Hello, accommodating readers! Byron is out this week, doing whatever Byron does when he’s not writing The Breakdown. Byron will be back next week for your regular scheduled programming.

This week, you’re getting a taste of our other Blockworks newsletter, 0xResearch. You’ll get daily alpha and insights from our Blockworks Research analysts.

Market Update 

BTC finished Wednesday roughly flat at -0.2%, as the S&P 500 (+1.08%) and Nasdaq (+1.54%) rallied Wednesday on sliding Treasury yields and tech gains. Cross-sector, Perps (+18.5%) and DeFi (+10.6%) lead the board on the week, with Meme (+7.1%) the only other sector in positive territory. BTC is finishing the week at -2.4%, roughly in line with the S&P 500 (-0.9%) and Nasdaq 100 (-1.6%), while Gold slipped -3.5%. The rest of the crypto tape was broadly red, with losses concentrated in infrastructure and ecosystem plays. Modular (-16.6%) and Solana Eco (-11.8%) were the notable laggards. The 35-point spread between Perps and Modular captures the week's theme: traders rotated into liquid, high-velocity venues while pulling back from longer-duration ecosystem bets.

HYPE was trading at $57.39 this morning, up roughly 47% on the week from $40.18 and +125% year-to-date from $25.44 on January 1. The platform generated $10.5M in total fees over the seven days ending May 20, averaging $1.5M per day, with perps accounting for $10.2M of that total. HYPE and LIT accounted for the majority of the growth experienced in the Perps Index this week. 

This week marks one year since Coinbase joined the S&P 500 on May 20, 2025 as the first crypto-native company added to the benchmark. COIN jumped 24% on the announcement, its largest single-day move since the November 2024 Trump election rally, in what markets read as the biggest institutional validation crypto had received. Bernstein estimated at the time that the inclusion triggered roughly $9B in passive buying pressure from S&P-linked ETFs and funds, with an additional $7B possible from actively benchmarked managers.

A year later, the passive bid is done and the stock is being repriced on fundamentals. Q1 2026 revenue came in at $1.41B, down 31% year on year, missing the $1.52B consensus. The company posted a $394M net loss, including a $482M markdown on crypto assets held for investment. The more interesting read, though, is what's holding. Subscription and services revenue came in at $584M, stablecoin revenue at $305M, and USDC held in Coinbase products reached $19B. Crypto trading market share hit an all-time high, growing approximately fivefold since Q1 2023. The stock is now trading near $191, down ~28% YoY $265 on May 20, 2025. 

— Nick

STRC Onchain: The Fastest Horse?

Love it or hate it, Strategy's STRC is one of the fastest growing RWAs in DeFi. With an 11.5% dividend yield, and historically de minimis volatility, is STRC a killer listing for DeFi, or just the latest and greatest points farm?

Two issuers lead this market: Apyx and Saturn Credit. Each take a distinct approach to issuing STRC-related instruments onchain. Apyx issues apxUSD, a "synthetic dollar" currently backed by 60% STRC, 37% cash and cash equivalents, and a little bit of SATA and tail hedges. apxUSD can be staked as apyUSD, offering users the underlying STRC and t-bill yield, albeit with the duration risk of a 20-day cooldown. Apyx leads this market with $476M in deposits since launching in February, and now ranks as the largest external onchain holder of STRC.

Saturn, on the other hand, issues USDat, a stablecoin fully collateralized by M0's tokenized treasury product. Users can stake USDat as sUSDat, where the majority of underlying reserve will be allocated to STRC, with the yield passed back to the staker. This bifurcation keeps USDat itself insulated from STRC drawdowns, as only sUSDat holders take the STRC exposure. Saturn has gained $191M in deposits since launching in March.

Downstream of the rapid traction by these issuers, Pendle stands as a primary beneficiary. STRC-related TVL on Pendle has grown to 26% of total TVL, with Apyx's instruments now the largest listing, flipping the historical incumbents of sUSDe, USDai, or USDG.

apxUSD alone now sits at roughly $210M on Pendle, with apyUSD adding another $145M. Saturn's USDat and sUSDat round out the stack at a combined $95M, with the Royco-tranched srUSDat and jrUSDat beginning to register. For a venue whose growth has historically been driven by liquid staking and Ethena, the speed of this rotation is notable, as most of it has accrued in the last six weeks.

In what has been an otherwise bleak environment for onchain yields, these STRC-related instruments, offering yields in excess of 11.5%, deliver some of the best returns on the board. Pendle's market for apyUSD has priced a fixed yield of 15 - 19%, consistently delivering a ~500 bps premium to the underlying and outcompeting many other onchain opportunities. This premium is largely attributable to the ongoing points program.

The market is getting it while it's hot, as no points program can last forever. While the implied premium will likely collapse post-airdrop and distribution from these issuers, and Pendle's hot maturities will expire and roll off, risks remain in that STRC is not a stablecoin. A suspension or markdown of the dividend by Strategy could result in STRC trading well beneath par, leaving airdrop farmers, loopers, and lenders caught with the bag. 

The honest answer to the opening question is probably both. STRC is a genuinely novel instrument to have onchain: a Nasdaq-listed, par-anchored, monthly-paying dividend stream wrapped into composable collateral. It is also, right now, the hottest points trade, and a non-trivial portion of the headline yield is attributable to that fact, rather than the underlying dividend.

— Luke