This Week in Crypto (August 3–10): BIP-110 Forks and Dies in Two Blocks, BTCPay Drains Merchant Lightning Nodes, and the CLARITY Act Finally Gets a Date

If last week BIP-110 was dead on arithmetic, this week in crypto it died on the chain — a real fork, at a real block, that produced two blocks and stopped. Bitcoin's infrastructure then took a second hit in seven days, draining merchants' Lightning nodes. Around those: a Senate cloture filing that puts market structure on the September calendar, an Ethereum proposal to burn staking rewards to zero, and the best ETF week since April landing alongside the category's first fund closure. Here's the week, story by story.

The week at a glance

BIP-110 forked Bitcoin at block 961,632 and mined two blocks

The soft fork that spent months failing to attract miners got its answer on Saturday, August 8. At block height 961,632, nodes enforcing BIP-110 rejected the first block that didn't signal bit 4 and began building their own chain. About 99.85% of Bitcoin's hashpower stayed where it was.

The arithmetic explains the rest. BIP-110 split at the start of difficulty period 477, so the minority chain inherited the full 127.48 trillion difficulty with roughly 0.15% of the hashrate. Difficulty readjusts only every 2,016 blocks, leaving the fork too weak to find blocks and an estimated 350 days from any relief. In about eight hours it produced two blocks against the main chain's 48. By August 9 it was more than 80 blocks behind.

On X: @saylor — "Bitcoin was free to fork, and the network was free not to follow," with the 99.85% hashpower split and the 80-block gap.

Roughnecks, the single mining operation carrying the fork, mined 961,632 and 961,633 and then quit, announcing at 03:40 UTC that it was ceasing operations under that name.

One correction to last week's roundup: the single-sourced report that developers had called off activation did not hold. It ran on schedule, with signaling near 2.6% against a 55% bar.

A second Bitcoin infrastructure exploit, this time hitting merchants

Seven days after the Coldcard entropy failure, the attack surface moved from cold storage to checkout. On August 7, BTCPay Server confirmed a critical vulnerability under active exploitation: an unauthenticated remote attacker could pull .macaroon files from Docker deployments running LND. A macaroon is the bearer credential authorizing commands against a Lightning node, so possession meant control — force-close channels, sweep the output.

On X: @BtcpayServer — "a critical vulnerability being actively exploited... which can result in the loss of funds," with instructions to update or take the server offline.

Version 2.4.2 shipped the same day and now blocks public remote LND connections over BTCPay domains and Tor onion addresses. Patching alone doesn't close the exposure, though: the credentials leaked, so operators also need to refresh macaroons and macaroon.db, rotate auth strings for other Lightning backends, and empty and recreate any BTCPay-generated hot wallet. Foundation, maker of the Passport hardware wallet, had its node drained overnight; Citadel21's was swept the same night.

On X: @zherbert — the Foundation CEO confirming attackers closed the company's channels and swept the funds.

The Coldcard attacker also moved coins for the first time on August 7: 30.185 BTC, about $1.94 million, into a fresh address. Two exploits in two weeks, neither breaking a cryptographic primitive — both turning on how keys and credentials were handled around it. Our documentation covers what to do when a wallet is compromised, and the trade-offs sit in our hardware wallet guide.

The CLARITY Act has a date, and not the votes

Just before 6:00 a.m. ET on August 7, Majority Leader John Thune filed cloture on the motion to proceed to H.R. 3633, the Digital Asset Market Clarity Act. It ripens Tuesday, September 15 at 2:15 p.m. ET, the day after the Senate returns.

On X: @SenatePress — the procedural record: cloture filed on the motion to proceed to Cal. #423, H.R. 3633.

Cloture takes 60 votes, and failing it effectively ends the bill this Congress. Democrats have signalled they'll withhold support pending agreement on two points: whether stablecoin issuers may pay yield to holders, which would set them against bank deposits and money market funds, and ethics rules for officials holding digital assets. The yield fight hardened this week as banks pressed Republicans to change the language. Filing cloture still matters — it spends leadership's floor time and puts the negotiation on a deadline.

Ethereum proposed burning staking rewards to zero, and the people who built on staking revolted

EIP-8363, "Tapered Issuance Burn," would burn a rising share of validator issuance as the staking ratio climbs, reaching 0% issuance-based yield at roughly 50% of ETH supply staked. The authors, including Ethereum Foundation researcher Justin Drake, argue each additional staked ETH buys less marginal security while diluting everyone else. Staking passed one third of supply in April 2026 and keeps rising; the current curve floors yield near 1.5% even at full participation.

The phase-in runs 18 months, base reward factor decaying 128 to 64. At zero issuance, validators live on tips — about 15% of staking yield today.

On X: @MikeSilagadze — "EIP released with 48 hours notice for comments... For a major network economics change with far reaching implications for all of DeFi."

Aave's Stani Kulechov warned it would push capital toward competing yield-bearing assets, and critics note the cut squeezes solo validators before institutions, thinning the decentralization issuance partly pays for. The proposal wasn't submitted for inclusion before the deadline.

Spot Bitcoin ETFs had their best week since April, and lost their first fund

Between August 3 and 7, US spot Bitcoin ETFs took in $853.54 million across five straight inflow sessions, the largest weekly total since mid-April — and BlackRock's IBIT absorbed about $693 million of it, roughly 81 cents on the dollar.

In the same week, Hashdex said it will liquidate its $14.7 million spot Bitcoin ETF, delisting August 17 — the first US spot Bitcoin ETF to close since the category launched in January 2024.

The honest read is rotation, not retreat. Outflows ran three straight months while BlackRock's iShares Future AI & Tech ETF gained 39% through July, against a ~36% fall in the CoinDesk 20. Money that stays consolidates into one product.

Also this week

• Hyperliquid's RWA perps are eating the revenue that backs HYPE. Gross revenue has fallen four quarters running, from about $357M in Q3 2025 to roughly $202M in Q2 2026 — while real-world asset perps hit a record $3.6B in open interest and overtook bitcoin as the platform's largest market.
• More than 100 crypto projects have folded in 2026. RootData counts over 100 shutdowns, bankruptcies or permanent silences this year, with BitMEX, BitMart, Movement Labs and Storj Labs all filing or closing in one week in late July as altcoins down 70–90% drained treasuries.
• Brazil will hold large outbound crypto transfers for 24 hours. Resolution BCB No. 584/2026, published August 7, bites once daily transfers to foreign providers or self-custody wallets exceed $10,000. It takes effect January 1, 2027. The same day, Coinbase won a full UK trading licence and OFAC sanctioned two Iran-linked exchanges.

What to watch next

Four dates carry the next month. August 15: Russia's mining ban across Moscow, the Moscow Region and parts of Kursk takes effect through 2032, in a country holding about 17.2% of global hashrate. August 17: Hashdex's fund delists. September 15, 2:15 p.m. ET: the CLARITY Act cloture vote, 60 votes or nothing. September 16: the FOMC, with futures near 56% odds of a pause after July payrolls came in at minus 23,000 against an expected plus 80,000. After two weeks of infrastructure failures, Coin98 Super Wallet generates seeds on-device.

Last updated: August 2026