Slumdog billionaire 2: ‘Top 10… brings no satisfaction’ says Polygon’s Sandeep Nailwal
Read Part 1 here: Slumdog billionaire: Incredible rags-to-riches tale of Polygon’s Sandeep Nailwal
Growing up in poverty in a Delhi ghetto with an alcoholic father and an illiterate mother, Sandeep Nailwal has always had a fire in his belly to achieve something better.
He wants to go big or go home — middling success is not an option.
“I am not doing something small,” he tells Magazine. “Okay, we build some network, and it has a token. It does well for one cycle and then fades into the dawn, and I make a few million dollars for myself and retire or whatever — this was not the plan.”
“We were very clear that we will build this, we will grow the community, and we’ll make it one of the biggest projects in the space.”
And that’s why, in his mind, Polygon — formerly Matic Network — is yet to truly succeed, despite nudging a $19-billion market cap at one point and joining the top 10 cryptocurrencies by market capitalization (it’s currently No. 13 with a $6-billion market cap).
“Being in the top 10, top 15 projects brings no satisfaction to me. It’s very clear in my mind that I want Polygon to have that kind of impact which Ethereum and Bitcoin have had. We have to go to the top three projects in the space. And that’s only when I would say that ‘OK Polygon has made it.’”
Part 1 of this feature told the story of Nailwal’s rise from grinding poverty to going all-in on Bitcoin with $15,000 he’d borrowed to fund his wedding and the difficult early days of Matic Network, where the threat of running out of funds was ever-present.
By mid-2019, Matic Network had raised $5 million in a Binance initial exchange offering to keep itself afloat and had launched the alpha version of its Ethereum layer-2 sidechain. But it was slowly becoming clear that the Plasma technology it was pursuing was not the answer the market was looking for.
Ideas around scaling had begun to change, and Plasma’s shortcomings (TLDR: complicated, better at transferring assets than running smart contracts) had seen it lose favor. Seeing which way the wind was blowing, the research-oriented Plasma Group decided to ditch the framework altogether in favor of building an Optimstic rollup and renamed the project “Optimism” in early 2020.
But the Matic Network white paper had outlined a Plasma-based solution with fraud proofs and a proof-of-stake checkpoint layer, and the team was determined to follow through and build it in 2019 and 2020, despite waning interest in the tech.
Mainnet market crash and resurrection
Just as the project was gearing up to launch its mainnet in May 2020, a worldwide pandemic and the March Black Thursday market crash intervened. Around 70% was wiped off the already paltry sub-3-cent price of MATIC within the space of 10 days. With fears of a new Great Depression gripping the world, Matic Network’s future again looked in doubt.
“Suddenly, everything felt like it will go to zero. That shock was there for two to three months. We survived that, but what we realized is that, you know, we started with Plasma technology, and now plasma is dead. And now we are launching our mainnet. People are, like, ‘Plasma is dead; there is no interest from the community.’”
Nailwal says the team came to two conclusions.
The first is they’d try and get as many developers and builders as possible. This was a success, as they launched their Ethereum layer 2 just in time for DeFi Summer’s ludicrous gas fees on layer 1.
The second conclusion was to never again put their eggs in one basket.
“We realized that we need to be multichain; we can’t be relying on one particular technology,” he says.
Long-term Ethereum community insider Mihailo Bjelic was also thinking about a multichain future and joined the project to become something of a bridge to markets and communities from which the team felt excluded at the time. Nailwal says the project’s roots in India meant it had a low profile in the Western world, where some considered it to be “just like another internet scam.”
Also read: Beyond crypto — Zero-knowledge proofs show potential from voting to finance
In early 2021, Matic Network rebranded as Polygon to highlight the change in direction. At the time, Nailwal told Cointelegraph the idea was to become “Polkadot on Ethereum” and to add Optimistic rollups, zero-knowledge (ZK) rollups and StarkWare-style Validiums alongside the PoS network.
But Nailwal says they quickly realized that Optimistic rollups were at best an “intermediate solution” that wouldn’t be able to scale up to have 50 chains working in the ecosystem.
“With ZK, you can imagine a world with […] 100,000 chains; each of them has 1,000 transactions per second (TPS); all of them combined together could be tens of millions of TPS in the whole network. And the architecture will still survive and keep scaling.”
“Infinite scalability, unified liquidity and that is the main point for why we bet on ZK because ZK is the endgame for blockchain scaling.”
Polygon bull-run fever
At the dawn of 2021, MATIC’s market cap was just $87 million. By mid-year, it had surged to almost $14 billion, and it was nearly $19 billion by year’s end. That’s in no small part due to its surging user numbers and ability to scale Ethereum.
At the end of 2020, it had fewer than 1,000 daily active users, but by October that year, it had surpassed Ethereum for the first time with 566,000 users in a day and had flipped ETH’s daily transactions, too, thanks to high gas fees on the L1.
Suddenly, the founders were very wealthy individuals, and the project itself had the funds to embark on a major acquisition spree.
In August, it snapped up the entire Hermez network for 250 million MATIC. The project became Polygon Hermez, an Ethereum Virtual Machine-compatible ZK solution focused on decentralization and a proof-of-efficiency consensus.
In December, it spent another $400 million in MATIC to buy the Mir team of ZK-proof experts to build Polygon Zero (ZK recursive scaling). And the acquisitions kept coming.
“We reached out to all of them. We said, ‘You want to work with us?’ And I think at that point in time, whatever was like number three, number four, number five, like we acquired all of them, because number one, number two did not come with us. (But) the talent in number three, four, five teams is super, super good.”
The venture capital seemed to think the new plan was a winner, with Polygon raising another $450 million in early 2022, selling MATIC tokens in a raise led by Sequoia Capital India and including Tiger Global and Softbank Vision Fund.
The advantages of having multiple teams taking different approaches became pretty clear.
“We initially kept them completely autonomous so they could pursue their own research, and they collaborated with each other. Due to that collaboration, suddenly, we got a ZK EVM, which people have thought is four or five years away.”
Read also
He says the ZK EVM took just 12 months to develop “because of the cross-pollination of ideas between these teams.”
Other ZK flavors developing under the Polygon umbrella include Miden (a StarkWare-like system with its own virtual machine) and Nightfall (Optimistic rollups meet zero-knowledge cryptography).
Bets each way on ZK, JavaScript is for midwits
The other big advantage of having multiple teams building different solutions is it doesn’t force Polygon to make the same hard choices other projects have had to make.
For example, StarkWare is betting that the additional performance provided by its Cairo virtual machine will make up for the fact that it’s much harder to port existing Ethereum projects over to StarkEx.
Most of the other projects — zkSync, Linea, Scroll, etc. — are making the opposite bet that less performance but easier compatibility with the Ethereum Virtual Machine will attract projects and see their solutions win market share.
Polygon is the only team with bets each way, with Polygon Miden following StarkWare with a ZK-optimised virtual machine. For his part, Nailwal thinks EVM will win in the short term, but other solutions will come into their own in the years ahead.
“I almost feel like EVM is like JavaScript right?” he says. “I remember when I was in first or second year of my engineering college… JavaScript was considered to be a programming language of the midwits! But today, JS is everywhere; maybe 80% of the web is powered by JavaScript. So, EVM kind of has those effects no matter how much you say, ‘These are the problems.’”
Nailwal adds, however, “Our plan is a 10-year-long plan. So, we have the ZK EVMs, we have Polygon Zero, but we also have Polygon Miden, which we believe is highly performant, has privacy features inbuilt […] and it will support all the programming languages.”
Miden founder Bobbin Threadbare told Magazine earlier this year that the Miden VM will enable users to do things like run high-quality video games and generate ZK-proofs on their home PCs they can send into the network.
“What they are doing, it gives me goosebumps,” Nailwal says. “But Miden will start blossoming in around one year. By that time, we, as the Polygon community, need to win the ZK EVM.” He hints that a new token and airdrop are being considered to help with this.
Ethereum upgrades to turbocharge Polygon L2s
Ethereum’s next big upgrade, EIP-4844, which is supposed to happen sometime before the end of the year, introduces proto-danksharding to make life easier for rollups, which Nailwal says is welcome but not a game changer.
“I think some estimates were saying up to 200–300 TPS only for the rollups. So, not a huge advantage, but it’s going to reduce the (gas) cost of the transactions.”
Full danksharding, which is “several years away,” according to the Ethereum Foundation, however, will multiply that improvement by the number of shards, currently expected at around 64.
“So, you can imagine that 64 multiplied by 200. So, there will be, like, you know, 12,000 TPS, all the rollups can support.”
In June this year, the project unveiled its Polygon 2.0 roadmap to become the “Value layer of the internet.” The vision is for a network of ZK-powered L2s that will seem like using a single chain to users thanks to a cross-chain coordination protocol. Builders can knock up their own ZK-powered L2 chain in a flash using Polygon’s Chain Development Kit.
The existing PoS blockchain will become a Validium, which is one approach to dealing with the data availability problem of how to affordably store stuff on Ethereum.
The roadmap will also see MATIC tokens upgraded to a new token called POL (short for Polygon) and introduce the controversial concept of restaking, which enables token stakers to earn additional rewards by helping secure other networks.
“The POL token is basically the hyper-productive, third-generation token. You can validate on multiple chains, and you can validate for multiple roles: You can be an aggregator, you can be a sequencer, you can be a data availability provider, and you can be a prover. So, with the same token, you can actually stake on multiple layers.”
Restaking is controversial in the Ethereum community, with critics arguing it could turn into an unstable house of cards. But Nailwal says POL will be natively integrated into the ecosystem rather than added by third parties on top, as with Ethereum’s EigenLayer, which will mitigate the risks.
“With Polygon, risk-taking is more enshrined in the protocol; this is part of the protocol; this is how the protocol behaves,” he says.
“If you’re a validator and you are running 100 chains, and of those 100 chains you falter or you do fraud on one chain, you get slashed from all of them,” he continues, adding he’s not sure EigenLayer could implement that — “especially when they are building on top of something.”
“I think there are a lot of nuances where ours is much simpler and easier to do.”
Polygon 2.0 is like the internet of money
For Nailwal, the ultimate aim of Polygon 2.0 is to evolve crypto networks in the same way the internet evolved. The forerunner of the internet was ARPANET in the 1970s, then the invention of TCP/IP in 1983 allowed multiple networks to connect, forming an inter-network, which grew into the internet thanks to additional technologies like the Domain Name System and the World Wide Web.
“It’s interconnectivity of all the networks,” he says. “This is exactly what you see is happening on blockchains.”
“It’s very hard to move your money trustlessly from one chain to another; you use these bridges, which get hacked all the time. That’s why Polygon 2.0 is not only about having infinite scalability […] But it should also make sure that that value that is being created on these hundreds of thousands of chains also is connected and seamlessly movable.
He says the interoperable layer will enable value to flow between L2 chains, as well as Ethereum and potentially other layer-1 chains as well in the future if they join in.
“So, with this Polygon 2.0, we can achieve the same characteristics as the web has,” he says. “The Web3 network, whichever will win, should have infinite scalability and seamless transfer of value between these chains.”
“That’s why Polygon 2.0 architecture has got a lot of critical acclaim.”
Read also
Future for Polygon and Sandeep Nailwal
Even as the founder of a multibillion-dollar blockchain and living in luxury in Dubai, Nailwal still feels unsatisfied, as if he has yet to make the impact he feels he should. He looks up to world changers like Mark Zuckerberg, Satoshi and Vitalik Buterin — “a truly remarkable man.” So, mere wealth is not enough. He wants to make a lasting impact.
“I’ve never felt that Polygon has made it,” he says. “That part is very relentless in my mind, like there is no middle ground like this.”
“I think Bitcoin, Ethereum only can say that they have made it — nobody else, no other protocol can say that they’ve made it; they can die in a matter of six to 12 months.”
So, Nailwal won’t be happy until the Polygon ecosystem truly deserves to stand along Bitcoin and Ethereum as the bedrock of the entire industry
“We have to go to the top three projects in the space,” he says.
Read Part 1 here: Slumdog billionaire: Incredible rags-to-riches tale of Polygon’s Sandeep Nailwal
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Cryptocurrency markets have extended their decline despite much-awaited political developments taking place in the US.
On Wednesday, President Donald Trump signed a funding bill to end the record 43-day US government shutdown, after the bill passed through the Senate on Monday and was approved by the House of Representatives on Wednesday.
The bill provides funding to the government until Jan. 30, 2026, and gives Democrats and Republicans more time to strike a deal on broader funding plans for the year ahead.
The end of the shutdown failed to lift demand among Bitcoin (BTC) exchange-traded fund (ETF) buyers. Spot BTC ETFs saw a brief resurgence on Tuesday, attracting $524 million in inflows, but outflows quickly resumed, with a whopping $866 million in daily net outflows on Thursday, according to Farside Investors.
Bitcoin fell to a six-month low of $95,900 on Friday, a level last seen in May as its biggest demand drivers continued to lack momentum.
Investments from ETFs and Michael Saylor’s Strategy were the two main vehicles driving demand for Bitcoin’s price this year, according to Ki Young Ju, founder and CEO of crypto analytics platform CryptoQuant.
Bitcoin ETF demand stalls as US shutdown optimism fails to lift sentiment
The lack of demand for spot Bitcoin ETFs is raising concerns about Bitcoin’s prospects for the rest of the year.
On Monday, the US Senate approved the funding bill and brought Congress a step closer to ending the shutdown. The legislation headed for a full vote in the House of Representatives, which occurred on Wednesday.
Despite optimistic news from the US, spot Bitcoin ETF investments remained flat on Monday, with just $1.2 million of inflows, according to data from Farside Investors.
“Despite the US shutdown seemingly ending, and the S&P and Gold bouncing hard, Bitcoin ETFs saw NO bid yesterday,” said Capriole Investments founder, Charles Edwards, adding that this is not a dynamic we want to see continue.
“Risk assets usually see a strong bid in the weeks out of the Shutdown. Still time to turn this ship around, but it needs to turn,” Edwards wrote in a Tuesday X post.
Spot Bitcoin ETF inflows were the primary driver of Bitcoin’s momentum in 2025, Standard Chartered’s global head of digital assets research, Geoff Kendrick, told Cointelegraph recently.
Bitwise exec says 2026 will be crypto’s real bull year; here’s why
Bitwise chief investment officer Matt Hougan is more confident that crypto markets will boom in 2026, particularly as there hasn’t been a late 2025 rally.
Speaking to Cointelegraph at The Bridge conference in New York City on Wednesday, Hougan said a crypto market rally at the end of 2025 would have fit the four-year cycle thesis, meaning 2026 would mark the start of a bear market, similar to 2022 and 2018.
When asked to revise his prediction about whether the crypto market will boom in 2026, Hougan said: “I’m actually more confident in that quote. The biggest risk was [if] we ripped into the end of 2025 and then we got a pullback.”
Hougan said interest in the Bitcoin debasement trade, stablecoins and tokenization would continue to accelerate, while arguing that Uniswap’s fee switch proposal introduced on Monday would reinvigorate interest in decentralized finance protocols in the coming year.
“I think the underlying fundamentals are just so sound,” Hougan said. “I think these earlier forces, institutional investment, regulatory progress, stablecoins, tokenization, I just think those are too big to keep down. So I think 2026 will be a good year.”
Arthur Hayes tells Zcash holders to withdraw from CEXs and “shield” assets
The privacy coin sector returned to the spotlight after BitMEX co-founder Arthur Hayes urged Zcash holders to withdraw their assets from centralized exchanges (CEXs).
On Wednesday, Hayes told holders to “shield” their assets, a feature that enables private transactions within the Zcash network. “If you hold $ZEC on a CEX, withdraw it to a self-custodial wallet and shield it,” Hayes wrote on X.
The comments came as Zcash (ZEC) saw sharp price swings in the last few days. The token rallied to $723 on Saturday before dropping to $504 on Sunday. It then surged to a high of $677 on Monday, only to see another sharp decline. At the time of writing, ZEC was trading at about $450, marking a 37% decline from its Saturday high.
Analysts had warned that ZEC might undergo a sharp correction due to its relative strength index (RSI) reaching its highest reading after continuing to rally above its overbought zone.
Vitalik Buterin champions decentralization in “Trustless Manifesto”
Ethereum co-founder Vitalik Buterin has authored and signed the new “Trustless Manifesto,” which seeks to uphold core values of decentralization and censorship resistance and push builders to refrain from adding intermediaries and checkpoints for the sake of adoption.
The Trustless Manifesto, also authored by Ethereum Foundation researchers Yoav Weiss and Marissa Posner, said crypto platforms sacrifice trustlessness from the first moment that they integrate a hosted node or centralized relayer, explaining that while it feels harmless, it becomes a habit, and with each passing checkpoint, the protocol becomes less and less permissionless.
“Trustlessness is not a feature to add after the fact. It is the thing itself,” the Ethereum Foundation members said in the manifesto published Wednesday. “Without it, everything else — efficiency, UX, scalability — is decoration on a fragile core.”
“When complexity tempts us to centralize, we must remember: every line of convenience code can become a choke point.”
While the manifesto wasn’t aimed at any particular person or company, some Ethereum layer 2s have been criticized for sacrificing decentralization to focus on scalability to speed up adoption.
Sonic Labs pivots from speed to survival with business-first strategy
Sonic Labs, the organization behind the Sonic layer-1 blockchain, announced a major strategic shift as it pivots from emphasizing transaction speed to building long-term business value and token sustainability.
After claiming industry-leading performance last year, Sonic Labs said its next chapter will focus on upgrades that deliver measurable financial outcomes, including new Ethereum and Sonic Improvement Proposals (EIPs and SIPs), token supply reductions and revamped rewards for network participants.
“Every decision we make moving forward will be guided by the principles of building real value, with price, growth, and sustainability always in focus,” said Mitchell Demeter, the new CEO of Sonic Labs.
The focus aims to bring “measurable, lasting value” for builders, validators and tokenholders, wrote Demeter in a Tuesday X post. “Our mission at Sonic is to move beyond hype and build a sustainable business model for a layer one, that creates, captures, and returns real value to tokenholders.”
The new fee monetization upgrade will include a tiered reward system for builders and fixed rewards for validators.
Sonic Labs will also increase the rate of programmatic Sonic (S) token burns, which means permanently removing tokens from circulation to tighten the supply.
Sonic claims to be the world’s fastest Ethereum Virtual Machine (EVM) chain, with a “true” finality of 720 milliseconds (ms) — the assurance that a transaction is irreversible, which occurs after it is added to a block on the blockchain ledger.
DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the red.
The privacy-preserving Dash (DASH) token fell 45% to stage the biggest decline in the top 100, followed by the Internet Computer (ICP) token, down over 27% on the weekly chart.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.
The UK’s central bank, the Bank of England (BOE), has released a proposed regulatory regime for stablecoins. The consultation paper took into account the perspectives of the crypto industry, but some observers say it remains restrictive.
BOE released the document on Nov. 10 — some two years after it announced the initial discussion paper. The original offered a vision for crypto that many in the industry claimed would doom the UK’s digital asset space.
The BOE said that it received comments and feedback from a broad range of 46 different stakeholders, including “banks, non-bank payment service providers, payment system operators, trade associations, academia, and individuals.”
The UK’s central bank may have scrapped some more hardline requirements, but some in the industry believe that it isn’t enough. Tom Rhodes, chief legal officer at UK-based stablecoin issuer Agant, said the bank remains “disproportionately cautious and restrictive.”
Bank of England still cautious on stablecoins
The new iteration presents a number of improvements on the 2023 version, Rhodes told Cointelegraph.
“The latest proposals do include some innovative features, such as direct BOE liquidity lines and the ability to repo reserves for liquidity purposes.”
He said that, as it concerns the UK market, “these proposals can be further explored and potentially expanded to create a more competitive backing asset regime, without compromising on stability.”
But despite the “welcome progress in the BOE’s sentiment towards stablecoins,” it has been “unusually vocal about the perceived risks of stablecoins,” said Rhodes.
One of the more controversial restrictions in the paper was limits on what the BOE called a “systemic retail stablecoin.” In the paper, this is defined as a stablecoin that is “widely used by individuals to make everyday payments such as for shopping and receiving salaries.”
The central bank wants to see limits of 20,000 pounds for individuals and 10 million pounds for businesses that accept it as a form of payment. This is an increase from the initial proposal, but the idea of limits on how much crypto you can hold didn’t sit well with some.
Crypto influencer Aleksandra Huk wrote, “Bank of England wants to cap stablecoin holdings at £20,000. Who gave them the right to tell us what to buy, where to store our money and how much we can have? […] Honestly, this is the best advert ever for privacy coins and for leaving the UK.”
Related: UK crypto hopes stall, but ‘encouraging signs’ are there
There are a few caveats to the suggested rule. Geoff Richards, head of community at the Ontology Network, noted, “The proposal applies only to sterling-denominated stablecoins used in UK payment systems that could become ‘systemic.’ Not USDT, not USDC, not random DeFi tokens.”
Ian Taylor, board member of crypto industry advocacy group CryptoUK, told Cointelegraph that he understands the central bank’s more cautious approach, at least as it applies to the stablecoin limits:
“The Bank of England has a mandate to protect against financial stability. And that financial stability is connected to the banking system. So insofar as banks take deposits and they issue loans against those deposits […] creates credit, this is an economic benefit to any economy that we have.”
The BOE is rightfully worried that taking deposits out of banks would reduce their ability to lend, affecting financial stability. “So, that’s why they want to baby-step this.”
Rhodes said that the “vast majority” of UK stablecoins will not fall under the regime anyway, at least not as stated in the paper. He noted that Mastercard was only recognized as a systemically important payment system in 2021 and that non-systemic stablecoins will be regulated under the Financial Conduct Authority’s (FCA) ruleset, “which is less restrictive.”
Still work to be done as UK opens up to crypto
Access to central bank liquidity and deposit accounts at the BOE was a welcome update for stablecoin issuers. But crypto industry representatives believe that there is still room for improvement in the central bank’s plan.
Regarding the stablecoin caps, “The systemic thresholds remain uncertain,” said Rhodes. He said it would be helpful to have clarification from His Majesty’s Treasury when an issuer has reached sufficient scale to “pose a risk to the UK economy as a whole, before they will recognize the issuer as systemic.”
Taylor also noted the difficulty of enforcing these stablecoin caps. If the government is licensing an issuer, then they’re the ones “responsible for monitoring each individual client or customer, whether wholesale, corporate or retail, as to how many stablecoins they’ve given them.”
The problem is that many people get their stablecoins on secondary markets or a “host of different sources.” People can receive stablecoins as compensation at work or on an exchange or peer-to-peer transaction. “So, the actual operational enforcement of that I question, and we’ve seen no detail in regards to that.”
Overall, “clarity and speed” will make the UK stablecoin ecosystem more competitive, said Arvin Abraham, partner at Goodwin Procter. He told Cointelegraph that regulators need to give issuers “a clean runway and predictable timelines” to navigate the approvals process.
Speed isn’t the government’s strong suit, however.
The British government has been working on crypto regulations since 2017, when it first adopted Anti-Money Laundering and Know Your Customer requirements for crypto-related businesses like exchanges. Now, eight years later, the central bank is still developing its policies based on industry feedback.
The slow pace of progress presents a problem. According to Taylor, “We’ve been consulting on a wider framework to regulate stablecoins for almost five years, and we still haven’t gotten any actual license framework in place, which is problematic for a number of reasons,” he said.
“It doesn’t help businesses that want to launch stablecoins in the UK. They don’t have a clear roadmap of how to do that,” he said, “which in turn forces them to move offshore to jurisdictions where there are other regulatory frameworks already live.”
This is for a number of reasons, Taylor explained, including consecutive changes in government, as well as a lack of “real champions in any of our key stakeholders, be that the current government, be that Treasury, be that the FCA.”
Progress on crypto regulations may be slow in the UK — slower than many in the industry would like — but for Abraham, “The Bank is being pragmatic and fair. The overriding message is that innovation is welcome, but if you want your token to function like money, you need money-grade controls.”
Magazine: 2026 is the year of pragmatic privacy in crypto: Canton, Zcash and more
The debut of the Canary Capital XRP exchange-traded fund (ETF) is signaling renewed demand for altcoins, after the fund posted the strongest first-day performance of the more than 900 ETFs launched in 2025.
Canary Capital’s XRP (XRP) ETF closed its first day with $58 million in trading volume, marking the most successful ETF debut of 2025 among both crypto and traditional ETFs, said Bloomberg ETF analyst Eric Balchunas in a Thursday X post.
The new fund garnered over $250 million in inflows during its first trading day, surpassing the recent inflows of all other crypto ETFs.
Part of the reason behind the successful launch was the ETF’s in-kind creation model, according to ETF analyst Nate Geraci.
“A few people asking how it’s possible to have ‘only’ $59mil trading volume, but nearly $250mil inflows… The answer? In-kind creations, which don’t show up in trading volume,” wrote Geraci in a Thursday X post.
The in-kind redemption model enables the creation and redemption of ETF shares through the underlying asset, as opposed to cash-only transaction models. In this case, Canary Capital’s ETF shares can be exchanged for XRP tokens.
The US Securities and Exchange Commission (SEC) approved in-kind creation and redemption for cryptocurrency ETFs on July 29, Cointelegraph reported at the time.
Smart money traders rotate into XRP longs after ETF debut
The launch of the ETF inspired a bullish rotation among the industry’s most successful traders, as tracked by returns and labeled as “smart money” traders on the crypto intelligence platform Nansen.
Related: Circle enters world’s largest financial market with onchain FX engine
Smart money traders have added $44 million worth of net long XRP positions over the past 24 hours, signaling more upside expectations for the token.
The cohort was net long on the XRP token, with a cumulative $49 million, but remained net short on the Solana (SOL) token, with $55 million worth of cumulative short positions on the decentralized exchange Hyperliquid.
Related: Metaplanet’s Bitcoin gains fall 39% as October crash pressures corporate treasuries
“XRP is holding near $2.30, showing relative stability but still feeling the effects of declining liquidity and cautious investor sentiment,” Ryan Lee, chief analyst at Bitget exchange, told Cointelegraph.
“For now, the setup looks like a healthy reset, not the end of the cycle, with both SOL and XRP well-positioned to lead the next wave once confidence snaps back.”
Spot Bitcoin ETFs saw $866 million worth of negative outflows on Thursday, their second-worst day on record, after the $1.14 billion daily outflows on Feb. 25, 2025, according to Farside Investors.
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