Stochastic Oscillator Dip Buying: Your Guide to Smart Crypto Entries
Introduction: The Art of Buying the Dip
We’ve all heard the mantra: “Buy the dip.” It sounds simple, but every trader knows the sinking feeling of buying a dip only to watch it become a waterfall. How do you know if a price drop is a temporary pullback or the start of a major downtrend? This is where the Stochastic Oscillator becomes your secret weapon. This classic momentum indicator can help you identify oversold conditions with precision, turning emotional dip-buying into a calculated trading strategy.
The Strategy Explained
What is the Stochastic Oscillator?
Before we dive into the strategy, let’s understand our tool. The Stochastic Oscillator is a momentum indicator that compares a cryptocurrency’s closing price to its price range over a specific period (typically 14 periods). It oscillates between 0 and 100, giving us clear signals about potential turning points.
– Above 80: The asset is considered overbought (potentially due for a pullback)
– Below 20: The asset is considered oversold (potentially due for a bounce)
How It Works: The Basic Signal
The core concept is beautifully simple: when the Stochastic drops below 20, it suggests the asset has been sold aggressively and may be due for a reversal. Think of it as the market catching its breath after a selling sprint.
The Setup: Your Dip-Buying Checklist
Here’s your step-by-step guide to implementing this strategy:
1. Identify the Trend First: Only use this strategy in an uptrend. Look for higher highs and higher lows on the daily chart. Buying dips in a downtrend is like trying to catch a falling knife.
2. Wait for the Oversold Signal: On your preferred timeframe (4-hour or daily charts work well for beginners), watch for the Stochastic lines (%K and %D) to cross below 20.
3. Look for the Bullish Crossover: The most powerful signal occurs when the %K line (the faster line) crosses back above the %D line (the slower line) while both are still in the oversold zone (below 20). This is your potential entry trigger.
4. Confirm with Price Action: The Stochastic gives the signal, but price action confirms it. Look for bullish candlestick patterns (like hammers or bullish engulfing) forming at key support levels.
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Example Setup:
– BTC is in a clear daily uptrend
– Price pulls back to a previous support level
– Stochastic drops to 15, then %K crosses above %D at 18
– A bullish hammer candle forms on the 4-hour chart
– This is your high-probability entry signal
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Risk Management: Protecting Your Capital
No strategy is complete without proper risk management. Here’s how to protect yourself:
– Position Size: Never risk more than 1-2% of your trading capital on a single Stochastic dip-buy setup.
– Stop Loss: Place your stop loss below the recent swing low that triggered the oversold condition. If the market breaks below this level, your thesis is likely wrong.
– Take Profit Levels: Consider taking partial profits at the next resistance level or when the Stochastic reaches overbought territory (above 80).
– False Signals Happen: Sometimes the Stochastic will stay oversold during strong downtrends. This is why trend confirmation is crucial—it filters out these dangerous situations.
Conclusion: From Random to Strategic
The Stochastic Oscillator dip-buying strategy transforms one of trading’s most common impulses into a disciplined approach. By waiting for the mathematical confirmation of oversold conditions within established uptrends, you increase your probability of success while managing your risk.
Remember: Indicators don’t predict the future—they measure current conditions. The Stochastic tells you when selling momentum has potentially exhausted itself, giving you a statistical edge. Combine this with trend analysis, confirmation from price action, and strict risk management, and you’ll be buying dips with confidence rather than hope.
Start by practicing this setup on historical charts. Watch how it performed during previous market cycles. With time and experience, you’ll develop an intuitive feel for when the Stochastic is giving you a genuine opportunity versus a false alarm. Happy trading!
Solana’s Quantum Security Dilemma Explained: Speed vs. Safety
What happens when the blockchain known for blistering speed has to choose between performance and future-proof security? That’s the exact tradeoff Solana is confronting as it experiments with post-quantum cryptography. Recent tests with cryptography firm Project Eleven reveal a stark reality: quantum-resistant signatures are 20-40 times larger than current ones and could slow the network by up to 90%. For a blockchain that has built its reputation on high throughput and low fees, this presents a fundamental identity crisis. This guide breaks down Solana’s unique quantum vulnerability, explains the technical tradeoffs in plain language, and explores what this early experimentation means for the future of crypto security. You’ll learn why Solana’s approach differs from Bitcoin and Ethereum, what interim solutions like “Winternitz Vaults” are, and how to think about long-term blockchain security.
Read time: 8-10 minutes
Understanding the Quantum Threat for Beginners
The quantum threat refers to the potential future ability of quantum computers to break the encryption that secures today’s blockchains and digital assets. Think of current encryption like a complex maze that would take a regular computer thousands of years to solve. A powerful quantum computer could, in theory, find a shortcut through that maze in minutes or hours. This isn’t a problem with today’s technology, but researchers are preparing for a future where it could be.
Why does this matter for crypto? Blockchains like Solana, Bitcoin, and Ethereum use digital signatures—mathematical proofs that verify you own your crypto and authorize transactions. These signatures rely on difficult math problems that quantum computers are exceptionally good at solving. If that happens, an attacker could potentially forge signatures and steal funds. The goal of post-quantum cryptography (PQC) is to develop new, “quantum-resistant” math problems that even these advanced computers can’t crack easily.
The Technical Details: How Quantum Resistance Actually Works
Implementing quantum-resistant security isn’t just a software toggle. It involves replacing the core cryptographic algorithms that a blockchain uses to sign and verify every transaction. Here’s what that process entails and why it’s so challenging for a network like Solana:
1. Replacing Signature Schemes: Today, Solana uses the Ed25519 signature scheme, which is fast and produces small signatures (64 bytes). Post-quantum alternatives, like those based on lattice cryptography, are much larger (often 1-2 kilobytes) and require more computational power to verify.
2. The Data Bloat Problem: In testing, these new signatures were 20-40 times larger. On a blockchain, every transaction’s data is stored and transmitted across the entire network. Larger signatures mean each block can hold fewer transactions, and more data needs to be propagated, slowing everything down.
3. The Verification Slowdown: Verifying these complex signatures takes more time for network validators. Project Eleven’s testnet showed this could reduce network throughput by roughly 90%, a massive hit for a chain that often boasts tens of thousands of transactions per second (TPS).
4. Solana’s Unique Vulnerability: Unlike Bitcoin and Ethereum, which use hashed public keys (addresses starting with 1, 3, bc1, or 0x), Solana exposes raw public keys directly on-chain. As Alex Pruden of Project Eleven notes, this means “100% of the network is vulnerable” in a quantum attack scenario, as a quantum computer could target any visible public key to try and derive its private key.
Why this structure matters: Solana’s architecture, optimized for speed and low cost, clashes directly with the current state of post-quantum tech, which prioritizes security at the expense of size and speed. Upgrading requires re-engineering a core tradeoff.
Current Market Context: Why This Matters Now
As of early 2026, the conversation around quantum computing has shifted from academic theory to practical blockchain roadmaps. Google’s recent research suggesting a future quantum computer could crack certain encryption in minutes has added urgency. While the “Q-day” threat is likely years away, the crypto industry is realizing that preparing for it is a multi-year, if not decade-long, process.
Solana is taking a notably proactive, experimental approach. While Bitcoin and Ethereum are in earlier research and discussion phases, the Solana Foundation has already partnered with Project Eleven to deploy a live testnet with post-quantum signatures. This “learn by doing” strategy is revealing the real-world performance costs early, which is valuable data for the entire industry. It highlights a key 2026 trend: blockchains are beginning to stress-test their systems against future threats, not just current ones.
Competitive Landscape: How Solana’s Challenge Compares
Solana faces a different set of quantum preparedness challenges compared to other major blockchains. Here’s a breakdown:
| Feature | Solana (High-Speed L1) | Bitcoin (Store of Value) | Ethereum (Smart Contract Platform) |
|---|---|---|---|
| Current Post-Quantum Status | Live experimentation. Testnet running with PQC signatures, actively measuring performance tradeoffs. | Early research & discussion. Focus is on long-term migration plans and consensus-building. | Theoretical roadmap planning. Active research (e.g., STARKs), but focused on integrating into its broader upgrade path. |
| Biggest Technical Hurdle | Performance vs. Security Tradeoff. Its value proposition (speed) is directly impacted by current PQC tech. | Decentralized Coordination. Upgrading a $1T+ network with maximal decentralization is a massive social challenge. | Ecosystem Complexity. Upgrading must account for millions of smart contracts and vast DeFi/ NFT ecosystems. |
| Unique Vulnerability | Exposed Public Keys. Every wallet’s public key is on-chain, making all funds theoretically vulnerable if a public key has been seen. | “Reuse” Vulnerability. Mainly at risk if BTC is sent from a p2pkh address (exposing the public key). Coins in never-spent addresses are safer. | Similar to Bitcoin. Vulnerable when a public key is exposed through transaction activity. |
| Current Mitigation Strategy | Interim wallet-level solutions like Winternitz Vaults, plus active testnet research. | Methodical, long-term BIP (Improvement Proposal) process. No rushed changes. | Research integration into the Ethereum protocol roadmap (e.g., Verkle trees, future forks). |
Why this matters: An investor or user should understand that a blockchain’s approach to this future threat is shaped by its core design and priorities. Solana’s experimental speed comes with clearer, immediate data on tradeoffs, while Bitcoin’s cautious pace prioritizes network stability.
Practical Applications: Real-World Use Cases
Why should the average crypto user care about Solana’s quantum tests today?
- Informed Portfolio Management: If you hold SOL or assets on Solana for the long term (5+ years), understanding this security evolution is part of responsible stewardship. It highlights that blockchain security is not static.
- Evaluating “Quantum-Resistant” Claims: Newer projects often market themselves as “quantum-safe.” Seeing the real performance costs Solana is grappling with gives you a benchmark to critically evaluate those claims.
- Understanding Wallet Security: The discussion around Winternitz Vaults and key exposure teaches a valuable lesson about address reuse. Using a fresh address for each transaction is a good security habit, regardless of the quantum timeline.
- Following Protocol Development: This showcases how major blockchains tackle existential upgrades. Observing how the Solana community debates and implements these changes offers insight into its governance and long-term viability.
Risk Analysis: Expert Perspective
Primary Risks & Tradeoffs:
1. The Performance Tradeoff: The core risk is that implementing current PQC could severely degrade Solana’s defining feature—its speed—potentially pushing users to other chains if a better solution isn’t found.
2. Upgrade Complexity: As a decentralized network, implementing a change this fundamental requires coordination across core developers, validators, wallet providers, and dApp teams. It’s a complex social and technical challenge.
3. Interim Vulnerability: While research continues, the network remains theoretically vulnerable to a sudden, unexpected breakthrough in quantum computing.
Mitigation Strategies & Solutions:
- Hybrid Approaches: Networks may initially adopt hybrid signature schemes that combine classical and post-quantum cryptography, balancing security and performance.
- Wallet-Level Solutions (Winternitz Vaults): These allow users to move funds into a special, more secure vault contract today, without waiting for a full network upgrade. It’s a practical, user-controlled safety measure.
- Algorithm Evolution: The field of PQC is still young. More efficient algorithms are being standardized (e.g., by the U.S. NIST), and future versions will likely have better performance profiles.
- Layer-2 and Modular Solutions: Future security upgrades might be handled on specific layers or modules, isolating the performance impact from the main transaction layer.
Expert Consensus: The clear takeaway from pioneers like Alex Pruden is that “This is a tomorrow problem—until it’s today’s problem. And then it takes four years to fix.” Solana’s early testing is a credit to its proactive stance, as waiting until a threat is imminent would be too late.
Beginner’s Corner: What You Can Do Now
While a full network upgrade is years away, you can adopt good security practices today that align with quantum-resistant principles:
1. Avoid Address Reuse: Whenever possible, use a new receiving address (wallet) for each transaction. This limits the exposure of your public key on the blockchain.
2. Research Wallet Support: Keep an eye on major wallet providers (like Phantom for Solana) for announcements regarding post-quantum features or integrated solutions like vaults.
3. Diversify Storage: For long-term, high-value holdings, consider spreading assets across different blockchain ecosystems. This mitigates the risk associated with any one chain’s specific vulnerabilities.
4. Stay Informed, Don’t Panic: Follow credible development sources. Remember, this is a long-term preparedness race, not an imminent emergency. The industry is actively working on solutions.
Future Outlook: What’s Next for Solana & Crypto
The path to a quantum-resistant future is a marathon. For Solana and the wider industry, the next phases will likely involve:
1. Continued Testing & Optimization: The Solana/Project Eleven testnet will generate crucial data to guide the development of more efficient PQC algorithms suitable for high-performance blockchains.
2. Industry-Wide Standardization: Crypto projects will coalesce around a handful of vetted, NIST-standardized post-quantum algorithms, ensuring interoperability and shared security.
3. Phased Network Upgrades: Solana may propose a phased rollout, perhaps starting with optional PQC features or specific use cases (e.g., high-value institutional transfers) before a mandatory network-wide upgrade.
4. Rise of Security-Focused Tools: We’ll see more user-friendly tools like Winternitz Vaults become mainstream, offering proactive protection as an intermediate step.
The key insight is that Solana’s current “90% slower” test result is a snapshot of early technology, not the final outcome. The goal of this experimentation is to find a path that preserves both security and performance.
Key Takeaways
- Solana’s quantum resistance tests reveal a direct tradeoff: Current post-quantum signatures are much larger and slower, potentially cutting network speed by 90% and challenging its core value proposition.
- Solana has a unique vulnerability: Unlike Bitcoin and Ethereum, it exposes public keys directly, making every wallet that has been active potentially vulnerable in a quantum attack.
- Proactive experimentation is a strength: Solana’s live testnet provides real-world data, putting it ahead of many chains in practical research, despite the tough tradeoffs discovered.
- User-level solutions exist today: Tools like Winternitz Vaults allow users to add quantum-resistant security to their own wallets now, without waiting for a full network upgrade.
Bitcoin Layer 2s: Complete Guide to Stacks, Lightning & Runes (2024)
Introduction
Bitcoin’s blockchain, while revolutionary for its security and decentralization, faces inherent limitations in scalability, transaction speed, and programmability. This is where Bitcoin Layer 2 (L2) solutions come in. These protocols are built on top of the Bitcoin base layer (Layer 1) to enhance its capabilities without compromising its core security. They enable faster, cheaper transactions and unlock new functionalities like smart contracts and token creation, expanding Bitcoin’s utility far beyond a simple store of value. This guide explores three leading approaches: the Lightning Network for payments, Stacks for smart contracts, and the emerging Runes protocol for fungible tokens.
Key Concepts
1. What Are Bitcoin Layer 2s?
Bitcoin Layer 2s are secondary frameworks or protocols that operate on top of the Bitcoin blockchain. They handle transactions off-chain or in a separate layer, then settle the final state on the main Bitcoin chain. This “off-loading” is key to solving Bitcoin’s scalability trilemma—balancing decentralization, security, and scalability.
2. The Lightning Network: Instant, Low-Cost Payments
The Lightning Network is a “state channel” protocol designed for micropayments and instant Bitcoin transactions. Users create private payment channels between each other, conducting numerous transactions off-chain. Only the opening and closing balances are broadcast to the main Bitcoin network. This makes transactions nearly instant and fees negligible, ideal for daily purchases and streaming payments.
3. Stacks (STX): Bringing Smart Contracts to Bitcoin
Stacks is a separate blockchain that uses Bitcoin as its base layer for security. Its unique “Proof of Transfer” consensus mechanism anchors all blocks and transactions to Bitcoin. Stacks enables decentralized applications (dApps), smart contracts (called Clarity contracts), and non-fungible tokens (NFTs) that are secured by Bitcoin’s hash power. Think of it as adding a programmable, application layer to Bitcoin’s robust settlement layer.
4. Runes Protocol: A New Fungible Token Standard
Introduced by Bitcoin developer Casey Rodarmor, the Runes protocol is a new standard for creating fungible tokens (like meme coins or utility tokens) directly on the Bitcoin blockchain. It aims to be a more efficient and UTXO-friendly alternative to earlier token standards like BRC-20. Runes leverages Bitcoin’s native UTXO model, potentially reducing blockchain “junk” and offering a streamlined way to issue and transfer tokens post-Bitcoin halving events.
Pro Tips
- Understand the Trade-offs: Each L2 optimizes for different use cases. Lightning is for payments, Stacks for apps, and Runes for tokens. Choose based on your goal.
- Security Models Vary: While all inherit Bitcoin’s security to some degree, their trust assumptions differ. Lightning requires channel counterparts to be online; Stacks has its own consensus; Runes are native but new.
- Watch the Ecosystem: L2 development is rapid. Follow key developers and community updates for Stacks and Runes to spot early opportunities.
- Start Small: When experimenting with new L2s or token protocols like Runes, use a small amount of capital to understand the mechanics and fee environment.
- For more details on this, check out our guide on What is Carbon Credits on Blockchain? (RWA Explained).
FAQ Section
Q: Are Bitcoin Layer 2s safe?
A> They are generally considered secure as they leverage Bitcoin’s security. However, as with any new technology, they may have implementation bugs or unique risks (e.g., Lightning channel risks). Always do your own research.
Q: Do I need a separate wallet for Layer 2s?
A> Often, yes. Lightning requires a compatible wallet (e.g., Phoenix, Muun). Stacks requires a Hiro or Xverse wallet. Runes may be supported by newer Bitcoin wallets like Unisat or Magic Eden.
Q: What’s the difference between Runes and BRC-20 tokens?
A> Both create tokens on Bitcoin, but Runes is designed to be more efficient by using Bitcoin’s native UTXO model directly, aiming to reduce blockchain clutter compared to the JSON-based BRC-20 standard.
Q: Can I use Stacks and Lightning together?
A> Not directly in a single transaction, as they serve different purposes. However, an ecosystem could use Stacks for a smart contract application that utilizes Lightning for payment components.
Q: How do I stay secure while using these technologies?
A> You might also be interested in reading about Evil Twin WiFi Attacks Explained: A Complete Guide to Crypto Security. Always use reputable wallets, safeguard your private keys, and be cautious of phishing sites mimicking L2 interfaces.
Conclusion
The Bitcoin Layer 2 landscape is transforming Bitcoin from a monolithic store of value into a vibrant, multi-layered ecosystem. The Lightning Network scales payments, Stacks introduces powerful smart contracts, and protocols like Runes open the door for native tokenization. While each solution has its own strengths and complexities, together they represent a collective effort to unlock Bitcoin’s full potential without sacrificing the security guarantees that made it revolutionary. As these technologies mature, they promise to bring faster, cheaper, and more functional Bitcoin-powered applications to users worldwide. The key for investors and users is to understand the specific problem each L2 solves and engage with a mindset of cautious exploration.
Real World Assets (RWA): How Tokenization Changes Investing | Complete Guide
Real World Assets (RWA): How Tokenization Changes Investing
Introduction
The financial landscape is undergoing a seismic shift as blockchain technology bridges the digital and physical worlds. Real World Asset (RWA) tokenization represents one of the most transformative developments in modern finance, converting tangible assets like real estate, commodities, and intellectual property into digital tokens on blockchain networks. This innovation is democratizing access to investment opportunities that were previously reserved for institutional players and high-net-worth individuals, while simultaneously introducing unprecedented liquidity, transparency, and efficiency to traditionally illiquid markets. As traditional finance (TradFi) and decentralized finance (DeFi) continue to converge, RWA tokenization stands at the forefront of this revolution, promising to reshape how we perceive ownership, value transfer, and investment accessibility.
Key Concepts
What Are Real World Assets (RWAs)?
Real World Assets are physical or traditional financial assets that exist outside blockchain ecosystems but are represented digitally through tokenization. These include:
- Real Estate: Commercial properties, residential buildings, land
- Commodities: Gold, silver, oil, agricultural products
- Financial Instruments: Bonds, equities, treasury bills
- Collectibles: Art, vintage cars, fine wine
- Intellectual Property: Patents, royalties, copyrights
- Infrastructure: Renewable energy projects, transportation assets
How Tokenization Works
Tokenization converts ownership rights of an asset into digital tokens on a blockchain. This process involves:
- Asset Selection & Valuation: Identifying suitable assets and determining their market value
- Legal Structuring: Establishing Special Purpose Vehicles (SPVs) or legal entities to hold the asset
- Token Creation: Minting digital tokens representing fractional ownership
- Compliance Integration: Implementing KYC/AML procedures and regulatory compliance
- Secondary Market Creation: Enabling trading on decentralized or regulated exchanges
Benefits of RWA Tokenization
- Fractional Ownership: Enables investment in high-value assets with smaller capital
- Enhanced Liquidity: Transforms illiquid assets into tradable digital tokens
- Global Accessibility: Removes geographical barriers to investment opportunities
- Transparency & Security: Blockchain provides immutable records of ownership and transactions
- Reduced Costs: Eliminates intermediaries and reduces administrative expenses
- 24/7 Markets: Enables continuous trading beyond traditional market hours
Challenges and Considerations
- Regulatory Uncertainty: Varying regulations across jurisdictions
- Legal Frameworks: Establishing clear ownership rights and dispute resolution
- Technological Infrastructure: Ensuring secure and scalable blockchain solutions
- Market Adoption: Building trust among traditional investors
- Valuation Complexity: Accurate pricing of tokenized assets
Pro Tips
- Start Small: Begin with tokenized assets that have clear valuation metrics and established markets
- Verify Legal Compliance: Ensure the tokenization platform complies with relevant regulations in your jurisdiction
- Diversify Across Asset Classes: Spread investments across different types of RWAs to mitigate risk
- Understand the Underlying Asset: Research the physical asset’s fundamentals before investing in its tokenized version
- Monitor Liquidity: Check trading volumes and market depth before entering positions
- Use Reputable Platforms: Choose established platforms with proven track records and proper custody solutions
- Consider Tax Implications: Consult with tax professionals about reporting requirements for tokenized assets
FAQ Section
What is the difference between RWA tokens and cryptocurrencies?
RWA tokens represent ownership in physical assets with intrinsic value, while most cryptocurrencies are native digital assets without direct physical backing. RWA tokens derive their value from underlying real-world assets, whereas cryptocurrencies typically derive value from network utility, scarcity, and market speculation.
Are tokenized RWAs regulated?
Regulation varies by jurisdiction and asset type. Many tokenized RWAs fall under existing securities regulations, while others may be classified differently. Platforms offering RWA tokens typically implement KYC/AML procedures and comply with relevant financial regulations. You might also be interested in reading about JPMorgan Downplays $6.6 Trillion Stablecoin Threat Raised by Community Banks for insights into how traditional financial institutions view tokenized assets.
How do I verify the underlying asset backing a token?
Reputable RWA platforms provide regular audits, legal documentation, and proof of asset custody. Look for platforms that offer transparent reporting, third-party audits, and clear legal structures that establish the connection between tokens and underlying assets.
Can I redeem tokens for the physical asset?
This depends on the token structure. Some tokens represent direct fractional ownership and may allow redemption under specific conditions, while others represent synthetic exposure or rights to cash flows without direct redemption rights. Always review the token’s legal documentation.
What are the risks of investing in tokenized RWAs?
Key risks include regulatory changes, technological vulnerabilities, custody risks, market liquidity risks, and potential disconnects between token price and underlying asset value. Proper due diligence is essential. For more details on this, check out our guide on Chart Patterns 101: Spotting Reversals with Head & Shoulders & Double Bottoms to help identify market trends and potential reversals in token prices.
Which blockchain networks support RWA tokenization?
Multiple blockchains support RWA tokenization, including Ethereum (with its robust smart contract capabilities), Polygon (for lower transaction costs), Solana (for high throughput), and specialized chains like Provenance and Polymesh designed specifically for regulated assets.
Conclusion
Real World Asset tokenization represents a paradigm shift in how we conceptualize ownership and investment. By bridging the gap between traditional finance and blockchain technology, RWAs offer unprecedented opportunities for democratized access, enhanced liquidity, and innovative financial products. While challenges remain in regulation, standardization, and market adoption, the trajectory is clear: tokenization is poised to transform trillions of dollars in traditional assets into programmable, accessible digital instruments. As the infrastructure matures and regulatory frameworks evolve, RWA tokenization will likely become a cornerstone of the future financial ecosystem, offering investors new ways to diversify portfolios and access previously inaccessible markets. The convergence of physical and digital value representation through blockchain technology marks not just an evolution in investing, but a revolution in how we define and transfer value in the global economy.
Restaking Explained: EigenLayer and Beyond | Complete Guide 2024
Restaking Explained: EigenLayer and Beyond
Introduction
Restaking represents one of the most significant innovations in decentralized finance since the advent of proof-of-stake consensus. At its core, restaking allows cryptocurrency holders to “reuse” their staked assets to secure additional protocols and services beyond the primary blockchain network. This revolutionary concept, pioneered by EigenLayer, unlocks new economic efficiencies and creates novel yield opportunities while fundamentally reshaping how blockchain security is provisioned and monetized. As the crypto ecosystem matures, restaking has emerged as a critical mechanism for bootstrapping security for new protocols and creating sustainable economic models for decentralized infrastructure.
Key Concepts
What is Restaking?
Restaking refers to the process of using already staked cryptocurrency assets (typically ETH on Ethereum) to provide security services to other protocols. Instead of locking assets in a single staking contract, users can opt-in to extend their staked assets’ security guarantees to additional applications, earning additional rewards in the process. This creates a shared security model where new protocols can leverage Ethereum’s established security without building their own validator set from scratch.
EigenLayer: The Restaking Pioneer
EigenLayer is the protocol that introduced and popularized the restaking concept on Ethereum. It functions as a middleware layer that allows ETH stakers to opt-in to validate additional services called “Actively Validated Services” (AVSs). These can include data availability layers, oracle networks, bridges, and other middleware components. By restaking through EigenLayer, validators can earn additional yield while providing crucial security services to the broader Ethereum ecosystem.
Liquid Restaking Tokens (LRTs)
Liquid Restaking Tokens represent staked positions in restaking protocols, providing liquidity to otherwise locked assets. Similar to liquid staking tokens (LSTs) like stETH, LRTs can be traded, used as collateral, or integrated into DeFi protocols while continuing to earn restaking rewards. Protocols like EtherFi, Renzo, and Kelp DAO have emerged as major players in the LRT space, creating a competitive landscape for restaking yield optimization.
Actively Validated Services (AVSs)
AVSs are the services that leverage restaked ETH for their security. These can range from new consensus layers and data availability solutions to oracle networks and cross-chain bridges. Each AVS defines its own slashing conditions and reward structures, creating a marketplace where restakers can choose which services to support based on risk-reward preferences.
Pro Tips
- Diversify Your Restaking Exposure: Consider spreading your restaked assets across multiple AVSs to mitigate protocol-specific risks and optimize reward potential.
- Understand Slashing Risks: Each AVS has its own slashing conditions. Thoroughly research these conditions before committing your assets, as improper validation could lead to partial loss of staked funds.
- Monitor Reward Structures: Different AVSs offer varying reward mechanisms. Some may provide token incentives, while others offer fee revenue. Choose based on your investment horizon and risk tolerance.
- Consider LRTs for Liquidity: If you need access to liquidity while participating in restaking, Liquid Restaking Tokens provide flexibility while maintaining exposure to restaking rewards.
- Stay Updated on Protocol Developments: The restaking landscape evolves rapidly. Follow official channels and community discussions to stay informed about new AVSs, protocol upgrades, and changing economic conditions.
FAQ Section
What are the main risks of restaking?
The primary risks include smart contract vulnerabilities, slashing conditions from multiple AVSs, centralization concerns if too many assets flow through a few operators, and potential systemic risks if restaking becomes too dominant in Ethereum’s security model. Additionally, there’s liquidity risk if you need to exit positions during market stress.
How does restaking differ from traditional staking?
Traditional staking involves committing assets to secure a single blockchain network. Restaking allows those same assets to simultaneously secure additional services beyond the base layer, creating multiple revenue streams from the same collateral. This increases capital efficiency but also introduces additional complexity and risk layers.
Can I restake with any cryptocurrency?
Currently, EigenLayer and most restaking protocols focus on Ethereum and ETH derivatives. However, the concept is blockchain-agnostic, and we may see restaking implementations on other proof-of-stake networks as the technology matures and gains adoption.
What happens if an AVS gets hacked or fails?
This depends on the specific AVS’s design and slashing conditions. In some cases, restakers might face slashing penalties if the AVS fails due to validator misbehavior. However, smart contract bugs or economic failures might not trigger slashing but could result in loss of potential rewards. Always review each AVS’s failure modes before participating.
Is restaking available to small ETH holders?
Yes, through pooled services and Liquid Restaking Tokens, even small ETH holders can participate in restaking. Many protocols have minimal entry requirements, making restaking accessible beyond large institutional validators.
Conclusion
Restaking represents a paradigm shift in how blockchain security is conceptualized and monetized. By enabling the reuse of staked assets across multiple protocols, EigenLayer and similar platforms are creating new economic efficiencies and yield opportunities while helping bootstrap security for emerging infrastructure projects. However, this innovation comes with increased complexity and novel risks that participants must carefully navigate. As the restaking ecosystem matures, we can expect continued innovation in risk management tools, derivative products, and governance mechanisms. For those willing to undertake the necessary due diligence, restaking offers a compelling opportunity to maximize returns on staked assets while contributing to the security and growth of the broader decentralized ecosystem. For more details on this, check out our guide on Privacy Coins: The Regulatory Tightrope Every Trader Should Understand. You might also be interested in reading about Risk Management 101: The 1% Rule Explained for Safer Trading.
Stock Tokenization: 24/7 Equity Trading Explained
Introduction: Tokenizing Traditional Equity
Stock tokenization represents the process of converting ownership rights in a publicly traded company into digital tokens on a blockchain. This creates a new asset class that bridges Traditional Finance (TradFi) and Decentralized Finance (DeFi). The fundamental difference lies in the infrastructure: off-chain traditional stocks exist in centralized databases and trade during market hours, while on-chain tokenized stocks are represented as programmable digital assets on distributed ledgers, enabling continuous operation.
How Stock Tokenization Works: The Technical Process
The conversion of equity into a tradeable digital asset follows a structured, multi-layered process designed to maintain legal compliance while leveraging blockchain efficiency.
The Four-Step Tokenization Framework
- Tokenization & Legal Wrapper: A financial institution or specialized issuer purchases the underlying stock and holds it in a regulated custody account. Legal ownership is then transferred to a Special Purpose Vehicle (SPV) or trust structure. This entity mints a corresponding number of digital tokens, each representing a fractional claim on the underlying asset.
- SPV & Custody Structure: The SPV acts as the legal owner of the traditional securities, isolating the asset from the issuer’s balance sheet. Reports from BlackRock have highlighted the importance of robust legal structures for asset tokenization to ensure investor protection and regulatory clarity.
- Oracle Integration: To maintain parity with traditional markets, decentralized oracle networks (like Chainlink) feed real-time price data, dividend announcements, and corporate action information from TradFi markets onto the blockchain. This synchronizes the token’s economic value with its real-world counterpart.
- Blockchain Settlement & Trading: The tokens are issued on a blockchain (often a permissioned chain or a layer-2 solution for scalability) and can be traded on dedicated digital asset exchanges. Settlement is near-instant through blockchain validation, unlike the T+2 settlement common in traditional markets.
Investment Analysis: Pros, Cons, and Key Risks
Tokenized stocks present a novel value proposition but come with a distinct risk profile that sophisticated investors must evaluate.
Advantages of Tokenized Equity
- 24/7 Global Market Access: Trade equity tokens anytime, removing geographic and time-zone barriers that restrict traditional exchanges.
- Fractional Ownership & Increased Liquidity: High-value stocks can be divided into minute fractions, lowering the entry barrier. Data from RWA.xyz shows tokenization can significantly increase the addressable investor base for an asset.
- Transparency and Auditability: All transactions are immutably recorded on-chain, providing a clear audit trail for ownership and activity.
- Programmability & Composability: Tokenized stocks can be integrated as collateral in DeFi lending protocols to generate yield, or bundled into innovative structured products.
Risks and Challenges
- Regulatory Uncertainty: The regulatory landscape is evolving. Jurisdictions differ on whether tokenized stocks are classified as securities, and compliance with KYC/AML remains paramount. For a broader market view, check out our analysis on Hedera Executives Call for Hybrid Governance as Crypto and TradFi Converge.
- Smart Contract Risk: The tokens and trading platforms rely on underlying code. Vulnerabilities or bugs in the smart contract could lead to loss of funds. Investors often compare this to Ethereum’s Hegota Upgrade Explained: A Complete Guide to the 2026 Roadmap, which focuses on core protocol security.
- Custodial & Counterparty Risk: Investors must trust the integrity and solvency of the entity holding the underlying assets in the SPV structure.
- Market Fragmentation & Liquidity Risk: Liquidity may be split between traditional exchanges and multiple tokenized venues, potentially impacting execution prices.
Tool Recommendation: Accessing the Market
For investors looking to explore tokenized assets, including equities, choosing a reputable and liquid platform is critical. Binance, as one of the world’s largest digital asset exchanges, offers a regulated and accessible gateway to a variety of tokenized investment products. It provides the necessary liquidity, security infrastructure, and compliance frameworks for this emerging asset class. You can begin your exploration by creating an account here.
Frequently Asked Questions (FAQ)
Do I own the actual stock when I hold a tokenized version?
Typically, you own a beneficial interest or a claim on the economic value of the stock, not the direct registered share. Legal ownership is held by a regulated custodian or SPV, which issues the tokens as digital certificates of your fractional ownership and rights to dividends/capital appreciation.
How are dividends handled for tokenized stocks?
Dividends are collected by the custodian/SPV from the underlying issuer. The funds are then converted to a stablecoin or native blockchain currency and distributed pro-rata to all token holders’ wallets automatically via a smart contract, ensuring transparency and efficiency.
Is trading tokenized stocks legal?
Legality depends entirely on your jurisdiction and whether the offering complies with local securities laws. Reputable issuers operate with necessary licenses (like broker-dealer or digital asset service provider licenses) and enforce strict KYC procedures. Always verify the regulatory status of an offering in your country before investing.
Conclusion: The Future of Equity Markets
The tokenization of stocks is more than a technological novelty; it is a foundational shift towards more inclusive, liquid, and efficient capital markets. While significant hurdles in regulation, interoperability, and market structure remain, the trajectory points toward a hybrid future where TradFi assets gain the superpowers of DeFi. For institutional and accredited investors, tokenized equity offers a compelling, albeit nascent, avenue for portfolio diversification and operational alpha. As the infrastructure matures and regulatory clarity improves, 24/7 equity trading may transition from a niche innovation to a standard feature of global finance.
Nevada Judge Extends Ban on Kalshi’s Crypto Prediction Markets
April 4, 2026 — A Nevada judge has ruled that Kalshi’s sports prediction markets constitute illegal gambling, extending a temporary ban in the state. Judge Jason Woodbury granted a preliminary injunction against the prediction market provider on Friday, siding with the Nevada Gaming Control Board. The decision intensifies a nationwide regulatory clash over whether crypto-based prediction markets are gambling or financial derivatives.
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Judge Jason Woodbury of Nevada’s First Judicial District Court extended a temporary restraining order for two weeks on April 4, blocking Kalshi from offering contracts on sports, entertainment, and elections. The judge stated he would grant the Nevada Gaming Control Board’s request for a preliminary injunction, which would remain in place until a broader court case is resolved.
During a hearing in Carson City, Judge Woodbury argued that Kalshi’s products are indistinguishable from traditional sports betting. “So I find based on the arguments that have been presented that it is a gaming activity that is prohibited for any non-licensee to engage in,” he said, according to Reuters. He specifically noted that buying a contract on a baseball game via Kalshi was “indistinguishable” from placing a bet on a state-licensed gaming platform.
Market Context & Reaction
This ruling is part of a rapidly escalating conflict between state regulators and federally approved prediction market platforms. State authorities across the U.S., including in Arizona, Illinois, and Connecticut, argue these platforms offer unregulated gambling. Conversely, Kalshi and similar companies maintain they are federally regulated Designated Contract Markets (DCMs) offering swaps, a type of derivative, and thus fall under federal, not state, jurisdiction.
The federal Commodity Futures Trading Commission (CFTC), led by Chairman Mike Selig, supports this view. In a significant move, the CFTC and the Department of Justice sued Arizona, Illinois, and Connecticut on April 3, alleging these states are infringing on the CFTC’s regulatory authority. The Nevada hearing occurred concurrently with a federal court hearing in Arizona, where Kalshi sought to block state enforcement actions.
Background & Historical Context
The legal confrontation has been building for months. Nevada’s Gaming Control Board first obtained a temporary restraining order against Kalshi on March 20. The core dispute hinges on a fundamental classification: are prediction markets a form of financial innovation or simply online gambling in a new format?
Prediction markets allow users to buy and sell contracts based on the outcome of real-world events. Kalshi, regulated by the CFTC, argues this makes it a financial marketplace. State gaming regulators, tasked with controlling gambling within their borders, see it as a direct competitor to licensed sportsbooks that should be subject to state licensing and taxes. The CFTC’s recent lawsuits mark a decisive federal effort to assert its primacy in this emerging sector of the crypto and derivatives landscape.
What This Means
The Nevada judge’s decision signals strong initial headwinds for prediction market operators seeking to offer event-based contracts nationally. In the short term, users in Nevada and other enforcing states will be blocked from accessing these markets. The parallel federal lawsuits by the CFTC will likely determine the ultimate regulatory landscape, potentially creating a path for federal preemption over state bans.
For the crypto and trading community, this represents a critical test case for innovative financial products built on blockchain and derivatives technology. The outcome will set a precedent for how new, digitally-native trading instruments are classified and regulated in the U.S. Investors and platforms should monitor the resolution of the Nevada case and the federal lawsuits in Arizona, Illinois, and Connecticut, as they will collectively shape the future legality of prediction markets.
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EU Crypto Firms Face July 1 Shutdown as MiCA Deadlines Already Passed
April 4, 2026 — A critical misunderstanding of the EU’s Markets in Crypto-Assets (MiCA) regulation is putting hundreds of crypto service providers at risk of forced closure. Legal experts warn that the widely-cited July 1, 2026 deadline is not the date to apply for a license, but the date by which a license must already be granted—a distinction that means the real application deadlines for most EU nations have already passed.
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According to a detailed analysis by legal advisory firm LegalBison, Article 143(3) of MiCA allows providers operating lawfully before December 30, 2024 to continue only until July 1, 2026, or until they are “granted or refused authorization.” The firm emphasizes that “granted” is the operative word, not “applied for.” With authorization processes taking several months, a service provider without a filed application in April 2026 does not have 90 days to act. “For most EU jurisdictions, the grandfathering window has already closed,” the report states.
The situation is particularly acute in countries like Poland, where a legislative veto in December 2025 left the nation without a designated National Competent Authority (NCA) to even receive applications. “A service provider that wanted to apply could not do so, because the regulatory infrastructure to receive the application did not exist,” the analysis explains. The Polish Financial Supervision Authority (KNF) has confirmed that without an established NCA by July 1, registered businesses “must cease providing crypto-asset services on July 2.”
Market Context & Reaction
The regulatory confusion has created a stark market asymmetry within the EU bloc. Foreign service providers holding MiCA authorizations from other member states can already passport their services into jurisdictions like Poland by notifying the local regulator. However, domestic Polish-registered providers cannot passport out, cannot apply domestically, and are confined to a local market with a “hard stop” looming. LegalBison notes that as of today, “banks are already reaching out to their VASP-only registered clients, informing them that they won’t continue providing banking services past July 1, unless the client provides proof of a CASP application or license.”
The European Securities and Markets Authority (ESMA) published a list of national grandfathering periods, revealing that critical application deadlines for major markets have long passed. Germany, Lithuania, Ireland, Austria, and Slovakia had deadlines around the end of December 2025. The Czech Republic’s deadline was July 31, 2025, and Bulgaria’s closed on October 8, 2025. A crypto-asset service provider (CASP) registered before December 2024 but which missed its member state’s specific deadline cannot rely on transitional protection.
Background & Historical Context
MiCA’s transitional “grandfathering” regime was designed to give existing crypto businesses time to adapt to the new licensing framework. However, its conditional nature has been widely misread. The protection was never automatic and was always subject to jurisdiction-specific application deadlines set by each EU member state. Furthermore, pre-MiCA VASP registrations were national anti-money laundering designations, not financial services licenses with cross-border passporting rights. This meant a service provider registered in one member state never had the legal right to solicit users in another during the transitional period, a restriction the MiCA timeline reinforced.
The analysis also debunks a common misconception about using reverse solicitation as a fallback strategy. Under Article 61 of MiCA, this exemption is extremely narrow and applies only when a client approaches a third-country firm entirely on their own initiative. ESMA’s guidelines state that factors like a website being available in a local EU language (e.g., Hungarian, Czech) or maintaining affiliate programs targeting EU users constitute solicitation, making the exemption largely unavailable to firms that have previously marketed to EU customers.
What This Means
For crypto platforms operating in the EU, immediate action is required. Service providers must determine if they are in a “gap zone” by checking three conditions: if they are in a member state without enacted MiCA legislation; if they missed their national CASP application deadline; or if they are operating without a pending authorization application. If any condition is true, the business is operating on borrowed time.
The primary path forward for affected firms is restructuring—securing a CASP license in a different EU jurisdiction with a functioning regulatory pipeline, such as Malta, Austria, Ireland, or Lithuania. This process requires establishing a genuine operational presence, including a corporate bank account with a formal credit institution, and meticulously managing the transition of any existing EU user base to avoid breaching reverse solicitation rules. For providers who cannot secure authorization by July 1, operations must pause on that date, with the ability to resume only once a license is granted.
Geopolitical Tensions Escalate as Second US Warplane Hit Over Iran
April 3, 2024 — A second U.S. military aircraft was shot down over Iran during combat operations, complicating U.S. claims of air dominance and escalating regional tensions. The incidents, involving an F-15E Strike Eagle and an A-10 Thunderbolt II, have immediate implications for global risk assets, including Bitcoin and cryptocurrency markets, as analysts warn of inflationary pressures from Middle East conflict.
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On April 3, Iranian forces shot down a U.S. F-15E Strike Eagle during ongoing combat operations. U.S. officials confirmed to CBS News that one crew member was rescued following a combat search-and-rescue mission, while a second crew member remains missing. Verified images showed low-flying rescue aircraft operating over Iran’s Khuzestan Province.
During the rescue operation, a helicopter extracting the surviving pilot was hit by small arms fire, wounding crew members. Subsequently, an A-10 Thunderbolt II dispatched as part of the search effort was struck by Iranian fire, forcing its pilot to eject over the Persian Gulf before being recovered. Iran’s state media claimed responsibility for downing the aircraft and announced a reward for the capture of any “enemy pilot.”
Market Context & Reaction
The escalating conflict directly contradicts recent U.S. government assertions of complete air dominance, with President Trump stating just days prior that Iranian anti-aircraft capabilities were “100% annihilated.” This development injects significant geopolitical uncertainty into global markets.
As analysts have warned, Middle East escalation carries severe supply chain and inflationary consequences that reverberate across all risk assets, including cryptocurrencies. Institutional capital flows have already begun shifting in response to the conflict’s progression, with large asset managers repositioning across both traditional and digital markets. The Federal Reserve Bank of Chicago’s Austan Goolsbee told CBS News that the war risks fueling inflation in a way that could prevent the Fed from cutting interest rates in 2026.
Background & Historical Context
Operation Epic Fury is now approaching its sixth week. According to Axios, three F-15E aircraft had previously been lost to friendly fire during the conflict, which has now claimed 13 American lives and wounded 365 service members. Iran’s military response has intensified alongside these aircraft losses.
In a significant economic escalation, Tehran has imposed a toll system on the Strait of Hormuz, a critical waterway for approximately 20% of globally traded oil. Missile and drone attacks also struck oil, gas, and desalination facilities across the Persian Gulf recently, further threatening energy markets and global economic stability.
What This Means
The downing of a second U.S. aircraft signifies a notable shift in the conflict’s dynamics, challenging the narrative of unchallenged U.S. military superiority. For traders and investors, the immediate implications are clear:
- Increased Volatility: Geopolitical uncertainty typically drives volatility in both traditional and digital asset markets as investors seek safe havens.
- Inflationary Pressure: Continued disruption to global oil supplies and trade routes threatens to reignite inflationary pressures, potentially altering central bank monetary policy timelines.
- Risk Asset Repricing: As institutional capital repositions, all risk-sensitive assets, including cryptocurrencies, may face repricing based on revised geopolitical risk premiums.
Market participants should monitor for further escalations and prepare for potential ripple effects across correlated asset classes. Conduct thorough research and consider geopolitical risk in your investment strategy.
The Ichimoku Cloud: Your All-in-One Trading Dashboard
Ever feel like you’re juggling too many indicators on your chart? What if you could replace most of them with a single, comprehensive system that shows you trend direction, momentum, support/resistance, and potential entry points all at once? Welcome to the Ichimoku Cloud, a powerful Japanese charting technique that’s like having a complete trading dashboard.
Developed by journalist Goichi Hosoda in the late 1930s, the Ichimoku Kinko Hyo (which translates to “one glance equilibrium chart”) was designed to give traders a holistic view of the market. While it might look complex at first, its genius lies in its ability to provide multiple layers of information in one visual package.
How It Works: The Five Lines of Insight
The Ichimoku Cloud consists of five main components. Don’t worry about memorizing the Japanese names—focus on what each line tells you.
The Core Components
1. Tenkan-sen (Conversion Line): The 9-period high-low average. Think of this as the short-term trend line. It’s quick to react to price changes.
2. Kijun-sen (Base Line): The 26-period high-low average. This is your medium-term trend line and a key support/resistance level.
3. Senkou Span A (Leading Span A): The midpoint between Tenkan-sen and Kijun-sen, plotted 26 periods ahead. This forms one edge of the “cloud.”
4. Senkou Span B (Leading Span B): The 52-period high-low average, plotted 26 periods ahead. This forms the other edge of the cloud.
5. Chikou Span (Lagging Span): Today’s closing price plotted 26 periods behind. This helps you see the current price in relation to past action.
The Cloud (Kumo)
The space between Senkou Span A and B is shaded—this is the famous “cloud.” It’s not just decoration; it’s a dynamic support/resistance zone:
– Thick cloud = Strong support/resistance
– Thin cloud = Weaker support/resistance
– Price above cloud = Bullish trend
– Price below cloud = Bearish trend
– Price inside cloud = Sideways/transition phase
The Setup: Reading the Signals
Trend Identification (The First Step)
Always start with the big picture:
1. Bullish Trend: Price is above the cloud, cloud is green (Span A > Span B)
2. Bearish Trend: Price is below the cloud, cloud is red (Span A < Span B)
3. Neutral/Ranging: Price is inside the cloud
Key Trading Signals
1. The TK Cross (Tenkan/Kijun Cross)
– Bullish Signal: Tenkan-sen crosses ABOVE Kijun-sen
– Bearish Signal: Tenkan-sen crosses BELOW Kijun-sen
2. Cloud Breakouts
– When price breaks through the cloud with conviction, it often signals the start of a new trend.
3. The Kumo Twist
– When Senkou Span A crosses Senkou Span B, the cloud changes color. This often precedes significant trend changes.
4. Chikou Span Confirmation
– The Lagging Span should be above price for bullish setups and below price for bearish setups (when looking 26 periods back).
Putting It All Together: A Sample Trade Setup
For a long position, look for:
1. Price above the cloud (green cloud preferred)
2. Tenkan-sen above Kijun-sen (TK Cross)
3. Chikou Span above price 26 periods ago
4. Price pulls back to the cloud or Kijun-sen for entry
For a short position, look for the opposite conditions.
Risk Management: Trading with the Cloud
The Ichimoku Cloud isn’t just for entries—it’s excellent for managing risk too.
Setting Stop Losses
– For long positions: Place stops below the cloud or below the Kijun-sen line
– For short positions: Place stops above the cloud or above the Kijun-sen line
The cloud acts as a dynamic support/resistance zone, making it a logical place for stop losses.
Position Sizing
Consider the cloud thickness when sizing your position:
– Thick cloud: Stronger support/resistance → You might use a slightly larger position (with appropriate stop)
– Thin cloud: Weaker support/resistance → Consider smaller positions or wait for clearer signals
Timeframe Harmony
One of Ichimoku’s strengths is its consistency across timeframes. Check that your signals align on multiple timeframes (e.g., 4-hour and daily) for higher probability trades.
Conclusion: Your New Trading Companion
The Ichimoku Cloud might seem overwhelming at first glance, but that’s exactly the point—it’s designed to give you a complete market picture at a single glance. Start by simply observing whether price is above or below the cloud. Then add the TK cross for timing. Finally, use the cloud edges and Kijun-sen for support/resistance levels.
Remember: No indicator is perfect. The Ichimoku Cloud works best in trending markets and can give false signals during choppy, sideways action. Combine it with volume analysis and fundamental understanding of what you’re trading for best results.
Practice on historical charts first. Watch how the cloud reacts during different market conditions. Soon, you’ll find yourself glancing at charts and immediately understanding the market’s story—exactly what Goichi Hosoda intended nearly a century ago.
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