The Ether's Bauermo moment: When everyone sings, the drive disappears

By Ben Lakoff

Original language: Deep tide TechFlow

Introduction:When the founders of the Bankless cleared up ETH, the 19-year-old developer came to Solana, there was consensus on the story of the bear city of the Taifung. But BanklessVC partner Ben Lakoff believes that this is exactly the replica of the Microsoft "Bolmer Times" -- the surface narrative is so bearish, and the bottom fundamentals are growing steadily. The 30 per cent pledge rate, ETF inhaling, and clear regulation are compressing the flow drive, and the time has come for encryption to move from a threat to a legal framework。

Welcome to the May traffic summary。

The arguments of this month were somewhat longer, so I put them ahead, and all the financing rounds, fund-raising and hackers ended up behind。

It's the time of the Boulmer of the Ether

Last month David Hoffman cleaned up all ETH at $2070 and wrote a thoughtful article explaining why. This was uploaded on x (tweeting)。

David then joined Chopping Block podcasts, and I loved that conversation. Tarun says the Ether is "simplifying" because there are no 19-year-olds who want to build it there. Max Resnick called the Taifung Foundation "Averting Risk". The rising Haseeb has given the whole bear city a name: this is the time of the Bolmer of the Ether. It resonates with me。

That's a great framework。

Yes, I see more "encrypted money", I see more BTC, I see more ETH I see more trends. But pretending to be weak is self-deception, so I would like to elaborate on my position. These are my points of view, which do not necessarily represent the views of BanksVC, and certainly not investment proposals。

Bears have a name, and it's true

The substance is real. In fact, we've been down 10 percent since that article was published。

David's argument: ETH is a long-term wager, and the Rollup Central Road Map makes it longer. The Ether House is a giver, not a demander. It is designed to distribute block space at cost. L2 The profit margin was 98 per cent of blob ' s income. Gas ceiling gradually raised to 100 million+. BPO split fork has dramatically expanded the blob supply. $3 billion to $163.0 billion in stable currency surges have created value for Circle and Tether, not ETH. In the meantime, SOL, NEAR, BNB and TRX have replaced the valuation with a cost-driven object. He was right on the mechanism. The agreement was designed to be space-rich, which is the opposite of the cost-driven value capture you want。

Tarun's "rigid" view is a cultural version of the same thing. Talent follows the energy of the founders, and now it's on Solana, Monad, Hyperliquid, and on any subsequent project (perhaps it's not an ephemeral, not an encrypted currency). Resnick's "Risk EF" is the corporate version. The Foundation is dedicated to protecting the integrity of the network at a time when it needs to remain competitive。

Haseeb was right. A "Bolmer era". Slow product rhythm. Screw the transition. There's a killer instinct for a sharper competition. Right-minded loud critics。

What exactly did Microsoft do in Bauermer

Bauermer ran Microsoft from 2000 to 2014. The story is: 14 years wasted. Missing movement, searching, socialization, Vista, several chairs。

That's what I remember, but there's something missing. Microsoft equities have been running across for more than a decade, while corporate franchisings have grown relentlessly at the bottom. Most of the work has been done. Office and Windows authorized the printing of banknotes throughout the Microsoft Dead narrative. Then Satya took over and MSFT increased tenfold。

The lesson (at least in the Microsoft version) is that deep-intended, business-friendly, time-tested infrastructure tends to grow exponentially in its own bear city narrative. Bear City narratives are usually superficially correct. Just not enough。

It is still the largest credible neutral public chain of monetized assets. BuIDL was introduced there. USDC has about 66% supply there. The deepest deFi mobility in there。

But the lead is rapidly shrinking. The BUIDL is not only on the Ether Workshop (40%), but is less than about 85% a year ago. USDC exists on 34 chains. The Western Union has chosen Solana instead of the Taipei for USDPT. The agency's default choice is moving from a single "Ether" to a complex "Clock"。

For those in positions, it still looks up. Just not a monopoly anymore. Whether 19-year-olds want to build there is a real long-term concern. But this is not a matter for deciding on the next two years。

Under the noise: Crashing

This is part of the largely ignored bear market discourse。

About 30% of ETH was pledged. The Treasury holds another 6% and is growing. Bitmine alone holds 4.47 per cent of the supply and openly targets 5 per cent. The spot ETF continues to absorb more. The SEC/CFTC ruling of 17 March classified pledge incentives as non-securities, which opened the entire pledge ETF pipeline. Five other issuers (Fidelity, Franklin, Invesco, 21 Shares, VanEck) have pending pledge amendments to be decided by Q2。

EVERY ETH THAT PASSES THROUGH AN ETF PLEDGE IS NOT SOLD AT PRICE IMPULSE. NET DISTRIBUTION IS ABOUT 0.23 PER CENT ANNUALLY. THE FLOW DRIVE IS SHRINKING FASTER THAN THIS AND THE RECEIVING END IS BIDDING FOR MOST DAYS. MATH DOESN'T CARE IF ETH IS BORING。

So David was right, ETH wouldn't re-pricing for the cost of destruction. The road map is rich in choice. However, ETH can be re-pricing because of the compression of the disk, the need to pledge the proceeds and the institutional Shelling Point premium, without the need to win the cost. At least in the short term。

ENCRYPTED CURRENCY TAM CONTINUES TO RISE

TAKE A LOOK FROM ETH. THE TRUE STORY OF THE PAST 12 MONTHS IS THAT ENCRYPTION HAS CHANGED FROM A THREAT TO SURVIVAL TO A STATUTORY FRAMEWORK。

THE GENIUS ACT HAS BECOME LAW. THERE IS NOW A FEDERAL SYSTEM FOR THE PAYMENT OF STABLE COINS. THE CLARITY BILL PASSED THE HOUSE OF REPRESENTATIVES LAST JULY, AND THE SENATE BANKING COMMISSION ON MAY 14, WITH A STRUCTURE THAT SEEMS LIKELY TO PASS BEFORE THE MIDTERM ELECTIONS. STABLE CURRENCY FLOWS EXCEED $280 BILLION AND ARE GROWING AT A COMPOUND RATE. MONETARYIZED STATE DEBT IS ON THE RISE. THE SPOT ETF ALREADY EXISTS IN A GROWING NUMBER OF ASSETS。

This is not the stage of the demise of encrypted money. This is the period when encrypted money becomes a regulated, trillion-dollar grade slice in the financial system, and boring institutions are asked to access it。

In the old bear city, we were really worried about the future of this ecosystem. But there are warnings, and they are important。

The first is that the winning of encrypted money is not the same thing as the winning of decentralized encrypted money. It's not David's cost math. It's "the block chain wins" that eventually looks like Canton, JPM Onix, DTCC's licensed books and several Avalanche subnets, and the public encrypted asset complex basically doesn't capture real value。

The world exists (and it's worrying), but I'll bet on this side of the chain for several reasons. The pure licensing chain, which has been marketed as an institutional answer for 10 years, continues to be lost (perhaps this time? The real winning structures are licensed assets on the public chain track: BuIDL, Benji, Ondo USDY. The token implements the KYC and transfer restrictions; settlement operates on the Ether, Solana and other public infrastructure. KYC pool and open public pool (Aave Arc, CommonTreasury) are documented as failing。

This still looks up as a public chain as a settlement layer, including ETH. But it's weaker than the complete deFi composition. The licensed assets could not be freely combined with the open pool, but the access version was the winning model。

SECOND: THE QUESTION IS NO LONGER WHETHER THE INTRODUCTION OF ENCRYPTED CURRENCY WILL HAPPEN. IT'S WHAT ENCRYPTED MONEY CAPTURES IT. THE HONEST ANSWER IS THAT NOT EVERYTHING FLOWS TO ETH, BUT THE LARGE, INSTITUTIONALIZED, REGULATED, "NEEDS CREDIBLE NEUTRALITY" IS ALMOST CERTAIN. BECAUSE THE ALTERNATIVE IS TO REQUIRE LEVEL I BANKS TO SETTLE TOKENIZED ASSETS ON CHAINS THAT OPERATE LIKE START-UPS ... IT IS UNLIKELY。

That's where the Bauermore framework underestimates cattle. It is only effective when the bottom markets continue to grow. The bottom market for encrypted currency is growing rapidly in an institutionalized manner that is favoured by the most regulated。

Bell strategy: looking at multiple trends rather than extremism

I'm serious about bear market arguments, not cost analysis. It is leadership and competition. EF may really need it Satya moment. The killer's instinct vacuum is real. Solana, Monad and Hyperliquid did not slow down. ETH/BTC and ETH/SOL may cross the wheel or take a low turn。

The way around this is simple: stop being extremists。

HOLDS ETH TO STAND THE TIME TEST/INSTITUTIONALIZATION/DISK COMPRESSION. HOLDS SOL FOR CONSUMER/INSUMPTION/DISTRIBUTION TRANSACTIONS. HOLD ON TO BTC TO DO THE MACROSHOCK. THAT'S WHERE THE REAL CULTURAL ENERGY FLOWS。

I KNOW. ETH IS A $250 BILLION ASSET AFFECTED BY MACRO-TRENDS, AND YOUR INVESTMENT IS ALWAYS BALANCED. I'M NOT AN EXTREMIST, BUT I STILL SEE MORE ETH. SUMMARIZING REASONS:

Circulation drives shrink faster than distribution。

Q2 PLEDGE ETF APPROVAL IS A REAL-TIME, DATED CATALYST。

THE CLARITY ACT MAKES EXTENSIVE PROVISION FOR THE RELEASE OF ENCRYPTED CURRENCY FROM INSTITUTIONS. CLEARER RULES ALLOW FOR LARGE-SCALE DEPLOYMENT OF REGULATED CAPITAL ACROSS ASSET CLASSES. ETH ' S MOAT IS THE LOCATIONAL NETWORK EFFECT, COUPLED WITH CREDIBLE NEUTRALITY, WHICH MAKES IT THE DEFAULT PUBLIC CHAIN SETTLEMENT LAYER FOR MONETIZED ASSETS, EVEN IF THE LEAD ADVANTAGE IS SHRINKING。

The argument of the bear market is so loud that it is now a consensus. In 2000 dollars, 60 percent of the retreated Consensus Bear City had a low historic hit rate。

"Satya Time" is not priced. If EF is reorganized or a more aggressive entity emerges to lead the development of the protocol, there is no pure upper space in the bear market model。

I think the deal is "David is partially correct and ETH is still valid". Microsoft is operating effectively under Bauermer. The use of encrypted currency is winning. The assets you want most are those that are embedded in the part of the encrypted currency that the US government has just spent two years making rules。

ONE STEP BACK FROM WHAT REGULATORS ACTUALLY SAY. SEC AND CFTC ARE TELLING YOU THEY WANT TO REBUILD FINANCE ON THE CHAIN. PUT THE DOLLAR IN THE CHAIN. IN THAT WORLD, HOW CAN THIS NOT BE CRAZY? MAYBE IF YOU'RE A CODE PUNK, IT'S NOT THE WORLD YOU'RE THINKING OF... DOOR CONTROL ASSETS, KYC TRACKS, EVERYTHING NEEDS PERMISSION. BUT FOR THE PUBLIC CHAIN AS A CLEARING INFRASTRUCTURE? THERE'S NO DOUBT ABOUT THAT。

THAT IS THE KEY TO OUR PLACE IN THE CYCLE. AI IS FOCUS, PERIOD. IT IS HOT, PARABOLICS RISE, AND THAT IS THE PROBLEM AS AN EARLY INVESTOR. YOU WANT TO DEPLOY FUNDS IN HOT SPOTS. WHEN A PLATE IS SO OVERHEATED, IT IS DIFFICULT TO INVEST CAPITAL WITHOUT PREMIUM, EXCEPT IN THE EARLY PRE-SEED PHASE。

Encryption money, now, not hot. Bear-market rhetoric is a consensus. Power is elsewhere. That's the set you want, not the run。

IN A LONG TIME LINE, EVERYTHING BECOMES AI, EVERYTHING BECOMES A BLOCK CHAIN. ONE OF THESE PRICES IS LIKE IT'S ALREADY HAPPENED. ANOTHER HAS JUST GAINED A TWO-YEAR LEAD IN WRITING THE LAW, AND EVERYONE IS LOOKING ELSEWHERE。

buckle up. now turn to the remaining encrypted currency/web3 finance:)

Ten rounds of encrypted money financing

Kalshi | F Round | Forecast market | $1 billion | 2026-05-07

Coatue voted, Sequoia, a16z, IVP, Paradigm, Morgan Stanley and ARK Invest participated. This round of $1 billion brought the Kalshi valuation to $22 billion, twice the $11 billion valuation just five months ago. Annualized transactions tripled to $178 billion in six months, and institutional transactions increased by 800 per cent. Kalshi, who is regulated by CFTC rather than being born of encrypted currency, calls it the asterisk on this list, but now has over 90 per cent of the projected market activity in the United States, which is one of the cleanest entry stories currently available to encrypted money。

Dunamu (Upbit) | Strategic Investment | Centralized Exchange | $408 million | 2026-05-28

Three Samsung related companies (tristar securities, Samsung SDS, Samsung Card) agreed to purchase 4 per cent of the shares of the Korea's largest encrypted currency exchange Upbit operator, Dunamu, at a price of approximately $408 million (62.28 billion won). Each buyer referred to the positioning of Korean Won-linked stable coins, tokenized securities and chain settlements prior to the introduction of the Korea Digital Assets Basic Law. This is part of May's sprint, transferring about 14 percent of Dunamu's shares to Korean giants like Hana and Hanwha. Done on 19 June。

| Infrastructure/stabilization | $222 million | 2026-05-11

Circle raised $222 million for Arc ($3 billion for FDV), its agency L1 for stabilizing currency settlements and monetizing assets. a16z crypto invested $75 million, with the participation of Belet, Apollo, ICE, Scum, SBI, Janus Henderson, General Catalest, Marshall Wace, ARK, Haun and Bullish. This is the clearest "traditional finance is choosing track" signal in 2026. A regulated stabilizer is building its own chain, with the largest asset management company on the list of shareholders。

Ripple (Ripple Prime) Debt financing Infrastructure/Main broker $200 million 2026-05-11

Ripple received $200 million in debt financing from a fund managed by Neuberger Specialty Finance to expand the lending capacity of its multi-asset broker, Ripple Prime. Existing institutional loans are used as collateral. Since Ripple's acquisition of the platform in 2025, Ripple Prime's income has tripled over the same period. Traditional financial credit guarantees the encoded accounts of the main broker。

Elliptic |D Round | Compliance/AI x Encryption |12 billion US$2026-05-12

One Peak took part in this round of $120 million (valued at $670 million) with NASDAC and Deutsche Bank and British commercial banks. This is the largest net equity risk investment cycle of the month. Elliptic is building proxy AML/compliance tool. From the perspective of April: this is the operational and compliance level that DeFi is constantly reminded of, and is now supported by traditional financial capital。

Fun A Round Payment/Consumer $72 million 2026-05-01

Multicoin Capital and SignalFire co-authored the vote, which was joined by Information Ventures, Pharmalus Capital and Justin Mateen. Fun is an encrypted/French access channel that supports financial platforms such as Polymark. The largest consumer/payment wind run this month is a clean bet on the forecast market and consumer encrypted hot-tide tracks。

Fasset | B Round | Stabilized Currency / Payment | 51 million US$ | 14 May 2026

The SBI Group took over the $51 million in financing, with the participation of Investcorp and Arz Portföy. Fasset is a new bank driven by stable currencies for emerging markets, with annualized transactions of about $32 billion. This is a true proof of the assertion that the currency of stability is a means of payment and that it takes place in the most important places: the corners of the world where the dollar track really changes life。

Varial | A Round DeFi/ Derivatives/RWA | $50 million | 20 May 2026

Dragonfly led by Bain Capital Cripto and Coinbase Ventures. Varial operates a platform based on the RFQ model, which provides a chain of eternal contracts for real world assets: oil, gold, silver, copper. The team's judgment is that the RWA contract may exceed the BTC and ETH contract in one year. This is the most controversial small deal this month。

OpenTrade | Strategy/ Growing Wheel | Stability Currency/RWA | $17 million | 6 May 2026

Mercury Fund and Notion Capital support $17 million in OpenTrade financing to expand its stable-currency return infrastructure supported by real-world assets. This is another data point for this month's dominant theme: the interest-stabilized track of RWA collateral at the bottom。

Cycles | Seed Wheel | Infrastructure/liquidation $6.4 million | 21 May 2026

Blockchange Ventures, Coinbase Ventures, Compund VC and Primitive Ventures. Cycles is building a multilateral clearing-house network to protect privacy for chain finance and currency stabilization. It's small, but it's exactly the kind of institutional pipeline that has to exist until the next $10 trillion goes in。

Click here to see all financing rounds in May

ENCRYPT VC FUND-RAISING ANNOUNCEMENT IN MAY

After a busy April, the new fund announcement was quiet this month, but two big moves..

Haun Ventures 2nd tranche $1 billion May 2026

Katie Haun ' s company raised $1 billion through early and later-term matching funds, raising management assets to over $2 billion. Three main priority themes: the next generation of financial infrastructure, asset monetization and new markets, and AI The Smart Economy, where systems trade on behalf of humanity. Funds will be deployed over the next 2-3 years。

a16z crypto | encryption fund 5 issues $2.2 billion may 2026

we officially received $2.2 billion in march from a fund that marked a target of about $2 billion. a full period, 10 years of investment, focused on practical applications: stabilization currency, payments, financial services, sustainable contracts, borrowing, forecasting markets, asset monetization. a16z is expressed as the "highest point in history" of the basic face of encrypted money。

Remind me if you're interested in more information about the Bankless Ventures II Fund, please fill in this form and we'll contact you

ETHGlobal New York 2026 | 12-14 June 2026

New York City, offline. This followed ETHConf NYC (8-10 June) and Pragma NYC。

Base Onchain Summer Hackers | June 2026 (date to be determined)

Online activity. Base's flagship chain has hackers and has attracted over 7,500 developers, including Stripe, Shopify, Farcaster and Zora. (The date of 2026 has not yet been confirmed, please check on Devfolio. I'm not sure

ETHGlobal Lisbon 2026 | 24-26 July 2026

Lisbon, Portugal, offline. Pragma Lisbon 25 July。

Solana Frontier hackers 6 April-11 May 2026

Online activity. The largest business competition of encrypted currency, with approximately 2857 submissions within five weeks. Awards: $30,000 for total champions, $10,000 for each of the 20 good teams, and $2.5 million for venture investment and accelerator admissions from Clossium. The winners as of the end of the month have not yet been announced; the review is in progress, and attention is drawn to blog.collossem.com from early to mid-June。

ETHPrague 2026 | 8-10 May 2026

Prague, Czech Republic. Fifth; meeting with the hackers, focusing on the future of Sun Punk in the Taifung。

Solana Mobile Haulsson April 2026

Online activity. Over 400 applications were submitted by developers from 66 countries。

Solana Frontier presentation day June 2026 (date to be determined)

Online activity. The final demonstration of the contestants for Frontier Hackson is expected to take place after the announcement of the winners。

ETHGlobal New York Exhibition Day 14 June 2026

New York City. Project appraisal and presentation on the last day of hackers。

ETHPrague 2026 Closing Presentation 10 May 2026

Prague. The presentation and evaluation of the last day of ETHPrague hackers。

Open accelerator application

Solana Incubator (No. 5) | Open Application/ Early Deadline around 5 June

New York City. Three-month project, beginning in September 2026; rolling audit, giving priority to early applicants. Search for 4-6 teams (the existing Solana team, the Web3 team considering Solana or the Web2 team adding Web3)。

Alliance DAO (ALL18) Open application/rolling clearance

VIRTUAL PLUS-LINE CLOSED. THE ALL 18 PERIOD BEGAN ON 7 SEPTEMBER 2026; INTERVIEW DECISIONS WERE MADE WITHIN APPROXIMATELY 2 WEEKS OF THE APPLICATION. APPROXIMATELY 5 PER CENT; MEDIAN GRADUATE FINANCING $3.5 MILLION, VALUED $25 MILLION。

a16z Cripto Enterprise Accelerator (CSX) | Open application (please verify next issue)

Underline, a nine-week project is held twice a year in different cities. $500,000 in exchange for 7 per cent equity; approximately 3 per cent acceptance rate。

Outlier Ventures Base Camp |Scrolling application

Virtual plus-line. Twelve weeks of accelerators to accept early applications in the direction of DeAI, DeFi, RWA and DePIN in 2026。

Techstars Web3 Open application

Virtual plus-line. The application was reportedly opened in 2026。

May is over

Thank you. Good luck

Ben Lakoff, CFA