{"id":"7ujTpb_jZXc","title":"NDNA 3 - When Economics Attack: Monero Under Fire","description":"Monero — the privacy coin famed for anonymity — is facing an attack not through vulnerability, but through economic power. In this video, we unpack how Qubic, led by IOTA co‑founder Sergey Ivancheglo, is leveraging CPU-based mining incentives to seize nearly 27% (peaking to 40%) of Monero’s hashing power, inching toward a possible 51% takeover.  \n\n📌 In this video, we’ll cover:\n • The economics behind the threat: spending $7K–$10K/day versus Monero’s ~$130K/day security budget   \n • How Qubic’s hashpower surged and how the network reacted—pushing it down to 7th-largest pool after community pressure  \n • Monero’s countermeasures: proposals for stealth mining, increased confirmations, population shift to decentralized pools like P2Pool, and talk of a hard fork  \n\n✅ Whether you’re a crypto developer, privacy advocate, or XMR holder—this deep dive explores how decentralized networks adapt when economics become an attack vector.\n\n👍 Like, subscribe, and hit the bell to stay updated on Monero, Qubic, and broader blockchain security issues.","channel_name":"NEAR DevHub","published_at":"2025-08-06T00:00:00.000Z","thumbnail_url":"https://img.youtube.com/vi/7ujTpb_jZXc/hqdefault.jpg","transcript_text":"from the blog post on August 4th, 2025. This is NDNA. When economics attack, Monero's crisis, misaligned air drops, and the potential wave of zombie chains. Monero isn't experiencing another hack, not another rugpull, and it's not someone seed phrase being leaked. There isn't even a smart contract vulnerability. What's unfolding with Monero is quieter, more subtle, and far more unnerving. This is not a breakdown of cryptographic security, but of economics, and it could soon threaten many blockchains, especially those whose survival depends on that thin veil of subsidies and idolistic assumptions. For context, Monero has been synonymous with payment privacy for years. Its random X algorithm designed to favor CPU mining has positioned it as a bastion of decentralized censorship resistant value transfer. But in July 2025, a different kind of threat emerged. Not from malicious hackers, but actually from rational economic actors. The participants aren't violating any rules. They've identified simply a way to dominate the network by remaining profitable while others are forced to abandon it. In essence, it's a 51% attack without the drama of a breach or the spectacle of a fork of any kind. It's a hostile takeover by the way of economic attrition. At the heart of this attack lies a basic truth. When a blockchain's economic incentives begin to break down, its technical robustness offers no further safety. Monero is currently experiencing what many have termed a profitability attack. Coordinated hash power has flooded the network. And as the difficulty adjusts and the rewards are spread thinner, smaller honest miners find they can no longer justify staying online. This cost outstrips their earnings and so then they just exit the network. those who can then afford to remain essentially consolidate control. And unfortunately, this isn't a patchable bug in the protocol. It's just the market. It's actually functioning exactly as markets do. But what makes this moment so important is that it shines a spotlight on a deeper principle that's often ignored in blockchain design. Blockchains are not only a technical system. They're better described as an economic system wrapped in software. Well, some are more centralized and have a token, but whatever. The point here is that the resilience of a decentralized protocol does not stem solely from its Nakamoto coefficient or how elegantly structures consensus. It's actually dependent on whether the incentives hold up under pressure. If the economic model collapses, the security model actually becomes irrelevant. Too many protocols operate under the assumption that good intentions will carry the day. It's a false assumption that validators remain loyal and that emissions will somehow always align with user growth and that the e ecosystems can then be sustained through grants and subsidies. But once the incentives are misaligned, it becomes more rational to then leave versus sustain. And then at that point, no amount of elegant code can actually stop this economic decay. More troubling, this decay rarely looks dramatic. More often, it's slow and quiet where validators start dropping off, users move elsewhere, and apps simply just go unmaintained. The chain continues to exist through decentralization technically, but it no longer matters. It's alive in code, but dead in practice. This is actually what leads to the future zombie chains. A chain where no one is building, no one is using it. Most crucially, no one is really earning. So these chains, still technically functional, survive only because their foundations continue to bankroll operations, paying for validators, funding developer grants, covering infrastructure costs, things like that. But foundations, like any other startup, have a runway. And when that runway ends, these networks won't implode, they just will rot. And Monero's decline is especially alarming because it strikes the most vulnerable and idealistic corner of the blockchain space, privacy. In a world increasingly lined with surveillance, privacy infrastructure is both essential and economically fragile. Monero was already fighting an uphill battle with very few institutional allies and limited commercial incentives. The fight wasn't just ideological, it's economic. And in this new paradigm, a chain can be rendered ineffective not by breaking its privacy guarantees, but by simply outpricing its supporters. A surveillance state doesn't need to just outlaw Monero to make it disappear. simply just need mean needs to make it economical to mine. The results become chilling censorship not through legislation or zero day exploits but through market pressure. The implications ripple far beyond Monero even for proof ofstake chains where mining isn't part of the equation. The same vulnerabilities apply any chain near included relies on a functioning validator economy, active delegation, healthy token incentives and constant stream of network activity to generate fees. If the token emissions decline or user fees don't rise to fill that gap, validator returns shrink. And if staking rewards compress or become unevenly distributed, delegation may accidentally become centralized. And if grants dry up, then the pace of development slows. Suddenly, the economic system around the ecosystem finds itself in the same danger zone that Monero is now navigating. not because it was hacked or attacked, but because of the underlying economic engine sputtered to a dead stop. And if the economic collapse of Monero serves as a macrolevel warning for how instances can fail and destroy a network, then the smaller user level examples playing out right now as well in the world of DeFi. One that shows how trust eros not through technical faults, but through mismanaged expectations and misaligned rewards. There's something uniquely disorienting about being early, being loyal, and then being forgotten. And across DeFi Telegrams and Xthreads, frustration seems to be mounting in the wake of the Ray of Finance airdrop. It wasn't the typical outrage over to tokconomics or emission schedules is something more intimate. Users that had been loyal or significantly invested felt not just underwhelmed, but outright dismissed. After staking tens of thousands of dollars contributing liquidity, even bridging assets to bootstrap the platform, many walked away from the airdrop with allocations only worth a few hundred dollars and felt disenfranchised by that. On paper, an airdrop can look generous. 100 million tokens or 10% of the total supply earmarked for the community and the term community that becomes problematic on its own and then really at best nebulous. Airdrops can favor a distribution mechanism that favors referrals or point systems or wall campaigns. But while early liquidity providers, those who are actually providing the most significant risk there are finding themselves eclipsed by users who simply click through social tasks. So at the heart of the backlash is a breakdown of the social contract that has made airdrop such a powerful tool in the first place. Airdrops at the best function kind of a retroactive equity for taking risk. They reward users not just for participation but for the belief the willingness to risk their own money. The airdrop is a signal that early trust mattered. For example, when unis swap air dropped tokens to every past user, it wasn't just a giveaway. It was an invitation to actually govern. When ENS allocated tokens to with delegate options, it validated a broader vision of community-led development. At their very best, airdrops function like a rectoactive equity. They acknowledge that real value contributed to a network that before it had a token. They reward the trust, experimentation, liquidity, and time. All of which carry opportunity costs and sometimes substantial risk. The most dangerous outcome of a poorly designed airdrop isn't momentary PR fallout. It's the slow irreversible loss of trust. Users who lock value, test apps and beta, maybe provide early feedback, or even just evangelize the protocol are the people who make the ecosystem viable. When they are neglected or misaligned with the rewards, then they don't just leave a single platform. They could disengage from the entire space or worse become skeptics and stop participating altogether. And this is where the stories of Monero and airdrops converge. In both cases, we'll see what happens when a system fails to reward people who keep it alive. Whether it's a minor squeezed down by profitability or DeFi user slighted by an opaque airdrop, the message is the same. When the economics break, the trust follows. Blockchains don't often die in a fire. More likely, it dies in silence from good actors walking away. Not only because they lost money, but because they no longer feel part of the ecosystem. If you enjoyed this episode, please make sure to subscribe, like, and share. Thanks for listening, and we'll be back again.","transcript_synced_at":"2026-11-03T03:50:59.567Z","segments":[{"start_seconds":6,"text":"from the blog post on August 4th, 2025.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=6s"},{"start_seconds":8,"text":"This is NDNA. When economics attack, Monero's crisis, misaligned air drops, and the potential wave of zombie chains.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=8s"},{"start_seconds":15,"text":"Monero isn't experiencing another hack, not another rugpull, and it's not someone seed phrase being leaked. There isn't even a smart contract vulnerability. What's unfolding with","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=15s"},{"start_seconds":24,"text":"Monero is quieter, more subtle, and far more unnerving. This is not a breakdown of cryptographic security, but of economics, and it could soon threaten","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=24s"},{"start_seconds":33,"text":"many blockchains, especially those whose survival depends on that thin veil of subsidies and idolistic assumptions. For","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=33s"},{"start_seconds":40,"text":"context, Monero has been synonymous with payment privacy for years. Its random X algorithm designed to favor CPU mining","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=40s"},{"start_seconds":49,"text":"has positioned it as a bastion of decentralized censorship resistant value transfer. But in July 2025, a different","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=49s"},{"start_seconds":56,"text":"kind of threat emerged. Not from malicious hackers, but actually from rational economic actors. The participants aren't violating any rules.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=56s"},{"start_seconds":64,"text":"They've identified simply a way to dominate the network by remaining profitable while others are forced to abandon it. In essence, it's a 51%","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=64s"},{"start_seconds":73,"text":"attack without the drama of a breach or the spectacle of a fork of any kind.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=73s"},{"start_seconds":78,"text":"It's a hostile takeover by the way of economic attrition. At the heart of this attack lies a basic truth. When a blockchain's economic incentives begin","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=78s"},{"start_seconds":87,"text":"to break down, its technical robustness offers no further safety. Monero is currently experiencing what many have termed a profitability attack.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=87s"},{"start_seconds":94,"text":"Coordinated hash power has flooded the network. And as the difficulty adjusts and the rewards are spread thinner, smaller honest miners find they can no","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=94s"},{"start_seconds":103,"text":"longer justify staying online. This cost outstrips their earnings and so then they just exit the network. those who","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=103s"},{"start_seconds":110,"text":"can then afford to remain essentially consolidate control. And unfortunately, this isn't a patchable","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=110s"},{"start_seconds":117,"text":"bug in the protocol. It's just the market. It's actually functioning exactly as markets do. But what makes this moment so important is that it","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=117s"},{"start_seconds":125,"text":"shines a spotlight on a deeper principle that's often ignored in blockchain design. Blockchains are not only a technical system. They're better","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=125s"},{"start_seconds":133,"text":"described as an economic system wrapped in software.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=133s"},{"start_seconds":137,"text":"Well, some are more centralized and have a token, but whatever. The point here is that the resilience of a decentralized","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=137s"},{"start_seconds":144,"text":"protocol does not stem solely from its Nakamoto coefficient or how elegantly structures consensus. It's actually dependent on whether the incentives hold","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=144s"},{"start_seconds":152,"text":"up under pressure. If the economic model collapses, the security model actually becomes irrelevant.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=152s"},{"start_seconds":160,"text":"Too many protocols operate under the assumption that good intentions will carry the day. It's a false assumption that validators remain loyal and that","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=160s"},{"start_seconds":168,"text":"emissions will somehow always align with user growth and that the e ecosystems can then be sustained through grants and","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=168s"},{"start_seconds":175,"text":"subsidies. But once the incentives are misaligned, it becomes more rational to then leave versus sustain.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=175s"},{"start_seconds":183,"text":"And then at that point, no amount of elegant code can actually stop this economic decay. More troubling, this","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=183s"},{"start_seconds":189,"text":"decay rarely looks dramatic. More often, it's slow and quiet where validators start dropping off, users move","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=189s"},{"start_seconds":198,"text":"elsewhere, and apps simply just go unmaintained. The chain continues to exist through decentralization technically, but it no longer matters.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=198s"},{"start_seconds":208,"text":"It's alive in code, but dead in practice. This is actually what leads to the future zombie chains. A chain where no one is building, no one is using it.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=208s"},{"start_seconds":216,"text":"Most crucially, no one is really earning. So these chains, still technically functional, survive only because their foundations continue to","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=216s"},{"start_seconds":224,"text":"bankroll operations, paying for validators, funding developer grants, covering infrastructure costs, things like that. But foundations, like any","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=224s"},{"start_seconds":231,"text":"other startup, have a runway. And when that runway ends, these networks won't implode, they just will rot. And","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=231s"},{"start_seconds":238,"text":"Monero's decline is especially alarming because it strikes the most vulnerable and idealistic corner of the blockchain space, privacy. In a world increasingly","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=238s"},{"start_seconds":248,"text":"lined with surveillance, privacy infrastructure is both essential and economically fragile. Monero was already fighting an uphill battle with very few","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=248s"},{"start_seconds":257,"text":"institutional allies and limited commercial incentives. The fight wasn't just ideological, it's economic. And in this new paradigm, a chain can be","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=257s"},{"start_seconds":265,"text":"rendered ineffective not by breaking its privacy guarantees, but by simply outpricing its supporters. A surveillance state doesn't need to just outlaw Monero to make it disappear.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=265s"},{"start_seconds":274,"text":"simply just need mean needs to make it economical to mine. The results become chilling censorship not through legislation or zero day exploits but","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=274s"},{"start_seconds":283,"text":"through market pressure. The implications ripple far beyond Monero even for proof ofstake chains where mining isn't part of the equation. The","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=283s"},{"start_seconds":291,"text":"same vulnerabilities apply any chain near included relies on a functioning validator economy, active delegation,","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=291s"},{"start_seconds":299,"text":"healthy token incentives and constant stream of network activity to generate fees. If the token emissions decline or user fees don't rise to fill that gap,","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=299s"},{"start_seconds":308,"text":"validator returns shrink. And if staking rewards compress or become unevenly distributed, delegation may accidentally","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=308s"},{"start_seconds":316,"text":"become centralized. And if grants dry up, then the pace of development slows.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=316s"},{"start_seconds":322,"text":"Suddenly, the economic system around the ecosystem finds itself in the same danger zone that Monero is now","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=322s"},{"start_seconds":330,"text":"navigating. not because it was hacked or attacked, but because of the underlying economic engine sputtered to a dead stop. And if the economic collapse of","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=330s"},{"start_seconds":340,"text":"Monero serves as a macrolevel warning for how instances can fail and destroy a network, then the smaller user level","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=340s"},{"start_seconds":347,"text":"examples playing out right now as well in the world of DeFi. One that shows how trust eros not through technical faults, but through mismanaged expectations and","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=347s"},{"start_seconds":356,"text":"misaligned rewards. There's something uniquely disorienting about being early, being loyal, and then being forgotten.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=356s"},{"start_seconds":363,"text":"And across DeFi Telegrams and Xthreads, frustration seems to be mounting in the wake of the Ray of Finance airdrop. It wasn't the typical outrage over to","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=363s"},{"start_seconds":371,"text":"tokconomics or emission schedules is something more intimate. Users that had been loyal or significantly invested felt not just underwhelmed, but outright","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=371s"},{"start_seconds":380,"text":"dismissed. After staking tens of thousands of dollars contributing liquidity, even bridging assets to bootstrap the platform, many walked away","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=380s"},{"start_seconds":388,"text":"from the airdrop with allocations only worth a few hundred dollars and felt disenfranchised by that. On paper, an","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=388s"},{"start_seconds":396,"text":"airdrop can look generous. 100 million tokens or 10% of the total supply earmarked for the community and the term community that becomes problematic on","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=396s"},{"start_seconds":403,"text":"its own and then really at best nebulous. Airdrops can favor a distribution mechanism that favors referrals or point systems or wall","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=403s"},{"start_seconds":411,"text":"campaigns. But while early liquidity providers, those who are actually providing the most significant risk there are finding themselves eclipsed by","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=411s"},{"start_seconds":420,"text":"users who simply click through social tasks. So at the heart of the backlash is a breakdown of the social contract that has made airdrop such a powerful","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=420s"},{"start_seconds":428,"text":"tool in the first place. Airdrops at the best function kind of a retroactive equity for taking risk. They reward","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=428s"},{"start_seconds":435,"text":"users not just for participation but for the belief the willingness to risk their own money. The airdrop is a signal that early trust mattered. For example, when","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=435s"},{"start_seconds":444,"text":"unis swap air dropped tokens to every past user, it wasn't just a giveaway. It was an invitation to actually govern.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=444s"},{"start_seconds":450,"text":"When ENS allocated tokens to with delegate options, it validated a broader vision of community-led development. At","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=450s"},{"start_seconds":457,"text":"their very best, airdrops function like a rectoactive equity. They acknowledge that real value contributed to a network","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=457s"},{"start_seconds":464,"text":"that before it had a token. They reward the trust, experimentation, liquidity, and time. All of which carry opportunity costs and sometimes substantial risk.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=464s"},{"start_seconds":474,"text":"The most dangerous outcome of a poorly designed airdrop isn't momentary PR fallout. It's the slow irreversible loss of trust. Users who lock value, test","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=474s"},{"start_seconds":483,"text":"apps and beta, maybe provide early feedback, or even just evangelize the protocol are the people who make the ecosystem viable. When they are","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=483s"},{"start_seconds":492,"text":"neglected or misaligned with the rewards, then they don't just leave a single platform. They could disengage from the entire space or worse become","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=492s"},{"start_seconds":500,"text":"skeptics and stop participating altogether.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=500s"},{"start_seconds":504,"text":"And this is where the stories of Monero and airdrops converge. In both cases, we'll see what happens when a system fails to reward people who keep it","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=504s"},{"start_seconds":511,"text":"alive. Whether it's a minor squeezed down by profitability or DeFi user slighted by an opaque airdrop, the","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=511s"},{"start_seconds":518,"text":"message is the same. When the economics break, the trust follows. Blockchains don't often die in a fire. More likely,","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=518s"},{"start_seconds":526,"text":"it dies in silence from good actors walking away. Not only because they lost money, but because they no longer feel part of the ecosystem.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=526s"},{"start_seconds":535,"text":"If you enjoyed this episode, please make sure to subscribe, like, and share.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=535s"},{"start_seconds":541,"text":"Thanks for listening, and we'll be back again.","url":"https://www.youtube.com/watch?v=7ujTpb_jZXc&t=541s"}],"youtube_url":"https://youtube.com/watch?v=7ujTpb_jZXc","url":"https://near-pedia.xyz/videos/7ujTpb_jZXc"}