TLDR:

• EIP-7864 proposes replacing Ethereum’s hexary keccak tree with a binary structure, cutting Merkle branch size by 75%.
  
• Blake3 and Poseidon hash functions could accelerate Ethereum’s proving efficiency by up to 100x over the current keccak setup.
  
• Replacing the EVM with RISC-V would reduce a ZK prover translation layer, cutting the protocol’s proving bottleneck by over 80%.
  
• A three-stage RISC-V rollout preserves full EVM backwards compatibility while retiring legacy infrastructure through a smart contract wrapper.

Ethereum execution layer improvements are at the center of a detailed proposal from Vitalik Buterin. The Ethereum co-founder recently shared a comprehensive breakdown of two major technical changes.

His post covers a transition to binary state trees and a long-term shift away from the EVM. Both changes target proving efficiency, client-side capabilities, and long-term protocol simplicity.

Together, they represent the most sweeping architectural rethink of Ethereum’s base layer in years.

Binary Trees: A Structural Overhaul of Ethereum’s State

The state tree change is among the most technically concrete proposals Buterin outlined. It centers on EIP-7864, which proposes replacing the current hexary keccak Merkle Patricia Tree with a binary tree structure.

The new design uses a more efficient hash function. Buterin noted on social X that this switch produces Merkle branches four times shorter than the existing setup.

Shorter branches make client-side verification cheaper. Tools like Helios and PIR would see a 4x reduction in data bandwidth costs.

On top of that, swapping out the hash function adds further efficiency gains. Blake3 could deliver roughly three times the speed over keccak, while a Poseidon variant could achieve 100 times the improvement, though more security review is needed there.

The binary design also groups storage slots into pages of 64 to 256 slots each. This allows storage to benefit from the same efficiency as code loading.

Many decentralized applications that frequently read from the first few storage slots could save over 10,000 gas per transaction as a result.

VM Changes: The Case for Replacing the EVM

Buterin made a pointed argument for replacing the EVM itself over the longer term. He pointed to a pattern where developers try to avoid the EVM whenever possible, treating it as an obstacle rather than a feature.

To him, this defeats the purpose of Ethereum’s generality. The fix, he argues, is building a better virtual machine rather than adding more workarounds.

His preferred candidate is RISC-V, the same architecture that most ZK provers already use. The reasoning is direct: if provers are already written in RISC-V, making the new VM be RISC-V removes an entire translation layer.

A RISC-V interpreter requires only a few hundred lines of code. Buterin described this as what a blockchain VM “should feel like.”

He proposed a three-stage rollout. The new VM would first handle precompiles, replacing roughly 80% of today’s precompiles with NewVM code. Users would then gain the ability to deploy NewVM contracts directly.

Finally, the EVM would retire and become a smart contract written in the new VM, preserving full backwards compatibility for existing users except for gas cost shifts.

What This Means for Ethereum’s Proving Infrastructure

Buterin was direct about why these changes matter beyond aesthetics. State trees and the VM together account for more than 80% of the proving bottleneck today.

Fixing both is essentially a prerequisite for any meaningful expansion of client-side proving. Without these changes, ZK applications that need to compose with Ethereum’s state must maintain their own separate trees, which adds complexity and cost.

The binary tree change allows Ethereum’s native state to become prover-friendly. That opens the door for ZK applications to work directly with Ethereum’s storage rather than building around it.

This would reduce the overhead that many privacy protocols and wallet applications currently carry.

Buterin acknowledged the VM changes remain more speculative and do not yet have broad consensus. However, he expressed confidence that once the state roadmap is in place, replacing the EVM will become the obvious choice.

His framing positions both changes as practical necessities rather than theoretical improvements, tied directly to the network’s ability to scale proving workloads across a wider range of use cases.

Rising tensions around the Strait of Hormuz are once again forcing crypto traders to look beyond blockchain fundamentals and toward global macro risk.

Roughly 20% of the world’s oil supply passes daily through the narrow maritime corridor between Iran and Oman. While no full closure has been confirmed, escalating military activity in the region has already pushed war-risk insurance premiums sharply higher.

Oil, Yields, and $2 Trillion in Liquidity: Why Crypto Could Be First to Crack

Premiums on oil tankers have surged more than 50%. At the same time, insurance costs for a $100 million vessel jumped from approximately $250,000 to $375,000 per voyage.

The spike in shipping risk alone, even without a formal blockade, has been enough to raise fears of supply disruption. Several analysts have suggested that crude oil could surge to $120–$130 per barrel under a prolonged disruption scenario.

“Estimates suggest crude could jump to $120–$130 per barrel,” wrote analyst 0xNobler in a post.

For crypto markets, the implications go far beyond energy.

The Inflation-to-Liquidity Transmission

An oil spike of that magnitude would likely reignite inflation expectations just as markets have been positioning for policy easing.

Higher crude prices feed directly into transportation, manufacturing, and consumer goods costs, putting upward pressure on CPI data globally.

“Wars are generally inflationary, driving up commodity prices and widening fiscal deficits, and despite an initial knee‑jerk selloff when the conflict began, it makes sense that we have subsequently seen Bitcoin prices recover over the weekend, given it also benefits from higher inflation expectations,” 21Shares Head of Macro Stephen Coltman told BeInCrypto in an email.

If inflation expectations rise, central banks, including the US Federal Reserve, may be forced to delay or scale back anticipated rate cuts. That repricing would likely push Treasury yields higher.

And yields are where crypto risk begins.

Rising yields tighten global liquidity conditions. When government bonds offer increasingly attractive returns, capital often rotates away from speculative assets. Trillions in rate-sensitive capital across bonds and equities could be repriced if yields rise materially amid renewed inflation fears.

Bitcoin has historically traded as a high-beta liquidity asset during tightening cycles. During prior periods of rising real yields, digital assets have tended to underperform as leverage unwinds and funding costs climb.

In other words, crypto does not need a geopolitical catastrophe to fall. It only needs liquidity to tighten.

Several prominent crypto commentators have warned of an imminent spike in volatility. Posts from accounts such as DeFiTracer and 0xNobler framed the Strait of Hormuz situation as a potential macro “turning point,” outlining a chain reaction:

“Higher oil → higher inflation → no rate cuts → rising yields → tightening liquidity.”

Meanwhile, Merlijn the Trader introduced a secondary risk. The analyst cites a potential hashrate shock if energy infrastructure in Iran, reportedly a hub for low-cost Bitcoin mining, were disrupted.

While speculative, such narratives add to broader uncertainty around supply dynamics and network stability.

Still, not all political voices share the alarm. President Donald Trump publicly commented that he is “not concerned” about the Strait of Hormuz situation.

Markets, however, tend to respond more directly to bond yields than to political reassurance.

Crypto’s Deleveraging Risk

The structure of crypto derivatives markets adds another layer of fragility. Leverage tends to build during periods of calm, and sudden macro shocks can trigger cascading liquidations.

If Treasury yields spike alongside oil, leveraged positions across Bitcoin and altcoins could unwind quickly.

High-risk assets, including small-cap equities, high-growth tech stocks, and cryptocurrencies, are typically the first to feel pressure when liquidity tightens.

Unlike traditional markets, crypto trades 24/7, meaning reactions can be immediate and amplified.

It explains why traders are already watching crude futures and bond markets as leading indicators. A temporary de-escalation could stabilize oil and restore risk appetite.

A sustained disruption, however, could transform what begins as an energy shock into a broader liquidity event.

The coming sessions, starting Monday, may determine whether this remains geopolitical noise or becomes crypto’s next macro-driven selloff.

Strategy chairman Michael Saylor used social media to announce a dividend adjustment at the Bitcoin treasury vehicle STRC. The company has raised the monthly distribution on STRC (EXCHANGE: STRC) to 11.50% for March 2026, up from 11.25%. STRC is a perpetual preferred stock with a variable yield that changes on a monthly basis, a design intended to balance income with trading dynamics around its $100 par value. The company’s update confirms that the payout remains monthly, with the next distribution scheduled for March 31 to shareholders of record. The move comes amid a broader pivot in Strategy’s financing approach and a continuing expansion of its Bitcoin (CRYPTO: BTC) holdings.

The STRC update, published on the company’s own site, explains that the dividend rate is adjusted monthly to encourage trading activity around the par value and to help dampen price volatility. This mechanism is part of a broader strategy to rely more on preferred stock than common equity for BTC-related funding. The social post from Saylor aligns with Strategy’s stated direction and adds color to a year in which the company has increasingly leaned on structured finance instruments to support its Bitcoin purchases.

On the same subject, February marked a notable shift in Strategy’s funding approach. CEO Phong Le described a transition away from issuing common stock to fund Bitcoin acquisitions toward issuing more preferred shares. The company has argued that the stretch and associated perpetual preferreds have proven effective at raising capital, citing last year’s fundraising results as a proof point.

Le has highlighted the scale of STRC and perpetual issues in the market, noting that last year these instruments raised about $7 billion, representing roughly a third of the entire domestic preferred market. The company’s leadership has signaled that 2026 could see more of a structural emphasis on preferred capital as a means to fund ongoing Bitcoin accumulation while managing shareholder dilution and equity risk. In this context, the market has watched Strategy continue to accumulate BTC, even as Bitcoin’s price has swung lower amid a broader risk-off environment.

In the meantime, Strategy has faced a tougher market backdrop. The price of Bitcoin itself has slipped significantly since October, and Strategy’s common stock has mirrored a broader downturn in crypto-related equities. The company’s stock, which tracks as a proxy for its Bitcoin holdings and management strategy, has retreated from the highs seen in late 2024 and has traded in a lower range in recent months. Data from Saylor Tracker shows Strategy’s aggregate Bitcoin purchases and the balance sheet moving forward, even as the stock’s price has come under pressure from a challenging macro and crypto market environment.

Looking at the larger picture,Bitcoin (CRYPTO: BTC) has fallen by more than a quarter year-to-date, a factor that has weighed on public companies with substantial corporate treasuries. In parallel, the Bitwise Bitcoin Standard Corporations ETF (EXCHANGE: OWNB) has also declined, underscoring the broader drag on equities tied to crypto balance sheets. The latest data shows Strategy’s BTC holdings continuing to accumulate, even as near-term price movements complicate capital planning. Strategy’s trackers and public disclosures show a continued cadence of purchases and a growing balance sheet despite market headwinds.

From a performance perspective, Strategy has faced a grim year in the stock market. The company reported a net loss of $12.4 billion for Q4 2025, released in February, even as revenue rose modestly to about $123 million for the quarter. The earnings backdrop has weighed on investor sentiment, contributing to a broader decline in Strategy’s share price, which fell sharply from the record highs reached in late 2024. The stock hovered around $129.50 at the end of the week, well below its peak levels, highlighting the contrast between the company’s aggressive BTC accumulation and the market’s appraisal of its profitability trajectory. Within this landscape, the price of BTC remains a critical driver of Strategy’s fortunes, underscoring the sensitivity of a BTC-focused treasury model to macro and crypto volatility. The company’s long-running accumulation strategy has included notable milestones, such as the 100th BTC purchase and the expansion of its balance sheet to 717,722 BTC, a testament to the scale of its framing of corporate treasury capacity around Bitcoin.

As the market contends with volatility, Strategy’s approach highlights a broader industry trend: corporate treasuries in the crypto space increasingly lean on structured finance and preferred equity to finance continued accumulation, balancing the goal of owning more BTC with managing equity risk and investor expectations. The broader market environment—characterized by price swings in BTC and a wave of related financial instruments—continues to challenge traditional capital-raising methods, pushing some issuers to rethink balance-sheet financing in favor of instruments like STRC and other perpetual preferreds. The company’s ongoing BTC purchases, including the relatively recent tranches, underscore a willingness to endure short-term price pressures for the longer-term objective of building a sizable Bitcoin reserve. The evolution of Strategy’s capital stack—moving from common equity toward preferred capital—also raises questions about how such a shift will influence liquidity, dividend policy, and the eventual realization of BTC gains in the face of market cycles. The narrative surrounding STRC’s yield adjustments and the related financing strategy paints a picture of a company that remains deeply committed to Bitcoin accumulation, even as it navigates a period of volatile prices and mixed financial results.

In a landscape where both crypto prices and the equities tied to corporate treasuries face headwinds, Strategy’s strategy remains closely watched by investors seeking exposure to Bitcoin through a corporate balance sheet. The company’s public communications, including updates to STRC’s dividend policy and its pivot toward preferred financing, signal a concerted effort to optimize capital structure while maintaining Bitcoin exposure. For market participants, the question remains how sustainable a perpetual preferred-based approach will be in delivering consistent returns to shareholders as BTC price and macro conditions evolve. The intersection of rising dividend yields, ongoing BTC purchases, and shifting financing sources will continue to shape the trajectory of Strategy and its peers in the crypto treasury space.

Why it matters

Strategy’s renewed emphasis on STRC’s elevated dividend rate and the ongoing shift toward preferred capital exposure matters because it reflects a practical adaptation to the realities of financing a BTC-heavy corporate treasury in a volatile market. By adjusting the monthly yield for STRC and maintaining a steady payout schedule, the company aims to offer income stability to investors while cycling through capital to acquire more BTC. This approach could influence the appetite for similar structures among other corporate treasuries seeking to scale Bitcoin holdings without diluting common equity, potentially shaping the broader landscape of crypto corporate finance.

For investors, the shift away from common stock toward preferred capital signals a potential change in risk and return profiles. Preferreds typically occupy a different position in the capital structure, often offering higher yields with a priority claim on assets and earnings relative to common shares. If Strategy can sustain its BTC accumulation while delivering consistent yields, it could attract institutional investors seeking exposure to Bitcoin through a structured instrument with a predictable income stream. However, the persistent price volatility of BTC and the performance of Strategy’s own equity remain critical inputs in assessing the risk-reward balance of this approach. The ongoing performance of Strategy’s BTC holdings, its Q4 2025 earnings, and the trajectory of its financing strategy will likely influence investor sentiment and the broader adoption of similar mechanisms in the crypto treasury space.

Ultimately, the interplay between BTC price movements, dividend policy, and the company’s financing choices will determine how STRC and other crypto treasury instruments fare over time. The market is watching whether the pivot to preferred capital can deliver a sustainable path to capital formation that supports Bitcoin accumulation while avoiding excessive dilution or cost of capital concerns. As Strategy continues to publish updates on its BTC purchases and balance sheet composition, observers will gauge whether this model can translate into durable value creation for shareholders in a sector still defining its long-term viability.

What to watch next

• Monitor STRC’s next monthly dividend adjustment and March 31 payout date for record holders.
• Watch Strategy’s ongoing pivot toward preferred capital and any subsequent financing rounds or issuances.
• Track BTC purchases and total holdings, including the 592 BTC purchase in the week of Feb. 16, to see if the pace of accumulation accelerates or slows.
• Assess Strategy’s Q1 2026 results for any improvement in operating metrics alongside BTC balance sheet expansion.
• Observe market reactions to STRC dividend changes and any European listings related to STRC ETP developments.

Sources & verification

• STRC dividend rate and payout schedule confirmation on Strategy’s official Stretch page.
• Saylor’s post on X (formerly Twitter) confirming the dividend adjustment.
• Strategy’s February statement about shifting from common stock to preferred stock for BTC funding.
• Strategy’s public disclosures of BTC purchases, including the 592 BTC purchase and total holdings of 717,722 BTC.
• Q4 2025 results reporting a net loss of $12.4 billion and revenue of about $123 million.

Strategy’s evolving capital mix and ongoing BTC accumulation

Strategy’s leadership has publicly framed 2026 as a year of structural evolution, with STRC (EXCHANGE: STRC) and other perpetual preferred instruments playing a central role in capital formation. The company’s chairman, Michael Saylor, communicated through a social post that STRC’s dividend rate is being adjusted monthly, targeting an 11.50% yield for March 2026. This adjustment follows a formal update posted on Strategy’s Stretch site, which notes that the payout is aligned with a par value of $100 and that the rate changes are designed to encourage trading around that level while dampening volatility. The monthly cadence remains intact, providing a predictable income stream for holders and a predictable funding mechanism for ongoing BTC acquisitions.

The broader policy shift toward preferred capital aligns with remarks from Strategy’s leadership in February, when CEO Phong Le described the company’s decision to pivot away from common stock issuances as a primary funding source for Bitcoin purchases. As the company continues to accumulate BTC, the balance sheet now holds a substantial stake—717,722 BTC—reflecting a disciplined approach to building a corporate treasury anchored by the world’s leading cryptocurrency. The latest tranche, a 592 BTC purchase in the week of February 16, underscores the ongoing emphasis on scalable BTC accumulation even as market prices fluctuate, with the company’s decision to finance purchases through preferred stock helping to manage dilution concerns and investor expectations.

While the macro backdrop has pressured crypto and related equities, Strategy’s financing strategy highlights a broader industry shift toward asset-backed, income-generating structures that can sustain long-term BTC holdings. The company’s stock performance and the price actions of related instruments—including the Bitwise Bitcoin Standard Corporations ETF (EXCHANGE: OWNB), which is also down—reflect the challenging environment for investor sentiment around crypto corporate treasuries. Nevertheless, Strategy’s approach demonstrates a commitment to leveraging preferred income to support a growing Bitcoin reserve, an approach that could influence other corporate treasuries seeking scalable, income-generating financing alternatives as the crypto industry matures.

Strategy chairman Michael Saylor said in a social media post on Sunday that the largest Bitcoin (BTC) treasury company is raising the dividend on its STRC preferred stock, also known as “Stretch,” to 11.50% for March 2026, from the previous 11.25%.

STRC is perpetual, meaning the company is not obligated to buy back the stock at any specified date, and features a variable yield that changes monthly.

A Friday update on the company’s website confirmed Saylor’s post. “STRC’s dividend rate is adjusted monthly to encourage trading around STRC’s $100 par value and to help strip away price volatility,” according to the website. The dividend is also paid monthly. with the next payout date on March 31, to shareholders of record

In February, Strategy CEO Phong Le said the company is pivoting away from issuing common stock to fund its BTC purchases and toward issuing more preferred shares.

“Last year, a stretch and our perpetual preferreds raised $7 billion. That’s 33% of the entire preferred market,” Le said.

“As we go throughout the course of this year, we expect structure to be a big product for us,” he said, adding, “We will start to transition from equity capital to preferred capital.”

To be sure, the company continues to accumulate Bitcoin amid a market drawdown that has nearly halved the price of Bitcoin since October and driven down the share prices of digital asset treasury companies.

In the year to date, BTC has lost 23.2% of its value, while the share price of Bitwise Bitcoin Standard Corporations ETF (OWNB) is down 16.1%. That exchange-traded fund provides exposure to public companies holding significant amounts of Bitcoin on their balance sheets.

Related: Strategy yield wrapper lands in Europe as 21Shares lists STRC ETP

Strategy records $12.4 billion loss in Q4 2025

Strategy in early February reported a net loss of $12.4 billion for the fourth quarter of 2025, leading to investors pushing the company’s share price down by 13% to about $107 per share. 

Despite revenue for the quarter increasing 1.9% year-over-year to about $123 million, the company’s stock has been in freefall.

Strategy’s (MSTR) common stock price briefly hit a high of $543 per share during intraday trading in November 2024, before falling back down below $300 in February 2025.

The company’s stock has fallen by about 75% since the November 2024 peak, closing on Friday at $129.50 a shares.

The price of BTC is trading well below Strategy’s average purchase cost of $76,020 per Bitcoin, according to data from the company.

Strategy’s last bought BTC during the week of Feb. 16, when the company purchased 592 BTC, valued at over $39.8 million, bringing its total holdings to 717,722 BTC, and marking its 100th BTC acquisition. 

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