WhiteboardCrypto Newsletter - Feb 1

Welcome back to this week's edition of our WhiteboardCrypto Newsletter!

Open-source AI caused market crash

It’s kind of ironic that open source tech is causing crypto markets to freak out, given the commonly held ethos in crypto that open source is king. Traditional stocks had the largest one-day loss in US history by market cap, with some stocks losing up to 17% of their market caps. AI-focused crypto assets suffered even more, some even losing 33% of their overall market cap, and the overall crypto market cap lost 7%. It started to recover by the end of the week.

Why? Largely (though not entirely) because of DeepSeek’s open source R1 AI model that is made far more cheaply than competitors like ChatGPT and uses way less computational power, yet may be even better at its job. This means that the big tech companies like Nvidia and other hardware creators may not be as needed as we thought, which makes sense why their stocks dropped. But why would that affect already open-source AI tokens? It’s complicated, confusing, and no one really knows. One would think that this tech would make it easier to launch AI tokens, not harder, though perhaps that means people think there will be more competition? Our guess is as good as yours. This is a reminder that markets move based more on emotions and trends than facts.

Learn more here.

Coinbase reassesses token listing model

In a post on X, Brian Armstrong, Coinbase’s CEO, suggested the company would be changing the process of listing coins. Citing that there are about 1 million tokens created per week, it’s impossible to do due diligence on them all, let alone have them get regulatory approval. So, they seem to be moving towards a block list rather than an allow list, relying on their customers’ feedback. This is risky because it means customers will not be able to trust whether an asset they are buying on the exchange is safe (though it’s debatable whether they already could or not) and it could bring even larger challenges to crypto newcomers who don’t really know what they’re looking at.

Learn more here.

Musk might use blockchains in US gov

The new D.O.G.E. department led by Elon Musk is meant to track government spending and cut back costs he deems unnecessary. But a problem with government spending has always been transparency and accountability - how do we know what they are spending on and how much? Blockchains try to solve these problems already, and apparently Musk is talking to a few public blockchain companies but has also hired his own developers, so whether he will choose a blockchain that is already in operation or create his own is unclear.

Learn more here.

Cardano starts to decentralize

As of the Plomin hard fork completed on Jan 29, ADA holders will be able to delegate their voting power to representatives who can vote on governance decisions. These decisions can include protocol changes, treasury withdrawals, and hard forks. Staking pool operators need to upgrade their nodes, if they haven’t already, to facilitate the hard fork.

Learn more here.

World’s biggest stablecoin launches on… Bitcoin?

Tether, the creator of USDT, has integrated with the Bitcoin mainnet as well as the Lightning Network L2, thanks to a relatively new type of technology called Taproot Assets that allows for unique assets to be issued on Bitcoin and transferred over the Lightning Network. Taproot Assets share the security of Bitcoin with the speed and scalability of the Lightning Network, much like if it were on the Arbitrum L2 and Ethereum.

Learn more here.

Thanks for reading and I hope you learned something!

- Theodore