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Cardano’s first full‐cycle ecosystem budget has reached its finish line. On August 19, 2025, Intersect—Cardano’s member-based organization that facilitated the process—announced: “Our ecosystem budget and withdrawal process has now reached its conclusion… DReps have approved ₳264m in ecosystem funding.” In the same statement, Intersect said the pipeline began with 194 proposals submitted through GovTool and the Ekklesia poll, was refined off-chain to 40, and ultimately produced 39 on-chain treasury withdrawals—37 of which cleared the required thresholds.

First Cardano Budget Cycle Closes

Intersect added that “more than 30 vendors have now signed contracts,” with those agreements being published for public review. The live “Intersect Administered Contracts” ledger confirms a growing roster of counterparties and amounts—ranging from the ₳64.3 million “Catalyst 2025” program to infrastructure and tooling efforts such as a ZK bridge and maintenance of key developer libraries. Intersect says additional contracts will be posted in the days ahead “together with the funding of related smart contracts.”

The conclusion caps a months-long governance sequence that combined off-chain deliberation and on-chain ratification. In July, Intersect submitted 39 Treasury Withdrawal governance actions for DRep and Constitutional Committee scrutiny; throughout late July and early August, proposals began surpassing the 67% DRep supermajority threshold that marks passage under CIP-1694’s current regime. Intersect’s development updates documented the first wave of supermajorities and directed participants to follow each proposal’s progression epoch by epoch.

With votes cast and thresholds met, Intersect has outlined what happens next. After a proposal passes, it is ratified at the epoch boundary, then enacted one epoch later, moving funds from the Treasury to designated smart-contract holding addresses. Intersect’s administration team finalizes legal agreements, deploys vendor-specific contracts with milestone schedules, and co-signs them alongside an oversight committee. Intersect’s August guidance emphasized the three-stage sequence—ratification, enactment, administration—and pledged status updates as each vendor’s contract goes live on-chain.

The mechanics behind those disbursements have been built for transparency. Intersect’s knowledge base details an end-to-end flow: withdrawals fund partitioned “Treasury Contracts”; vendors sign written agreements; “Vendor Contracts” encode milestones and payment dates; the oversight committee holds keys to provide checks and balances; and vendors withdraw only as milestones mature. Funds sit effectively in escrow, are auditable on-chain, and unclaimed balances time out back to the Treasury.

To monitor the delivery phase, Intersect points the community to two public dashboards. A Smart Contract dashboard exposes milestone breakdowns, dates, and payment events for each funded project, while a Cardano Treasury dashboard tracks flows from the Treasury into the reserve and project contracts.

The now-published contract catalog provides a first look at how the approved ₳264 million will be administered across core infrastructure, governance tooling, developer experience, and ecosystem programs. Entries include continued development for the AdaStat explorer, ongoing maintenance of PyCardano, and a ZK bridge prototype—illustrating the mix of large-scale programs and targeted technical workstreams that made it through the final on-chain filters.

IOG Takes The Lead

Cardano’s single largest allocation goes to Input Output’s core protocol program. Intersect’s contract ledger lists ₳96,817,080 for the “2025 Input Output Engineering Core Development” proposal, dedicated to “engineering, maintenance, and development services to enhance and secure the Cardano protocol and its core infrastructure,” explicitly framed as delivery of the community-endorsed technical roadmap. A companion research track, “Input Output Research (IOR): Cardano Vision – Work Program 2025,” adds ₳26,840,000 for multi-year research and technology validation.

Intersect also shows two further IOG-administered items—₳5,159,000 to overhaul Project Catalyst’s technical stack and ₳1,300,000 to decentralize the Blockfrost API via a gateway and “Icebreaker” network—bringing Input Output–family contracts to roughly ₳130.1 million, just under half of the approved ₳264 million budget.

Input Output characterizes the engineering mandate as the first community-authorized core development program in Cardano’s history, approved with 73.93% support. In its newsroom statement, IOE says the funded roadmap will advance scalability, developer experience, and interoperability through initiatives including Ouroboros Leios, Hydra, Mithril enhancements, nested transactions, and Project Acropolis—a modular re-architecture of the node—with “faster sync times, lower RAM usage, and reduced operational costs for stake pool operators.”

At press time, ADA traded at $0.92.

Featured image created with DALL.E, chart from TradingView.com

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July 11th What did the Block Chair highlight about Bitcoin’s security budget?

Blockchain Explorer and Analytics Firm Blockchair recently launched its budget. Day is a website designed to raise awareness and encourage discussion about the decline in Bitcoin security budget. This is an issue that could threaten the long-term viability of your network. The platform presents a simplified live visualization so that users can understand how Bitcoin security is funded through a combination of block subsidies and transaction fees. With block subsidies halving every four years and the fare market still undeveloped, the budget underscores the increased risk of insufficient mining incentives, which could expose the network to a potential 51% attack. The site also explores potential responses, ranging from scaling solutions to controversial proposals such as changes to 21 million BTC supply caps. By addressing widespread misconceptions such as relying on Hashrate’s growth and optimistic price forecasts, Blockchair aims to promote more informed, solution-oriented debates about Bitcoin’s future security.

How does Bitcoin security model actually work?

Bitcoin’s security model is based on a distributed proof of job (POW) consensus mechanism. This mechanism involves miners spend computational energy to validate transactions and protect the network. This model relies on economic incentives to adjust participants’ interests and to block malicious behavior. Miners compete to solve the encryption puzzle, and those who first find a valid solution will win the right to add new blocks to the blockchain. This process requires significant energy consumption and hardware investment, making attacks like double spending and chain reorganization economically unfeasible, unless the attacker controls most of the total network hashrate. The difficulty adjustment algorithm ensures that blocks are generated every 10 minutes regardless of changes in network hash power, maintaining a stable cadence of predictable publication and transaction processing.

A “security budget” refers to the total amount of value paid to a miner to encourage this ongoing work. These are two important factors: block subsidies and transaction fees. Block subsidies are new bitcoins created in each block, starting at 50 btc, half every four years (currently at 3.125 BTC per block as of half of 2024). Transaction fees are paid by users to include transactions in blocks, and become more and more important over time as subsidies decrease. Together, these rewards must remain economically attractive enough to maintain participation of miners. If security budgets are below what miners need to cover operational costs, some may drop networks, reduce hashrates, and make them more vulnerable to system attacks.

Bitcoin’s long-term security model predicts that the final face will be eliminated from block subsidies approaching zero around 2140. As a result, the network ultimately relies entirely on transaction fees to maintain its security budget. This shift has made the ongoing high demand for block space and healthy rate markets very important. If trading volumes and fees are too low in the unsubsidized future, Bitcoin could struggle to maintain sufficient hash power unless alternative mechanisms (such as optional sidechains and off-chain solutions such as lightning networks) generate sufficient economic activity to maintain base tier fees. Critics have questioned whether fees alone are sufficient to maintain robust security, but supporters argue that rarity, adoption and economic utility support a naturally viable fee market.

An important feature of this model is its game-theoretical resilience. Miners are encouraged to act honestly, as attacking networks is not only expensive, but also undermine trust in the system and undermine the value of the attacker’s own Bitcoin holdings and mining infrastructure. Furthermore, as Bitcoin’s fixed supply schedules have declined over time the security budget issuance component, the long-term viability of the network depends on demand-driven transaction fees and ongoing technology adaptation. Therefore, Bitcoin’s security model is not static, but a dynamic equilibrium of economic incentives, user behavior and technological innovation, all of which need to continue evolving in tandem to maintain network integrity.

What is a budget? Why do you claim that Bitcoin’s security model is risky?

Blockchair’s newly launched website, Buldge.day, serves as educational resources and warning signals for bitcoin security budgets that decrease by 50% every 210,000 blocks when herbs occur, or block subsidies, which can become a structural issue with a long-term impact on network history. The site provides an explicit language breakdown of how Bitcoin’s POW model relies on miners’ compensation through block subsidies and transaction fees, and what happens when its financial incentives become weaker. Budget fills the budget as blocks’ rewards are halved every four years and trading fees cannot fill the gap. Day argues that Bitcoin could ultimately face situations where its economic defenses no longer thwart attacks such as double spending, trading censorship, or network stalling. The concern is not theoretical. It is based on measurable trends and declines in miners’ revenue compared to the overall value of Bitcoin.

At the heart of the site’s discussion is the decline in block subsidies, which now drops to 3.125 BTC per block, eventually reaching zero around 2140. Theoretically, this reduction subsidy should be offset by a robust fee market, but it suggests that no data has occurred. As of early 2025, trading fees have contributed only a small portion of miners’ total revenue, and fee levels remain low as users are motivated to seek cheaper alternatives in other chains due to limited block space. The budget warns that if fees and revenue from rising BTC prices do not outweigh the decline in subsidies, there may be fewer miners who may feel they are worthy of securing a network. This reduces hash power, lowers the cost threshold for successful 51% attacks, and weakens the deterrent that underpins Bitcoin’s unreliable design.

Budget outlines some potential paths, ranging from technical scaling to more fundamental protocol changes. The first option, on-chain scaling, includes increasing block size, reducing block time, or incorporating optional block extensions. These changes could potentially increase transactions per block, allowing individual fees to be reduced while maintaining appropriate total miner compensation. More controversial proposals include shifting Bitcoin consensus mechanisms through mechanisms such as tail ejection and demerging to alternatives such as proof of fact and alternatives that implement continuous inflation. However, these approaches raise philosophical and practical concerns, such as violations of Bitcoin’s fixed supply principles and increased risk of centralization. This site presents these as trade-offs that need to be critically evaluated, rather than as approval.

A key part of the budget is challenging the widely held assumptions about Bitcoin’s future security. The site warns that hashrates alone will not guarantee security, especially when it comes to cheap energy or hardware. It also counters the idea that future Bitcoin price increases will automatically resolve the issue, allowing miners to be paid with BTC, potential attackers to be funded with BTC, and FIAT’s negative predictions are made regardless of network security. The conclusion is direct but measured. Without meaningful adaptations and reforms, Bitcoin’s current incentive model may not be sufficient to secure a chain in the long term. The site does not claim to provide a final answer, but rather seeks to raise technical and economic issues that are below the debate despite its fundamental importance.

Is the block chair problem trolling or is the conversation worth it?

The team behind the budget deserves recognition by opening conversations that have long been preferred over side steps by many of the Bitcoin community. Addressing the long-term viability of Bitcoin security budgets is not an easy task, especially when challenging the general narrative of self-sufficiency and inevitable success. Rather than promoting self-satisfaction, the project highlights the true risks associated with reduced incentives for miners and the assumption that rising prices or speculative demand will naturally resolve all structural problems. By presenting data in a clear and accessible way, the budget invites the community to be honest with these concerns. This requires both technical insight and a willingness to question legitimacy.

When Bitcoin was introduced, it was envisioned as a peer-to-peer electronic cash system, allowing for large amounts of daily trading at a minimum fee. Early usage reflects its purpose, with microtransactions and direct payments playing a central role. But over time the story changed. Faced with intense internal debate about scalability limitations and block size, Bitcoin’s dominant use cases have evolved to that of “digital gold.” This transformation has provided certain benefits such as broader institutional acceptance and enhanced and valuable appeals, but also produced unintended side effects. The decline in Bitcoin usage has weakened the development of a sustainable fee market that could ultimately replace block subsidies. This dynamic poses a structural challenge to the long-term integrity of Bitcoin’s work proof system. Relying on rising transaction fees to compensate for falling subsidies envisages continuous, large-scale use of the baseline. However, when most owners are investors who rarely move coins, and those seeking low-cost move to a tier 2 solution or alternative blockchain, the on-chain activity needed to support miners’ incentives may not be realized.

With the perceived impact on network fees and differences from Bitcoin’s original purpose, unorthodox tokenization protocols such as ordinal numbers and runes have sparked major controversy within the Bitcoin community. These protocols allowed the inscription and mint of digital assets on the Bitcoin blockchain, and in many cases, trading fees have skyrocketed during periods of high activity. For many everyday users, this rendered Bitcoin is temporarily unavailable, making basic transactions prohibitively expensive. Critics, especially the longtime Bitcoiner, dismissed these tokens, messed up the network and misused block space for speculative purposes. However, from the perspective of miners operating at thin razor margins in an increasingly competitive environment, these fee spikes needed so much revenue that some miners began offering private mempools and out-of-band relay channels directly to tokenization projects, such as marathon slipstreams. As block subsidies have declined over time, the additional revenue generated by ordinances and rune-driven demand provided temporary economic reprieves, highlighting the growing tension between Bitcoin’s evolving use cases and its reduced security budget.

Several voices from the Bitcoin development community, including Peter Todd, have expressed concern about the issue. Todd is openly debating the possibility that hard forks introducing modest, continuous inflation, such as tail release, or that it may be necessary to ultimately protect the network as subsidies approach zero. Such a proposal is naturally controversial as it challenges one of the fixed 21 million btc supply caps, one of Bitcoin’s most sacred design principles. However, raising these options should not be seen as heresy, but as a responsible effort to maintain the long-term viability of the system. The budget does not specify a specific solution, but it should be praised for bringing these perspectives to the surface. Ignoring the potential discrepancies between current usage patterns of Bitcoin and its future security model, the network will not give favor. By choosing to take difficult questions seriously, the leadership behind the budget ensures that Bitcoin evolution is guided by informed deliberations rather than blind faith.

]]> https://earlybirdsinvest.com/what-did-the-block-chair-highlight-about-bitcoins-security-budget/feed/ 0 47124 https://earlybirdsinvest.com/big-short-investor-steve-eisman-says-us-budget-deficit-nothing-to-talk-about-due-to-insatiable-demand-for-treasuries/ https://earlybirdsinvest.com/big-short-investor-steve-eisman-says-us-budget-deficit-nothing-to-talk-about-due-to-insatiable-demand-for-treasuries/#respond Wed, 09 Jul 2025 09:27:02 +0000 https://earlybirdsinvest.com/big-short-investor-steve-eisman-says-us-budget-deficit-nothing-to-talk-about-due-to-insatiable-demand-for-treasuries/

One of the investors who called and profited off the subprime mortgage collapse of 2008, Steve Eisman, is brushing off concerns over the rising US budget deficit.

In a new interview on CNBC, the Wall Street investor says the heavy demand for US treasuries from across the globe suggests there’s no cause for worry over the deficit.

“There’s a great slogan that I think really applies to politics and international affairs, which is when someone tells you who they are, believe them. But in the market, when someone tells you who they are, don’t believe them [until when] they actually do something with their money.

So all the people who are pontificating about this… The price of this risk is a 10-year Treasury yield. And what’s happened to the 10-year Treasury yield? It’s been directionless since December of 2022. So the more important question is given that all these people are pontificating about it, why hasn’t it moved? And again, I think the reason is there’s no alternative to Treasuries.

If there was a real alternative to Treasuries, then all of this stuff about the deficit is something that I would pay attention to. But as long as there’s no alternative, there’s nothing to talk about.”

Eisman also says the demand for US bonds all over the world is “insatiable” and that he believes investors will always show up in Treasury auctions to accumulate government debt.

Late last month, Eisman said he was optimistic about the stock market due to the long-term growth potential of the US economy.

“We’ve been in a bull market pretty much for the last 10 years with some fits and starts. And so buy the dip has become almost a religion. It’s a religion that right now I largely subscribe to because I am of the view… that the US economy is more dynamic than it’s ever been in my lifetime. So long term, I am very bullish.”

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As Republicans rush to pass President Donald Trump’s “One Big Beautiful Bill” budget plan, a timely initiative is emerging in Congress that puts cryptocurrency in the spotlight once more.

Lawmakers are seeking to attach amendments aimed at providing significant advantages for cryptocurrency investors, contributing to the ongoing shift in the regulatory landscape for digital assets in the country.

Fair Tax Treatment For Crypto Miners And Stakers

On Monday, Senator Cynthia Lummis, an advocate for the adoption of digital assets, took to social media platform X (formerly Twitter), to voice her concerns about the current tax treatment faced by crypto miners and stakers. 

The Senator highlighted that these individuals are taxed twice: once when they receive block rewards and again upon selling their assets. “It’s time to stop this unfair tax treatment and ensure America is the world’s Bitcoin and Crypto Superpower,” Lummis stated.

This sentiment resonates with President Trump, who has consistently supported the integration of digital assets into the country’s financial system. His administration has proposed the establishment of the nation’s first crypto strategic reserve, which would include Bitcoin (BTC) and other tokens as part of its framework.

Fox journalist Eleanor Terret also reported on X that discussions around crypto tax amendments remain alive, despite some disagreements that arose over the weekend. 

Congressional Divisions Toward Digital Assets

Terret indicated that the White House is advocating for the inclusion of Lummis’s proposed changes in the final version of the bill, demonstrating a concerted effort to galvanize support for the cryptocurrency sector.

In contrast to Lummis’s approach, Senator Jeff Merkley introduced an amendment aimed at barring elected officials from promoting or profiting from crypto tokens in which they have a financial interest. 

Merkley argued that allowing such practices undermines the integrity of governance. “The sale of crypto coins by any of us for financial benefit is corrupting our responsibility to govern by and for the people,” he asserted.

Lummis opposed Merkley’s amendment, warning that it could stifle American innovation and hinder the government’s ability to effectively understand and regulate digital assets. 

In a pointed remark in Congress on Monday, the pro-crypto Senator noted, “If we’re serious about ethics and financial products, let’s focus on real solutions and all financial products, not just digital.”

Ultimately, Merkley’s amendment was defeated, failing to pass with a vote of 47 to 53, reflecting the ongoing tensions in Congress regarding the regulation of digital assets, as well as the divisions among lawmakers regarding this emerging technology.

As of press time, Bitcoin trades at $107,187, up 2% on the weekly time frame. Despite the short-term recovery for the market’s leading crypto, BTC still trades 4% below its record price of $111,800.  

Featured image from DALL-E, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.

Gaming phones are seeing a resurgence on the back of increasing mobile gaming, and brands are increasingly turning their attention to the mid-range and budget segments, which is great to see. Infinix in particular saw a lot of success with its GT series of devices over the last two years; I enjoyed using the GT 10 Pro, and the GT 20 Pro built on that foundation.

The GT 30 Pro was just announced, and the phone is all set to make its debut in India. Ahead of its global launch, I had an email interaction with Infinix’s Product Director Weiqi Nie to get a better sense of what the brand is doing differently this time around, and how it is positioning the GT series.

Design has always been a key selling point of previous GT models, and Infinix has doubled down in that area with the GT 30 Pro. The phone has a “cyber-mecha” design aesthetic that looks plain cool, and while the GT 10 Pro looked like a derivative of Nothing’s phones, that is definitely not the case with the GT 30 Pro.

Nie noted that Infinix took inspiration from “futuristic machines and modular aesthetics” in designing the device. “Over time, this concept has evolved to be more expressive, functional, and aligned with the needs of modern gamers. In the GT 30 Series, this vision comes to life through the upgraded Mechanical Light Waves system. Built on deep integration between software and hardware design, it delivers 14 lighting scenarios and over 20 customizable effects that respond dynamically to actions like charging, gaming, and notifications.”

Infinix basically wanted to deliver a phone with a bold design, and thanks to the custom pattern at the back and vibrant lighting, the GT 30 Pro manages to stand out quite a bit. Of course, while design is a consideration, the biggest factor when choosing a gaming phone is the performance.

Infinix went with MediaTek instead of Qualcomm, and Nie said the Dimensity 8350 offered the brand the ideal mix of high frame rate gaming and thermal management. “MediaTek’s platform offered the right combination of performance, efficiency, and scalability to bring the GT 30 Pro’s vision to life. The Dimensity 8350 Ultimate delivers smooth high-frame-rate gaming, effective thermal control, and optimized power usage—crucial for maintaining consistent performance across both gaming and daily use.”

“The Dimensity 8350 Ultra’s capabilities provided the performance headroom needed to integrate features like a 144Hz AMOLED display, advanced cooling solutions, and responsive gaming enhancements, without compromising on price accessibility. This approach allows the GT 30 Pro to deliver a flagship-level experience that is designed for a broader range of users.”

Overheating continues to be an issue on gaming phones, with this year’s Qualcomm chipsets in particular having a higher thermal threshold. Thankfully, that isn’t the case with MediaTek designs, and Nie said sustained performance is a “core priority” on the GT 30 Pro, particularly during longer gaming sessions. The GT 30 Pro features Infinix’s 3D Vapor Cloud Chamber (3D VCC) liquid cooling tech, and Nie noted that the brand does “intelligent software optimization that dynamically manages power and thermal behavior based on real-time usage.”

There are two accessories as well — the MagCase and MagCharge Cooler — with the latter being an active cooling solution that funnels cool air to the back of the device. “The GT 30 Pro takes a system-level approach—combining a high-performance chipset, efficient cooling, and smart charging solutions such as Bypass Charging 2.0 and optimized wireless charging with active cooling. This ensures stable, high frame rates over long periods, without overheating or throttling—even while charging.”

I’ll be testing the GT 30 Pro’s prowess in this regard, and having used other MediaTek mid-range designs, I’m excited to see what the phone brings to the table. The GT 30 Pro also retains ultrasonic triggers, allowing gamers to assign in-game actions with relative ease — they make a genuine difference while gaming.

The phone gets a 144Hz panel, and what I like the most is that it unlocks 120fps in demanding titles including PUBG Mobile. Like other brands catering to this niche, the GT 30 Pro is aimed at a younger audience, and the design and visual aesthetic reflects that.

While Infinix is focused on phones, Nie said the brand is looking to build an ecosystem of gaming devices under the “GT Verse” umbrella. “GT Verse is a full-stack experience designed around the needs of mobile gamers. In addition to the GT 30 Pro, the lineup is expanding with GT Buds 4 with 30dB ANC and low-latency Game Mode, the GT Power bank with 55W multi-device fast charging, and even a dedicated cooling accessory under development.”

“This ecosystem approach allows users to stay connected, powered, and immersed across devices—whether they’re gaming at home or on the move. While future product plans will be guided by community feedback and innovation readiness, the GT Series will remain at the core of Infinix’s long-term vision to serve gamers with purpose-built tools across categories.”

Pricing is a big part of what makes a budget gaming phone succeed, and Infinix is targeting a $300 price point with the device. Given that there aren’t that many gaming-focused phones in this category, the aggressive positioning combined with the feature-set of the device should allow the GT 30 Pro to win out against its rivals. With an imminent launch in India, we don’t have to wait too long to know more about the GT 30 Pro, and I’ll have more to share on the device in the coming days.

Joe Maring / Android Authority

I’ve tried to love Google’s TV products, but the budget experience is so poor.

Ryan Haines / Android Authority

C. Scott Brown / Android Authority

Poor performance will turn users off Google TV in the long run.

Palantir Technologies (PLTR -4.63%) shares have been red hot for the past couple of years, but the stock was tumbling after Defense Secretary Pete Hegseth ordered the Pentagon to slash its $850 billion budget by 8%, or about $50 billion.

Even more alarming is that the White House is looking to reduce the budget of the Department of Defense (DoD) by 8% a year over the next five years. The government was Palantir’s largest customer in 2024, representing nearly 42% of its total revenue, with most of that coming from the DoD and branches of the military.

Palantir CEO Alex Karp has also adopted a new Rule 10b5-1 plan, which is used by executives and other insiders to sell their company’s shares based on a set of parameters that they give to brokers. These plans are used to avoid any illegal insider selling and can be as simple as selling shares on set dates regardless of price, to using more complicated triggers. In the past, Karp’s plans have been more complex, and he began to greatly increase his selling last September.

Under his old plan, Karp sold 37.6 million shares, generating nearly $1.5 billion in proceeds. Under the new plan, he will be able to sell nearly 10 million shares through mid-September. He still had the ability to sell about 11 million shares under his old plan when he canceled it for the new plan, so it appears that he wanted to change the selling parameters.

Defense spending cuts

Under the directions of Hegseth, the Trump administration wants the DoD spending cuts directed toward “woke” programs such as fighting climate change, as well as excess bureaucracy, while directing funds toward projects such as securing the country’s borders, drones, and the Iron Dome for America missile defense system.

While there likely won’t be any cuts to Palantir’s programs, the question becomes how much room for growth will there be. An 8% annual DoD budget reduction combined with military money being directed toward border control and a big missile defense project appears to leave less room for other projects.

The opposing argument, though, is that Palantir’s artificial intelligence (AI) solutions can help create efficiency, and thus more money could be directed toward the company’s software platform.

In the past, Palantir has seen its government revenue growth be a bit unpredictable. In 2023, its government revenue growth hit a trough of 14% after seeing 19% growth in 2022 and 47% in 2021. It picked back up to 30% growth in 2024, including jumping 45% in the fourth quarter. The company was seeing strong momentum as the government was becoming more receptive to its new AI solutions.

At the same time, the stock became a Wall Street darling due to the strides it was making in the U.S. commercial sector, which saw revenue climb 54% in 2024, including a 64% surge in the fourth quarter. Palantir has been gaining a lot of momentum in the commercial sector from its AI platform, which can be used to address mission-critical tasks across various industries.

The running joke is that most Palantir investors don’t actually know what the company does. Its roots are as a data gathering and analytics vendor for the government, finding non-obvious patterns. These solutions have been used to fight terrorism and track coronavirus cases.

With AI, however, it has evolved to become an AI operating system, where it uses logic, functionality, and rigorous testing so that customers can use AI to accomplish tasks in real world environments. It has spurned building AI models, focusing instead on the application and workflow layers of AI.

Palantir has been able to attract a lot of commercial customers to its platform. However, many of these newer customers are still in the proof-of-concept stage with AI, with the company having a big opportunity to them into production.

Image source: Getty Images

Should investors buy the dip or sell?

The biggest negative against Palantir has largely been valuation. Even with the big drop in price, the stock still trades at a forward price-to-sales (P/S) multiple of 62 times 2025 analyst revenue estimates.

To put that in context, at its peak a few years ago, the software-as-a-service (SaaS) sector was trading at around 20 times sales with over 30% average revenue growth. Palantir grew total revenue by 29% last year and has forecast 31% growth at the high end of its guidance for 2025.

PLTR PS Ratio (Forward) data by YCharts

The company has a chance to grow into its valuation if it can continue to move customers from proof-of-concept into production. However, if growth once again dries up at its largest customer, the government, then it will be really difficult to justify the stock’s current valuation.

At this time, exactly how DoD budget cuts will affect Palantir Technologies is an unknown, but I don’t want to be holding a stock trading at 62 times sales with it facing this type of potential risk. As such, I’d move to the sidelines.