Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development.

In this week’s issue of the Protocol newsletter:

• Trump’s crypto team
• Aptos’ leadership shake-up
• TikTok meets tokens
• Kraken scales up

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday.

Network News

TRUMP CRYPTO APPOINTMENTS: President-elect Donald Trump continues to make high-profile appointments embracing cryptocurrency and emerging technologies in his second term. 1) Stephen Miran, tapped as Chair of the Council of Economic Advisers, is a pro-crypto advocate who aims to integrate blockchain and decentralized finance into the U.S. economy. 2) Bo Hines, a former college football player, will head the newly formed Crypto Council. Hines is tasked with balancing innovation and consumer protection as he builds a regulatory framework for digital assets. 3) David Sacks, a veteran of Silicon Valley and vocal blockchain supporter, is stepping in as AI and Crypto Czar. Sacks plans to merge blockchain with AI while bolstering U.S. dominance in both sectors. These appointments signal a clear shift from Trump’s earlier skepticism of digital assets. The big question now is how these moves translate into meaningful policy amid regulatory gridlock and political friction.

APTOS LEADERSHIP SHIFT: Aptos Labs CEO and co-founder Mo Shaikh has stepped down, with co-founder Avery Ching taking over as CEO. Shaikh, who will remain a strategic adviser, highlighted the company’s achievements, including raising $400 million in venture funding and building a thriving ecosystem supported by partners like BlackRock, Google, Mastercard, and PayPal. Known for its layer-1 blockchain leveraging the Move programming language from Facebook’s Diem project, Aptos Labs is expanding into finance and AI applications with the help of advisers like former Grayscale CEO Michael Sonnenshein and OpenAI’s Kevin Weil. The leadership transition underscores the company’s ongoing focus on scalability, security, and innovation in blockchain technology.

SONIC TO AIRDROP TIKTOK: Sonic, a Layer 2 solution on the Solana blockchain, has announced plans to airdrop its native token, SONIC, to TikTok users. This initiative aims to introduce TikTok’s vast user base to decentralized finance (DeFi) by integrating blockchain technology with social media platforms. The airdrop is part of Sonic’s strategy to enhance user engagement and promote the adoption of Layer 2 solutions for improved scalability and reduced transaction costs on the Solana network. By targeting TikTok users, Sonic seeks to bridge the gap between mainstream social media audiences and the DeFi ecosystem, fostering broader participation in decentralized financial services.

ALSO:

• MicroStrategy added 5,262 BTC to its holdings as its stock secures a spot on the Nasdaq 100, reinforcing its long-standing Bitcoin strategy.
• Nokia enters the crypto world with a patented technology for encrypting digital assets, signaling its move into blockchain innovation.
• Ripple’s legal chief urges Congress to focus on regulating crypto practices rather than stifling innovation by targeting the technology itself.

Feature: Kraken’s Ink Layer-2 Goes Live

Kraken, the seventh-largest crypto exchange, said its layer-2 rollup network, built on top of the Ethereum blockchain, has gone live.

The network, called Ink, is based on the OP stack, a customizable framework that lets developers build their own rollups using Optimism’s technology. The team had originally planned for Ink to go live in early 2025, so the launch of its main network is ahead of schedule.

Kraken agreed to receive 25 million OP tokens (worth about $58 million) as part of a deal to build on the OP Stack. Optimism has acknowledged that handing out developer grants for participants building on the stack is part of its strategy, which in turn contributes back to the wider “Superchain” ecosystem.Kraken competitor Coinbase said in August 2023 that it would build a layer-2 network with OP Stack.

The product, called Base, is now the second-largest rollup network according to L2beat. At the time, Optimism said the Base team would receive up to 118 million OP tokens and, in return, would contribute the higher of 2.5% of its sequencer revenue or 15% of its profits to the Optimism Collective.

Read the full story by Margaux Nijkerk here

Money Center

Fundraising

• Avalon Labs has secured $10 million in a Series A funding round to expand its Bitcoin-backed stablecoin, aiming to enhance liquidity and stability in the cryptocurrency market. The investment reflects growing interest in Bitcoin-collateralized financial products as a bridge between traditional finance and digital assets.

Deals & Grants

• Tether has announced a $75 million deal to acquire a stake in Rumble, a video-sharing platform. The investment aims to support decentralized media and aligns with Tether’s commitment to fostering open communication technologies.

Data & Tokens

• Bonk (BONK) surged 30%, leading a rebound among dog-themed meme tokens, with Shiba Inu (SHIB) and Dogecoin (DOGE) also experiencing gains. Additionally, the Commodity Futures Trading Commission (CFTC) classified Floki (FLOKI) as a utility token, potentially influencing its regulatory status.

Data Corner: 60M USDC Outflows Hit Hyper Liquid

Hyper Liquid, a cryptocurrency exchange focused on perpetual contracts, has reported a record outflow of $60 million in USDC amid speculation that North Korea is investigating the platform. The sudden exodus of funds raises questions about the exchange’s liquidity and the stability of its operations. This highlights the growing tension of crypto markets with geopolitical issues, as regulatory scrutiny and potential misuse of platforms by state actors come into focus. The incident underscores the vulnerabilities in crypto markets, particularly for exchanges dealing with high-risk financial products like perpetual contracts. Hyper Liquid’s situation may prompt further scrutiny of similar platforms, emphasizing the need for stronger safeguards in the face of increasing global regulatory pressure.

Get the full scoop by Omkar Godbole here

Calendar

• Jan 9-12, 2025: CES, Las Vegas
• Jan. 15-19: World Economic Forum, Davos, Switzerland
• January 21-25: WAGMI conference, Miami.
• Jan. 24-25: Adopting Bitcoin, Cape Town, South Africa.
• Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
• Feb. 1-6: Satoshi Roundtable, Dubai
• Feb. 19-20, 2025: ConsensusHK, Hong Kong.
• Feb. 23-24: NFT Paris
• Feb 23-March 2: ETHDenver
• March 18-19: Digital Asset Summit, London
• May 14-16: Consensus, Toronto.
• May 27-29: Bitcoin 2025, Las Vegas.

MicroStrategy Inc. co-founder and executive Chairman Michael Saylor says he is willing to advise Trump on cryptocurrency policy when the crypto advisory council is set.

During the Dec. 18 episode of the Open Interest show on Bloomberg Television, Saylor voiced his willingness to provide his advice on the digital assets policy to President-elect Donald Trump, either publicly or confidently, if he is asked to do so. 

Before expressing his willingness to advise Trump on the crypto policy, Saylor admitted that he had already met “with a lot of people” in the incoming administration but declined to specify the personalities nor mentioned if he already met Trump. 

Is Saylor fit for a position?

Since the 2020s, Michael Saylor has been one of the key Bitcoin advocates and investors. Saylor is one who puts money where his mouth is, as he personally spent around one billion dollars on BTC. In 2020, Saylor took to X (Twitter at the time) to announce that he personally owns 17,732 bitcoins and that he acquired these coins before MicroStrategy (MSTR) made the first massive purchase of bitcoins. YahooFinance! reports that currently MicroStrategy owns around 440,000 BTC, which is close to a 2% share of the entire BTC supply. MicroStrategy made headlines on the eve of the latest BTC price peak when the company was included in the Nasdaq 100 index. 

Michael Saylor names Bitcoin an apex property of the human race and has an insatiable thirst for bitcoins. He compares Bitcoin to the territories like Manhattan or Alaska that were bought by the early colonist administration, specifying that Bitcoin is rather a kind of cyberspace. That’s why MicroStrategy aims to own bitcoins in bulk. According to Saylor, buying as much of this “space” as possible is crucial for the United States. This vision speaks to the statement posted by Donald Trump on the Truth Social platform. “We want all the remaining Bitcoin to be MADE IN THE USA!” the post reads.

Saylor singled out Trump as the most crypto-friendly Republican politician. It seems that Saylor shares the President-elect’s views on Bitcoin. Although not an outright GOP supporter, in September, Saylor made claims that he sees Republicans as a more progressive party when it comes to cryptocurrency regulation. He names regulation pressure decrease, treating crypto as a tool to boost the U.S. economy, and encouraging individuals to pursue their economic aims using digital finance as progressive characteristics of the Republican approach to the crypto industry. 

What Do We Know About the Crypto Advisory Council?

Trump proposed the creation of a crypto advisory council during his now famous speech at the Nashville cryptocurrency conference in July 2024. As of December, not much information about the preparations of this council has been made public. 

The participating companies’ lineup is not clear yet. However, it has been reported that such brands as Coinbase, Ripple Labs, Paradigm, and Andreessen Horowitz (a16z) are seeking interactions with the incoming administration. Allegedly, an a16z rep was involved in advising the Trump team during the presidential campaign. On December 6, Trump introduced entrepreneur and venture capitalist David O. Sacks as the “White House A.I. and Crypto Czar” via the Truth Social post.

It’s worth saying that, to say the least, before 2024, Trump wasn’t an avid crypto enthusiast. In the past, the President-elect made a series of anti-crypto remarks, calling Bitcoin “not money” and saying that the value of cryptocurrencies is based on thin air. 

However, the 2024 Presidential campaign saw a drastic change in Trump’s stance on crypto. He started to take donations in digital currencies, visited a major crypto conference in Nashville where he promised to make America “a crypto capital of the world,” and made several important proposals concerning the cryptocurrency policy.

On top of tax cuts for the U.S. cryptocurrency companies, the removal of Gary Gensler from the SEC, and the creation of the strategic Bitcoin reserve, Trump announced the creation of the advisory body with the leading position granted to the richest man on Earth and his passionate supporter Elon Musk. This unofficial agency is called The Department of Government Efficiency, or simply DOGE, a reference to a legendary memecoin, a notorious soft place of a Tesla CEO. Who knows just what else to expect from Donald Trump when he goes crypto?