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Howdy!

As a starting point, I base the importance of crypto news on whether my non-crypto friends have heard about it. When Donald Trump started making his crypto pivot, the normies didn’t seem to know.

But yesterday at a friend’s birthday party (for her cat — not my idea), I was asked what the crypto drama is these days, and I said Telegram CEO Pavel Durov had been arrested in France. Multiple other people in the room had already heard about it and started slinging opinions. I think that’s going to become a pretty big story. But for now:

Investors hope for a third straight Solana September

Solana’s price hopped up Friday following dovish remarks in a keynote speech from Federal Reserve Chair Jerome Powell in Jackson Hole. 

SOL climbed from around $144 — where it had traded for roughly two weeks — to over $160 when Powell said “the time has come” for interest rate cuts. It was trading at around $158 at press time. But barring any major price catalysts, Solana is looking at its third straight August with a price decline (although the asset spiked by roughly 200% in August 2020 and 2021).

If Solana investors need a bit of copium, however, September has been bullish for SOL in each of the past two years: SOL rose 5% in September 2022 after shedding 25% that August, and SOL climbed 8% in September 2023 after shrinking 17% the month prior.

If crypto markets generally continue to rally amid looming September rate cuts, that would certainly be good news for another Solana September. But multiple analysts are casting doubt on whether the network’s memecoin engine has finally run out of steam.

An analyst from Flipside Crypto told me that Solana transaction fees have seen a “sizable” dip over the past month, which they saw as a result of declining usage on Solana DEXs — and downstream from memecoin “fatigue.”

When Solana ETPs saw their largest-ever outflows last week, CoinShares similarly chalked it up to memecoins losing steam. 

DogWifHat, Popcat and Bonk are all down double-digits over the past month. Memecoin launchpad pump.fun’s revenue and new token launches have plateaued a bit since Elon Musk’s X Space with Donald Trump set off a brief memecoin frenzy. But for what it’s worth, I think the platform’s decline is a bit overstated. Revenue is lower, but it’s not yet dramatically lower than what we’ve seen for the past few months. 

Solana ETFs also appear off the table for the time being, as the SEC reportedly reiterated concerns about SOL being a security in conversations with potential issuers.

If memecoins do fall off in a more meaningful way, and ETFs get kicked down the road, SOL may be in need of a fresh narrative. Fortunately for investors, Solana’s flagship Breakpoint conference is happening next month.

“Breakpoint served as a catalyst for this year's bull run,” Cube Exchange CEO Bartosz Lipinski told me. “We believe a similar outcome is likely after this year's Breakpoint, and strong support at the 50-week moving average means that we have probably reached a price floor from which to consolidate and build higher.”

Solana also continues to gain on its main rival in Ethereum. SOL’s price, relative to ETH, reached an all-time high during a major Ethereum sell-off earlier this month, according to CoinMarketCap. Ethereum’s market cap is still four times larger than Solana’s.

Solana’s price is now 5.8% of Ethereum’s. A year ago, it was at 1.2%.

— Jack Kubinec

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One piece of evidence (apart from vibes) that memecoins could be losing favor is recent Solana DEX volumes.

Flipside Crypto put together this chart of DEX volume with swaps of over $1 million filtered out to try accounting for wash trading. As you can see, volumes have declined since late July and have spent the past couple weeks at the level of mid-April’s lull.

Solana’s superpower is remaining cheap and fast despite high volumes, so maybe the network can pull another rabbit out of its hat and drive up usage once again. Or, we may be reaching the end of a memecoin summer that stress-tested Solana, produced a few funny moments and left many of us a few lamports poorer.

— Jack Kubinec

Telegram founder Pavel Durov was nabbed at France's Le Bourget Airport on his way to…well, somewhere that probably wasn’t a French prison. His alleged crimes, according to reports, involve failing to adequately moderate illegal activities on Telegram including drug trafficking, the promotion of terrorism and the spread of illicit content.

Naturally, the Web3 community is up in arms. Helius Labs CEO Mert Mumtaz summed it up nicely: “The fact that this guy is in jail because he built something that lets people message each other is literally INSANE.” He continued, "If this guy gets 20 years in French prison because he didn't ‘moderate content’ on his software — then we have truly lost the ideals of the west."

Nic Carter, a partner at Castle Island Ventures, criticized European leaders for their overreach: “There’s something deeply offensive about European leaders who preside over a decaying continent which produces nothing aside from ‘culture’ and trinkets of their lost empire appointing themselves technocrats and imposing their rules on global tech companies built elsewhere.”

Balaji Srinivasan, former CTO of Coinbase, didn’t mince words either. He argued that the French government's actions are more about control than crime prevention: “Macron hasn't wiped out crime among 70M Frenchmen with all the power of the French State. So it's completely unreasonable to expect Durov to wipe out crime among 1B+ Telegram users with his minimal power of content moderation.”

However, not everyone rushed to defend Durov. Zooko Wilcox-O'Hearn, the founder of Zcash, voiced strong skepticism: “Telegram is a weapon of centralized power. [...] People get so confused about that because Pavel Durov says the right things. When are we going to become less gullible?” Zooko questioned Durov's narrative of defying Putin, suggesting instead that Telegram might actually be collaborating with Russian authorities: “Telegram isn’t a censorship-resistant platform (like Signal or Zcash), it’s a weapon. [...] Tricking people into thinking they have privacy while you spy upon them is taking power over them. Power that nation states will then want.”

Users on Twitter (X, whatever) had plenty to say as well. @CheburekiMan was quick to suggest a geopolitical conspiracy: “You can bet the US State Dept is behind this, they want leverage to compromise Telegram. France is just an obedient colony.” @jotis33 also took a swipe at France, remarking, “Sadly this is probably the most important the French have felt in decades. They’re basically irrelevant otherwise.” @otterlycorrect expressed disillusionment with European leadership, saying “It’s like Article 11 never existed. Sad to see the current state of the EU, we need new leadership badly.”

@Jymba_ pointed out the real-world consequences of Telegram’s laissez-faire approach: “Telegram is e2e encrypted and promotes pedos and terrorists AND the CEO doesn’t care for a decade.” Similarly, @oddphunk noted, “isis literally uses telegram as an app of choice to recruit people and send directions which then lead to (surprise) blowing shit up in France and europe.”

— Jeffrey Albus

What’s the future of DeFi on Solana?

Catch the Lightspeed podcast live on stage at Permissionless to find out.

A message from Bartosz Lipinski, CEO of Cube: