Cryptonite August 2025

dolla dolla bill y'all

Shyam Sunder

Aug 10, 2025

It’s time for Cryptonite - our monthly roundup of all things crypto - with Dr. Tejaswi Nadahalli.

You can follow Tejaswi on twitter @nadahalli and he blogs at tejaswin.com

A detailed summary can be found here.

Concise Summary (via recall):

Introduction to Oracles and Background

An oracle in the crypto context is an entity that provides external data to crypto protocols, such as the price of Bitcoin or Ethereum, which is not inherently known by the blockchain itself 01:03

Chainlink is a prominent oracle that supplies prices to many protocols, and its decentralization is incentivized through its own token to prevent manipulation of markets 02:31

The speaker works at Chainlink, but not on the oracle aspect, instead focusing on privacy and cryptography, which has helped to reduce their involvement in the day-to-day ups and downs of the crypto market 04:03

Stable Coins and Emerging Markets

Stable coins, including Tether, hold a significant amount of US treasuries, with Tether possibly being among the top 30 treasury holders in the world, and if a large stable coin issuer faces a run, it could flood the market with treasuries, increasing yields and affecting mortgages 10:14.

Emerging markets, such as China and India, are against crypto because it allows people to park their money in US Dollar-based assets, potentially leading to a dollarized economy and loss of control over interest rates and liquidity 11:14.

In India, there is a soft ban on crypto, with people who have bought bitcoin or other cryptocurrencies facing tax notices and potential anti-money laundering charges, making it difficult for innovation in crypto to occur in the country 13:24.

US Environment and Legal Challenges

The US is considered a place with enough capital and freedom to do innovative things, despite its weirdness and craziness, and has a tradition of allowing anonymous writing and freedom of expression 20:48

The case of Tom Hayes, a trader who was imprisoned for his involvement in the Libor scandal, highlights the challenges of fighting against the state, even when one is innocent, and the importance of having resources to fight back 21:24

Ethereum and Blockchain Platforms

Ethereum has shown signs of life and is tracking well against Bitcoin, with potential use cases such as tokenized stocks and stable coins, but faces challenges from other coins like Solana, which has a more focused approach and advantages like a business development team and venture capitalist funding 24:15

Cloud providers like AWS, Azure, and Google capture value from platforms built on top of them, whereas Ethereum does not capture as much value from platforms built on it, because those platforms do not pay Ethereum as much as they would pay a cloud provider 30:55

The analogy between cloud platforms and blockchain platforms is not exact, as companies like Netflix do not try to build a faster version of the cloud platform they are built on, whereas many blockchain projects try to build faster versions of existing blockchains 32:10

Ethereum's value proposition is altruistic, aiming to do good in the world, which makes it a difficult token proposition, as its value is not directly tied to its usefulness as a platform for building other projects 33:30

Markets this Week

The fall in the rupee vs. the dollar masks the fact that it has lost a more value because…

… the dollar itself has tanked against the euro and the pound.

More here: country ETFs, fixed income, currencies and commodities.

Links

Research

The Causal Effect of News on Inflation Expectations (NBER)

This paper studies the response of household inflation expectations to television news coverage of inflation. Increased media coverage of inflation raises expectations.

Eradication of Sparrows and the Great Famine in China (NBER)

How do large disruptions to ecosystems affect human well-being? This paper tests the long-standing hypothesis that China's 1958 Four Pests Campaign, which exterminated sparrows despite scientists’ warnings about their pest-control role, exacerbated the Great Famine—the largest in human history. Combining newly digitized data on historical agricultural productivity in China with habitat suitability modeling methods in ecology, we find that, after sparrow eradication, a one-standard-deviation increase in sparrow suitability led to 5.3% larger rice and 8.7% larger wheat declines. State food procurement exacerbated these losses, resulting in a 9.6% higher mortality in high-suitability counties—implying nearly two million excess deaths.

Retail Investors’ Contrarian Behavior Around News, Attention, and the Momentum Effect (NBER)

We show that retail investors trade as contrarians after large earnings surprises, especially for loser stocks, and that such contrarian trading contributes to price momentum and post earnings announcement drift (PEAD).

Hindsight and Survivorship Biases in Managed Futures (alphaarchitect)

This paper analyzes the effects of hindsight and survivorship biases on performance persistence.

Crypto

Trump opens the door for private equity and crypto as 401(k) retirement plan options (thehindu).

CFTC to launch an initiative to allow for trading of spot crypto asset contracts listed on a futures exchange registered with the agency (reuters).

Tariffs

Missed signals, lost deal: How India-US trade talks collapsed (reuters).

Trump imposed an additional 25% tariff on Indian goods, citing New Delhi's continued imports of Russian oil (reuters).

The Indian seafood export industry is staring at a business loss opportunity of almost Rs 24,000 crore to the US due to the country’s doubling of existing tariff to 50% on India (economictimes).

Titan is exploring shifting some manufacturing to the Middle East Gulf to maintain low-tariff access to U.S. (reuters)

Trump imposes 15% 'reciprocal' tariff on most Japanese goods (japantimes).

The most persistent driver of America's unsustainably large trade deficit is foreign investment in the United States, not other countries' trade barriers. If President Donald Trump manages to shrink the US trade deficit, it will be because he drove away foreign investment and slowed US economic growth (piie).

The issue is that levying tariffs is like a person simultaneously shooting himself and another person in the foot. If the other person responds by shooting both himself and the original person in the foot, that would leave both unable to walk (ft).

India

Optimists hold out hope that Trump throwing a spanner in the Indian economy will spur our policy makers to push through much needed reforms (livemint). Little do they know…

India's high economic growth and falling inflation have failed to accelerate sales of cars and 2-wheelers. Passenger vehicle sales declined 1.4% , two-wheeler sales fell 6.2% and commercial vehicle sales declined by 0.6% in the three months through June (livemint).

India’s ₹2 trillion paneer rush, and a battle with fakes (livemint).

The Supreme Court finally clarifies laws around environmental clearances that potentially unlocks over 70,000 housing units in Mumbai and Pune (economictimes).

The Supreme Court has directed states to clear decades-old dues to power distribution companies within four years, paving the way for a phased increase in electricity tariffs across consumer categories (indiatoday, thehindu, livemint).

The JSW acquisition of Bushan Steel off IBC was supposed to be a success story. It has now turned into a circus (economictimes).

The nature of IT work is changing due to artificial intelligence. And it is changing in a way that may not turn out to be favourable for our IT giants (indiatoday).

Even as Centre dithers on notifying labour codes, most states amend labour laws to attract investments (theprint).

India achieved 20% ethanol blending in petrol in 2025. However, vehicles manufactured in India prior to 2023 are not compatible with ethanol mixed petrol (thesouthfirst).

row

America’s corporate leaders are doubling down on a strategy to promote their companies in the Donald Trump era: butter up the president (ft).

Donor List Suggests Scale of Trump’s Pay-for-Access Operation (nytimes)

Whether Trump and his team know it or not, what they’re doing has been tried before. It’s what Juan Peron did in the 1940s that turned Argentina into a poster child for economic dysfunction. If you want to understand where Trump's attacks on our foundational economic institutions can lead, look to Argentina. Warning: the ending isn't pretty (therebuild).

AI is becoming a major driver of workforce reductions, with over 10,000 job cuts in the U.S. in 2025 directly linked to automation (msn).

Loyalty programmes are keeping America’s airlines aloft (economist).

China’s industrial policy is creating instability at home and abroad. Overcapacity – from electric vehicles to high-speed rail to housing – is destroying profits as well as GDP (theguardian).

Chocolate cartels: the rise of cocoa smuggling (ft)