**Bitcoin ‘anti-spam’ BIP goes nowhere fast**
In a significant setback for efforts to reform the Bitcoin network, a proposed soft fork known as BIP-110 has been effectively declared “Dead On Arrival.” The initiative, which aimed to reduce blockchain spam by filtering out non-financial transactions like Ordinals, failed to gain sufficient support during its mandatory signaling period. With only 2.5% of miners signaling approval, the proposal split off into a minority chain that managed to mine just two blocks before stalling entirely.
The core objective of BIP-110 was to eliminate what its supporters termed “non-financial transactions” from the Bitcoin blockchain. These included everything from Ordinals and other inscriptions to arbitrary data uploads. However, the proposal faced fierce resistance from prominent voices in the cryptocurrency space, who argued that it violated Bitcoin’s foundational principle of neutrality. Strategy executive chairman Michael Saylor, while acknowledging the stated goals of the BIP, warned that its implementation threatened Bitcoin’s consensus rules and could set a dangerous precedent for censorship on the network.
Blockstream CEO Adam Back also raised alarms, suggesting that the consensus-level change could undermine Bitcoin’s credibility and even render certain unspent transaction outputs (UTXOs) permanently unspendable. The backlash was so strong that Bitcoin Core developer Murch subsequently moved to remove BIP-110 backer Luke Dashjr from his position as a BIP Editor, further highlighting the deep divisions within the community.
### **Why the minority chain stalled**
One of the key reasons BIP-110’s fork failed to gain traction was purely economic. Unlike the main Bitcoin chain, the new chain offered no viable path for miners to recoup their costs. Mining remains as difficult and expensive as ever, and without the ability to sell block rewards profitably, miners had little incentive to continue supporting the chain. For difficulty to drop and make mining feasible, the chain would have needed to mine through an additional 2,014 blocks—a threshold it failed to reach.
### **Regulatory developments take center stage**
While the BIP-110 drama unfolded, attention has shifted toward regulatory developments in the United States. The CLARITY Act, which aims to provide regulatory clarity for stablecoins and other crypto-assets, saw its procedural vote postponed until September. Despite earlier optimism that Senators Tim Scott and Cynthia Lummis could push the vote through before the August recess, Senate Majority Leader John Thune declined to force the issue. As a result, the cloture vote is now scheduled for September 15, leaving crypto lobbyists with a short window to secure the necessary 60 votes. Key sticking points include ethics rules, stablecoin yield concerns, and protections under the Bank Responsibility and Consumer Protection Act (BRCA).
### **Bitcoin security goes AI-assisted**
In a separate development, a volunteer Bitcoin security group known as the Bitcoin Red Team has uncovered nearly 5,000 potential vulnerabilities in Bitcoin-related projects using AI-assisted analysis. By the weekend, that number had ballooned to 7,958, including 168 critical flaws and 1,120 high-severity issues. The effort was partly motivated by the Coldcard hardware wallet hacks, which exposed weaknesses in random number generation used for seed phrases. To date, attackers have stolen over $100 million from more than 7,300 wallets, making it the third-largest crypto heist of 2026. The incident has led many in the community to reconsider the security of hardware wallets and rely on manual seed phrase generation using dice or other offline methods.
### **Ethereum staking proposals face backlash**
Meanwhile, Ethereum researchers have proposed changes to the network’s staking issuance policy designed to curb rewards as the proportion of staked ETH rises. Known as Tapered Issuance Burn (EIP-8363), the plan would eliminate validator rewards entirely once staked ETH exceeds 50% of total supply. Currently, about 34% of ETH is staked, with a large queue waiting to enter the network. Critics, including DeFi platform Ether.fi founder Mike Silagadze, argue that the proposal could harm decentralization, adoption, and the network’s overall credibility. The backlash underscores the delicate balance between securing the network and maintaining a vibrant DeFi ecosystem.
### **Bitcoin ETFs see renewed momentum**
On the investment front, Bitcoin ETFs experienced their strongest week in four months, recording net inflows of $853.54 million—five times the total seen in July. Ether ETFs also performed well, adding $243.7 million. Some industry observers have linked the surge to increased concerns following the Coldcard hack, suggesting that institutional investors view exchange-held assets as safer than self-custody solutions. Binance co-founder Changpeng Zhao was among those expressing this sentiment, stating, “It is statistically safer to store coins on exchanges than to self custody.”
### **Market winners and losers**
Bitcoin (BTC) led the market higher, gaining 2% to trade at $64,814. Ethereum (ETH) rose 1.7% to $1,908, while XRP (XRP) fell 5% to $1.02. The total cryptocurrency market capitalization now stands at $2.21 trillion. Among the top 100 cryptocurrencies, Pump.fun (PUMP), LayerZero (ZRO), and Curve DAO (CRV) emerged as the biggest weekly gainers, while Injective (INJ), Canton (CC), and Cronos (CRO) recorded the steepest losses.
### **Prediction of the Week**
Bitcoin may never fall below $60,000 again, according to Alex Svanevik, founder of analytics platform Nansen. Svanevik believes that $60,000 represents not just a support level but a psychological floor, marking the cycle low for Bitcoin’s current bull run. His optimism is rooted in the asset’s role as a hedge against fiat currency expansion, a trend he believes will continue until global monetary policy shifts.
### **Top FUD of the Week**
Physical attacks on crypto holders, known as “wrench attacks,” surged in the first half of 2026, with criminals stealing over $30 million across 46 documented incidents. Chainalysis reported that while the total number of attacks increased slightly from 2025, the success rate dropped from 49% to 26%, suggesting that heightened awareness may be paying off.
In other unsettling news, the ElizaOS token plummeted 19% to an all-time low after founder Shaw Walters declared the project “dead.” Once a high-flying AI-agent token with a market cap of $2.5 billion earlier this year, ElizaOS now has a market cap of just $2.1 million. Walters stated that development of the Eliza software would continue, but without the token or the Eliza Foundation.
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### **FAQ**
**What was BIP-110 and why did it fail?**
BIP-110 was a proposed soft fork for Bitcoin designed to eliminate non-financial transactions, such as Ordinals, by allowing miners to reject certain types of data. It failed because it lacked sufficient miner support, with only 2.5% signaling approval. The minority chain it created could not sustain itself economically, as mining remained costly and unprofitable without block reward sales.
**Who opposed BIP-110 and why?**
Prominent figures such as Michael Saylor and Adam Back opposed BIP-110, arguing that it violated Bitcoin’s neutral consensus rules and could introduce censorship. Developers also raised concerns about its impact on network integrity, leading to calls to remove key supporters from editorial roles.
**What is the CLARITY Act and why is it delayed?**
The CLARITY Act aims to provide regulatory clarity for stablecoins and crypto assets. Its procedural vote was postponed until September after Senate Majority Leader John Thune declined to force a vote, citing a lack of consensus. Lawmakers now have until September 15 to secure the 60 votes needed to proceed.
**What is the Bitcoin Red Team and what did they discover?**
The Bitcoin Red Team is a volunteer security initiative that used AI tools and manual review to scan Bitcoin-related open-source projects. They identified thousands of vulnerabilities, including critical flaws that could be exploited by attackers. The effort was partly a response to the Coldcard hardware wallet hacks, which exposed weaknesses in seed phrase generation.
**Why are Bitcoin ETF inflows significant?**
Bitcoin ETFs recorded their best weekly inflows in four months, with $853.54 million in net investments. This surge suggests renewed institutional interest and may be linked to security concerns following the Coldcard hacks, as investors view regulated custody solutions as safer alternatives to self-custody.
**What is the Tapered Issuance Burn (EIP-8363) proposal?**
EIP-8363 is an Ethereum proposal to reduce validator rewards as the amount of staked ETH increases. The plan would cut rewards entirely once staking exceeds 50% of total supply, aiming to prevent economic inefficiencies. However, the proposal has drawn criticism from DeFi advocates who fear it could undermine decentralization and adoption.
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### **Conclusion**
This week in crypto was marked by both setbacks and shifts in momentum. The failure of BIP-110 highlights the challenges of implementing top-down changes in Bitcoin’s decentralized ecosystem, while regulatory progress on the CLARITY Act remains uncertain. Security concerns continue to shape investor behavior, evidenced by the rise of AI-assisted audits and renewed interest in Bitcoin ETFs. Meanwhile, Ethereum faces internal debate over staking policy, reflecting the broader tension between security, decentralization, and scalability. As the market evolves, these developments will play a crucial role in shaping the future of blockchain technology and digital assets.
