Exploring the tech behind crypto one block at a time |
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Hi, Bradley Keoun here, editor of The Protocol. Happy New Year! The mood in crypto markets has suddenly turned quite bullish with speculation reaching a fever pitch that U.S. regulators will finally approve a spot bitcoin ETF after years of denials. Based on one estimate, some $100 billion of capital might flow into the products. One question might be how many of the incoming investors actually understand the nitty-gritty of how Bitcoin actually works – not just the technical details, but the governance. In today's Network News, we dive into a well-known Bitcon developer's proposal that would have severely curtailed a key source of recent traffic on the blockchain; over the past week the effort was abruptly ended by a maintainer of the open-source Bitcoin Core software project.
In this week's feature article, our Sam Kessler kicks the tires on the new "Verify" tool from Fox Corp. (parent of Fox News) and Polygon, the Ethereum scaling project, that supposedly will help to detect deepfakes.
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GITHUB REJECTION! While crypto traders, tradfi investors, financial institutions and probably lots of normies and newbies were engaging in the gripping speculation over whether U.S. regulators would approve a spot bitcoin ETF, a struggle over the very soul of the Bitcoin blockchain was taking place on the open-source developer platform GitHub. At the core of the matter was whether data-oriented applications like Ordinals inscriptions – often referred to as "NFTs on Bitcoin" – should be allowed on a network that purists argue should be preserved primarily as a settlement layer for peer-to-peer payments. In September, the longtime Bitcoin developer Luke Dashjr, who sits in the latter camp, created a proposal – technically known as a "pull request" or PR – to put strict limits on the amount of data that could be stuffed into an individual transaction. The proposal quickly touched off an acrimonious debate that went on for months, until several days ago when Ava Chow, a maintainer of the paramount Bitcoin Core software, abruptly closed the PR without taking action. "It's abundantly clear that this PR is controversial and, in its current state, has no hope of reaching a conclusion that is acceptable to everyone," Chow wrote, the last post in the thread. It's possible there could be additional chapters, though, since Dashjr later tweeted, "Spam filtering isn't dead until the spam is dead."
ICYMI: We finally got around to reading this report from last month by Galaxy Research's Christine Kim (who by the way is also the former co-author of The Protocol's predecessor newsletter, Valid Points) on why ETH might underperform in the near term. We highly recommend it. A teaser: "The forthcoming Cancun/Deneb upgrade on Ethereum is expected to reduce fees paid by rollup operators for block space and thus, in the near term, act as a headwind to Ethereum’s fee-derived protocol revenue. Over the long-term, if the blockchain modularity thesis proves correct, then the main network fee drivers for layer-1 blockchains like Ethereum and Celestia will be layer-2 rollup service providers, instead of end-users."
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- This week's hack of the SEC's X (Twitter) account to post a fake bitcoin ETF approval was "due to an unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party,” based on a preliminary investigation by the social media-platform. The report also noted that the SEC's account did not have two-factor authentication enabled.
- Grayscale, purveyor of GBTC bitcoin trust, is standing ground on fees amid ETF price war, though some analysts say tax considerations might keep many investors in the investment vehicle post-conversion.
- U.S. arrests 'Bitcoin Rodney' alleged HyperVerse crypto scheme promoter, on IRS charges of fraud. (Link)
- North Korean hacking group Lazarus withdraws $1.2M of bitcoin from unidentified coin mixer. (Link)
- Mysterious $1.2M bitcoin transaction to Satoshi Nakamoto sparks speculation. (Link)
- Bitcoin ETF chaos memorialized on blockchain, with nod to Satoshi Nakamoto's "Chancellor on the Brink" Reference. (Link)
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Screenshot showing jokester's line encoded into the Bitcoin blockchain using the OP_RETURN function. (Mempool.space) |
A message from Stellar Community Fund |
The Stellar Community Fund (SCF) has played a crucial role in the Stellar ecosystem since its inception in 2016. As we approach the groundbreaking Soroban Mainnet launch, which introduces smart contract functionality to the Stellar public network, SCF is set for its fifth iteration. The recent expansion of SCF marks a significant stride in bootstrapping the ecosystem, on the Stellar native smart contract platform Soroban. This initiative has been crucial in fostering the development of innovative tools and applications within the Stellar network. With an impressive allocation of nearly $10M in XLM* to over 130 projects in 2023 alone, SCF demonstrates its commitment to scaling up support for blockchain innovation. READ MORE: The Stellar Community Fund Evolves to Support New Projects built on the Stellar Network |
Highlighting blockchain tech upgrades and developments. |
- Metis, the layer 2 blockchain, in the first official disbursement of their Ecosystem Development Fund (EDF), revealed that DeFi products suite WAGMI will receive a $2 million grant and deployed on Metis on Jan. 8, according to the team: "WAGMI is the latest venture from DeFi magnate Daniele Sesta, and WAGMI will be deploying a decentralized exchange that will allow permissionless pool creation, arbitrage bots that will be a way for market inefficiencies to become users' returns and GMI strategies that allow users to seamlessly interact with concentrated liquidity pools."
- Parallel Network has officially launched on mainnet and is open to developers, according to the team, claiming to be the first layer-2 network on Arbitrum Orbit to go live. "It is also the first non-custodial omni-chain margin protocol, which allows liquidity to be pooled across multiple chains and makes it immediately available on the Parallel Network."
- AQUA by JAN3, a Bitcoin and stablecoin wallet headed by former Blockstream Chief Strategy Officer Samson Mow, launched on Jan. 3, according to a press release. Designed for users in Latin America, AQUA claims features that "can also attract die-hard Bitcoin Maximalists, offering them a powerful interface to layer-2 technologies like Lightning and Liquid. By utilizing submarine swaps, AQUA can completely bypass high fee-rate environments, seamlessly moving between Lightning and Liquid. AQUA gives Bitcoiners the ability to batch their Bitcoin transactions in Layer 2 and then swap to mainchain Bitcoin when fees are low."
- C3.io, a hybrid crypto exchange, announced the launch of public mainnet. The project's "self-custodial approach ensures users control their funds, enhancing security while reducing insolvency risks," according to the team. According to the project documentation: "C3’s on-chain component consists of two smart contract applications, the Cross-collateral Clearing Engine and the Health Calculator, which are deployed on the Algorand blockchain and serve as C3's settlement layer…. To consolidate balances, C3 leverages Wormhole’s cross-chain interoperability protocol to process deposits and withdrawals to and from C3’s on-chain component."
- Libre, a newly established tokenization platform, is emerging from stealth mode under the leadership of tokenization pioneer Avtar Sehra, constructed using Polygon CDK, the blockchain development kit of the Ethereum-based scaling network. Heavy hitters from the world of institutional cryptocurrency investing like Nomura’s Laser Digital, Brevan Howard’s WebN group and private markets giant Hamilton Lane are foundational partners and the first users, the companies said on Wednesday.
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Want to showcase your project's latest development? |
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We Tried Fox's Blockchain-Based Tool for Deepfake Detection. Here's How It Went |
Results of authentication using the Polygon-based Verify tool, on Fox News image from an article about Elon Musk and deepfakes. (Verify.fox, modified by CoinDesk) Fox Corp. made ripples in media circles on Tuesday when it announced that it was launching "Verify," a new blockchain-based tool for verifying the authenticity of digital media in the age of AI. The project addresses a pair of increasingly nettlesome problems: AI is making it easier for "deepfake" content to spring up and mislead readers, and publishers are frequently finding that their content has been used to train AI models without permission. A cynical take might be that this is all just a big public relations move. Stirring "AI" and "Blockchain" together into a buzzword stew to help build "trust in news" feels like great press fodder, especially if you're an aging media conglomerate with credibility issues. We've all seen Succession, haven't we? But let's set the irony aside for a moment and take Fox and its new tool seriously. On the deep-fake end, Fox says people can load URLs and images into the Verify system to determine if they're authentic, meaning a publisher has added them to the Verify database. On the licensing end, AI companies can use the Verify database to access (and pay for) content in a compliant way. Blockchain Creative Labs, Fox's in-house technology arm, partnered with Polygon, the low-fee, high-throughput blockchain that works atop the sprawling Ethereum network, to power things behind the scenes. Adding new content to Verify essentially means adding an entry to a database on the Polygon blockchain, where its metadata and other information are stored. |
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- Tune.FM, a Web3 music platform, has received $20 million in capital from alternative investment group LDA Capital to advance its goals of helping musicians earning a greater share of royalties from their work. Using Hedera Hashgraph's blockchain technology, Tune.FM provides musicians with a platform to receive micropayments for streaming in its native JAM token (JAM) as well as minting non-fungible tokens (NFTs) for digital music assets and collectibles.
- Bracket Labs, a provider of leveraged structured products for non-custodial DeFi users, raised $2 million in a pre-seed round led by Binance Labs and NGC Ventures for their "Passage" volatility trading product on the BracketX platform, according to the team.
- EOS Network Ventures (ENV) "just invested $500K in EZ Swap, a multi-chain NFT DEX protocol and inscription marketplace, during its successful second fundraising round in December 2023, totaling $1 million," according to the team.
- KuCoin Labs, the investment and incubation program of Seychelles-based crypto exchange KuCoin, has made a strategic investment in DeMR, a "decentralized mixed reality (MR)" infrastructure network (MR-DePIN) built on the Solana blockchain, according to a press release.
- Ta-da, an AI data marketplace, completed a $3.5M funding round from investors including Morningstar Ventures, the layer-1 blockchain protocol MultiversX, GBV Capital, XVentures, NxGen and Spark Digital Capital, according to the team.
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Ethereum Gets Flippened by Bitcoin on NFTs |
Those who have followed the growth of NFTs over the past several years know that the tokens initially exploded as a phenomenon on the Ethereum blockchain. But according to a recent chart from the analysis firm Messari, Bitcoin has now taken the lead in NFT sales volume, with $881 million in December. "This well surpasses any single-month sales volume for Ethereum or Solana in 2023," according to Messari. The driver? Ordinals inscriptions. |
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Consensus Ain’t for Devs?! Here’s Why You’re Wrong |
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At the heart of Consensus, Protocol Villagepresented by XRP Ledger is where the top blockchains show off their latest advancements, share their detailed roadmaps, dive deep with technical workshops and forecast the next wave of innovation. Get your $109 Developer Pass before they’re gone. |
- Jan. 10-12: Crypto Finance Conference, St. Moritz.
- Jan. 30: Stellar upgrade for Soroban smart contracts, public network readiness date.
- Feb. 22-24: Bitcoin++, Buenos Aires.
- Feb. 23-March 3: EthDenver.
- April 2024 (estimate): Next Bitcoin halving.
- April 8-12: Paris Blockchain Week.
- April 18-19: Token2049, Dubai.
- May 29-31: Consensus, Austin Texas
- July 25-27: Bitcoin 2024, Nashville.
- Sept. 30-Oct. 2: Messari Mainnet, New York.
- Oct. 21-22: Cosmoverse, Dubai.
- November 12-15: Devcon Southeast Asia, Bangkok, Thailand
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