Staking locks your crypto and earns yield. Liquid staking hands you a tradeable receipt for that locked position, so the same capital can earn twice. It is one of DeFi’s largest markets, and it comes with a specific danger most guides skip: the receipt can trade below what it represents. Here is how liquid staking tokens work, and where the risk actually lives.

Staking a proof-of-stake asset like Ether involves a trade-off that used to be absolute: lock your tokens to help secure the network and earn rewards, and accept that the locked tokens are frozen and useless for anything else. Liquid staking removes the second half of that bargain. You deposit your tokens with a protocol, the protocol stakes them for you, and in return you receive a new token, a liquid staking token, that represents your staked position and can be freely traded, sold, or put to work elsewhere in decentralized finance. The original capital keeps earning staking rewards; the receipt token lets that same capital do a second job.

That double-duty is why liquid staking became one of the largest categories in all of DeFi, with tens of billions of dollars flowing into it. It is also why it carries a risk that plain staking does not. The receipt token is only useful if the market treats it as equal in value to the asset it represents, and there are moments, usually the worst possible moments, when the market does not. A liquid staking token can trade below the value of the staked asset behind it, an event called a depeg, and understanding when and why that happens is the difference between using this tool safely and being surprised by it.

This guide explains what liquid staking tokens are, the two designs they come in, how the peg is supposed to hold and how it breaks, the concentration risk hiding behind the biggest provider, the way these tokens get stacked into leverage across DeFi, and the practical questions to ask before holding one. The star example throughout is stETH, the largest liquid staking token, but the mechanics apply across the category, from Rocket Pool’s rETH on Ethereum to the staked-asset tokens on other proof-of-stake networks. The goal is to leave you able to hold one of these tokens understanding exactly what it is, what backs it, and under what conditions its price can part ways with the asset it represents.

The problem liquid staking solves

To see why liquid staking exists, start with the friction of ordinary staking. On Ethereum, running your own validator requires locking thirty-two ether, operating node software with constant uptime, and accepting that your stake is subject to exit queues when you want out. For most holders this is impractical: they lack thirty-two ether, do not want to run infrastructure, and dislike freezing capital they might need, especially as Ethereum reworks its staking and consensus layers in ways that will reshape validator economics for years.

Staking pools solved the first problems by letting many users combine smaller amounts under professional validators, but the funds were still locked. Liquid staking solves the last problem, the lock itself. When you deposit into a liquid staking protocol, it pools your tokens with everyone else’s, stakes them across a set of validators, and mints you a token representing your share of the staked pool plus its accruing rewards. You no longer need thirty-two ether, you never touch validator software, and, crucially, your position is now liquid: the receipt token sits in your wallet and can move freely while the underlying stake keeps earning.

A coat-check analogy captures it. You hand over your coat and receive a claim ticket. The coat stays safely in the cloakroom earning nothing, but the ticket is now in your hands, and while you cannot wear the ticket, you can hold it, hand it to a friend, or even sell it. Liquid staking works the same way: the staked asset stays locked and productive, while the token proving your claim to it circulates freely. Whoever holds the ticket holds the claim, so selling the token means selling the staked position along with it.

The result is capital efficiency that plain staking cannot match. A holder can stake, receive the token, and then lend it, use it as collateral, or provide it as liquidity, earning a second layer of return on top of the base staking reward, all without unstaking. That stacking is the appeal and, as later sections show, the source of the systemic worry.

Two designs: rebasing and value-accruing

Liquid staking tokens come in two flavors, and the difference matters for how rewards show up in your wallet and how the token behaves in DeFi.

A rebasing token keeps its price pegged to the underlying asset one to one and delivers rewards by increasing the number of tokens you hold. Lido’s stETH is the classic example: hold it, and your stETH balance grows a little each day, with each stETH meant to remain worth roughly one ether. The appeal is transparency, since your balance visibly climbs, but the growing balance complicates integrations, because many DeFi protocols were not built to handle a token quantity that changes on its own.

A value-accruing token keeps the token count fixed and delivers rewards by rising in value against the underlying asset. Rocket Pool’s rETH works this way, as does the wrapped version of stETH, wstETH. You hold the same number of tokens over time, but each one is redeemable for progressively more ether as rewards accumulate; stake when one token equals one ether and, a year later, that token might redeem for meaningfully more. This design integrates more smoothly across DeFi because the balance is stable, which is why wrapped, value-accruing versions dominate in lending and liquidity protocols and increasingly appear in the institutional DeFi rails being built on other ledgers too.

The distinction is easy to miss and important in practice. A rebasing token used as collateral can behave strangely because its balance shifts; a value-accruing token trades at a price that is intentionally above one-to-one and rising, so seeing rETH or wstETH quoted above the price of ether is normal and correct, not a premium to fear. Knowing which design you hold prevents misreading its price and misusing it in a protocol.

How the peg holds, and how it breaks

The entire usefulness of a liquid staking token rests on the market valuing it close to the staked asset it represents. That relationship is a soft peg, maintained by arbitrage and redemption instead of any hard guarantee, and understanding the mechanism explains exactly when it can slip.

In normal conditions the peg holds tightly because of a redemption path. A stETH is a claim on staked ether, and once the protocol’s withdrawal queue is functioning, that claim can be redeemed for actual ether. If stETH ever trades meaningfully below one ether on the open market, arbitrageurs buy the discounted stETH, redeem it for a full ether through the queue, and pocket the difference, and that buying pressure pushes the price back toward parity. Deep secondary-market liquidity reinforces this: research on stETH has found that most deviations beyond a small threshold correct within hours, because the arbitrage is reliable and the market is deep.

The peg breaks when the redemption path is slow and the market panics faster than arbitrage can act. Redeeming a liquid staking token for the underlying asset is not instant; it runs through the network’s validator exit queue, which can take days when many people withdraw at once. In a stressed market, holders who want out immediately cannot wait for the queue, so they sell on the open market instead, and a wave of forced selling can push the token below the value of the asset behind it. This is a depeg: not a loss of the underlying stake, but a temporary discount on the receipt.

The defining real-world case came in 2022, when stETH traded as low as roughly a nickel under parity during a broad market crisis. Large holders facing liquidation needed liquidity immediately, the withdrawal path at the time did not allow direct redemption, and the resulting sell pressure drove stETH to a visible discount to ether. Critically, the underlying staked ether was never lost or impaired; the discount reflected the mismatch between an instant desire to exit and a redemption process that could not move instantly. Once redemption became possible and panic subsided, the peg restored. The episode is the template: a liquid staking token depeg is almost always a liquidity-and-timing event, not a solvency event, but that distinction is cold comfort to someone forced to sell at the discount.

How the yield actually stacks

A concrete walk-through of the returns shows both why liquid staking is popular and where the layers of risk enter, because each layer of yield is also a layer of exposure.

Start with the base. Staking ether on Ethereum earns a network reward, a modest annual percentage that comes from new issuance and transaction fees paid to validators for securing the chain. A holder who simply stakes and holds a liquid staking token captures this base reward with almost none of the friction of solo staking: no thirty-two-ether minimum, no node to run, no direct exit-queue management. For many holders, that is the entire appeal, and it is a reasonable, relatively conservative use of the tool.

The second layer comes from putting the token to work. Because the liquid staking token is freely tradeable, a holder can deposit it into a lending protocol to earn interest, supply it to a liquidity pool to earn trading fees, or use it as collateral, each adding a return on top of the base staking reward. This is the capital efficiency that plain staking cannot match: the same underlying ether earns its staking reward and a second yield simultaneously. It is also where smart-contract risk begins to compound, because the token now passes through a second protocol’s code in addition to the staking protocol’s own.

The third layer, and the dangerous one, is leverage, described earlier: borrowing against the token to acquire more of it and repeating the loop. Each turn of the loop multiplies the base yield, which is why advertised returns on some liquid staking strategies look far higher than the underlying staking reward could ever justify. The arithmetic that produces those headline numbers is leverage, and leverage is precisely what converts a survivable depeg into a forced liquidation.

The practical takeaway is to read any liquid staking yield as a signal of how many layers are involved. A return close to the base staking reward is a plain, relatively safe position. A return well above it means the token is deployed into other protocols, adding smart-contract exposure. A return far above the base almost always means leverage, and therefore liquidation risk in a depeg. The yield number is not just a reward; it is a readout of the risk stack beneath it, and matching the layer you accept to the risk you understand is the whole discipline of using these tokens well. The same logic governs every layered yield strategy in DeFi: more yield is always more of something else at risk.

The concentration problem

Beyond the depeg risk sits a subtler, more structural concern: one protocol dominates Ethereum liquid staking to a degree that worries people who think about the network’s health.

Lido, the issuer of stETH, has for long stretches controlled roughly a third of all staked ether, a share large enough that Ethereum researchers openly discuss it as a risk to the network itself. The reasoning is about consensus: if a single staking entity controls too large a fraction of validators, it gains outsized influence over block production and could, in extreme scenarios, threaten the neutrality or censorship-resistance the network depends on. This is not an accusation that Lido would misbehave; it is a structural observation that concentration itself is a vulnerability, regardless of the operator’s intentions, and it is why parts of the community actively encourage stakers to choose smaller providers.

Concentration also compounds the token-level risks. When one liquid staking token is embedded as collateral across nearly every major lending protocol, a serious problem with that token, a smart-contract bug, a governance failure, or a severe depeg, is not one protocol’s problem but a shock that ripples through all of DeFi at once. The dominant token’s ubiquity, which is a convenience in calm markets, becomes a transmission channel in stressed ones. The same dynamic appears wherever a single asset becomes foundational infrastructure, from stablecoins to the restaking protocols that layer additional yield on top of staked positions: dominance buys efficiency and sells fragility.

For an individual holder, concentration risk is mostly about awareness. Using the largest, most liquid token gives the tightest peg and the deepest DeFi integration, which is a real benefit; it also means holding the asset most entangled with everything else, so a systemic event touches it first. Diversifying across providers reduces personal exposure and, in aggregate, improves the network’s health, at the cost of slightly thinner liquidity in the smaller tokens.

The leverage stack, and why it magnifies everything

The feature that makes liquid staking tokens powerful, their usability across DeFi, also enables a leverage loop that turns a modest depeg into a cascade. Understanding this loop is essential to understanding why depegs matter beyond the inconvenience of a discount.

The loop works like this. A user stakes ether and receives a liquid staking token. They deposit that token as collateral in a lending protocol and borrow ether against it. They stake the borrowed ether, receive more of the liquid staking token, deposit that as collateral, and borrow again. Repeated, this stacks several layers of leverage on a single underlying position, each layer amplifying the yield in calm markets. It is a popular strategy precisely because the base staking reward, multiplied by leverage, produces attractive returns.

The danger is what happens when the token depegs. Each borrowing position has a liquidation threshold tied to the value of the collateral, and a depeg lowers that value. As the token slips below parity, leveraged positions approach liquidation; liquidations force the collateral token to be sold; that selling deepens the depeg; the deeper depeg triggers more liquidations. In stressed markets this becomes a self-reinforcing spiral, a domino run dressed in yield-farm packaging. The 2022 depeg was made sharper by exactly this dynamic, as leveraged holders were forced to unwind into a falling market.

The lesson for holders is that a liquid staking token held plainly is a fairly conservative instrument: it earns staking yield and, absent a solvency failure in the protocol, its worst realistic outcome is a temporary discount that arbitrage eventually closes. The same token levered several times over is a very different risk, one where a discount that a plain holder could simply wait out becomes a forced liquidation. The token did not change; the leverage around it did. Anyone evaluating liquid staking yields that look unusually high should assume leverage is involved and price the liquidation risk accordingly.

What to check before holding one

Liquid staking is a genuinely useful tool, and using it well comes down to a handful of concrete checks, not blanket caution.

Confirm the token design. Know whether you hold a rebasing token, whose balance grows, or a value-accruing one, whose price rises, because the two behave differently in your wallet and in any protocol you deposit them into. Value-accruing wrapped versions are generally the smoother choice for DeFi use.

Assess the redemption path. The peg’s strength depends on being able to redeem the token for the underlying asset, so check that direct withdrawals are live and how long the exit queue runs. A token with a fast, functioning redemption path has a stronger peg than one where exit depends entirely on selling into secondary-market liquidity.

Gauge the liquidity and the provider. Deep secondary-market liquidity is what lets arbitrage defend the peg between redemptions, so a token with thin liquidity is more prone to slipping and slower to recover, the same slippage dynamics that govern any thinly-traded swap. Weigh the largest provider’s tight peg and deep integration against its concentration risk, and consider whether spreading across providers suits your risk tolerance and, incidentally, helps the network.

Respect the layered smart-contract risk. Your capital passes through the staking protocol’s contracts, and if you deploy the token into lending or liquidity protocols, through those as well. Each layer is code that can contain bugs, and stacking layers stacks the places something can break, the same concentration-of-risk lesson that runs through every major bridge exploit. Favor audited, long-lived protocols, and treat any strategy promising outsized yield as a signal that leverage, and its liquidation risk, is present.

Held with these checks in mind, a liquid staking token does what it promises: it unlocks the value of a staked position so the same capital can work twice, earning a base reward while remaining liquid and productive. The depeg risk that defines the category is real but specific, a timing-and-liquidity event instead of a loss of the underlying stake, and it is most dangerous not to plain holders but to those who lever the token into a stack that turns a temporary discount into a forced sale. Understand which of those two users you are, and the risk becomes something you can size instead of something that surprises you.

The broader significance is worth a closing thought. Liquid staking tokens have become foundational plumbing for proof-of-stake economies: tens of billions of dollars of staked value now circulate as these receipts, and they underpin lending, trading, and collateral across DeFi. That ubiquity is a genuine achievement, turning otherwise idle staked capital into productive infrastructure. It also means the health of a few dominant tokens matters to the whole system, which is why the concentration and depeg risks discussed here are not merely individual concerns but systemic ones.

Using these tokens knowledgeably, favoring strong redemption paths, deep liquidity, and audited protocols, and staying alert to the leverage hiding behind unusually high yields, is how an individual participates in that system without being surprised by its failure modes.

Frequently asked questions

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Digital asset markets are volatile and you can lose your entire investment. Always do your own research. Information current as of July 7, 2026.

This is Part 3 in the technical article series about Bitcoin covenants by Cointelegraph Research. To read the previous article click here. 

SIGHASH_ANYPREVOUT, as proposed in BIP 118, builds on the earlier SIGHASH_NOINPUT concept mentioned in the 2015 Lightning Network paper by Joseph Poon and Thaddeus Dryja, and later formally proposed by Joseph Poon on the bitcoin-dev mailing list in February 2016.

SIGHASH_ANYPREVOUT is not a new opcode but a proposed new value for the SIGHASH flag, designed to be deployed as a soft-fork upgrade to Bitcoin. The SIGHASH flag is appended to a signature and determines which parts of a transaction are signed and will be checked by the CHECKSIG opcode. The selected flag is chosen by the signer, not enforced by the scriptPubKey. Due to the technical details related to upgradability in a softfork, the SIGHASH_ANYPREVOUT proposal only extends to spends from taproot addresses.

A variety of standard SIGHASH modes already exist, as illustrated in Figure 1. If the flag is set to SIGHASH_ALL, the signature must cover all inputs, all outputs, and the specific outpoint being spent, thus cryptographically binding the authorization to that exact UTXO. An outpoint is the combination of a transaction ID and an output index that together uniquely identify which UTXO a transaction is consuming. With SIGHASH_NONE, only the inputs need to be signed, leaving the outputs unconstrained. The SIGHASH_SINGLE variant signs all inputs, but only the output at the same index as the input being signed. The ANYONECANPAY modifier introduces further flexibility by allowing a single input to be signed independently of the others. Crucially, none of these existing modes allows a signature to omit commitment to the outpoint. That restriction is what SIGHASH_ANYPREVOUT removes.

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BIP-118 defines two ANYPREVOUT variants that differ in how much of the previous output they omit from the digest, summarised in Figure 2. Under SIGHASH_ANYPREVOUT, the outpoint is excluded from the digest, but the signature still commits to the amount and scriptPubKey of the previous output, as well as the input’s nSequence. Under SIGHASH_ANYPREVOUTANYSCRIPT, the amount and scriptPubKey are also excluded, meaning the signature is not bound to the locking script of the spent output at all. All other commitments follow the standard Taproot signature message construction and depend on the selected base flag, such as SIGHASH_ALL or SIGHASH_SINGLE.

Because the outpoint is omitted from the digest, the same signature can authorize spending any compatible UTXO that satisfies the remaining committed fields. For example, a transaction pre-signed with ANYPREVOUT | ALL to produce a 0.5 BTC output can be reused if the same address later receives another UTXO of 0.5 BTC, even if the private key used to create the original signature is no longer available. If the new UTXO holds more than 0.5 BTC, however, the excess will be lost to miners unless the original signature included a change output. This rebinding property is what makes ANYPREVOUT useful for layer-2 protocols, where the same pre-signed transaction must apply to multiple possible on-chain UTXOs without requiring new signatures for each one.

For covenant-like applications, the ANYPREVOUT variants preserve commitment to the scriptPubKey of the previous output, and are typically the most relevant. They allow signatures to be reused across compatible UTXOs while ensuring funds remain bound to the same locking script. ANYPREVOUTANYSCRIPT removes this binding entirely and is therefore less suited to covenant-style applications.

Similar to OP_CTV, SIGHASH_ANYPREVOUT improves on the logic already achievable with pre-signed transactions but does not by itself enable recursive covenants or transaction introspection. Instead, it relaxes the binding between a signature and a specific UTXO, allowing a signature to be reused across multiple compatible UTXOs.

Some research has also noted that removing the outpoint commitment makes recovered-key constructions possible — that is, a public key can be derived from a fixed signature and message pair such that the corresponding private key is provably unknown to anyone, making the UTXO’s key path provably unspendable and forcing any spend through the script path. It would avoid the need for temporary keys, which are otherwise required to make the key path unspendable in constructions that rely on script-path-only enforcement. This observation appears in Bitcoin Covenants: Three Ways to Control the Future by Jacob Swambo et al. (2020), although it remains a theoretical construction rather than a design proposed in BIP-118.

The primary risk associated with SIGHASH_ANYPREVOUT signatures is signature replay. Because these signatures do not commit to a specific outpoint, the same signature can be used to spend a different UTXO than the one originally intended, provided the new UTXO satisfies the remaining committed fields. This risk becomes more pronounced in specific configurations: when ANYPREVOUT | SINGLE is used and output amounts can be rearranged; when a separate UTXO exists with the same scriptPubKey and amount, in the case of ANYPREVOUT; when the same public key appears in a compatible script, in the case of ANYPREVOUTANYSCRIPT; or when a miner can influence transaction ordering and inclusion to exploit these conditions. However, these scenarios require either deliberate misuse or a failure of the user or developer to account for replay conditions during protocol design.

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In our next article we will commence our discussion of Opcodes that serve as supporting tools. These extend the expressiveness of Bitcoin script or data handling but do not implement covenant functionality unless combined with other opcodes. In this next category, we will discuss OP_CHECKSIGFROMSTACK and OP_CAT.

Bitcoin (BTC) circled $63,000 after Tuesday’s Wall Street open as chip companies led a dip in US stocks.

Key points:

• Bitcoin attempts to hold $63,000 after seeing its highest levels in two weeks.
• US stock markets see a correction on the day SpaceX joins the Nasdaq-100.
• Bollinger Bands creator John Bollinger continues to eye a long-term BTC price reversal.

BTC price comes off two-week highs as US stocks fall

Data from TradingView showed BTC price action cooling after a trip to $64,660 — its highest point since June 22.

BTC/USD one-day chart. Source: Cointelegraph/TradingView

BTC/USD surfed a comedown in US equities, with the S&P 500 and Nasdaq 100 down 0.6% and 2.1%, respectively, at the time of writing. Chip stocks led the sell-off, with Micron Technologies, whose earnings were highly anticipated last month, down over 9%.

Micron Technologies stock one-hour chart. Source: Cointelegraph/TradingView

At the same time, Tuesday was due to see SpaceX added to the Nasdaq 100 after its own stock turbulence in late June.

“This marks the fastest inclusion into the Nasdaq 100 in the index’s history,” trading resource The Kobeissi Letter noted in its latest commentary on X.

US spot Bitcoin ETF net flows (screenshot). Source: Farside Investors

Fresh from a second day of net inflows to the US spot Bitcoin exchange-traded funds (ETFs), BTC/USD managed to avoid a major comedown.

“Correlation to the Nasdaq just flipped to +0.72 from -0.87 in the matter of days last week,” trader Daan Crypto Trades reported on X. 

“That’s the difference between trading like a complete hedge/inverse and trading like a high beta tech stock. Right now we’re back to the middle on the 4H timeframe.”

BTC/USDT futures (Binance) four-hour chart. Source: Daan Crypto Trades/X

Commentator Exitpump was conservative on low time frames, expecting a “rounding topping structure” and further downside next.

“The next correction on S&P should mark the true $BTC bottom according to history,” trader Killa suggested. 

“Lets see if we repeat, 2015, 2018 & 2022.”

S&P 500 chart data. Source: Killa/X

Bollinger: “We are at a critical point”

In recent X discussions, meanwhile, John Bollinger, creator of the Bollinger Bands volatility indicator, had some more positive news for Bitcoin bulls.

Related: Bitcoin can fall below $58K if one of its ‘cleanest’ metrics copies history: Analysis

As Cointelegraph reported, Bollinger was eyeing a “W”-shaped reversal pattern currently in the process of confirmation on daily time frames.

Last week, he queried whether its latest iteration could end up canceling the BTC price downtrend altogether.

“We are at a critical point,” he added on Monday. 

“In a bear market bullish setups break and in a bull market bearish setups break. So if this W pattern is successful I would see it as a confirmation of a change in trend.”

BTC/USD one-day chart with Bollinger Bands. Source: John Bollinger/X

Bitcoin financial services platform Strike has launched a “volatility-proof” Bitcoin-backed loan that eliminates margin calls and forced liquidations amid the depths of a bear market, but only for those who can pay on time and handle a 14% interest rate.

In an announcement on Tuesday, Strike CEO Jack Mallers said the offering came in response to broad customer feedback on Strike’s first Bitcoin loan product, which launched in May 2025 and triggered many liquidations during a timeframe in which Bitcoin (BTC) dropped 54% from peak to trough.

“No margin calls. No price liquidations. No matter how far bitcoin falls, your bitcoin doesn’t move,” Strike CEO Jack Mallers said of the new Bitcoin loan product. The trade-off is an expensive interest rate, a shorter six-month loan term, and an obligation to pay on time to avoid liquidation, Mallers said.

Strike’s Jack Mallers is presenting the new Bitcoin-backed loan product. Source: Jack Mallers

The Bitcoin industry has spent the better part of a decade racing to build financial products that expand Bitcoin’s use case beyond a savings technology. A report in June from crypto lending platform Ledn, however, found that while 88% of surveyed crypto investors said they would consider a crypto-backed loan, only 14% use them.

Ledn said confidence in crypto-lending products and market volatility are among the main reasons for this 6-to-1 “crypto collateral gap” that has slowed adoption.

Volatility has been one of the biggest obstacles behind that push, with Bitcoin dropping 30% or more in 10 of the past 12 years, while also experiencing a 50% or more drawdown four times since 2014, Mallers noted.

Other crypto market participants offering Bitcoin-backed loans are Binance, Coinbase, Nexo and Xapo Bank.

Strike charges double-digit interest

The maximum initial loan-to-value ratio for the volatility-proof loans is 45%, meaning that a customer who puts up $100,000 in Bitcoin as collateral can borrow up to $45,000, while the annual percentage rate (APR) is also 2.95 percentage points higher than Strike’s standard loan product.

“The secret sauce is that we’re taking the extra charge that we’re giving you guys and we’re putting it on extra hedges in the market to protect all of us.”

Strike’s standard Bitcoin loans charge an annual percentage rate between 7.75% and 11.25%, meaning the volatility-proof products could carry interest between 10.7% and 14.2%. 

“If you’re OK with a slightly shorter term and a little bit higher of a fee, there is no price move that can liquidate you,” Mallers said.

Over the past year, Bitcoin has fallen 54% from its all-time high of $126,080 in October to $58,190 on June 25.

Bitcoin investor Fred Krueger said the loan product “could eliminate one of Bitcoin’s biggest structural problems: forced selling during market crashes.” 

“Instead of volatility causing automatic liquidations, defaults would be driven by borrowers’ inability to service debt rather than by temporary price swings,” he said.

Related: Coinbase rolls out UK crypto-backed loans as FCA shapes rules

“Great product for those who need near-term liquidity and don’t want to risk liquidation,” added Vibes Capital Management executive chairman Rob Topping, though he also acknowledged the 14% APR was expensive. 

Customers must pay up or face consequences

If a client misses a payment, they have 10 days to make the payment or contact Strike to explain their financial situation, Mallers said.

Failing to pay after that 10-day period may mean Strike starts liquidating their Bitcoin to cover the overdue amount, Mallers warned.

“If we don’t hear from you for a few weeks, then I may have no choice but to sell off some of the Bitcoin because it seems like you’re doing a hit-and-run.”

“That’s why we call it ‘volatility-proof,’ not ‘liquidation-proof,’” Mallers added.

The Bitcoin loans are offered in most US states and can be taken out in both personal and business names. They can be used for new loans, refinancing or consolidating.

While the minimum loan amount varies from state to state, the minimum loan offered through personal loans is $10,000, while businesses in certain states can access loans as low as $5,000.

Features: Bitcoin miners are pivoting to AI, so why is the hashrate near ATHs?

Bitcoin covenants continue to be explored through incremental, deployable changes to the protocol—rather than sweeping new functionality. In Cointelegraph Research’s technical series, the focus shifts to SIGHASH_ANYPREVOUT, a proposed soft-fork upgrade that changes how Bitcoin signatures bind to the transaction they authorize.

As described in BIP 118, SIGHASH_ANYPREVOUT would not introduce a new opcode. Instead, it proposes a new value for the SIGHASH flag so that signatures can omit commitment to the exact outpoint being spent. The key idea: keep important parts of the previous output committed, while relaxing one binding that normally prevents safe signature reuse across compatible UTXOs.

Key takeaways

• SIGHASH_ANYPREVOUT is a proposed SIGHASH-flag value, not a new opcode, intended for soft-fork deployment.
• The proposal excludes the spent outpoint from the signature digest, enabling signature reuse across different but compatible UTXOs.
• SIGHASH_ANYPREVOUT preserves commitments to the previous output’s amount, scriptPubKey, and the input’s nSequence; SIGHASH_ANYPREVOUTANYSCRIPT relaxes the scriptPubKey commitment too.
• Because the signature no longer commits to a specific outpoint, replay risk increases, depending on how the scheme is configured and implemented.
• The “soft-fork upgradability” constraints limit applicability to taproot spends under the proposal’s design.

Why outpoint binding matters in Bitcoin signatures

In Bitcoin, the SIGHASH flag is appended to a signature and determines what parts of a transaction are included in the data that the CHECKSIG opcode verifies. The signer chooses the SIGHASH value; it is not enforced by scriptPubKey. The upshot is that different SIGHASH modes control how tightly a signature is cryptographically bound to the transaction structure.

Cointelegraph Research notes that Bitcoin already has several standard SIGHASH behaviors. For example, with SIGHASH_ALL, the signature must cover all inputs, all outputs, and the specific outpoint (the transaction ID plus output index) being spent—meaning the authorization is locked to that exact UTXO. Variants like SIGHASH_NONE and SIGHASH_SINGLE loosen what outputs are committed to, while ANYONECANPAY allows a single input to be signed independently of other inputs. However, the common thread is that none of these established modes allows the signature to omit commitment to the outpoint itself.

That omission—removing outpoint commitment from the digest—is the central change SIGHASH_ANYPREVOUT introduces.

What BIP 118 proposes: two ANYPREVOUT variants

According to BIP 118, SIGHASH_ANYPREVOUT defines two variants that differ in how much of the previous output remains in the signing digest.

SIGHASH_ANYPREVOUT excludes the outpoint from the digest. But the signature still commits to several other fields: the previous output’s amount and scriptPubKey, along with the input’s nSequence. In other words, the signature is not tied to “which exact UTXO index is spent,” yet it remains tied to the characteristics of the previous output relevant to spending conditions.

SIGHASH_ANYPREVOUTANYSCRIPT goes further by also excluding the previous output’s amount and scriptPubKey. As Cointelegraph Research highlights, this means the signature is not bound to the locking script of the spent output at all. The rest of the signature message construction follows the normal Taproot signature digest rules, depending on the selected base flag (such as SIGHASH_ALL or SIGHASH_SINGLE).

How signature reuse could work—and why it matters for layer-2

The practical effect of leaving the outpoint out of the digest is that the same signature can authorize spending any compatible UTXO that matches the remaining committed fields. Cointelegraph Research provides a concrete example: a transaction pre-signed under ANYPREVOUT | ALL to create a 0.5 BTC output could be reused later if the address receives a different 0.5 BTC UTXO. In that scenario, reuse does not depend on retaining the original signing key.

But reuse is not free of economic consequences. If the new UTXO holds more than the original amount, the extra value may be lost to miners unless the original design included a change output. That means protocol designers still need to account for the possibility that the “next available” compatible UTXO might differ in total value—despite the signature being reusable.

Cointelegraph Research connects this rebinding property to a broader use case: layer-2 protocols. In these systems, it’s common to preconstruct or preauthorize transactions that must later become valid under multiple possible on-chain realities. By allowing the same pre-signed transaction to apply to multiple compatible UTXOs, ANYPREVOUT-style flexibility can reduce the number of times new signatures—and new coordination—are required.

Where covenants fit—and what remains technically missing

For covenant-like applications, the research notes a crucial distinction. SIGHASH_ANYPREVOUT preserves commitment to the previous output’s scriptPubKey, making it more relevant than SIGHASH_ANYPREVOUTANYSCRIPT, which removes that binding entirely. If the goal is to enforce that funds remain governed by a specific locking script across compatible UTXOs, maintaining that commitment is typically important.

The series also clarifies a limitation. While SIGHASH_ANYPREVOUT improves on what pre-signed transactions can already do, it does not by itself enable more advanced covenant mechanisms such as recursive covenants or transaction introspection. Instead, it changes the binding between a signature and a specific UTXO, allowing reuse across compatible candidates—one building block rather than a complete covenant system.

Cointelegraph Research additionally references academic work suggesting another theoretical angle: removing outpoint commitment might enable “recovered-key” constructions where a public key can be derived from a fixed signature and message pair such that the corresponding private key is provably unknown. In principle, that could force spending through a script path rather than a key path, potentially avoiding temporary keys used in some script-path-only designs. However, the piece stresses that this observation appears in research literature rather than representing a BIP-118 design proposal.

The main downside: signature replay risk

The most important concern with SIGHASH_ANYPREVOUT signatures is signature replay. Cointelegraph Research explains that because the signature does not commit to a specific outpoint, the same signature can be used to spend a different UTXO than the one originally intended—so long as the new UTXO satisfies the other committed fields.

The severity depends on configuration and surrounding assumptions. The research highlights situations where replay becomes more pronounced, such as:

• Using ANYPREVOUT | SINGLE when output amounts can be rearranged.
• Having a separate UTXO with the same scriptPubKey and amount in the case of ANYPREVOUT.
• Having compatible script structures that include the same public key in the case of ANYPREVOUTANYSCRIPT.
• Miner influence over transaction ordering and inclusion that could potentially be exploited under certain conditions.

At the same time, Cointelegraph Research emphasizes that these are not unavoidable flaws. They generally require deliberate misuse or failure to account for replay conditions during protocol design and implementation.

Looking ahead, Cointelegraph Research says the next article will move from signature mechanics to “supporting tools”—opcodes that expand what Bitcoin script can express or how data can be handled, but don’t provide covenant behavior on their own. For readers tracking SIGHASH_ANYPREVOUT’s relevance, the open watchpoints are straightforward: how developers plan to mitigate replay risk, which taproot spend patterns emerge in practice, and whether future covenant constructions can leverage the relaxed outpoint binding without introducing new operational fragility.

EX DeFi is gaining attention as an AI-powered cloud mining platform, offering users access to BTC, DOGE, and LTC mining without owning hardware.

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EDX Markets, a cryptocurrency exchange focused on institutional investors, has raised $76 million in a Series C funding round led by Japan’s SBI Holdings, marking one of the larger funding rounds this year for crypto market infrastructure as institutional adoption continues to expand.

The company said Monday it will use the proceeds to expand its spot trading, clearing and settlement services, develop new products and grow internationally. EDX operates a US-focused institutional spot exchange and a Singapore-based perpetual futures venue for eligible non-US institutional clients.

The latest round builds on previous backing from traditional financial companies, including Citadel Securities, Fidelity Digital Assets, Virtu Financial and Charles Schwab, highlighting continued investor appetite for institutional crypto infrastructure despite a slower venture funding market.

Source: EDX Markets

EDX has quietly expanded its institutional footprint over the past year. In May, Ripple Prime integrated with the exchange, allowing institutional clients to access EDX’s spot and perpetual futures liquidity through Ripple’s prime brokerage platform, with the companies also planning to support RLUSD as a settlement and collateral asset.

The exchange has processed as much as $685 million in daily trading volume, underscoring growing demand for institutional crypto trading venues. 

Related: Ripple co-founder backs venture launched by US senator’s son: Report

Crypto infrastructure continues to attract capital despite bear market conditions

The latest funding round reflects continued investor interest in institutional crypto infrastructure, even as digital asset trading volumes have softened and venture funding remains below the industry’s 2021 peak. 

Investors have increasingly backed companies building trading, payments and settlement infrastructure, betting that institutional adoption will continue to expand as the US regulatory environment becomes more accommodating.

San Francisco-based Framework Ventures, an early investor in several crypto startups, recently raised $400 million for a new fund targeting frontier technologies, including blockchain networks and decentralized finance, according to Fortune.

Other crypto infrastructure startups have also secured fresh capital. Fomo, a crypto trading startup focused on cross-chain trading, recently raised $75 million at a $550 million valuation. Meanwhile, Trace Finance, a startup building stablecoin-based cross-border payment and settlement infrastructure for businesses, raised $32 million to expand its platform.

Magazine: Bitcoin decouples from tech stocks, Ether eyes ‘selling wave’: Market Moves

A decentralized exchange swap worth $2.01 million ended in a steep loss for one trader after a liquidity router routed the trade through a thin market, enabling an Ethereum block builder to capture profits from a same-block arbitrage. According to GoPlus Security, the order effectively turned into a “backrun extraction” rather than a fair swap outcome—one that left the victim with only about $14,500 in the resulting tokens.

The episode highlights how maximal extractable value (MEV) activity and routing mechanics can combine to produce outsized losses when trades are executed through low-liquidity pools. It also underscores a practical lesson being shared in the community: users should review the transaction route before signing DEX actions, not just confirm the trade.

Key takeaways

• A $2.01 million ETH swap on a DEX resulted in a near-total value drop, landing at roughly $14,500 after execution via a low-liquidity pool.
• GoPlus Security described the event as same-block backrun extraction, not a conventional “sandwich” attack.
• Titan Builder was identified as the largest beneficiary, receiving about $1.8 million as a builder reward from the transaction.
• The victim’s route involved routing into an AVAIL/WETH pool that executed at around 120x the later sell price, enabling an imbalance to be monetized.
• Traders are being urged to verify swap routes before confirming, since clicking through without inspecting routing can lead to irreversible execution outcomes.

A swap that was rerouted into a low-liquidity trap

GoPlus Security said the trader swapped 1,126.44 ETH on Monday at 1:59 am UTC but received only 5,776 Lighter (LIT) tokens. The security firm framed the result as a “textbook case of same-block backrun extraction,” where the trade’s execution path created an exploitable price discrepancy within the same block.

In the assessment, this was not portrayed as a classic sandwich attack. Instead, the core mechanic was that a router directed the swap through a pool with insufficient depth, allowing another actor—working with block-building capabilities—to profit from the temporary mispricing and the order’s same-block lifecycle.

The incident was publicly discussed via on-chain analysis referenced in earlier community posts, including Lookonchain, and GoPlus’s commentary identifying the nature of the extraction.

How the route imbalance drove a ~99% loss

GoPlus Security’s breakdown points to the swap’s intermediate routing. The firm said the victim’s transaction routed roughly 1,117 ETH into a low-liquidity AVAIL/WETH pool on Uniswap v3. Once executed, the swap price was reportedly around 120 times higher than what the received AVAIL tokens could later be sold for.

That pricing mismatch becomes a leverage point when a trade is executed in a way that creates a temporary window for extraction. After the trader received nearly 6.67 million AVAIL tokens at an inflated price, the router involved—identified by GoPlus as “0x router”—reportedly sold a small amount of externally sourced AVAIL back into the same pool. The purpose, according to GoPlus, was to extract approximately 1,072 WETH before paying out 1,018 ETH, worth about $1.8 million, to Titan as a builder reward.

After these internal steps, the AVAIL was swapped for LIT tokens valued at roughly $14,200. That translated to a reported 99.3% loss for the trader, based on the amounts described in GoPlus Security’s analysis.

For users, the key takeaway is that the harm didn’t come from a smart contract “hack” in the typical sense. It came from execution conditions—specifically, routing into a pool where trade size relative to liquidity could severely distort outcomes, while MEV-aware infrastructure could monetize that distortion before the victim can unwind.

Why this is more than “just a bad swap”: MEV and routing mechanics

The episode fits a broader pattern in decentralized trading: as long as block builders can influence transaction ordering and routing can route through multiple liquidity venues, the same block can contain both the victim’s swap and the counter-trade needed to extract advantage from temporary imbalances.

The article’s framing also connects the event to ongoing concerns about MEV bots and liquidity routers atop a landscape that already faces risks from scams and exploits. While the details here are specific, the implication is general—traders may believe they are placing a straightforward order, but routing behavior and transaction ordering can turn the execution into a target.

From an investor or trader perspective, this means diligence has to extend beyond token and protocol selection. Execution parameters—including route, intermediary hops, and whether a swap is likely to interact with thin liquidity—can determine whether the trade results in the expected price or in an unfavorable extraction scenario.

Community warning: read the route before you click confirm

In response to incidents like this, crypto trader Ruslan Khairullin advised that traders should read the transaction route before signing the transaction. He described the event as what happens when someone “clicked confirm faster than you read the route,” calling it a “painful lesson” after the fact.

This kind of guidance is practical because it targets the behavioral failure mode: users often focus on the expected output shown by interfaces while ignoring what the route actually does under the hood. In low-liquidity conditions, the route’s intermediate steps can matter as much as—if not more than—the end pair.

Where the mechanics are especially risky is when routing can pull a large trade into a pool with limited depth, because the price impact can be severe enough to create an exploitable imbalance. If the resulting swap path lets MEV-capable actors profit within the same block, victims may not have a straightforward opportunity to recover at a reasonable price.

Titan Builder’s role and what to watch next

GoPlus Security identified Titan Builder as the biggest beneficiary, stating it received about $1.8 million from the transaction as a builder reward. Cointelegraph reported that it reached out to Titan but did not receive an immediate response. Separately, DefiLlama data shows Titan has made $112.6 million in revenue from block building services this year.

The firm’s profitability is not limited to this case. Cointelegraph noted that Titan’s biggest day this year came in March, when it extracted around $34 million in arbitrage profit from a MEV bot incident involving the CoW Protocol.

For market participants, the immediate question is not whether these mechanics exist—they do—but how often they are triggered by routing into low-liquidity pools and whether future tooling will make route inspection easier for ordinary users. The next developments to watch are whether DEX interfaces or aggregators tighten route transparency by default and whether users get better warnings when a trade path passes through thin liquidity that could be targeted by same-block extraction.

Solana has extended its July rally after record on-chain activity, tokenized stock issuance, and steady ETF inflows revived bullish sentiment.

According to data from crypto.news, Solana (SOL) extended its recovery this week, gaining roughly 11% over several sessions to trade around $81 after briefly reclaiming the $82 level. The rally accelerated as institutional adoption on the network continued to expand, led by Securitize tokenizing $295 million worth of New York Stock Exchange-listed common stock on Solana following its SPAC debut.

The development arrived alongside the launch of the Solana Foundation’s Governance Proposals framework, introducing formal on-chain validator voting and adding another utility milestone for the ecosystem.

Network activity has expanded at the same time. Solana processed more than one billion weekly non-vote transactions for the first time, while tokenized asset spot volume reached an all-time quarterly high of $5.77 billion, reinforcing the network’s growing role in real-world asset issuance.

Institutional demand also remained positive, with spot Solana ETFs recording approximately $5.75 million in net inflows even as several other crypto investment products experienced persistent capital outflows.

Technical structure has shifted back in favor of buyers

The daily chart shows Solana recovering from its June selloff after buyers defended the long-term support zone near $73, close to the 0.786 Fibonacci retracement level referenced by many traders during last month’s decline. Price has now reclaimed the previous breakdown area around $80.14 and is attempting to convert it into support while approaching horizontal resistance near $83.13.

Momentum indicators have improved alongside the rebound. The daily RSI has climbed above 62 after recovering from oversold conditions in June, while the Supertrend indicator has remained bullish with dynamic support near $69.6. A successful close above $83 could expose the next resistance around $90, whereas failure to hold above $80 may invite another test of the $75.4 support region.

Shorter-term charts also favor bulls. On the 4-hour timeframe, SOL continues trading above its 20-, 50-, 100- and 200-period moving averages, with the 20 SMA near $81.4 providing immediate dynamic support. The moving average alignment remains constructive even as price has entered a brief consolidation after last week’s sharp advance. The Aroon indicator still favors buyers, although the slight decline in Aroon Up suggests momentum has slowed while the market waits for another catalyst.

Derivatives positioning presents a similar picture. CoinGlass liquidation heatmaps show one of the largest nearby short liquidation clusters sitting around the $84 level. A decisive move through that zone could trigger forced short covering and accelerate upside toward the upper liquidity pocket near $87. On the downside, dense long liquidation levels have accumulated between $78 and $79, making that area an important support if profit-taking intensifies.

Analysts target triple-digit prices while key resistance remains intact

Market participants have also become more optimistic after Solana strengthened against Bitcoin. Commenting on the latest structure, analyst Michaël van de Poppe wrote that SOL “is still in an uptrend here,” adding that it has broken its year-long downtrend versus Bitcoin.

“I don’t think that we’ll stall, I do think that we’ll continue to see strength happening here,” he wrote, adding that he would buy lower levels if a deeper correction develops before concluding that “it’s a matter of time until $SOL regains the $100+ levels.”

Despite the improving technical backdrop, Solana remains roughly 74% below its all-time high near $293 and more than 40% lower year to date. Macro uncertainty surrounding future Federal Reserve policy, geopolitical risks, and relatively thin crypto spot liquidity continues to limit aggressive positioning. Until bulls establish sustained closes above the $90 and $100 resistance zones, the current recovery is likely to remain vulnerable to renewed selling pressure despite the network’s strengthening institutional fundamentals.