New Ethereum proposal aims to increase throughput by 50%

October 7, 2024 Coin Telegraph

Connext founder proposes ‘Sovereign Bridged Token’ standard after Multichain incident

July 10, 2023 Coin Telegraph

Bridges

EIP-7281 will allow token issuers to list official bridges and limit the rate at which they can mint tokens, potentially limiting losses from bridge hacks.

An Ethereum Improvement Proposal (EIP) made on July 7 seeks to standardize how tokens are bridged between networks. The “Sovereign Bridged Token” standard, or EIP-7281, allows token issuers to create canonical bridges across multiple networks.

The proposal was co-authored by Arjun Bhuptani, founder of the Connext bridging protocol. In a July 7 social media post, Bhuptani claimed the protocol would help prevent issues like the July 6 Multichain incident, which some experts have described as a “hack.”

Today's @MultichainOrg hack is a sad reminder of the systemic risks tokens face from bridges.

We believe these risks stem from a single underlying problem:

✨Token Sovereignty✨

We're proposing ERC-7281 (aka xERC20) - an open standard to fix this.https://t.co/k9Vyd55Eb5

1/x
— Arjun | ERC-7281 arc (@arjunbhuptani) July 7, 2023

According to the proposal’s discussion page, it allows token issuers to designate a list of canonical bridges. Only bridges added to this list could mint an official version of the issuer’s token. Issuers can also limit the number of tokens a bridge is allowed to mint. These parameters can be changed at virtually any time by the issuer.

In Bhuptani’s view, this proposal will ensure that “ownership of tokens is shifted away from bridges (canonical or 3rd party) into the hands of token issuers themselves” and will limit losses if a bridge’s security comes into question:

“In the event of a hack or vulnerability for a given bridge (e.g. today’s Multichain hack), issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users.”

Bhuptani said the proposal would also help prevent user experience problems in decentralized finance, as all bridges will issue the same official token. Over time, this will eliminate the need for multiple versions of the same token, he claimed.

Stablecoin issuer Circle has already created the Cross-Chain Transfer Protocol (CCTP) to list official bridges for its token, US Dollar Coin (USDC). EIP-7281 intends to implement the basic concept behind CCTP but also tries to make this solution apply “more broadly to all tokens,” according to the proposal’s notes.

Both Circle and Tether have blacklisted some of the addresses used in the Multichain incident, preventing $65 million worth of USDC and Tether (USDT) from being moved out of these addresses.

ETH DeFi ‘circuit breaker’ could cut hack losses by 70% — Developer

July 7, 2023 Coin Telegraph

circuit breaker

Diyahir Campos, a smart contract developer behind the new ERC proposal, sought action after falling victim to the Euler Finance hack in March.

A decentralized finance (DeFi) “circuit breaker” could have prevented billions of dollars worth of crypto from being stolen from DeFi protocols in 2022, according to the developer of the newly published ERC-7265 proposal.

A new Ethereum request for comment (ERC) was published on GitHub on July 3. In it, the lead developer Diyahir Campos proposed a standard for a DeFi “circuit breaker.” It essentially aims to set a standard for a smart contract that can halt suspiciously large token outflows from a DeFi protocol.

1/ Announcing ERC 7265: Circuit Breaker

We are fixing the biggest problem with DeFi Security - lack of response time to mitigate hacks.

Built by @Diyahir @tcb_00 @real_philogy https://t.co/4KQDYEK2H7
— Meir Bank (@MeirBank) July 3, 2023

Last year was the single biggest year for crypto hacks, with at least $3.1 billion stolen from DeFi protocols — and cross-chain bridges accounted for 65% of that.

Speaking to Cointelegraph, Campos said circuit breakers could have prevented billions in losses.

“The ones that weren’t rugs, you could probably save 70% of the money [...] with minimal impact to users.”

Campos revealed he was one of the many that lost funds in the $195 million Euler Finance attack in March, which led to contagion impacting 11 other protocols.

“Actually, I was one of the depositors in the Euler hack,” he said.

3/ Our data analysis shows that DeFi Guardian could have saved more than 50% of losses from the recent @eulerfinance hack.

Instead of draining the entire TVL of Euler within moments, the Euler hacker would have been rate limited, saving tens of millions of dollars for users. pic.twitter.com/Nuck06iQIo
— Meir Bank (@MeirBank) June 1, 2023

“From that experience, I’m looking at the TVL [total value locked] charts and the transactions that happened, and really it begged the question:”

“Why would you ever let 100% of your TVL leave in 10 seconds or five blocks?”

A typical DeFi protocol would see around 20% of total value locked entering or leaving a project in a day.

“Once you start talking 30% or 40%, that's when you really start separating exploits versus daily usage,” said Campos.

The proposed standard has not been without controversy. DeFi researcher Chris Blec was among the skeptics on Twitter concerned the circuit breaker could be used for potentially nefarious purposes.

Oh dear Lord. What is this nonsense?

Giving DeFi devs a protocol-level method that allows them to freeze your money forever?

WHAT COULD POSSIBLY GO WRONG???

(h/t @DefiantNews) pic.twitter.com/RofYYv9Nud
— Chris Blec (@ChrisBlec) July 6, 2023

Campos said the circuit breaker isn’t suitable for every DeFi protocol and doesn’t guarantee a protocol is safe. He noted the circuit breaker would be an “opt-in thing” for DeFi projects.

He also believes that a well-designed circuit breaker must strike a balance between protecting users and preventing “false positives,” as it would be extremely disruptive whenever the breaker trips.

However, a circuit breaker would be useless in cases of internal rug pulls, as it could simply be deactivated by the team controlling the protocol.

A quick exploration of the power of circuit breakers in DeFi and their limitations in preventing costly hacks https://t.co/bZKeWJyUkI
— Diyahir (@Diyahir) June 27, 2023

Campos is a smart contract developer at Hydrogen Labs. He said work began on the proposed standard during an April hackathon in Tokyo alongside Meir Banks, the co-founder of Hydrogen Labs.

The idea for the DeFi circuit breaker was inspired by similar circuit breakers that have been used by global stock exchanges for decades.

“In DeFi, we aren’t trying to calm the markets, which is the intention of the [New York Stock Exchange’s circuit breaker] rather we want to prevent hack losses,” wrote Campos in a June 27 blog post.

Other developers working on the standard include Philippe Dumonet, founder and CEO of DeReg and Blagoj Dimovski, co-founder and former chief technology officer of Diagonal Fiance.

Campos said the standard is still being shaped at this stage, but is confident it will be ready “within months,” which would put it in “a really good stage” to be integrated into protocols.

Magazine: Should you ‘orange pill’ children? The case for Bitcoin kids books

Forget HTTP: Ethereum has a new URL standard that can’t be blocked

March 15, 2023 Coin Telegraph

Coin Telegraph

Under a newly rolled out Ethereum standard, DApps and NFTs can be accessed by internet users without the worry of centralized censorship.

Web3 URLs — enabled with the launch of ERC-4804 — have made it onto Ethereum, allowing internet users to access Ethereum apps and NFTs without worrying about centralized censorship.

The new Ethereum standard, titled “Web3 URL to EVM Call Message Translation,” was first proposed on Feb. 14, 2022, and was co-authored by ETHStorage founder Qi Zhou, Ethereum researcher Sam Wilson and Chao Pi.

It described the proposal as an “HTTP-style” URL to directly access on-chain Web3 content, such as decentralized apps (DApps) front-ends and NFTs. More than a year later, ERC-4804 was approved and finalized on the mainnet on March 1.

1/n, I am delighted to announce that the first web access protocol for ETH ERC4804: Web3 URL is approved by EIP editors and finalized!

web3:// (https://t.co/uXpTGdXirF) is decentralized http://. It allow users to directly browse the rich web content on EVM, pages/images/songs!
— Qi Zhou (@qc_qizhou) March 1, 2023

Anthurine Xiang, a spokesperson for layer-2 storage protocol ETHStorage, explained that in many cases, the ecosystem is still reliant on centralized web servers to provide access to “decentralized” apps.

“Right now, all the DApps like Uniswap [...] claim to be decentralized apps," Xiang explained, adding: "But how [do] we get on the webpage? You have to go through the DNS. You have to go through GoDaddy. [...] All those are centralized servers.”

*Graphic explaining how the new model compares to Web2. Source:* *w3eth.io*

Today, most users access the internet via “Hypertext Transfer Protocol,” widely known as HTTP.

When an internet user clicks a link or types in a website address, the computer uses HTTP to ask another computer to retrieve the information, such as a website or pictures.

Under ERC-4804, internet users have the option to type in web3:// (as opposed to http://) in their browsers to directly bring up DApps such as Uniswap or on-chain NFTs. This is because the standard allows users to directly run a query to an Ethereum Virtual Machine (EVM).

*Flow chart explaining how Web3 URL standard works with Uniswap. Source: w3eth.io*

Entire websites can also theoretically be accessed by these means as long as their content is stored on the Ethereum blockchain or a compatible layer-2 protocol. However, the costs of doing this are still very prohibitive, according to ETHStorage founder Qi Zhou.

“The critical issue here is that the storage cost on Ethereum is super, super expensive on mainnet,” Zhou said in a recent presentation at ETH Denver.

“For example, 1 Gigabyte of on-chain data will cost roughly $10 million. [...] That is unacceptable for a lot of Web2 applications and even a lot of NFTs,” Zhou added, noting that layer-2 storage solutions could help mitigate some of the costs.

Xiang suggested that given the costs, the new URL standard makes sense only for specific applications.

“Not everything needs to go decentralized. If you are running a pretty good Web2 business and you don’t have to worry too much about centralized censorship. [...] You can just go for that.”

On the other hand, the new standard would be useful for DApps or websites that are at risk of censorship, with Tornado Cash as an example.

“For example, for Tornado Cash, a lot of people can’t get to them through their website because there’s censorship,” Xiang explained.

“If you’re a DApp and you’ve already been decentralized, why are you still using a centralized website for people to get access to you?”

*Example of websites that are able to be accessed via web3:// URL Source: w3eth.io*

Asked whether the new standard could be leveraged by bad actors to partake in illicit activity, Xiang said:

“This is really hard to say just like how Bitcoin was founded. I think Bitcoin was not born for evil, but still, in the beginning, people [were] doing shady things like the Silk Road, they had been using Bitcoin.”

Instead, Xiang believes like Bitcoin, they're just giving people a decentralized option they may not have otherwise.

The new Ethereum standard is the first of its kind for the blockchain, noted Xiang, though it’s not the first solution to decentralized web hosting.

IPFS, or the InterPlanetary File System is an example of a network that was created to do what centralized cloud servers currently provide, only via decentralized means. However, Xiang noted that an IPFS URL can only link to static content, which can’t be amended or changed.

I *use* IPFS to store my blog. It has serious UX issues (took ~1h for my last update to propagate). Sticking the blog on-chain would have been way easier.

For blogs, that's unfortunately too expensive, but for short text records the logic applies.
— vitalik.eth (@VitalikButerin) May 27, 2022

ERC-4804 however, will allow for “dynamic data,” such as allowing people to leave likes and comments and interact with content on a website, explained Xiang. Being Ethereum native, the standard is also expected to be able to interact with other blockchains much easier, Xiang added.

Breaking: Shanghai upgrade executed on testnet but not without issues

March 15, 2023 Coin Telegraph

Beacon Chain

Ethereum validators are now one step away from being able to unstake their Ether from the Beacon Chain.

The Shapella hard fork has been executed on the Goerli testnet — the last test run before Ethereum validators will be able to withdraw their Ether (ETH) from the Beacon Chain.

There were, however, issues with the hard fork. Ethereum core developer Tim Beiko noted that while deposits were being processed, the process didn’t run as smoothly as it could have because several testnet validators didn’t upgrade their client software before the Goerli fork.

Deposits are being processed (https://t.co/CxYtPcGMCp), but it seems like several validators haven't upgraded. Looking into it

One challenge with testnet validators is that given the ETH is worthless, there's less incentive to run a validator/monitor it.
— timbeiko.eth (@TimBeiko) March 14, 2023

He blamed it on testnet validators having “less incentive” to make the upgrade given that the Goerli “ETH is worthless” but expects validators to make proper adjustments ahead of the fork on the Ethereum mainnet.

Through Ethereum Investment Proposal EIP-4895, staked ETH from the Beacon Chain will be “pushed” to the execution layer.

While the Shapella upgrade comprises five different EIPs, EIP-4895 has been by far the most anticipated one, as it moves Ethereum one step closer to a fully functional proof-of-stake system.

Shapella is now expected to take effect on the Ethereum mainnet in early April.

The execution on Goerli was shared in a March 15 live stream by EthStaker on YouTube.

We're going LIVE in ~10 minutes to discuss the Goerli Shapella Upgrade

Watch here https://t.co/PDFvmqyFGM
— r/EthStaker (@ethStaker) March 14, 2023

This is a developing story, and further information will be added as it becomes available.

Nexo Agrees to Pay $45 Million to SEC and State Regulators for Unregistered Offering of Earn Interest Product

January 20, 2023 Bitcoin.com

Vitalik Buterin highlights what he’s bullish about for 2023

January 2, 2023 Coin Telegraph

Coin Telegraph

The Ethereum co-founder expects to reach a new milestone for rollups this year.

Ethereum co-founder Vitalik Buterin has shared some bullishness for the year ahead, including reaching a new milestone for rollup scaling as per the Ethereum roadmap.

The Ethereum developer also confirmed the rollout of the Ethereum Improvement Protocol (EIP) 4884 sometime in 2023, which had been removed as part of the upcoming Shanghai upgrade package set for March.

Responding to a Dec. 31 post from former chief technology officer of Coinbase, Balaji Srinivasan, asking users what they were bullish for in 2023, Buterin said he was looking forward to reaching the “basic rollup scaling” milestone as outlined in the Ethereum roadmap.

Reaching the "basic rollup scaling" milestone in my roadmap diagram.

That means:

* EIP-4844 rolled out
* Rollups partially taking off training wheels, at least to "stage 1" as described here https://t.co/qNQonDQkzG pic.twitter.com/7HePctWw1l
— vitalik.eth (@VitalikButerin) December 31, 2022

He explained that this meant the rollout of The Surge-related Ethereum Improvement Proposal (EIP)-4884.

EIP-4884 was initially expected to be packaged in with Shanghai, introducing “proto-danksharding” to significantly enhance layer-2 rollup scalability (The Surge) ahead of the full implementation of the major Sharding upgrade late next year.

He also said that this would mean that rollups would be “partially taking off training wheels, at least to stage 1” referring to a Nov. 22 post on the “Ethereum Magicians forum” which describes three stages of “trust model” based on how mature a project's tech was.

Stage 0, which Buterin likens to having “full training wheels” has the requirements for all transactions being on-chain and providing users the ability to withdraw their assets without the operator.

Stage 1 or “limited training wheels” must have a transaction verification method such as a fraud proof or validity proof scheme to accept or reject which transactions are allowed by the smart contract, along with an overriding security council to oversee the process.

While stage 2, has “no training wheels” and must have two distinct fraud provers, two distinct validity provers, or one of each. Upgrades are allowed at this stage but must have a delay of more than 30 days.

In a separate Twitter post one day earlier on Dec. 30, Buterin also made some comments on what he believes a “Good Crypto Future” might look like.

Buterin outlined several areas of crypto that would need to be fixed, including scaling, privacy, user experience and making user accounts more secure for average users than centralized services.

He also sees payments and decentralized finance (DeFi) being part of this future, and new organizational paradigms powered by decentralized autonomous organizations (DAOs).

Ethereum Co-Founder Vitalik Buterin Discusses Proposal to Alleviate Network’s Congestion, High Fees

February 6, 2022 Bitcoin.com

Ethereum London upgrade launches on testnet as 100K staked in a day on Eth2

June 25, 2021 Coin Telegraph

1559

The Ethereum community is anxiously awaiting the mainnet launch of EIP-1559.

Ethereum’s forthcoming London upgrade, containing the highly-anticipated Ethereum Improvement Proposal (EIP) 1559, has been deployed on the Ropsten testnet.

Following the June 24 launch on Ropsten, London is now expected to progress through Ethereum’s Goerli, Rinkeby, and Kovan testnets at roughly weekly intervals — from which point the Ethereum community expects a date for mainnet deployment to firm up.

The new upgrade will see transaction fees burned. According EIP-1559 tracking website, Watch the Burn, roughly 88,500 testnet ETH nominally worth $177.6 million has been burned on Ropsten over the day since London’s deployment.

The high rate of Ether being burned on Ropsten has reignited discussion regarding whether EIP-1559 will render Ethereum deflationary — where more ETH is destroyed than new supply enters into circulation — and what this could mean for Ethereum’s price moving forward.

700 per day is the estimated low. Will burn 250000 ETH annually. Decreasing supply. 6000 per day will burn 2 million each year. Excited.
— Caesar’s Palace (@CeasarBlue92) June 24, 2021

However, EIP-1559 is not the only upgrade that the community is looking forward to from London, with David Mihal of CryptoFees describing EIP-3074 as “fixing one of Ethereum’s most overlooked security issues” to do with approvals.

One of the most overlooked security issues in Ethereum is ERC20 approvals.

I've given up on my push for ERC777 to fix this... Our next chance to fix this is EIP-3074.

3074 will allow a user to approve a transfer, execute an action, then revoke the approval all in 1 transaction. https://t.co/zk52JtYaAj
— David Mihal (@dmihal) June 24, 2021

Coincidentally or not, crypto data aggregator, CryptoQuant, identified that 100,000 Ether had been deposited into Eth2's staking contract around the same time as the launch, worth roughly $200 million.

CryptoQuant also noted that more than 5% of ETH’s supply is currently locked in staking worth approximately $11.75 billion.

Over 100k ETH staked in ETH 2.0 yesterday

Read more in Quicktakehttps://t.co/XNyCB3wbQ6 pic.twitter.com/oovBdeIM2C
— CryptoQuant.com (@cryptoquant_com) June 24, 2021

Ethereum has strong fundamentals, so why are pro traders bearish on ETH?

June 3, 2021 Coin Telegraph

bitcoin options

Ethereum price has outperformed Bitcoin by 32% since May but derivatives data shows pro traders are feeling less bullish about the top altcoin.

Ether (ETH) has outperformed Bitcoin (BTC) by 32% since May and even though there has been a steady flow of bullish reports from JPMorgan and Goldman Sachs, derivatives metrics show elements of bearishness in both assets.

*Ether and Bitcoin price change since May. Source: TradingView*

Bitcoin is trading 41% below its $64,900 all-time high and that move has driven the "Crypto Fear and Greed Index" to the lowest level since March 2020. While retail fears the dip, professionals such as global investment firm Guggenheim Investments have filed with the United States Securities and Exchange Commission for a new fund that may seek exposure to Bitcoin.

Billionaire investor Stanley Druckenmiller reiterated his bullish stance on Bitcoin when he said:

"I think BTC has won the store of value game because it's a brand, it's been around for 13-14 years and it has a finite supply".

Ethereum network momentum has been outstanding

Ethereum overtook Bitcoin in terms of miner revenue and network value transacted right as a report from Goldman Sachs revealed the global investment bank believes that Ether has a "high chance of overtaking Bitcoin as a dominant store of value." The report noted the growth of the decentralized finance sector and the non-fungible token ecosystems being built on Ethereum.

*Bitcoin and Ethereum network miners revenue, USD. Source: CoinMetrics*

Notice how Ethereum miners' revenue significantly outpaced Bitcoin's in May, reaching a $76 million daily average. This figure leapfrogged Bitcoin's $45 million in miners revenue, including the 6.25 subsidy per block, plus transaction fees.

A similar situation happened in the amount transacted and transferred on each network. For the first time, Ethereum presented a significant advantage according to this metric.

*Bitcoin and Ethereum network average daily transactions, USD. Source: CoinMetrics*

The chart above shows the Ethereum network settling $25 billion per day on average, which is 85% higher than Bitcoin's. Stablecoins certainly played an important role, but so did the $50 billion net value locked in decentralized finance applications.

The futures premium is slightly bearish

When measuring the futures contract premium, both Bitcoin and Ether display similar levels of bearishness. The basis rate measures the difference between longer-term futures contracts and the current spot market levels.

The one-month futures contract usually trades with 10%–20% premium versus regular spot exchanges to justify locking the funds instead of immediately cashing out.

*OKEx Bitcoin and Ether futures annualized premium (basis). Source: Skew*

As depicted above, the futures premium has been below 10% since the May 19 crash for both Bitcoin and Ether. This indicates a slight bearishness, although far from a negative indicator, known as backwardation.

Ether's 25% delta skew signals "fear"

To assess Ether trader's optimism, one should look at the 25% delta skew. The metric will turn positive when the neutral-to-bearish put options premium is higher than similar-risk call options. This situation is usually considered a "fear" scenario. On the other hand, a negative skew translates to a higher cost of upside protection and points toward bullishness.

*Ether options 25% delta skew. Source: Laevitas.ch*

Similar to the futures premium, Ether options 25% delta skew has been ranging above 10% since May 19. This indicates that market makers and whales are unwilling to offer downside protection, indicating "fear".

Albeit distant from a highly adverse situation, both Ether derivatives indicators point to a complete lack of bullishness, despite the altcoin 270% gain year-to-date.

In the face of this disappointing data, some analysts will find the "glass half full" as it leaves room for a positive surprise. The Ethereum Improvement Proposal 1559, or EIP-1559, expected for July, will create a base network fee that would fluctuate based on network demand. The update also proposes to burn transaction fees, thereby introducing deflation to the Ethereum ecosystem. OKEx analyst Rick Delaney stated that it "may enhance the asset's appeal among the planet's wealthiest investors."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

EIP

Ethereum network momentum has been outstanding

The futures premium is slightly bearish

Ether's 25% delta skew signals "fear"

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