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## Executive Summary Seven prominent Ethereum DeFi protocols, including **Aave Labs**, **Curve**, **Lido Labs Foundation**, and **Uniswap Foundation**, have launched the **Ethereum Protocol Advocacy Alliance (EPAA)** to coordinate global policy efforts and educate legislators on decentralized finance, representing over **$100 billion** in secured assets. ## The Event in Detail The **Ethereum Protocol Advocacy Alliance (EPAA)** has been officially formed by seven leading Ethereum protocol development teams: **Aave Labs**, **Aragon**, **Curve**, **Lido Labs Foundation**, **Spark Foundation**, **The Graph Foundation**, and **Uniswap Foundation**. This coalition aims to coordinate efforts on global policy issues pertinent to blockchain networks and Ethereum-based software. These protocols collectively secure more than **$100 billion** worth of assets across public blockchains through open, non-custodial systems that operate without intermediaries. The EPAA's shared policy framework is structured around four key priorities: * **Protecting Protocol Neutrality:** Ensuring the protocol layer remains neutral and that code itself is not subject to regulation. * **Advancing On-Chain Transparency:** Promoting real-time, verifiable on-chain data as a source of compliance. * **Preserving Innovation Flexibility:** Avoiding rigid or overbroad standards that could stifle innovation. * **Upholding Global Access:** Maintaining permissionless, decentralized infrastructure access globally. ## Business Strategy & Market Positioning The formation of the EPAA signifies a strategic shift by decentralized finance entities to proactively engage with policymakers. Instead of traditional lobbying, the alliance intends to contribute technical expertise to policymakers, advocacy partners, and public consultations. They will produce pragmatic resources explaining how on-chain systems mitigate risk and embed accountability within their codebases. This approach aims to strengthen the collective voice of builders in policy discussions, reinforcing the understanding that **Ethereum** ecosystem stakeholders play a critical role in educating legislators. The EPAA will collaborate with established advocacy organizations such as the **DeFi Education Fund**, the **Decentralization Research Center**, and the **European Crypto Initiative**. The **Ethereum Foundation** has publicly welcomed the creation and work of the EPAA, emphasizing the importance of community-led coordination on advocacy efforts. This strategy seeks to ensure that laws accurately reflect the operational realities of on-chain systems, rather than potentially misinformed perceptions, thereby balancing the influence of centralized crypto entities. ## Market Implications The establishment of the EPAA carries significant implications for the regulatory landscape of the **DeFi** sector and the broader **Web3** ecosystem. By presenting a unified front and providing technical guidance, the alliance could foster the development of more favorable or clearly defined regulations for decentralized protocols. This proactive engagement may reduce regulatory uncertainty, potentially encouraging further institutional adoption and innovation within the **Ethereum** ecosystem. The substantial assets secured by EPAA members—over **$100 billion** in total, with **Ethereum's Total Value Locked (TVL)** standing at **$78.6 billion** and **Aave** alone holding over **$39 billion** in TVL—underscore the economic significance of the protocols involved. A more stable and predictable regulatory environment could enhance investor confidence and facilitate continued growth in decentralized finance, reinforcing **Ethereum's** position as a foundational layer for digital assets. ## Broader Context The EPAA represents a pivotal moment for the decentralized sector, marking a concerted effort by protocol teams to actively shape their regulatory future. This initiative moves beyond passive observation of policy developments, adopting a proactive stance to ensure that the unique benefits and operational mechanisms of decentralized infrastructure are understood and accommodated by global regulators. This coordinated advocacy reflects a maturing industry increasingly focused on long-term sustainability and mainstream integration, striving to protect the core tenets of transparency, neutrality, and permissionless access that define the **Web3** space.
## Executive Summary The Uniswap Foundation has allocated up to $9 million to Brevis for a new trustless routing rebate program, aiming to incentivize the integration of Uniswap v4 Hook pools and enhance decentralized exchange efficiency. ## The Event in Detail The Uniswap Foundation announced a grant of up to **$9 million** to **Brevis**. This funding is earmarked for the development and implementation of a 'trustless Routing Rebate program'. The primary objective is to incentivize routers to integrate with **Uniswap v4 Hook pools**, providing rebates on gas fees. ## Financial Mechanics and Technological Implementation The program's financial incentive centers on gas fee rebates, designed to mitigate operational costs for aggregators and routers. This mechanism aims to make **Uniswap v4 Hook pool** integration more attractive by directly offsetting transaction execution expenses. Brevis will leverage its **ZK Data Coprocessor network** and **Pico zkVM (zero-knowledge Virtual Machine)** to ensure the trustless calculation and verification of these rebates. The **ZK Data Coprocessor** enables verifiable computation and data verification across various blockchains, utilizing **zkProofs** and off-chain processing to provide private and scalable verification. Brevis has demonstrated capabilities, having generated over **37.5 million proofs** and processed **52,420 API requests** across **69,153 unique addresses**. This technological framework is critical for maintaining transparency and integrity in the rebate distribution process. ## Business Strategy and Market Positioning This initiative reflects a strategic move by the Uniswap Foundation to accelerate the adoption of **Uniswap v4**, enhancing its market position by incentivizing key ecosystem participants. By offering **order-routing rebates**, Uniswap is transforming the conventional Web3 crypto wallet into a more active income channel for aggregators, akin to recurring revenue streams derived from taker/maker fees and funding-rate slices in perpetual trading environments. This strategy parallels models seen in other blockchain ecosystems; for instance, **Klaytn** launched a similar gas fee rebate program for gaming companies, offering up to **$100,000 worth of KLAY per month** per grantee to offset operational costs and foster ecosystem growth. The **Uniswap Foundation's** program is a direct investment in increasing **v4 liquidity** and reducing user transaction costs, critical elements for competitive advantage in the decentralized finance (DeFi) landscape. ## Broader Market Implications The introduction of a trustless routing rebate program by the **Uniswap Foundation** via **Brevis** carries significant implications for the broader Web3 ecosystem. It signals a growing trend toward **incentive-driven protocol adoption** and the strategic use of **zero-knowledge proofs** for verifiable, off-chain computations in DeFi. By fostering **v4 Hook pool integration**, the initiative is expected to increase overall **liquidity** within the Uniswap ecosystem, potentially leading to more efficient trading and reduced slippage for users. Furthermore, the explicit financial incentive for routers could set a precedent for how decentralized protocols engage and remunerate their network contributors, ultimately driving innovation and improving user experience across various decentralized applications. This move underscores a bullish sentiment regarding **Uniswap's** future growth and the continued maturation of DeFi infrastructure.
## The Event in Detail Mainland China, which enacted a comprehensive ban on cryptocurrency trading and mining in 2021, demonstrates emerging signs of a potential policy re-evaluation in 2025. This shift is notably influenced by Hong Kong's proactive establishment as a regulated Web3 hub and the United States' enactment of the GENIUS Act. Commentators, including Yifan He, CEO of Red Date Technology, suggest the probability of China reversing its ban has increased to over 50% from zero two years prior, attributing this to Hong Kong's strategic role in bridging China with the global crypto ecosystem. In July 2025, the **United States** formalized its approach to digital assets with the signing of the **GENIUS Act**. This legislation establishes a comprehensive regulatory framework for stablecoins, prioritizing consumer protection through requirements such as 100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries. It mandates monthly public disclosures of reserve compositions and prohibits misleading claims of government backing or federal insurance. The GENIUS Act explicitly subjects stablecoin issuers to the Bank Secrecy Act, enforcing stringent anti-money laundering (AML) and sanctions compliance programs, thereby strengthening the U.S. dollar's dominance and attracting investment into the country's digital asset sector. Concurrently, **Hong Kong** advanced its position as a digital asset hub with the **Stablecoins Ordinance (Cap. 656)**, which became effective on August 1, 2025. This Ordinance establishes a comprehensive licensing regime for fiat-referenced stablecoins (FRS), building upon a stablecoin issuer "sandbox" launched in March 2024. The sandbox involved participants such as **JINGDONG Coinlink Technology Hong Kong Limited**, **RD InnoTech Limited**, and a consortium including **Standard Chartered Bank (Hong Kong) Limited**. This regulatory framework aims to foster innovation while ensuring compliance, positioning Hong Kong as a strategic observation ground for Beijing regarding digital asset integration. **China** continues to strategically advance its **digital yuan (e-CNY)**, leveraging it as a geopolitical tool to enhance monetary sovereignty and reduce reliance on the U.S. dollar. The establishment of the e-CNY International Operations Center in Shanghai in September 2025 underscores this objective, aiming to build cross-border blockchain infrastructure. Data from 2025 indicates Chinese cross-border transactions in yuan reached 54.3% of total volumes, or $725 billion, supported by initiatives like the Cross-Border Interbank Payment System (CIPS) and the mBridge project, which facilitates sub-10-second settlements with significant cost reductions. Governor Pan Gongsheng of the **People's Bank of China (PBOC)** has highlighted the e-CNY's potential to rival decentralized stablecoins, with cumulative transactions reaching $7.3 trillion and 180 million wallets by 2025. Adding to this evolving landscape, Beijing has formalized a process for liquidating seized cryptocurrencies by utilizing licensed exchanges in Hong Kong. This arrangement allows Chinese authorities to offload substantial digital assets, including approximately **194,000 Bitcoin** and **833,000 Ethereum**, confiscated from criminal cases, with proceeds converted to yuan and deposited into government accounts. This marks a significant development as authorities previously lacked formal mechanisms for converting seized crypto into traditional currency. ## Market Implications These converging developments generate significant market implications, fostering increased institutional clarity within regulated crypto markets in the United States and Hong Kong. The structured regulatory environments are expected to attract further institutional interest, potentially leading to a gradual re-evaluation of crypto policy within Mainland China itself. The global stablecoin market, exceeding $250 billion, is being reshaped by these contrasting yet influential regulatory frameworks. The **US GENIUS Act**, by mandating 1:1 reserve backing with U.S. Treasuries, is designed to drive demand for U.S. debt, thereby reinforcing the U.S. dollar's position as the global reserve currency. This approach primarily attracts large institutional players but may limit decentralized finance (DeFi) innovation and retail adoption due to stringent compliance requirements and a ban on yield-bearing stablecoins. However, the legislation creates a feedback loop where growing stablecoin adoption increases global demand for USD and Treasuries, cementing U.S. financial hegemony. In contrast, **Hong Kong's Stablecoins Ordinance** aims to balance compliance with innovation. While it features an accessible capital threshold of HKD 25 million, compliance costs and stringent licensing criteria, with the **Hong Kong Monetary Authority (HKMA)** planning a "single-digit" number of licenses in 2025, favor well-capitalized firms. The Ordinance offers flexibility to issue stablecoins pegged to various currencies, including HKD, USD, or offshore RMB, enhancing Hong Kong's competitiveness in the Asia-Pacific region. This aligns with China's **Belt and Road Initiative (BRI)**, facilitating cross-border transactions and offering regulated stablecoins for trade and remittances. ## Broader Context China's evolving stance reflects a sophisticated, dual-track strategy: aggressive promotion of the state-controlled e-CNY for domestic and geopolitical objectives while leveraging Hong Kong as a quasi-regulatory sandbox for broader crypto engagement. This strategic positioning occurs amid a global trend where various jurisdictions, including Singapore, Bahrain, South Korea, Japan, and the UAE, are developing their own sovereign stablecoin regimes, indicating a global race to define the future of digital currencies. The contrasting regulatory philosophies between the US and Hong Kong illustrate different approaches to governing digital assets. The US emphasizes bolstering its existing financial infrastructure and currency dominance, while Hong Kong aims for a more flexible, innovation-friendly environment to become a regional Web3 hub. This dynamic sets the stage for intensified competition between fiat and digital currencies, with significant geopolitical considerations as China's de-dollarization efforts continue to challenge the U.S. dollar's supremacy. Despite Mainland China's official ban, legal precedents exist where Chinese courts have recognized and protected Bitcoin ownership rights, suggesting a nuanced domestic environment beneath the surface of official policy. This global realignment of digital asset policies underscores the growing importance of regulatory clarity and strategic innovation in the international financial landscape.
## The Event in Detail Grayscale Investments completed the third-quarter 2025 rebalancing of its three multi-asset funds: the Grayscale Decentralized Finance (DeFi) Fund, the Grayscale Smart Contract Fund, and the Grayscale Decentralized AI Fund. These adjustments were finalized at the end of the day on October 3, 2025, and announced on October 8, 2025. Within the **DeFi Fund (DEFG)**, **MakerDAO (MKR)** was removed from the portfolio. Concurrently, **Aerodrome Finance (AERO)** was added and now represents 6.60% of the fund's components. Other significant holdings in the DeFi Fund include **Uniswap (UNI)** at 32.32%, **Aave (AAVE)** at 28.07%, and **Ondo (ONDO)** at 19.07%. The rebalancing was conducted in accordance with the CoinDesk DeFi Select Index methodology. The **Decentralized AI Fund (AI Fund)** saw the inclusion of **Story (IP)**, which now accounts for 21.53% of its assets. The largest components in the AI Fund are **NEAR Protocol (NEAR)** at 25.81%, followed by **Bittensor (TAO)** at 22.15%. Other assets include **Render (RENDER)** at 12.91%, **Filecoin (FIL)** at 11.39%, and **The Graph (GRT)** at 6.21%. For the **Smart Contract Fund (GSC Fund)**, updated weightings were announced, with **Solana (SOL)** holding 30.97% and **Ether (ETH)** at 30.32%. Additional components include **Cardano (ADA)** at 18.29%, **Avalanche (AVAX)** at 7.57%, **Sui (SUI)** at 7.35%, and **Hedera (HBAR)** at 5.50%. As of September 30, 2025, Grayscale Investments reported approximately **$35 billion** in assets under management (AUM), solidifying its position as a prominent digital asset-focused investment platform. ## Market Implications The rebalancing actions by Grayscale Investments are expected to induce **increased trading volume and potential price fluctuations** for the directly affected tokens, notably **Aerodrome Finance (AERO)** and **Story (IP)**, as well as **MakerDAO (MKR)**. Grayscale's strategic allocations signal a notable **institutional interest** in specific sectors of the digital asset economy, primarily decentralized finance (DeFi) and artificial intelligence (AI) driven blockchain projects. This institutional endorsement could influence broader **investor sentiment** and potentially direct additional capital into these emerging ecosystems. The shift from **MakerDAO (MKR)** to **Aerodrome Finance (AERO)** within the DeFi Fund suggests a prioritization of protocols demonstrating robust liquidity and established governance frameworks, while potentially reducing exposure to projects perceived as having declining user activity. The integration of **Story (IP)** into the AI Fund underscores a growing recognition of **AI-driven blockchain solutions** as a critical growth sector, capable of bridging decentralized infrastructure with machine learning capabilities. ## Business Strategy and Investment Thesis Grayscale's Q3 2025 fund rebalancing reflects a strategic pivot towards digital assets characterized by **robust fundamentals, institutional-grade utility, and alignment with emergent technological frontiers**. This approach emphasizes **diversification and innovation** within the rapidly evolving digital economy. The firm's commitment to adapting its multi-asset portfolios to dynamic market conditions is evident through these adjustments. By prioritizing projects with demonstrated **real-world utility, potential for institutional adoption, and technological innovation**, Grayscale aims to position its funds to navigate both market volatility and regulatory uncertainty. The **DeFi Fund's** rebalancing specifically highlights a focus on protocols with **proven liquidity and active ecosystems**, indicating a mature investment perspective on the sector. Furthermore, the targeted allocation within the **Decentralized AI Fund** towards assets like **NEAR Protocol, Bittensor, and Story** aims to capture innovation and computing demand at the intersection of AI and blockchain. This strategic positioning anticipates significant growth in a sector projected to expand as enterprises seek decentralized solutions for AI training and inference. Grayscale's selections provide investors with diversified exposure across **DeFi, smart contracts, and AI-driven blockchain ecosystems**, while concurrently mitigating risks associated with more speculative tokens. ## Broader Context Grayscale Investments, established in 2013, operates as the world's largest digital asset-focused investment platform, leveraging a decade of experience in the sector. The firm's quarterly rebalancing serves as a significant barometer for **institutional sentiment** within the cryptocurrency market. These strategic allocations are consistent with broader **macroeconomic tailwinds**, including increased venture capital funding directed towards AI-native crypto projects and a trend towards clearer regulatory frameworks in key jurisdictions. The continuous evolution of the crypto market underscores that adaptability and innovation remain non-negotiable attributes for sustained growth and investor confidence.