7 confusing crypto terms (almost) nobody understands

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December 10, 2023 Coin Telegraph

Ledger co-founder clarifies “there is no backdoor” in Recover firmware update

May 20, 2023 Coin Telegraph

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Ledger co-founder clarifies "there is no backdoor" in Recover firmware update

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Coin Telegraph

Ledger Recover is an OTA firmware update, which would allow users to back up their seed phrases by third-party entities only if a user chooses to opt-in to the new service.

The launch of Ledger Recover, a service that allows users of the Ledger hardware wallet to back up their secret recovery phrases, met with immense resistance from the crypto community. Ledger co-founder and ex-CEO Éric Larchevêque took the criticism against Ledger as “a total PR failure, but absolutely not a technical one.”

Ledger Recover is an OTA firmware update, which would allow users to back up their seed phrases by third-party entities. If a user chooses to opt-in to the new service, the recovery phrase fragments get encrypted and are stored by 3 different parties, which can be used to recover the phrase in the future. However, the idea of the seed phrase leaving the hardware wallet did not resonate with users that considered Ledger as a trustless service for storing cryptocurrencies.

Addressing the rising concerns of users worldwide, Larchevêque posted on Reddit clarifying that Ledger was never a trustless solution:

“Some amount of trust must be placed into Ledger to use their product. If you don't trust Ledger, meaning you treat your HW manufacturer as an adversary, that can't work at all.”

He argued that the Ledger Recover update has no impact on the hardware wallet’s security model. He added:

“My mistake as a CEO during my tenure was probably not be relentless enough about explaining the security model, but at some point you just give up as people don't care at all. Until they care again, like now.”

Larchevêque believed that the only thing that changed is the general user’s perspective on trustlessness and that the Recover code in the firmware is not a malicious code:

“Ledger is still safe, there is no backdoor, the Ledger Recover is not a conspiracy, no one will ever force anyone to use Recover.”

Trusting Ledger with sharding the seed phrase is just like trusting Ledger with signing a transaction, he added. Addressing a user’s recommendation about having two different firmware to eradicate ‘backdoor’ concerns, Larchevêque said that “it wouldn't change anything” and would be saddening for him personally.

The firmware update in question is not available for Nano S — Ledger’s cheapest hardware wallet offering — as the chipset does not have enough memory to store the new firmware.

Amid the rollout of Ledger’s controversial firmware update, competing hardware wallet provider GridPlus decided to open-source its firmware for its users.

The most trusted name in cryptography, relied upon by the world's governments for their highest security applications for decades, sold products backdoored by the CIA. How can we ensure this won't happen again? Open-source software.

GridPlus will open-source its firmware in Q3. pic.twitter.com/889OnqXd20
— GridPlus (@gridplus) May 18, 2023

Turning the Ledger controversy into a marketing opportunity, GridPlus announced plans to open source its device firmware in the third quarter of 2023 to deliver greater transparency.

What’s in and what’s out for Ethereum’s Shanghai upgrade

December 9, 2022 Coin Telegraph

Coin Telegraph

A tentative timeline of March 2023 has been set for the Shanghai upgrade which will enable staking withdrawals, a list of EIPs have also been packaged in but EIP-4844 didn't make the cut.

Ethereum core developers have opted to prioritize the enabling of staking withdrawals via the Shanghai upgrade first before implementing The Surge-related Ethereum Improvement Proposal (EIP)-4884.

As reported by Cointelegraph, the next key milestone on Ethereum’s roadmap is the Shanghai upgrade, which will enable withdrawals for ETH stakers/validators from the Beacon Chain — among other things.

EIP-4884 is also important and 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.

However, according to Ethereum core developer Tim Beiko at the latest Ethereum Core Developers Meeting on Dec. 8, the ultimate consensus was to focus on Shanghai first to avoid any potential delays if EIP-4844 were to not be ready in time.

In a rundown thread on Twitter, Beiko noted that everyone agreed to “(1) seeing Shanghai happen quickly, ideally around March and (2) following this with a fork centered around EIP-4844.”

While EIP-4844 won't be included, the devs have agreed to include a set of EIPs that essentially upgrade the Ethereum Virtual Machine (EVM), including introducing a new EVM contract format, code/data separations and new operation codes.

Beiko noted that as these upgrades, known as EVM Object Format (EOF) are quite easy to walk back and remove from Shanghai, if devs haven’t finished working on it when Shanghai is ready for implementation, then EOF will simply be removed and shipped later.

Additionally, a set of previously agreed upon EIPs will roll out alongside Shanghai, the list includes EIP-3651: Warm Coinbase, EIP-3855: PUSH0 instruction, EIP-3860: Limit and meter initcode and EIP-4895: Beacon chain push withdrawals as operations.

So, that's where we landed for Shanghai: Withdrawals, EOF & a few already implemented EIPs (PUSH0, Warm COINBASE, Limit/Meter initcode) are what we will go for. If by January, we don't meet the EOF milestones mentioned above, we'll remove it from Shanghai so withdrawals ship ASAP
— timbeiko.eth (@TimBeiko) December 8, 2022

EIP-3651: Warm Coinbase in particular will potentially have some cost reduction benefits for the network. Not to be confused with the name of crypto exchange, Coinbase in this context refers to the name of the software that builders use to receive new tokens on the network.

Every new transaction on the platform needs to interact with the Coinbase software multiple times, however, the initial transactions start off more expensive as Coinbase essentially needs time to warm up.

With the new EIP implementation, this won’t be the case anymore and thus lowering gas fees when builders are interacting with it.

As per the Ethereum Foundation, Sharding is a multi-phase upgrade designed to significantly ramp up Ethereum’s “scalability and capacity” via the implementation of shard chains, which will give the network significantly “more capacity to store and access data.”

With the improved data storage capabilities, this will essentially enable Layer 2 solutions to offer much lower transaction fees.

After all of this is completed, the network's next major event and final part of the roadmap is the Sharding upgrade, which is expected to roll out over 2023 and 2024.

VC Roundup: Web3 dev, EVM sharding and crypto banking headline blockchain funding deals

October 22, 2022 Coin Telegraph

Avalanche

WWVentures, Shardeum, Myna Swap, Antic, Juno, Zerion and thirdweb attract venture capital interest in latest funding blitz.

Web3 dominance within crypto funding rounds has been well documented by Cointelegraph Research. In addition to the Web3 mega funds announced recently, venture capital has also been making smaller, more targeted investments in the sector. In this week’s Venture Capital (VC) Roundup, we chronicle the latest Web3 funding initiatives and draw attention to a sharding platform, nonfungible token (NFT) marketplace, crypto banking solution and co-ownership infrastructure provider.

Gamers, athletes and content creators back WWVentures

WWVentures, a boutique crypto venture firm, has raised $15 million for its Web3 fund — putting the company on track to invest in metaverse, decentralized finance and blockchain gaming startups. The funding round was backed by a slew of notable gamers, content creators and athletes, including former UFC Champion Michael Bisping and Trent Alexander Arnold of Liverpool F.C. The fund will focus exclusively on startups with a “community-first approach” to development and will aid their growth through social capital and community-building support.

Happy to be involved with this project and a proud investor. Let’s go! @WW_Ventures https://t.co/q6td5fiDna
— michael (@bisping) September 27, 2022

Scalability-focused blockchain raises $18.2M

Ethereum Virtual Machine-based blockchain Shardeum has received $18.2 million in seed funding from over 50 investors, including venture firms Jane Street, The Spartan Group and DFG. Shardeum is a proof-of-stake network focused on solving one of blockchain’s biggest pain points: scalability. As the name implies, the platform uses sharding — a type of database partitioning — to increase throughput capacity. Shardeum claims that its scaling capacity is superior to other layer-1 blockchains.

Avalanche-native platform rises $6M for NFT marketplace

Myna Swap, a luxury collectible marketplace that allows users to convert their physical assets into digital twins via NFTs, has raised $6 million in seed funding. Investors include Polygon Studios, Blizzard Avalanche Fund, Spartan Capital and Wave Financial. The platform, which offers trading and vaulting services, is geared toward collectors of sneakers, sports cards and watches and was built on the Avalanche blockchain. Myna Swap is set for launch later this year.

Alexis Ohanian backs Antic in $7M raise

Web3 co-ownership infrastructure provider Antic has raised $7 million in funding led by Sheva and Alexis Ohanian’s Seven Seven Six venture studio, with additional participation from Pantera Capital, Sound Ventures and Dapper Labs. Antic described co-ownership technology as an emerging concept within the Web3 community that allows companies to establish blockchain-based ownership models more easily.

Crypto banking platform closes $18M Series A

Web3 banking platform Juno has raised $18 million in Series A funding led by ParaFi Capital, with additional participation from Hashed, Jump Crypto and others. Juno provides a crypto-native checking account that allows users to bank with their digital assets more easily. Following the investment round, Juno is planning to expand its product offerings and launch a tokenized loyalty program that allows users to earn coins for taking their paycheck in crypto or spending digital assets with their Juno card.

Wintermute Labs leads Zerion funding round

Web3 wallet and DeFi aggregator Zerion has closed a $12.3 million Series B funding round led by Wintermute Labs, the venture arm of liquidity provider Wintermute. Zerion will use the funding to further develop its Web3 wallet by integrating advanced data and enabling better cross-chain identity management for Ethereum-compatible blockchains. Zerion claims that its trading volume has grown from $47 million in 2019 to more than $1.5 billion.

The growth of the Web3 VC industry is showing no signs of slowing down.

Polygon founder Sandeep Nailwal is the latest to join the party after raising $50 million for a new startup fund. https://t.co/XqEuvk5PV3
— Cointelegraph (@Cointelegraph) August 25, 2022

thirdweb lands $24M from major VC investors

Web3 developer platform thirdweb achieved a lofty valuation of $160 million following its Series A funding round that landed the company $24 million. The Series A funding was led by Haun Ventures and included several notable investors such as Coinbase Ventures, Shopify, Polygon and Protocol Labs. Founded in 2021, thirdweb is developing the infrastructure layer for Web3 that could enable more seamless app development across blockchains.

Ethereum launches testnet for Shanghai upgrade: Here’s what is next

October 18, 2022 Coin Telegraph

Coin Telegraph

Staked ETH withdrawals and lower gas fees are among the developments expected with the upgrade.

Staked ETH withdrawal and lower gas fees are some of the developments expected with the next critical improvements for the Ethereum network, the Shanghai upgrade. The testnet version, dubbed Shandong, is now live. Developers can now begin working on the implementations; a process expected to continue until September 2023.

This is the first major update since Ethereum's consensus switched to Proof-of-Stake (PoS) in September after the Mainnet and Beacon Chains merged.

Moreover, the coming upgrade introduces an elemental change to Ethereum Virtual Machine (EVM), the technology that powers the network smart contracts. EIP-3540, or EVM object format, is one of the community's most-anticipated updates since it separates coding from data, which could be beneficial for on-chain validators. Galen Moore, content lead at Axelar, told Cointelegraph about the proposal:

"From my perspective, EIP 3540 is the most significant upgrade proposed for Shanghai. It’s a further step toward interoperability within the Ethereum ecosystem. Currently, Layer-2 networks on Ethereum use a cumbersome code validation process. EIP 3540 separates code and data, making that process more efficient. It’s especially good news for the growing ecosystem of Polygon Supernets — dAppchains built on Polygon Edge."

Another expected proposal is EIP-4895, which will allow staked ETH and earned rewards withdrawals via the Beacon Chain. In order to ensure network stability, validators with staked ETH currently cannot withdraw funds directly.

Among the proposals under consideration, the upgrade will also introduce changes to layer-2 protocols, reducing gas prices by equalizing block sizes and increasing calldata efficiency in the network. Moore also noted:

"When specialized chains can build on a Layer-2 like Polygon and reduce the cost of communicating with the base chain Ethereum, that reduces gas prices for users everywhere in the ecosystem — by making it more efficient to scale horizontally in a way that spreads demand."

As previously reported by Cointelegraph, the Merge was the first step in this five-part process, which has since been elaborated upon by a number of Ethereum developers, ecosystem participants and commentators. The key change of the Merge is the drastic reduction in power consumption, reducing Ethereum’s energy usage by 99%.

Additional steps to come include the Surge, an important step in increasing the scalability of the blockchain’s ability to store and access data, followed by the Verge, Purge and Splurge. The last three steps in Ethereum’s ongoing development and set to take place over the next few years.

Sharding could resolve Ethereum scalability trilemma, says researcher

September 21, 2022 Coin Telegraph

Coin Telegraph

Scalability trilemma implies that to scale, blockchains usually need to sacrifice one of their three fundamental cornerstones — security or decentralization, or transaction throughput.

After a successful Ethereum Merge, all eyes are set on the next phase of transition that would introduce key scalability solutions on the platform, including sharding. Market experts believe sharding would be a game changer for the Ethereum network as it could potentially solve the scalability trilemma.

In an exclusive conversation with Cointelegraph, Uphold’s head of research, Dr. Martin Hiesboeck, explained how sharding could pave the way for Ethereum to become a truly global network.

Hiesboeck believes sharding could eventually solve the long-running scalability trilemma of blockchain networks. Scalability trilemma implies that to scale, blockchains usually need to sacrifice one of their three fundamental cornerstones — security or decentralization, with the third one being scalability itself. He explained:

“Sharding is indeed one of the most effective and universal ways to solve the so-called 'scalability trilemma.' Not sure it’s sufficient to proclaim it the only true scalability solution, but sharding is definitely among the best ones we have at the moment.”.

In layman's terms, sharding would introduce parallel processing, enabling secure distribution of data storage requirements and making nodes easier to operate. In the current blockchain processing system, transactions are processed one block after the other, while with the introduction of sharding, the network can process multiple blocks of transactions concurrently.

Using this mechanism, validators that verify certain blocks will publish signatures attesting to the fact that they did so. Meanwhile, everyone else will have to only verify 10,000 such signatures instead of 100 full blocks, which is a significantly smaller amount of work.

*Depiction of a Sharded Version of Ethereum. Source: Quantstamp.*

Hiesboeck explained that sharding would not only increase Ethereum’s throughput by multifold but also lower the gas fees and make the network more energy efficient. He explained that the energy saving and scalability both come from “the smaller packets that have to be moved as sharding stores datasets in manageable blocks and allows additional requests to be executed at the same time.”

Earlier, Ethereum developers planned to launch 64 shards which require roughly 8.4 million Ether (ETH) to be staked in Eth2. However, there are already nearly 13.8 million ETH staked by now, so the number of initial shards can potentially be even higher than that.

The transition to PoS has also raised node centralization concerns, especially in the wake of the United States Securities and Exchange Commission's (SEC) jurisdiction claims over ETH, since nearly 43% of nodes are clustered in the U.S. Hiesboeck said that the SEC’s assertions over Ethereum are misguided. He argued that the concentration of nodes can change overnight and explained:

“Ethereum nodes can pop up anywhere in the world, and while around nearly 43% of them are indeed centralized in the U.S. right now (the second-biggest country being Germany with 11.8%), this can change at a moment's notice.”

Hiesboeck concluded by saying that the Ethereum developer community has a proven track record and has already demonstrated its resilience in the past so that anything can be solved, given time.

Ethereum’s L2 solution ‘Optimism’ rallies 300% in a month — will OP price gains sustain?

August 4, 2022 Coin Telegraph

Coin Telegraph

Optimism eyes an increase in adoption after the Merge upgrade triggers Ethereum's "Rollup-Centric Roadmap."

The price of Optimism (OP) has been skyrocketing since the beginning of July due to its proximity to Ethereum.

Notably, OP's price rallied by nearly 300% in over a month to reach $2.31, its second-highest level on record, on Aug. 4. The token received its bullish cues primarily from the euphoria surrounding Ethereum's potential transition to proof-of-stake in September via an upgrade called "the Merge."

*OP/USD four-hour price chart. Source: TradingView*

Why the "Optimism"

To recap: Optimism is an Ethereum rollup solution. In other words, the so-called layer-2 solution handles a bundle of Ethereum's transaction verifications off-chain to boost scalability on the main chain.

Optimism could benefit from the Merge due to Ethereum's "Rollup-Centric Roadmap," which turns its main chain into a settlement and data availability layer and places scalability in the hands of layer-2 rollups via "danksharding."

"Currently, with the combined rollup and Ethereum architecture, the current Ethereum-only transaction throughput of 15–45 TPS could scale to as much as 1,000–4,000 TPS," noted Ally Zach, a researcher at Messari, adding:

"The introduction of shards has expanded the data storage capacity for rollups to increase this throughput to [the] north of 100,000 TPS."

That explains why OP and other layer-2 tokens have responded positively to the Merge announcement on July 15.

*Ethereum layer-2 tokens and their performances on different timeframes. Source: Messari*

OP price could drop 30% in August

Despite strong fundamentals, OP's technical metrics suggest its rally could exhaust in the coming weeks.

On the four-hour chart, OP's rising price coincides with its falling relative strength index (RSI), indicating "bearish divergence." Meanwhile, the attempted breakout above the $2-level has faced strong rejection twice since July 29, including its 15% drawdown after peaking out locally at $2.31 on Aug. 4.

*OP/USD 4-hour price chart. Source: TradingView*

Therefore, an extended correction could have OP test its 50-4H exponential moving average (50-4H EMA; the red wave) near $1.54 as its interim downside target. This curvy level has limited OP's downside attempt on Aug. 2.

Moreover, a break below the 50-4H EMA could push OP to $1.36, down 30% from today's price. Interestingly, the $1.36-level also served as support in August and coincides with a multi-month ascending trendline support.

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

ETH Co-Founder Vitalik Buterin Says The Merge Could Happen in August, There’s Also ‘Risk of Delay’

May 21, 2022 Bitcoin.com

Ethereum futures premium hits a 7-month low as ETH tests the $2,400 support

February 26, 2022 Coin Telegraph

Ethereum futures premium hits a 7-month low as ETH tests the ,400 support

basis

ETH price dropped 30% in two weeks, and derivatives data shows pro traders are bearish even with Feb. 25’s rally back toward $2,800.

Ether (ETH) reached a $3,280 local high on Feb. 10, marking a 51.5% recovery from the $2,160 cycle low on Jan. 24. That price was the lowest in six months, and it partially explains why derivatives traders’ main sentiment gauge plummeted to bearish levels.

Ether’s futures contract annualized premium, or basis, reached 2.5% on Feb. 25, reflecting bearishness despite the 11% rally to $2,700. The worsening conditions depict investors’ doubts regarding the Ethereum network’s shift to a proof-of-stake (PoS) mechanism.

As reported by Cointelegraph, the much-anticipated sharding upgrade that will significantly boost processing capacity should come into effect in late 2022 or early 2023.

Analyzing Ether’s performance from a longer-term perspective provides a more appealing sentiment, as the cryptocurrency is currently 45% below its $4,870 all-time high.

Furthermore, the Ethereum network’s adjusted total value locked (TVL) has held a reasonable 42.8 million ETH despite the price correction.

*Ethereum network total value locked, in ETH. Source: DefiLlama*

As shown above, the network’s TVL increased by 16.5% in three months, reflecting growth from decentralized finance (DeFi) and nonfungible token (NFT) marketplaces.

However, due to network upgrade delays and worsening global macro conditions, professional traders are becoming frustrated and anxious, a sentiment that is depicted in multiple derivatives metrics.

Ether futures hit their most bearish level in seven months

Retail traders usually avoid quarterly futures due to their fixed settlement date and price difference from spot markets. However, the contracts’ biggest advantage is the lack of a fluctuating funding rate, hence the prevalence of arbitrage desks and professional traders.

These fixed-month contracts usually trade at a slight premium to spot markets because sellers are requesting more money to withhold settlement longer. This situation is known technically as “contango” and is not exclusive to crypto markets.

*Ether futures 3-month annualized premium. Source: Laevitas*

Futures should trade at a 5%–15% annualized premium in healthy markets. Yet, as displayed above, Ether’s annualized premium has decreased from 20% on Oct. 21 to a meager 2.5%.

Although the basis indicator remains positive, it has reached the lowest level in seven months. The crash to $2,300 on Feb. 24 caused bearish sentiment to prevail, and not even Feb. 25’s 10% recovery was enough to flip the tables.

Currently, data shows few signs that bulls are ready to regain control. If this were the case, the Ether futures premium would have turned positive after such a rally.

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.

sharding

Gamers, athletes and content creators back WWVentures

Scalability-focused blockchain raises $18.2M

Avalanche-native platform rises $6M for NFT marketplace

Alexis Ohanian backs Antic in $7M raise

Crypto banking platform closes $18M Series A

Wintermute Labs leads Zerion funding round

thirdweb lands $24M from major VC investors

Why the "Optimism"

OP price could drop 30% in August

Ether futures hit their most bearish level in seven months

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