The Ethereum Foundation made the announcement on November 24 that the developers working on the platform had reached a consensus on eight Ethereum Improvement Proposals (EIP) to investigate as part of the Shanghai update. This update is the next major upgrade following the Merge and the transition to proof-of-stake consensus.
Beacon Chain staked Ether (ETH) is scheduled to be unlocked as one of the primary features that are anticipated to be included in the Shanghai hard fork. This will make it possible for the assets to be withdrawn along with the upgrade, which means that users who had staked Ethereum prior to the Merge will be able to access those tokens in addition to any other rewards that may be available.
According to a prior roadmap, unlocked ETH was supposed to become available between 6 and 12 months following the Merge.
One of the ideas that was accepted is known as EIP 4844. This proposal focuses on using proto-danksharding technology, and it is anticipated that it would increase network throughput while simultaneously reducing transaction costs, which will be a big gain for scalability.
Other EIPs, such as EIP 3540, EIP 3670, EIP 4200, EIP 4570, and EIP 5450, deal with the modernization of Ethereum Virtual Machines.
One of the most-anticipated updates for the community is the Shanghai testnet version, which was given the name Shandong and went live on October 18. This version enables developers to work on implementations such as the Ethereum Virtual Machine (EVM) object format. This update is one of the most-anticipated updates because it separates coding from data, which may be beneficial for on-chain validators.
Shanghai, China’s most crowded city, is looking for ways to use metaverse in public services over the next five years.
Shanghai Municipal Commission of Economy and Information Technology’s five-year development plan for the electronic information industry listed four frontiers for exploration, and one of them is metaverse.
According to a CNBC report, the paper called for promoting the metaverse’s use in public services, business offices, social leisure, industrial manufacturing, production safety, and electronic games. The commission plans to encourage further study and development of underlying technologies, such as sensors, real-time interactions and blockchain technology.
China’s interest in new technology has been unwavering in recent years. China’s efforts to establish a central bank digital currency (CBDC) and its use of digital biometric hardware wallets for the virtual yuan have cemented it as a leader in the issuance of a CBDC.
In March, China’s State Council released its 5-year development plan that included many of these same fronts for exploration. As reported by Cointelegraph, the term “blockchain” was used for the first time in China’s 14th five-year plan, a document that outlines the country’s economic goals for the next five years, which runs from 2021 through 2025.
Related:Chinese companies embark on a metaverse trademark race
The metaverse has become an area of interest for many major companies in recent months. In October, Facebook changed its name to Meta in order to bank on the popularity of the term metaverse.
Despite the People’s Bank of China’s (PBOC) warning on metaverse and nonfungible tokens (NFTs) in November, over 1,000 Chinese businesses have filed tens of thousands of trademark applications that reference the term. More than 1,360 Chinese businesses have applied for 8,534 trademarks, according to the South China Morning Post.
Chinese companies are in the process of developing metaverse technologies, with Baidu, Tencent, and Alibaba among those aggressively working on related projects. Last week, Baidu debuted its XiRang metaverse app, which will fully launch in six years.
As financial authorities around the globe become increasingly concerned about stablecoin regulation, a jurisdiction in China is preparing to pilot a new yuan-pegged stablecoin for international trade.
Chris Banbury, head of global operations at permissionless blockchain project Conflux, told Cointelegraph on Sept. 21 that the firm will provide its technology to launch an offshore renminbi (RMB) stablecoin pegged to China’s central bank digital currency (CBDC), the digital yuan.
“This is going to be pegged to the digital yuan in price only with no formal integration,” Banbury noted, adding that the project will be exploring how the token trades against other currencies.
The new stablecoin project will facilitate international trade in Shanghai’s Lin-gang Special Area after the Chinese government granted the free economic zone permission to explore free trade with an offshore RMB stablecoin in July.
“While the use case for the offshore RMB stablecoin has been approved by the government of China and Shanghai, the pilot program is not endorsed by or connected with the government,” Banbury noted.
In contrast to popular stablecoins like Tether (USDT) and USD Coin (USDC), the upcoming offshore RMB stablecoin will not be a private stablecoin because it is fully decentralized, Banbury said. The executive said that the new stablecoin is called the “offshore RMB stablecoin” because its functionality will be limited to global trading:
“The term ‘offshore’ refers to the RMB’s use for international trading purposes — not domestic trading. The digital yuan is used exclusively for domestic purposes. As such, the offshore RMB is not an ‘offshore yuan.’ The digital yuan is for domestic purposes overseen by the People’s Bank of China.”
Related:Chinese banks explore e-yuan for selling investment funds and insurance
According to Banbury, the offshore RMB stablecoin is being held through the Shanghai ShuTu Blockchain Research Institute, a branch of the Conflux Tree-Graph Institute for blockchain research and development. The stablecoin has not yet received a dedicated ticker as the development team is still determining when to launch, he added.
One of the world’s first nations to debut a CBDC, China has continued to crack down on cryptocurrency trading and mining, with local authorities shutting down multiple mining farms and suspending crypto trading transactions this year.
According to the Information Office of Shanghai Municipality, the latest proposed trial testwill see the region give out as much as 19.25 million yuan (about 3 million U.S. dollars) in digital currency to consumers in the city through a lottery system.
China is one of the major economies that has advanced in its developmental strides per its government-backed digital Yuan pursuits. Ranking as one of the pioneers of the CBDC innovation, China has entered into the retail testing of its Digital Yuan. Residents get to use the new form of legal tender for small-scaled retail payments in its major cities, including Shenzhen. The same program is on track for the residents of Shanghai.
According to the announcement made on the official WeChat account, a total of 350,000 digital red envelopes, each containing 55 yuan of digital currency, will be given to lottery winners. This cash is non-refundable, and the program is in collaboration with the Industrial and Commercial Bank of China Shanghai Branch and the cloud service of the Bank of Communications Shanghai Branch.
While the early testing through the lottery system was not without hitches, China has primarily advanced integrating the Digital Yuan into people’s lives. The People’s Bank of China (PBoC) has not announced the date it will officially launch the Digital Yuan.
However, there are plans to make the new form of money available at the Beijing Olympics scheduled to hold in 2022. At the historical games, the Digital Yuan will be made available to foreign athletes and visitors, marking the first time the CBDC will be open to non-Chinese residents.
The Asian giant has been stiffening its crypto regulations lately, as analysts believe this new crop of regulations was launched to help pave the way for the soon-to-be-launched Digital Yuan.
Sentiment in China has slumped as WeChat searches for Bitcoin dropped 7% this week, while searches for “bear market” spiked 102%. One trend that remained strong was NFT-related, with NFTs receiving an 86% increase in WeChat searches over the seven-day period. Token sales were another hot item with interest in Casper Labs surging after signups on CoinList breached 100,000 on global platforms.
One high-profile token sale to emerge from China was DAO-as-a-Service platform Dora Factory. The project, backed by DoraHacks, held a public token launch on March 21 with listings on OKEx, Gate and MXC. DoraHacks is well-known for hosting developer events and is one of the most active blockchain developer communities to originate from China. The team will be hosting a global hackathon series in 2021, landing in regions including Singapore, the United States, Germany and India.
Real world events back for spring season
Cointelegraph China kicked off their Hot Trends 2021 event in Chengdu on Thursday, welcoming a number of projects and industry participants to the southern city. The event’s speeches and panels are exploring the sustainability of trends such as DeFi and NFTs. Chengdu has long been an important city in the Chinese cryptocurrency mining space due to low electricity costs and developed infrastructure.
Solana and Serum hosted a DeFi Night in Shanghai on March 20 as they continued promoting their ecosystem in Asia. The event also included speakers from Aave, Chainlink, Multicoin Capital, Raydium and The Graph. The ecosystem arms race has become important as major players such as BSC, Huobi (Heco), OKEx (OKExChain), and Solana all attempt to attract their share of the large development pool in cities like Shanghai, Beijing, Shenzhen and Hangzhou. FTX founder Sam Bankman-Fried gave a keynote to the event via pre-recorded video.
Digital yuan tests
The Hong Kong Monetary Authority began working with the People’s Bank of China Digital Currency Research Institute to test the technology that enables the use of digital yuan for cross-border payments, according to Yu Wai-man. Yu is the current Chief Executive of the HKMA. It announced on March 19 that these financial services are expected to launch in the second half of this year.
Also on March 19, several state-owned companies, under the guidance of the CPC Working Committee began applying the digital yuan to be used as a method of payment in charging electric vehicles in the Xiongan new area near Beijing. Among these companies were a sub-branch of the PBoC, Bank of China, China Telecom and the China State Grid. Linking the digital yuan with clean energy initiatives is quickly becoming a priority for state-related organizations, especially with the announcement that the new five-year plan would target carbon neutrality by 2060.
On March 23, Chinese state media outlet Sina reported that the six largest major government-owned banks have begun testing wallet services for the digital yuan. The banks would be able to whitelist testers who can then download the mobile app and set up a sub-account. Phase 1 of the formal pilot should begin next month
Ant Group’s blockchain paper
Ant Group, a major financial subsidiary of Alibaba, issued a white paper on blockchain and government services on March 17. The paper outlined how government organizations can use information technology, digital identity solutions and blockchain infrastructure to deliver and manage data. Ant Group has had a difficult period after their highly-anticipated public offering was canceled amid concerns about interest rates on electronic lending.
Case studies on money laundering
Finally, on March 21, the PBoC and the Supreme People’s Procuratorate (China’s highest legal prosecuting authority) released six cases of modern money laundering methods, most of which included Bitcoin and cryptocurrency. In one of the cases, one convicted person received two years in prison and a fine for illegal fundraising via an unlicensed digital currency trading platform.
This new weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
Shanghai’s New World City and New World Daimaru Department Store, and food caterer Taikang Food Store handled thousands of digital yuan transactions over the past weekend, Shanghai Daily reports.
As part of the trial, the retailers featured digital yuan payments as part of a sales campaign in conjunction with International Women’s Day. Brand director of Shanghai New World Li Wei said that the firm reached out to commercial banks to offer discounts as part of the campaign.
“We have worked to upgrade the digital payment module ahead of the trial program, and we believe it offered extra stimulus for shoppers on top of the existing sales campaign,” Li said.
Major Chinese banks including the Bank of Communications and China Construction Bank participated in the trial by providing retailers with virtual coupons to reward customers paying with the digital yuan. Specifically, the Bank of Communications gave 100 yuan ($15) coupons to 6,500 local shoppers, while China Construction Bank offered 150 yuan ($23) coupons to 2,000 individuals when they made purchases of over 380 yuan ($58).
Participants were reportedly required to visit pre-selected local branches of the bank in order to apply for the trial and add a digital yuan application on their smartphones.
As Shanghai continues to accelerate its digital yuan pilots, the city will likely feature the new payment option at all merchants on Nanjing Pedestrian Road Mall during the upcoming shopping season in early May, the report states.
China initially launched CBDC trials in four regions — Shenzhen, Suzhou, Xiong’an and Chengdu — in April 2020, and subsequently extended the pilot to Shanghai, Hainan, Changsha, Qingdao, Dalian and Xi’an as part of the 2021 agenda.
Blockchain startup Conflux has received over $5 million research grant from the Shanghai Science and Technology Committee and Changning District government, which is part of the city’s municipal government.
The Beijing-based firm touted that it has become the only public, permissionless blockchain project backed by the Chinese government, according to the firm’s statement shared with CoinDesk. The project has made it in the list of 57 high tech projects, including 5G and aerospace technologies, by the Shanghai government, according to an Nov. 25 official document from its tech committee.
The funding will be used to develop the public chain’s research. The project will also support an aerospace supply chain proposed to be built on Conflux Network, the firm said.
Conflux’s project has been included in the latest Five-Year Plan by the Shanghai government according to the firm. The plan is a series of social and economic initiatives that define the country’s future economy and societal development..
China has been mostly focused on developing permissioned blockchain while being cautious about public decentralized chains, since such projects have launched initial coin offerings (ICO) to raise capital and distribute their tokens as an alternative to fiat currencies.
“While the amount of money granted is important, it is the government’s signal to support a public permissionless chain like Conflux that matters the most for us,” Conflux co-founder Fan Long told CoinDesk.
The People’s Bank of China, the country’s central bank, has banned ICOs and clamped down on fiat-to-crypto trading since 2017. Conflux will not launch an ICO or be involved in any form of centralized token sales, according to Long.
Founded in 2018, Conflux has raised $35 million via a private token sale from prominent investors in China, including private equity firm Sequoia China, Huobi Group, Shunwei Capital and Rong360. Its team includes developers who went to top engineering schools in China and studied abroad for their graduate degrees.
The Shanghai government agreed to help Conflux open a research institute and incubation center with an undisclosed amount of research funding, CoinDesk reported in December 2019.