June 21, 2023

Exploring the tech behind crypto

one block at a time

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Hi, Bradley Keoun here, editor of The Protocol.  

In today’s issue, we cover a proposal by Ethereum developers to increase the maximum number of ether tokens (ETH) that individual validators can stake – to about $3.6 million worth – raising knotty questions about the second-largest blockchain's degree of decentralization. We also highlight the scare in the crypto community that Apple might use its control over the App Store to restrict blockchain payment apps and bitcoin's price rally past $30K for the second time this year. Our Margaux Nijkerk writes that as blockchains proliferate, “storage proofs” might be an alternative to hack-prone cross-chain bridges.

‘Storage Proofs’ Touted as Alternative to Hack-Prone Bridges in Multichain World

As new blockchains proliferate, users who want to swap assets between chains are dependent on bridges prone to problems and attacks. 

Chainanalysis estimates that bridge attacks accounted for 69% of all cryptocurrency stolen in 2022, with over $2 billion siphoned from buggy cross-chain bridge platforms. 

As blockchain developers increasingly recognize the problem of vulnerable bridges, some, like the Ethereum layer 2 network Starknet, are turning to “storage proofs” for help. 

Storage proofs are a cryptographic method to allow users to “prove” that certain data, transactions or assets on a blockchain are true or valid, without having to rely on a third party.

“Today, you hand over money to third parties to transport over a bridge. Anyone

can be lurking, waiting to ambush you and steal money,” Eli Ben-Sasson, co-founder of Starkware, the company behind the Starknet blockchain, explained in a statement. “Storage proofs will let you just press a button and more-or-less teleport liquidity from chain to chain. It’s a dramatic difference.”

Eli Ben-Sasson, co-founder and president of Starkware. (Starkware)

According to Starknet, the network will be the first to have storage proofs natively integrated, after the setup goes through a security audit later this year. Currently, Starkware’s Goerli testnet has storage proofs built on it by a team called Herodotus, so project developers can experiment with the new proofs.

Ben-Sasson contends that storage proofs can, in some cases, eliminate the need to transfer assets across different chains. Instead, users could use storage proofs to simply show on one chain that assets exist on another.

A message from Bittrex, Inc.

Bittrex, Inc., et al., have established bar dates for submitting proofs of claim. Persons and entities that agree with their claim as listed in the Schedules [Docket Nos. 87, 91] or otherwise exempted need not submit a proof of claim. Otherwise, all persons and entities that assert a claim against Bittrex, Inc. and its affiliates must submit a proof of claim before the applicable bar dates outlined in the Bar Date Notice [Docket No. 107-3].

Network News

Ethereum co-founder Vitalik Buterin (CoinDesk)

32 ETH – Back in 2020, when Ethereum developers initiated the blockchain’s multi-year shift to a proof-of-stake network, they set the level for serving as a validator – responsible for processing transactions under the new system – at 32 ether (ETH), worth about $60,000 at current prices. Now, two months after the full transition to proof-of-stake officially completed, developers are proposing a major change they say will make Ethereum’s operations more efficient: raising the validator maximum to 2,048 ETH ($3.6 million worth), while keeping the minimum at 32 ETH. The change would spare large investors from having to set up multiple validators, while also making it possible to set up automatic accruals; under the current setup, any staking rewards must get routed to separate accounts. Another benefit is that existing stakers who want to double down on their investments could avoid the queue for spinning up a new validator, which has stretched out to a month-long wait. One question that immediately percolated on an Ethereum discussion forum was whether the change would lead to more centralization – allowing corporate entities and large, wealthy investors to gain more control over the network, while relegating smaller stakers to the status of “second-class citizens.” One crypto investor tweeted that forcing organizations to run multiple validators actually “obscures circulation,” instead creating an “inefficient circus of singular parties running hundreds of nodes.”    

Bitcoin-friendly presidential candidates. Miami Mayor Francis Suarez, who vowed to make the city a Bitcoin hub, jumped into the race for the U.S. 2024 Republican presidential nomination last week, joining bitcoin-friendly rivals including Florida Governor Ron DeSantis and the entrepreneur Vivek Ramaswamy. On the Democratic side, Robert F. Kennedy Jr. made his first public appearance as a presidential candidate at last month’s Bitcoin 2023 conference in Miami. 

Cross-chain bridges. The decentralized crypto exchange Uniswap’s affiliated foundation said a committee of nine experts had conducted an extensive review of crypto bridge providers and approved Wormhole and Axelar for the specific use case of protocol governance. 

Apple reversed its decision to reject the Bitcoin wallet Zeus, which uses the blockchain’s Lightning Network, from inclusion on the App Store. The scare came as the crypto community was already rattled by fears of growing hostility from the computer and smartphone maker. Apple previously had threatened to delist Damus, a decentralized media platform that runs on the Nostr protocol and also integrates with Lightning.

Also:

Protocol Village

Bitkey self-custody bitcoin hardware wallet (Block)

Money Center

Data Corner

ZkSync Era's TVL hits new record high above $500 million (L2Beat)

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