Tag: News

Ethereum Layer 2s Surpass Prominent Layer 1s in Total Value Locked

by Blockchain News

Top-performing Ethereum Layer 2 solutions like Arbitrum, Optimism, and BASE have outpaced prominent Ethereum competitor Layer 1 blockchains such as Solana and Avalanche in terms of total value locked (TVL) as of September 25, 2023, according to Grayscale. This shift is pivotal as it demonstrates the growing significance of Layer 2 solutions in enhancing the scalability and transactional capacity of the Ethereum network.

Layer 1 refers to the base protocol layer of a blockchain network. It encompasses the fundamental rules governing the network, including consensus algorithms, transaction validation processes, and the creation of new blocks. Layer 1 solutions are integral to the operation of a blockchain and include established networks like Bitcoin, Ethereum, Solana, and Avalanche. However, as blockchain networks grow in popularity, scalability issues arise, often leading to slower transaction speeds and higher fees.

Layer 2 solutions are secondary protocols built atop Layer 1 blockchains, aiming to alleviate scalability issues by offloading transaction processing from the main chain. These solutions retain the security guarantees of the underlying Layer 1 blockchain while providing faster transactions and lower fees. Examples of Layer 2 solutions include Arbitrum, Optimism, and BASE, which operate on top of the Ethereum blockchain.

Layer 2 blockchains operate by processing transactions from decentralized applications (dApps) and subsequently “batching” them together. This batch of transactions is then sent back to the main network in a compressed form for final settlement. This mechanism serves as an auxiliary route or even a dedicated bus lane augmenting a major highway, thus optimizing the transaction process.

By functioning as outlined, Layer 2s enhance the overall usability and transaction potential of the Ethereum ecosystem while still leveraging the network’s fundamental security. As the Ethereum network scales further, a significant amount of activity can transition to the more cost-effective Layer 2 solutions. This transition, in turn, directs value back to Ethereum, further bolstering its position in the blockchain sphere.

Among the 31 active Ethereum Layer 2 projects listed by L2Beat, five projects namely Optimism, Arbitrum, BASE, Starknet, and zkSync are recognized for their standout performance in fundamental metrics. A chart released by Grayscale on September 27, 2023, sheds light on these top Layer 2s by TVL. It’s noteworthy that while Arbitrum and Optimism have launched a token, BASE, Starknet, and zkSync have yet to do so. The market caps column within the chart signifies the market cap for each respective token.

A recent report by Will Hamilogden delves deeper into the landscape of Layer 2s within the Ethereum ecosystem, providing a more extensive understanding of this burgeoning sector. The report is available on Grayscale’s website for individuals seeking a more comprehensive exploration of Layer 2s and their role in scaling Ethereum.

l2beat-tvl.JPG

Source: L2BEAT 

The data from L2BEAT reveals that as of October 2, 2023, the sum of all funds locked on Ethereum converted to USD stands at $10.78 billion, marking a 4.64% growth over the past seven days. The TVL across various projects underscores the growing traction of Layer 2 solutions. For instance, Arbitrum One leads with a TVL of $6.03 billion, followed by OP Mainnet with $2.70 billion, and zkSync Era with $459 million.

The ascent of Layer 2s such as Arbitrum, Optimism, and BASE in terms of TVL is a testament to their value proposition in augmenting the Ethereum ecosystem. By surpassing notable Layer 1s like Solana and Avalanche, these Layer 2s have showcased their potential in fostering a more scalable and cost-effective environment for dApps, thereby contributing significantly to the advancement of the blockchain technology landscape.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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Paradigm Challenges SEC’s Authority in Lawsuit Against Binance

by Blockchain News

On September 29, 2023, Paradigm filed an amicus brief in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Binance, a leading cryptocurrency exchange. Paradigm is not an investor in Binance and has no direct financial interest in the lawsuit’s outcome. However, the firm believes that the SEC’s actions represent a form of government overreach that could have significant implications for the broader financial and crypto markets.

The SEC initiated legal action against Binance in June 2023, accusing the exchange of multiple violations of securities laws. These include operating without the necessary licenses and registrations as an exchange, broker-dealer, or clearing agency. The SEC’s investigation into Binance began in May 2023. In its amicus brief, Paradigm argues that the SEC is attempting to change existing laws without adhering to the established rulemaking process, thereby acting outside its regulatory scope.

Paradigm’s brief raises several critical points that challenge the SEC’s interpretation of securities law. The firm argues that the SEC’s expansive interpretation of “investment contract” could bring a wide range of asset sales under the purview of securities laws. Paradigm also highlights flaws in the SEC’s application of the Howey test, a legal standard used to determine what constitutes a security.

Circle, a stablecoin services company specializing in blockchain technology, has also been brought into the legal battle between Binance and the SEC as well. Circle argues that stablecoins, a type of cryptocurrency designed to maintain a stable value, should not be treated as securities, adding another dimension to the ongoing case.

Paradigm emphasizes that regulatory gaps do exist in the crypto sector and that it is Congress’s responsibility to fill these gaps. This perspective aligns with SEC Chair Gary Gensler’s Congressional testimony, where he acknowledged the SEC’s limitations in regulating crypto secondary markets.

Paradigm’s amicus brief serves as a significant counterpoint to the SEC’s actions against Binance and other crypto exchanges. By challenging the SEC’s authority and interpretation of securities law, Paradigm adds a layer of complexity to an already intricate legal landscape. The firm’s stance could potentially influence how securities laws are applied to the crypto industry in the future.

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Google Cloud Becomes Validator on Polygon’s PoS Network

by Blockchain News

On September 29, 2023, Google Cloud made a significant move by joining Polygon’s Proof of Stake (PoS) network as a validator. The development was confirmed by both Polygon Labs and Google Cloud Singapore through their respective Twitter accounts. Google Cloud will utilize the same infrastructure that powers its flagship services, such as YouTube and Gmail, to contribute to the security and governance of Polygon’s network.

Google Cloud’s entry into Polygon’s PoS network is a milestone for multiple reasons. First, it adds a layer of institutional credibility to the network, which already boasts over 100 validators. Google Cloud is renowned for its high-quality, secure, and reliable services, making it a valuable addition to the validator set. This is particularly important for enhancing the security protocols for Heimdall, Bor, and Polygon PoS users.

In the Polygon PoS network, validators are entities that produce new blocks and confirm transactions. They play a crucial role in maintaining the network’s integrity and security. Validators are chosen based on the amount of MATIC tokens they have staked as collateral. The more MATIC staked, the higher the chances of being chosen to validate transactions and create new blocks.

Polygon’s PoS network has a diverse range of validators, each contributing to the network’s collective security and governance. According to the latest data from Polygon’s staking technology website, Staked leads with 47,714,780.75 MATIC staked. Infosys follows with 20,927,642.45 MATIC. Other notable validators include Ethermon Validator with 21,413,514.21 MATIC and Worldpay from FIS with 14,524,984.72 MATIC staked. Google Cloud’s stake is comparatively modest but significant, with 25,391.67 MATIC staked at a commission rate of 100%.

Polygon Labs has provided a dashboard accessible at Polygon’s staking technology website. This dashboard allows anyone to monitor the performance and checkpoint signatures of all validators, offering a transparent view into the network’s operations.

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Bitcoin Miner Integrated Ventures Sees Decline in Annual Revenue Despite Higher BTC Production

by Blockchain News

Integrated Ventures Inc. (OTCQB: INTV) disclosed its yearly mining revenues amounting to $3,862,849 with a production of 162.71 bitcoins for the financial period ending on July 30, 2023, according to a press release on September 29, 2023. Despite the increased bitcoin production compared to 108.29 bitcoins in 2022, the company witnessed a revenue dip from $4,871,473. The decreased revenue against a higher bitcoin yield is primarily attributed to the faltering cryptocurrency market conditions during 2023, where the average dollar value of mined bitcoin plummeted to $23,740.44 from $44,986.17 in the preceding year.

Integrated Ventures’ financial highlight unveiled a net income loss of $25,459,967 for 2023, significantly up from the $688,003 net loss in 2022. The stark increase in net income loss was largely driven by expenses including a depreciation expense of $3,597,346, loss on disposition of mining equipment amounting to $1,197,522, impairment of mining equipment valued at $5,574,363, and a noteworthy annual stock compensation to management, valued at $15,247,500. Excluding these expenses, the annual income loss would stand at $458,736.

The gross loss for the year was reported at $6,297,476, primarily due to an uptick in depreciation expense which totaled $3,597,346. On excluding this expense, the annual gross profit would have been positioned at $1,162,733.

CEO Steve Rubakh acknowledged the challenging cryptocurrency milieu, marked by events like the FTX debacle, which impacted mining revenues. Despite these hurdles, the company managed to enhance bitcoin production without additional capital infusion.

Furthermore, the management is eyeing fintech sectors emphasizing liquidity, alongside AI/VR smart glasses/headsets. Due diligence is underway on two promising projects for potential strategic mergers or asset acquisitions to bolster shareholder value and revenue growth.

Integrated Ventures, a Technology Holdings Company, continues to focus on cryptocurrency mining among other tech-oriented domains. The company’s revenue streams presently encompass digital currency mining and hosting.

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Ethereum’s ACDE 171 Paves Way for Devnet Launches and Private ETH Transfers

by Blockchain News

On September 28, 2023, Ethereum‘s developer community convened for the 171st All Core Devs Ethereum (ACDE) meeting, covering a range of topics including upcoming devnets, audits for Ethereum Improvement Proposal (EIP) 4788, and a new proposal for private Ethereum (ETH) transfers among others, according to timbeiko.eth (@TimBeiko).

The meeting kicked off with Barnabas Busa giving an update on the Dencun devnet-9 which is slated to launch the following day. The devnet is significant as 75% of its validators will be utilizing Nethermind or Geth, 19% will be on Besu or Erigon, and 2% each with Reth and EthJS. Following the devnet-9, a short-lived devnet-10 is set to launch to test the new churn limits triggered by a large validator count.

During the call, updates regarding the audit of EIP-4788 contract bytecode were shared. Three auditing firms: ChainSecurity, Dedaub, and Trail of Bits were engaged for the review. The auditors endorsed the changes made based on their feedback, including the explicit handling of the 0 timestamp, and found no issues with the implemented fixes.

Discussions moved to the Holesky re-launch where, despite initial hitches in the first 10 epochs, the chain began finalizing with a 70-80% participation rate. The causes for validators being offline were identified and were being addressed during the call.

A notable highlight was the presentation of EIP-7503, proposing a scheme for private ETH transfers by burning and reminting ETH. This proposal facilitates users to send ETH to a provably un-spendable address and, using a new transaction type, provide proof of the burnt ETH to re-mint it at another address.

The proposal stirred a rich discussion regarding the implications and practicality of this mechanism on Ethereum, with questions surrounding the calculation of ETH supply and the safety of zk-friendly hashing functions on the mainnet.

Lastly, a minor amendment to EIP-6780 was proposed by Guillaume Ballet, which only allows the SELFDESTRUCT operation in the same transaction as a contract creation. A problematic specification concerning post-Verkle Tries behavior was agreed to be removed, aligning with the current behavior of Ethereum.

With a packed agenda, the meeting set the course for the next ACDE scheduled for October 12, 14:00 UTC, where the Ethereum community will continue to iterate and improve upon the network’s protocols and features.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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DOJ Plans to Call Former FTX Consumers, Investors, and Employees as Witnesses in Upcoming Samuel Bankman-Fried Trial

by Blockchain News

The judicial spotlight is soon to be on Samuel Bankman-Fried, the former CEO of FTX, as the U.S. Department of Justice (DOJ) outlines its strategy for the upcoming trial. On September 30, 2023, the DOJ disclosed through a letter motion in limine, the array of witnesses it intends to call upon. These individuals, hailing from different interactions with the cryptocurrency exchange FTX, are expected to provide crucial testimonies concerning the company’s handling of customer funds under Bankman-Fried’s watch.

A significant part of the trial will hinge on the testimonies from a variety of individuals who had differing relationships with FTX. Initially, the government intends to call upon some customers of FTX, who deposited funds on the platform. Their testimony will aim at shedding light on their expectations and understandings regarding how the company would manage and safeguard their deposits.

Following that, investors who purchased shares in FTX are expected to testify about the representations made by Bankman-Fried concerning FTX’s role as a “custodian” of customer funds. Their insights will delve into how these representations influenced their understanding and decisions in investing in FTX.

Moreover, certain cooperating witnesses, who have already pled guilty to conspiring to commit fraud with the defendant, are anticipated to testify about their interactions and understandings of certain actions and statements made by Bankman-Fried during the period under scrutiny.

Among the witnesses, a notable mention is an individual from Ukraine, referred to as “FTX Customer-1.” Given the ongoing unrest in Ukraine, traveling to the U.S. to testify presents a significant challenge. The DOJ, recognizing this hurdle, has suggested the use of video conferencing as a viable alternative to ensure the witness’s testimony is recorded and considered.

On the other side of the aisle, the defense team of Bankman-Fried argues that these interrogations could implicitly show guilt on Bankman-Fried’s part, which could be prejudicial and undermine the “innocent until proven guilty” principle.

With the process of jury selection scheduled to begin on October 3, the upcoming trial has garnered significant attention. The spotlight on this high-stakes legal showdown is expected to intensify as the trial date nears. The case is not only pivotal for the involved parties but is also likely to have broader implications on the regulatory landscape surrounding cryptocurrency exchanges, particularly concerning the safeguarding of customer assets.

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Arbitrum Foundation and Fracton Ventures Ally to Boost Arbitrum Adoption in Japan

by Blockchain News

On September 29, 2023, the Arbitrum Foundation unveiled a significant strategic partnership with Fracton Ventures Co., Ltd., to broaden the horizons of Arbitrum scaling solutions in Japan. This joint venture, christened Arbitrum Japan, is geared towards enhancing blockchain technology adoption and spearheading the growth of the Arbitrum ecosystem within the Japanese domain.

The primary objective behind this strategic alliance is to expedite the expansion of the Arbitrum ecosystem in Japan and to proliferate the adoption of blockchain technology in the region. Arbitrum, acclaimed as a prominent Layer 2 scaling solution on the Ethereum blockchain, currently holds a commendable position with nearly 55% of the Total Value Locked (TVL) across Layer 2 chains.

Fracton Ventures, with its established reputation in Ethereum protocol development, will helm the inception of Arbitrum Japan. This endeavor is anticipated to galvanize consumer interest and developer involvement in the Arbitrum ecosystem. Moreover, the partnership aims to unlock new business prospects by capitalizing on Arbitrum’s superior scalability and security features, particularly in the realms of finance and entertainment.

In addition to business development, a significant focus of the alliance is to augment technical education and fortify the developer community within the region. A suite of activities including Ask Me Anything (AMA) sessions, hackathons, and other community-centric initiatives are slated to fast-track the comprehension and adoption of Arbitrum technology.

Established in March 2023, the Arbitrum Foundation has been steadfast in its mission to propel the Arbitrum network and its community forward, while cementing its position at the vanguard of blockchain adoption. The cornerstone of the foundation, Arbitrum One, conceived by Offchain Labs, emerges as a leading Layer-2 scaling solution for Ethereum, boasting over 54% TVL in the Layer 2 segment. With an extensive repertoire of more than 2000 DeFi and NFT projects thriving within its ecosystem, the Arbitrum Foundation continues its endeavor to provide robust scaling solutions for the Ethereum blockchain.

Nina Rong, Head of Ecosystem Development at The Arbitrum Foundation, articulated the immense untapped potential within the Japanese region. Through the collaboration with Fracton Ventures, she envisages a unique positioning to connect with a new demographic of developers, innovators, and blockchain-curious consumers who have not yet explored the advantages of blockchain technology and how Arbitrum has harnessed it to emerge as the leading Layer 2 scaling platform across the industry.

Siddharth Pillai, Head of Partnerships at Fracton Ventures, echoed similar sentiments. He emphasized that the partnership embodies an opportune moment to extend Arbitrum’s footprint in Japan, as the region is primed for innovation within the blockchain sector.

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Decentralized Exchange dYdX Proposes $20M Incentive Program for v4 Launch

by Blockchain News

dYdX is moving forward with a proposal for a $20M Launch Incentives Program by Chaos Labs to facilitate a smooth migration to its version 4 (v4) platform. The fund, sourced from the dYdX Chain Community Treasury upon its deployment on the mainnet, is earmarked for a six-month duration to motivate the seamless transfer of users and trading volumes to the dYdX Chain. This proposition aims to gather community endorsement and is subject to a governance proposal on the dYdX Chain.

The dYdX Grants team hired Chaos Labs as a service provider for a number of tasks, such as creating portals for market maker risk, LP reward reporting and analysis, and new asset listing. In order to provide permissionless market listings on dYdX v4, they also participated in research with an emphasis on risk reduction, improving user experience, and liquidity provisioning incentivization.

The primary challenge as dYdX nears the v4 launch is migrating and expanding its existing user base. The necessity to secure liquidity and incentivize user migration to the new dYdX Chain is considered pivotal for the success of dYdX v4. Historical data underscores the effectiveness of Liquidity Mining or token reward programs in boosting protocol growth and trading volumes across the DeFi space. The Launch Incentives Program aims to replicate this success by encouraging a swift transition to v4.

The program is structured in two main phases, pre-launch and post-launch, detailed as follows:

Pre-Launch

Trading Reward Genesis Research: A preliminary phase focused on crafting reward distribution methodologies to promote desired user behaviors within the dYdX Chain ecosystem, including deposits, trading, staking, and governance participation.

v4 Analytics and Risk Portal: Designed to offer transparency and enable verification of reward recipients’ activity by the dYdX community. This portal will serve as a data hub, providing insights into user and market-specific activity.

v4 Reward Leaderboard Portal: This will display user engagements and accumulated rewards transparently, fostering healthy competition and community engagement.

Post-Launch

Trading Seasons: The incentive program will be divided into several trading seasons. The initial season is shorter to allow fine-tuning of the reward strategy and improve wash trading detection. Subsequent seasons will be determined randomly to introduce unpredictability, thereby reducing potential manipulation.

Trading Season Analysis: Post each trading season, analysis reports will be generated to highlight market dynamics, user behavior patterns, and overall protocol efficacy. These insights are crucial for shaping future reward allocation decisions.

The distribution of DYDX rewards will be governed by dYdX Chain community proposals at the end of each trading season. Chaos Labs will abstain from voting in any dYdX governance votes concerning reward distributions under the Launch Incentives Program to maintain an unbiased and transparent decision-making process.

This proposal, slated between September 28, 2023, and October 2, 2023, is a community temperature check before the final governance proposals, which will be created on the dYdX Chain post each trading season. With a near-unanimous community backing of 99.08% votes in favor, and a total of 15M DYDX votes supporting the proposal, it reflects a strong community endorsement for the Launch Incentives Program.

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OpenTrade and WOO X Unite to Offer Tokenized T-Bills to Asian Investors

by Blockchain News

On September 29, 2023, OpenTrade, a notable platform bridging traditional financial markets with digital asset realms, declared a strategic collaboration with WOO X, enabling its user base to tap into tokenized Treasury Bills (T-Bills) and avail USDC-collateralized loans against liquid assets on a blockchain infrastructure, according to WOO official blog. This initiative is engineered through OpenTrade’s recent unveiling of tokenized T-Bills on Circle Research’s Perimeter Protocol.

The collaboration stems from a rising demand for tokenized T-Bills, driven by the comparatively higher yields from US government bonds against those found in decentralized finance (DeFi). WOO X, through this partnership, aims to fortify its foothold in the Asian region by offering a low-cost switch to tokenized T-Bills for its users. Jack Tan, WOO’s Founder and CEO, emphasized the commitment to furnishing customers with yield products anchored to real-world financial assets, and envisages an array of Real-World Asset (RWA) yield products delivered via the OpenTrade platform.

OpenTrade’s CEO, Dave Sutter, underlined the ambition of paving a “flatter, smarter, more efficient, and more inclusive financial markets” through this venture. The utilization of Circle Research’s Perimeter Protocol is lauded as a fundamental technological underpinning for a secure, scalable, and composable platform conducive for this evolution. OpenTrade emerges as a pivotal conduit linking traditional financial landscapes with the burgeoning digital asset space, heralding a new era of financial ingenuity and inclusivity.

In a concurrent development, WOO X unveiled its successful integration with South Korea’s CODE compliance solutions, epitomizing a strategic endeavor to amplify its presence in Asia, particularly South Korea—known for its voluminous active trader market. A cardinal aspect of CODE compliance entails the verification of user addresses prior to withdrawal, thus broadening the spectrum of WOO offerings accessible to Korean clientele.

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SEC Charges FTX Auditor Prager Metis Over Independence Violations

by Blockchain News

On September 29, 2023, the Securities and Exchange Commission (SEC) announced legal charges against the international accounting firm Prager Metis CPAs, LLC and its Californian counterpart, Prager Metis CPAs LLP (jointly referred to as Prager), for alleged violations of auditor independence rules and for supposedly aiding and abetting their clients in breaching federal securities laws. The complaints pointed to improper conduct over approximately three years, from December 2017 to October 2020, during which Prager was alleged to have included indemnification clauses in engagement letters for more than 200 audit-related assignments, thereby compromising its independence as required by federal securities laws.

Prager’s alleged misconduct involved repeatedly signing engagement letters with indemnification clauses and issuing “accountant’s reports” purporting independence, despite senior partners being notified that such actions jeopardized the firm’s independence. The SEC complaint suggests that many of Prager’s clients incorporated these “accountant’s reports” in their SEC filings, and accuses Prager of not advising its clients about these violations even after being informed by the Public Company Accounting Oversight Board (PCAOB) that such actions were in violation of federal laws concerning auditor independence.

The SEC’s action against Prager gains additional significance considering the firm’s prior engagement with cryptocurrency exchange FTX before the latter filed for Chapter 11 bankruptcy in November 2022. Prager Metis provided audit and tax preparation services to FTX, a notable engagement revealed in earlier court documents. Although the SEC’s complaint did not specifically name FTX, it highlighted “hundreds” of auditor independence violations over a span of nearly three years.

The case underscores the stringent auditor independence framework that prevents an auditor from providing additional services that might pose a conflict of interest. Eric I. Bustillo, Director of the SEC’s Miami Regional Office, emphasized the importance of auditor independence in safeguarding financial reporting integrity and fostering public trust.

The SEC’s complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a civil monetary penalty against Prager, marking a stern reminder for auditing firms about the critical importance of adhering to federal laws and regulations concerning auditor independence.

Furthermore, the legal scrutiny extends beyond Prager Metis. A recent filing on September 21 revealed that the law firm Fenwick & West, which had previous engagements with FTX, is also under investigation. The plaintiffs argue that Fenwick & West should be held partially responsible for FTX’s downfall due to alleged over-extension in service offerings to the exchange.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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