency. Unlike gold, Bitcoin can be seamlessly integrated into both decentralized and traditional financial systems. With that in mind, we'll now dive into one of the most effective ways to free up Bitcoin's idle capital and make it productive. Bitcoin-backed lending. Rather than turning Bitcoin into a speculative yield engine, BTC lending aims to unlock the utility of high-value assets. $BTC is currently trading at around $110,000, with more than $1.37 trillion in BTC sitting idle, waiting to be utilized. The industry is thriving thanks to the rise of regulated custodians in the United States and Canada, who hold spot Bitcoin on behalf of investors. Bitcoin ETFs currently hold $129.02 billion worth of BTC, or 6% of the total supply (source: @SoSoValueCrypto). In addition to liquidity, there is also a growing interest in Bitcoin borrowing and lending due to the tax benefits offered to those holding large yields (see the next section for details). Individual and institutional borrowers are increasingly using these instruments as part of their money management. As Bitcoin becomes a core asset in institutional portfolios, these institutions are looking for better ways to mine its value without selling it. Now, let's dive into why institutional players love BTC lending, and just how big the opportunity really is. Advantages of Bitcoin-backed lending 1. Access liquidity while taking a long position The core advantage of Bitcoin-backed lending is simple: they allow investors to unlock liquidity without selling BTC. Borrowers can both preserve Bitcoin's potential upside and get the cash they need to meet their immediate financial needs. Image source: @Croesus_BTC Bitcoin's appeal to all types of investors is clear. Over the past 5 years, Bitcoin has grown at a compound annual growth rate (CAGR) of 63%, compared to 14% for gold and 14% for the S&P 500. For example, in the chart below, you can see that the $ANFI created by @NEX_Protocol (the combination of gold and Bitcoin, 73%-27%) far outperforms traditional assets while eliminating the volatility unique to Bitcoin. Chart source: @NEX_Protocol 2. Tax advantages Bitcoin-backed lending can offer significant tax advantages in jurisdictions like the United States. In this case, the Internal Revenue Service (IRS) classifies cryptocurrencies as property, which means that selling Bitcoin will usually trigger capital gains tax on any portion of the appreciation. However, when Bitcoin is used as collateral for lending, holders can gain access to liquidity without a taxable event, deferring capital gains tax payments. In addition, interest payments may also be tax deductible if the borrowed funds are used for investment or business purposes. Put simply, Bitcoin-backed lending allows investors to take long positions, defer taxes, and, in some cases, reduce taxable income through deductible interest expense. 3. Deep liquidity Bitcoin's deep market liquidity sets it apart from other assets that are used as collateral for borrowing and lending, especially crypto-native assets. Borrowers can access funds without significant slippage, while lenders are backed by assets that can remain highly liquid even during periods of heightened volatility. 4. The importance of decentralization After more than a decade of uninterrupted operation, the Bitcoin network has proven its immunity to attacks, outages, and failures that have affected other blockchain ecosystems and traditional banks, such as: Silicon Valley Bank collapsed in 2023, resulting in the dissolution of more than $200 billion in assets. Terra ($LUNA) collapsed in 2022, causing more than $60 billion in capital to evaporate. Solana has experienced more than 7 network outages since 2021. This resilience builds trust for borrowers, lenders, and institutions that rely on Bitcoin as collateral. 5. Borderless collateral Unlike traditional assets such as stocks or real estate, which are subject to local market dynamics and regional risks, Bitcoin has a global value. Whether you're in New York, Sydney, or Bangkok, 1 BTC is always equal to 1 BTC. This global fungibility removes the friction of currency exchange, jurisdictional restrictions, and geographic premiums, making it an ideal cross-border collateral asset. 6. 24/7 management Bitcoin is traded 24 hours a day, all year round. This ensures that collateral appraisals are always accessible and lending can be managed at any time. This is a clear difference compared to traditional assets that rely on market trading hours, which can experience valuation gaps over the weekend or after the market closes. 7. Risk Diversification Bitcoin-backed lending provides institutional players with a way to diversify their lending portfolios, potentially hedging against traditional market risks. As with any lending, the quality and liquidity of the collateral is crucial. Bitcoin's characteristics enable institutions to act quickly in the event of a default, resulting in faster capital recovery and maintaining a robust risk profile. Unleash potential capital As of May 2025, about 63% of Bitcoin has not moved in the last 6 months. Bitcoin's total market capitalization is around $2.2 trillion, which means that $1.4 trillion in capital is idle. To put it more intuitively, $1.4 trillion is more than the sum of the following assets: Total Value Locked (TVL) across all DeFi chains - $119 billion All stablecoins in circulation - $244 billion Market capitalization of Ethereum - $319 billion JPMorgan Chase's market capitalization - $724 billion Releasing just 5-10% of idle Bitcoin will inject $70 billion to $140 billion into the crypto space, enough to reshape the lending market, drive DeFi growth, and unlock liquidity for tokenized assets and new financial primitives. @galaxyhq highlighted another point: the CeFi and DeFi lending markets peaked at around $64 billion in Q4 2021. Source: The State of Crypto Lending - @galaxyhq This means that even the release of only 5% of idle Bitcoin capital would break the all-time high, injecting more than $70 billion into the space. At this scale, Bitcoin-backed lending will rival the credit departments of most national banks in the United States, and even surpass the entire banking sector in some smaller countries. Finally, Bitcoin has the potential to fill an even bigger gap on this topic: the credit gap for small and medium-sized enterprises (MSMEs) around the world. The World Bank estimates that this shortfall is more than $5 trillion, especially in emerging markets in Africa, Southeast Asia, and Latin America. Many businesses and individuals in these areas struggle to access affordable borrowing for the following reasons: The banking infrastructure is weak High inflation or currency instability Lack of formal credit history Overcollateralized loan requirements Access to international capital is limited Even if only a fraction of this $5 trillion gap can be covered using Bitcoin as collateral, the ripple effects will be enormous. While the advantages and opportunities are discussed, it is also necessary to look at the potential risks that may come with using Bitcoin as collateral for the sake of fairness. Challenges to be aware of 1. Hidden taxes Many lending protocols require users to use a wrapped version of BTC as collateral. However, this process can trigger a tax event. In some jurisdictions, packaging is considered a disposition of the original asset (deemed a tax event for the sale of the original asset) and is therefore subject to capital gains tax. This complexity, combined with the technical resistance posed by wrapping technology, may discourage many users from using DeFi lending platforms in favor of CeFi solutions, which typically offer native BTC support. It's also important to note that wrapped BTC relies on custodians or bridging mechanisms, which introduces smart contract and custody risks. If the protocol holding the original BTC is compromised (as happened in many bridge hacks), the wrapped BTC may lose its peg and become uncollateralized or worthless. 2. Volatility management Bitcoin's price volatility poses a significant challenge to collateral valuation. Institutions need to implement robust real-time monitoring systems to track collateral value and establish clear margin call and liquidation protocols. In addition, this volatility introduces inefficiencies that are not typically seen in fiat lending. Since the price of Bitcoin can fluctuate significantly in a short period of time, lenders are forced to demand high amounts of overcollateral. This reduces capital efficiency and makes these borrowings more complex than fiat or stablecoin-backed borrowing, which have relatively stable valuations, allowing for lower collateral requirements, longer repayment terms, and a more predictable risk profile. 3. Centralization While CeFi lending is not directly related to the essence of Bitcoin, the risks it introduces have repeatedly harmed users. The collapse of major platforms such as Celsius, BlockFi, and Voyager suggests that users' funds can be frozen or lost quickly due to bankruptcy or improper asset management. These failures have made many investors more cautious, accelerating the shift to non-custodial, decentralized alternatives, although these have their limitations (such as the need to wrap BTC). As a result, DeFi lending protocols have steadily grabbed market share from CeFi platforms and now account for more than 60% of the market. Bitcoin Capital Markets As more investors look for ways to access liquidity, borrowing and lending has skyrocketed, and Bitcoin-backed lending has become a key pillar of BTCFi, and in my opinion, it will become a core element of DeFi sooner or later. Both CeFi and DeFi lending models will help shape the future of the industry. The CeFi platform offers stability, regulatory clarity, and a user-friendly experience, making it a top choice for users who value predictable lending terms and legal protection. DeFi lending, on the other hand, brings innovation through programmability and composability, but it still needs to be improved in terms of risk management. Even so, DeFi still has a distinct advantage in terms of global expansion, which makes it easier to serve underserved or emerging markets and gain market share faster than CeFi platforms. In conclusion, for those who remain skeptical, the opportunity here is not to change the properties of Bitcoin, but to build better infrastructure around it. With the development of a more secure platform and native infrastructure, it is now possible to mine Bitcoin's potential capital without compromising its integrity. All of these also benefit Bitcoin. When holders gain liquidity, they no longer need to sell their assets, reducing the selling pressure and cementing Bitcoin's position.

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Genesis Update: Referral System Live The Referral System is now live to reward Virgens who bring new participants into the ecosystem and help grow agents. When a new Virgen uses your referral code and begins trading agent tokens in a taxable Agent/$VIRTUAL pool, you'll earn a share of the trading tax. How it Works: The system supports up to two layers of referral rewards: • Layer 1: Your direct referral. When this Virgen trades, you receive 20% of the trading tax from their activity. • Layer 2: The referral of your referral. When they trade, you also receive 5% of the trading tax from their activity. Only two layers are eligible for referral rewards. Activity beyond Layer 2 does not generate any rewards. Referral rewards are paid out daily in $VIRTUAL and are funded from a 1% trading tax applied to eligible trades. What Qualifies: • Buy or sell activity in taxable agent/$VIRTUAL pairs • Referral code must be entered before any trading activity What Doesn't Qualify: • Trades involving tax-exempt tokens (e.g., $LUNA or migrated tokens) • Trades in non-taxable pools (e.g., $VIRTUAL/USDT on CEXs or DEXs) • Trading activity from wallets without a referral code • Staking agent tokens, staking $VIRTUAL, and yapping • Activity before a referral code is entered (rewards are not retrospective) Where to Find Your Referral Code: You can find your unique referral code, in the Profile page on Virtuals Protocol. Referral rewards will begin distribution starting tomorrow. Now go recruit Virgens. Genesis needs you.

Shorting $TON now is like shorting LUNA in April 2022