Unlocking the Potential: Exploring the Hype Surrounding Ethereum’s Dencun Update

The main news this week centers around today’s Ethereum upgrade, Dencun, which marks the blockchain’s biggest technical shift in over a year. As Coindesk’s Margaux Nijkerk reports, the upgrade could help slice fees for Ethereum users through “proto-danksharding,” an upgrade that’s designed to optimize the network for layer 2 (L2) rollup networks like Optimism and Arbitrum. On the other hand, some developers warn that the shift could fragment the Ethereum ecosystem and set it down a path that risks costing it its competitive edge versus competing chains.
In this week’s issue of The Protocol:

• Developers are debating whether Dencun will be a good or a bad thing for the Ethereum network.
• Investors and builders are breathing new life into DePIN networks that merge the physical and blockchain worlds to deliver on crypto use cases.
• Legacy financial institutions like MasterCard, Goldman Sachs and BNY Mellon are continuing their march into the blockchain domain through new crypto partnerships and pilot programs.
• Top picks from the past week’s Protocol Village column: Swell, Polygon, EigenLayer, Vega Protocol, Nibiru, Rarimo, Burnt Banksy, XION.
• Over $160 million of blockchain project fundraises.
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ETHEREUM UPGRADES: Ethereum’s biggest upgrade in over a year has finally happened. The update, Dencun, contains a slate of code changes designed to improve Ethereum for developers and make it quicker and cheaper for end-users. The main one that people are paying attention to is “proto-danksharding,” which will allow abstract “blobs” of data to be posted to Ethereum alongside plain-old transactions. The idea of adding new lanes to the Ethereum highway via “sharding” is not a new one, but this first stab at the technique zeroes in specifically on decreasing fees for the “layer 2” chains that are rapidly becoming the primary venues by which people transact on Ethereum, which has seen its fees soar in recent years with rising network traffic. Developers hope the change will ramp up capacity on the network, allowing L2 blockchains like Arbitrum, Optimism and Coinbase’s Base network to post larger volumes of data to Ethereum without paying an arm and a leg to do so. While blobs could help slice gas fees for L2 users, there remains some uncertainty around the extent to which proto-danksharding will ease the chain’s fee woes: As any city planner will warn Ethereum’s core developers, adding lanes to a highway (or “shards” to a blockchain) may not ease congestion as intended. Some developers have also voiced concern that Ethereum’s embrace of L2s and native “data availability” risk fragmenting the ecosystem, and could lose the base chain its competitive edge versus rival networks.

GOING DEEP IN ON DEPIN: Speeds are improving and fees are reducing across blockchains, but we’re 15 years into the crypto “revolution” and few use cases have caught on outside of the narrow realms of memecoins and finance. One of the major trends helping to expand the crypto conversation beyond DeFi and infrastructure is “decentralized physical infrastructure networks,” or DePIN, which meld the physical world with blockchains to accomplish everything from easing supply chain inefficiencies to deploying unused compute resources. Projects that bridge blockchains with physical goods are nothing new: Helium, one of the more (in)famous examples of a DePIN project, is trying to create a wireless network that rewards contributors for setting up WiFi hubs. Filecoin, a veteran data-storage blockchain, rewards people for lending their unused hard drive space and remains a go-to example of how blockchain tech can solve real-world problems. The DePIN moniker was on the tip of everyone’s tongue at last week’s ETHDenver conference, but one might be tempted to wave it away as yet another marketing term meant to entice investors and users to tired ideas. But things have changed recently in the DePIN space, with improved blockchain tech and AI hype – buoyed by a surge in investor dollars – fueling the rise of newer projects like the compute-focused Akash and Render networks. If nothing else, the DePIN space is one to keep an eye on because it could help present an answer to an age-old question that has plagued crypto since its inception: Where are the use cases?

• Kamino Finance revises the point-earning rules for its KMNO token airdrop in response to community backlash, promising additional rewards for long-term users, though the specifics of the changes remain undisclosed.
• Goldman Sachs, BNY Mellon and more than a dozen other banks, custodians, and crypto firms are working with bluechip financial blockchain provider Digital Asset to pilot a program for tokenized asset transference and settlement.
• PancakeSwap, the decentralized exchange, unveils a new version that it says is designed to make trading more efficient.

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

1. Ethereum staking protocol Swell has introduced a layer-2 rollup with $1 billion in total value locked (TVL) using Polygon’s chain development kit (CDK). Swell developed the rollup alongside Ethereum scaler AltLayer and a16z-backed crypto staking project EigenLayer. The rollup will take the form of a “restaked rollup,” which comes with a range of services such as decentralized sequencing, verification and faster finality, Swell said on Wednesday.
2. Vega Protocol, a purpose-built blockchain for decentralized derivatives trading, is launching the first futures markets for “points,” according to the team. The first markets are for EigenLayer points, with more expected soon. Vega uses UMA’s Optimistic Oracle to resolve each points market at the time of the “Airdrop Event,” which triggers settlement and determines the price per point. Users can assert claims to the oracle, which are verified on-chain if undisputed. This decentralized framework enables complex market rulesets without relying on a single centralized custodian.
3. NibiruChain, a layer-1 blockchain built by founders from Google, Tendermint, IBM and Sommelier, is announcing the launch of its public mainnet, according to the team: “Nibiru aims to address users’ onboarding challenges and provide a fully mainstream decentralized multichain solution. It is capable of processing 40,000 TPS with instant finality, made possible through parallel optimistic execution.” Smart contracts on Nibiru are written in Rust CosmWasm, which runs in the WebAssembly runtime, according to the project’s documentation.
4. Members of the Rarimo community, a digital identity protocol, revealed that “Russia2024 is the first use case of the recently launched Freedom Tool, an open-source solution for citizen-run, surveillance-free elections and polling.” According to the team: “Russia2024 is an encrypted polling app allowing dissenting Russian citizens to sign petitions, vote in polls and participate in protest elections.The Revolutionary Advancements of Russia2024 and XION Blockchain Launch

There has been a lot of buzz recently around Russia2024, the innovative Freedom Tool application that boasts zero-knowledge cryptography servers to protect the safety and anonymity of its users. Founded and announced by opposition activist Mark Fegyin, this groundbreaking technology is revolutionizing the way people can securely vote and participate in online activities without the fear of being traced.

One major feature of Russia2024 is its use of a blockchain, a decentralized digital ledger that is tamper-proof and transparent. This ensures that votes and other data are accurately recorded and cannot be altered. This is a huge step forward in promoting fair and secure online voting processes.

But that’s not all – Russia2024 also uses zero-knowledge cryptography servers, adding an extra layer of security and anonymity for its users. This means that votes and other information are encrypted and only those who are authorized can access it, keeping the identity of the user completely hidden. This is especially important for those who may be participating in controversial or politically sensitive activities.

With the recent launch of XION’s mainnet, the first blockchain purpose-built for mainstream adoption, this groundbreaking technology is gaining even more attention. XION’s use of USDC, a fully-reserved digital dollar, as its primary transactional currency, further solidifies its potential for widespread use and adoption.

The launch of XION was announced in a unique and attention-grabbing way – through a performance by Burnt Banksy, the founder of the platform. During the performance, Burnt Banksy lit himself on fire, symbolizing a new light for the crypto industry. This exciting and innovative launch event drew even more attention to the potential of XION and its impact on the future of blockchain technology.

But what does all of this mean for the industry as a whole? Will Ethereum’s Big Update Help or Harm the Network?

Ethereum’s biggest update in over a year, Dencun, finally arrived after years of planning and it’s seen as a positive move by many. With the introduction of proto-danksharding, a new method for increasing transaction capacity, Ethereum is taking the first step towards a scalable future. This is great news for layer 2 networks, which will see reduced fees and increased affordability.

However, not everyone is as optimistic about Dencun. Some worry that it could set Ethereum down a path that may have negative consequences in the long term. These concerns stem from the focus on empowering layer 2 solutions, rather than addressing the underlying scalability issues of the blockchain itself.

Regardless, the launch of Dencun and the success of Russia2024 and XION prove that the future of blockchain technology is bright, and it’s only a matter of time before we see widespread adoption and use of these revolutionary advancements.

Money Center: Exciting New Developments in the Crypto World

In other news, there have been some major developments in the world of cryptocurrency. Open-source cryptography firm Zama raised a whopping $73 million in Series A funding to develop applications based on fully homomorphic encryption (FHE). This groundbreaking technology enables data to be processed without decrypting it, making it potentially useful for protecting privacy in blockchain and AI.

Eclipse Labs, the company building a blockchain to scale Ethereum, raised $50 million ahead of its mainnet debut. Eclipse seeks to combine technology from Solana, Celestia, Ethereum and RISC Zero to create a solution that offers both speed and security.

Fjord Foundry, a token-sale platform, raised $4.3 million in a seed round led by Lemniscap. They offer a variety of token sale methods, including their Liquidity Bootstrapping Pools (LBPs) which prioritize equitable distribution and mitigate the risk of manipulation. This comes as they prepare to announce all-inclusive chain aggregation and the launch of their native utility token FJO.

Other notable fundraisings include Cleartoken’s $10 million in seed investment, Elixir’s $8 million Series B funding round, and Bluwhale’s $7 million from undisclosed investors. NFTfi also raised $6 million in a Series A1 fundraising. Additionally, New York-based Blackwing raised $4.5 million, and Ethereum network revenue has surged to nearly two-year highs.

Optimism, the Ethereum layer 2 scaling solution, also made headlines as it sold $89 million worth of its OP governance tokens in a private transaction. All of these developments demonstrate the growing confidence and investment in the future of cryptocurrency and blockchain technology.

In conclusion, the recent advancements of Russia2024, XION, and Ethereum’s Big Update show that the future of blockchain technology is full of potential and exciting developments. With increased security, privacy, and scalability, we can only imagine what other groundbreaking innovations will come next. And with the continued growth and investment in the cryptocurrency industry, we can be sure that these advancements will have a major impact on the way we live and conduct business in the digital age.The Tokens Vesting Over Two Years

Solana-based DeFi protocol Kamino has announced that it will airdrop its KMNO governance token in April. This airdrop is limited to users who have accumulated points by using Kamino’s products. The distribution will be based on the users’ accumulated points, ensuring that those who have actively engaged with the protocol will benefit the most.

Ether.Fi Introduces ETHFI Token on Binance Launchpool

Ether.Fi, the liquid restaking protocol on Ethereum, is set to introduce its highly anticipated ETHFI token on Binance Launchpool next week. This move will bring more liquidity to the protocol and help it scale further. The protocol has been gaining popularity for its efficient restaking solution that generates ETH rewards while also enabling users to use their staked ETH for other options like yield farming and borrowing.

Domo Partners with Former Sparring Partners for Governance

Domo, the pseudonymous creator of the popular Ethereum-inspired BRC-20 tokens, has taken a unique approach to address blockchain governance issues. The creator has partnered with two former sparring partners to co-maintain the protocol. This partnership is expected to bring more stability and transparency to the protocol, addressing some of the concerns raised by the community.

Ethereum Network Revenue Surges to Record High

The Ethereum network has seen a surge in revenue, reaching its highest levels in almost two years. This increase in revenue has been attributed to the recent speculative frenzy around meme coins. Retail traders have been driving the demand for Ethereum-based meme tokens like pepe (PEPE), shiba inu (SHIB), and floki (FLOKI), leading to a significant increase in trading activity on the network.

Optimism Sells $89 Million Worth of OP Tokens

Optimism, the popular Ethereum layer 2 scaling solution, has sold $89 million worth of its OP governance tokens in a private transaction. The tokens will vest over a period of two years, providing stability to the network and its future developments. Optimism’s solution has been gaining popularity as a viable option for scaling Ethereum and handling high transaction volumes.

U.S. President Proposes Crypto Mining Excise Tax

President Joe Biden’s recent budget proposal includes a crypto mining excise tax and the application of wash trading rules to digital assets. This move is aimed at generating significant revenue and addressing environmental concerns associated with crypto mining. It reflects the government’s growing interest in regulating the crypto industry and finding ways to generate revenue from it.

Former U.S. President Trump Changes Tone on Bitcoin

Former President Donald Trump has expressed a more constructive view towards Bitcoin in a recent interview on CNBC. He acknowledged its widespread use and suggested that Bitcoin has become an “additional form of currency,” marking a significant shift from his previous stance, where he labeled Bitcoin as a “scam.”

Coinbase Sues U.S. Securities and Exchange Commission

In a surprising move, Coinbase, the largest U.S. crypto exchange, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC). The company has accused the agency of acting arbitrarily and capriciously by refusing to establish clear rules for the oversight of the crypto industry. This move reflects the growing frustration among crypto companies with the lack of regulatory clarity in the U.S.

Digital Asset Investment Funds See Record Inflows

Digital asset investment funds have seen a significant surge in weekly inflows, reaching a new record of $2.7 billion. This influx has primarily been driven by Bitcoin, which contributed $2.6 billion to the week’s total. According to CoinShares, the new inflows mean the industry could potentially surpass its record annual inflow of $10.3 billion set in 2021, all less than three months into 2022.

Solana Sees Inflows Topping $24 Million

Last week, Solana (SOL) saw inflows topping $24 million, indicating a growing interest in cryptocurrencies beyond just Bitcoin. This influx comes as no surprise, as Solana has been gaining attention for its fast transaction speeds and low fees, making it a popular choice for developers and investors alike.