👀 Why Institutions Still Love Layer-1s (Even If They Don’t Need Them)

PLUS: Robinhood engages with regulators over tokenized equities

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In today's newsletter:

• 💡 Why Institutions Still Love Layer-1s (Even If They Don’t Need Them)

• 📣 Robinhood engages with regulators over tokenized equities

• 📈 Despite DeFi’s rapid growth, only 55 projects earned over $1M last month

Let’s dive in!

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💡 Insight

Why Institutions Still Love Layer-1s (Even If They Don’t Need Them)

Solana ETFs are here. AVAX, XRP, DOT, and SUI are next. But why are institutions still obsessed with Layer-1s when most crypto natives agree—we don’t need more of them?

The answer isn’t tech. It’s regulatory survival.

Let’s unpack why Layer-1s are still dominating—and what it means for your altcoin bets.

The Pattern No One Talks About

While digging into the newly approved Solana ETFs, I noticed something strange.

Every single upcoming ETF—$SOL, $XRP, $DOT, $AVAX, $SUI—is a Layer-1.

Where are the top-tier ERC-20s like $UNI, $LINK, or $MKR?

They’re not even in the conversation.

Why Institutions Need Layer-1s

The answer lies in regulatory clarity.

Thanks to the U.S. Clarity for Digital Tokens Act, only tokens that power their own blockchains (Layer-1s) can be classified as digital commodities.

That’s crucial because:

• Commodities are regulated by the CFTC, not the SEC.

• Commodities are eligible for ETFs.

• Commodities can be listed on U.S. exchanges without being labeled as securities.

So if you’re an institution looking for legal safety, ERC-20s are a no-go. Layer-1s are the only path forward.

Layer-1s as a Legal Strategy

For builders, launching a Layer-1 isn’t about scalability anymore—it’s about compliance.

If you want to:

• Get listed on U.S. exchanges

• Be ETF-approved

• Avoid securities lawsuits

You need your own chain.

That’s why we’re seeing an explosion of “unnecessary” Layer-1s. It’s not about innovation. It’s about regulatory arbitrage.

Which Layer-1 Narratives Actually Matter?

Let’s break down the Layer-1s that fit key institutional narratives:

💳 Payments

• $XRP, $ADA → ETF-ready, ISO-20022 compliant.

• Also watch: $XLM, $HBAR, $XDC.

📈 Traders’ Chain

• $SOL dominates.

• Base rising fast.

• $AVAX doubling down on gaming & DeFi.

⚙️ Scalability

• $APT, $SUI have Solana-like stacks.

• Aptos is aligned with U.S. institutions and looks undervalued.

🔗 Real-World Assets (RWAs)

• Ethereum remains king.

• Solana is catching up with tokenized stocks.

🧠 AI Narrative

• $TAO and $NEAR both qualify as digital commodities.

• Strong regulatory and narrative upside.

💵 Stablecoin Infra

• $TRX quietly dominates USDT usage.

• USDC exposure = Circle stock.

Key Takeaway: Regulation Is the Meta

Most new Layer-1s aren’t solving technical bottlenecks. They’re solving legal ones.

They exist to check three boxes:

• ✅ Independent chain

• ✅ Commodity status

• ✅ ETF compatibility

This wave of Layer-1s? It’s not about speed or TPS. It’s about survival in the post-regulation era.

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📣 Update

Robinhood engages with regulators over tokenized equities

Robinhood Markets is discussing its latest tokenization effort with European regulators after its plan to give EU users blockchain-based “stock tokens” of OpenAI and SpaceX received public backlash from Sam Altman’s AI firm.

The brokerage is fielding questions from entities, such as the Bank of Lithuania, about how the tokens are structured and whether they blur the line between real equity and derivatives, Bloomberg reported.

Read more →

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📈 Signal

Despite DeFi’s rapid growth, only 55 projects earned over $1M last month

Still early, still massive opportunities!

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