Cobra Warns of a New Bitcoin Soft Fork Next Year

December 3, 2024 Bitcoin.com

Matter Labs co-founder proposes ‘Ethereum Supreme Court’ for on-chain disputes

September 4, 2023 Coin Telegraph

The crypto entrepreneur believes it would scare off bad actors and strengthen the state of the Ethereum network.

Matter Labs co-founder and CEO Alex Gluchowski has proposed an Ethereum court system resembling a hierarchical court system similar to the real world.

In a Sept. 2 post on X (Twitter), Gluchowski floated the idea for an “Ethereum Supreme Court” — which would work similar to the United States Supreme Court — serving as a final stop for parties to dispute smart contract issues rather than needing to take matters to a traditional lawyer or court.

“The most important function of such a system will be to protect protocols against political inference from the outside. It will serve as a great deterrence mechanism, and will elevate the role of Ethereum as a powerful network state,” said Gluchowski.

Smart contract implementation risks remain the biggest unsolved problem of Defi. L2s are equally affected.

Let me pitch an idea: L1 Fork as the Court of Final Appeal.

First, why existing solutions don't work:

1) Time-locked upgrades are great for scheduled changes, but… pic.twitter.com/EcaogkZBH9
— Alex G. ∎ (@gluk64) September 2, 2023

According to Gluchowski’s concept, disputes and emergency upgrades would be handled by a hierarchical system of on-chain courts. The final stop, however, would be an Ethereum layer-1 soft fork as the “Court of Final Appeal.”

Gluchowski said that in this system, every protocol would have its own governance with normal and emergency upgrade mechanisms, and would also designate a special contract which can trigger an appeal.

When there is an emergency upgrade to a protocol, there would be an appeal period, during which any user can submit a challenge to the higher court. However, they’ll have to put up a pre-defined bail deposit.

Each court specifies the higher court to appeal to, with the Ethereum Supreme Court serving as the final destination for challengers, Gluchowski said.

Let's chat. The main idea of the post: no human-driven court should be able to say the last word. The final appeal must always be an L1 fork.
— Alex G. ∎ (@gluk64) September 2, 2023

An example court heirachy would see protocols like Aave and Uniswap would contest matters in a court such as CourtUnchained or JusticeDAO. After those courts reach a decision, a party can appeal to the Ethereum Supreme Court.

However, there would need to be a strong social consensus for the on-chain court system to work, Gluchowski acknowledged.

He added that it would be expensive so that only “truly extraordinary” cases will be brought before it.

“[It will need to be] worthy of the attention of the entire Layer-0 (the social consensus) of Ethereum. Think of a bug in @Uniswap, a major L2, a Defi protocol with a systemic risk, etc.”

Gluchowski noted there were several existing solutions to such disputes already, but argued that they aren’t effective.

For example, enabling time-locked features on smart contracts isn’t suitable in emergency situations and introducing a security council can mitigate the problem, but won’t solve it, while carrying its own risks.

“A security council could only freeze the contract temporarily, requiring a token governance approval for an emergency upgrade. But now a malicious majority of undercollaterized stakers could perform an evil take-over upgrade and steal all the assets,” he explained.

Gluchowski said he and the team at zkSync — an Ethereum layer 2 scaling solution created by Matter Labs — will happily fund research into the proposal.

Magazine: ‘Moral responsibility’ — Can blockchain really improve trust in AI?

Controversy as MakerDAO’s Spark Protocol blocks users with VPNs

August 7, 2023 Coin Telegraph

Chris Blec

Users attempting to access Spark Protocol with a virtual private network will not be able to, sparking criticism from supporters of privacy.

MakerDAO, one of the early pioneers of decentralized finance, has sparked criticism over its decision to block virtual private network (VPN) users from accessing its recently launched lending platform, Spark Protocol.

At the time of writing, VPN users that attempt to access the Spark Protocol website will be met with an error: “Accessing this website via VPN is not allowed.”

*Cointelegraph tested accessing the site with Australian and Singapore-based VPNs and was met with the warning. Source: Spark Protocol*

The measure appears to be linked to Maker’s attempt to restrict United States users from accessing the crypto lending platform, discussed in a May 9 update to Spark Protocol’s terms of service warns against the use of VPNs to circumvent the block.

*Spark Protocol’s terms of service prohibits U.S. users from using a VPN to conceal their U.S. residency. Source: Spark Protocol*

In an Aug. 6 tweet, DeFi analyst Chris Blec was among those saying he was “disgusted” with the decision, highlighting it effectively acts as a blanket ban on VPNs across the globe, not just in the U.S.

“It’s one thing to block US residents. It’s a whole other thing to block anyone in the entire world who is using a VPN for privacy,” said Blec, adding it is an “actual war on privacy.”

https://t.co/jQMBepF1j7
— Chris Blec (@ChrisBlec) August 6, 2023

Blec, a self-proclaimed decentralization and privacy advocate, also took shot at MakerDAO’s creator Rune Christensen and the firm’s other developers in a response tweet, stating that they have prioritized profits over user privacy:

“The root of the problem here is that these developers are putting profit over principle. They’re putting their bank account balance ahead of your privacy and your rights.”

Cointelegraph has reached out to MakerDAO for comment, but did not receive an immediate response.

Launched in May, the Spark Protocol supposedly offers users up to 8% in annual returns by lending DAI. The lending platform was created as a soft fork of Aave v3 by Phoenix Labs, a blockchain research and development firm launched by the Maker Foundation.

*Prior to lending cryptocurrencies in Spark Protocol, users must agree that they are not using a VPN. Source:* *Spark Protocol*

Spark Protocol is said to use TRM’s blockchain intelligence services to block wallets from Spark Protocol that engage in legally prohibited conduct.

Magazine: Joe Lubin — The truth about ETH founders split and ‘Crypto Google’

Debate Intensifies Over Significance and Implications of Ordinal Inscriptions on Bitcoin Blockchain

February 4, 2023 Bitcoin.com

A year after Taproot, Bitcoin community works to unlock its DeFi potential

December 9, 2022 Coin Telegraph

Coin Telegraph

Smart contracts functionalities on the Bitcoin network could boost adoption and provide additional liquidity to DeFi.

Taproot support across the industry is still crawling one year after the Bitcoin soft fork, indicating a strong potential for innovation and broader adoption of Web3 solutions to be unlocked through the world's largest cryptocurrency, sources told Cointelegraph.

"Since early on, Satoshi predicted that layers being built on top of the Bitcoin blockchain would enable Bitcoin to move beyond being only sound money by adding programmability, which makes Bitcoin the optimal framework to build out Web3 capabilities," noted Alex Miller, CEO of the Web3 developer platform Hiro.

The Taproot upgrade took place in November 2021 and laid the foundation for accelerating decentralized financial services through the Bitcoin (BTC) network. It enables more efficient validation of multi-signature scripts, which addresses privacy issues, and improves block storage by reducing the size of complex transactions occurring on the network.

The changes were long-awaited in the industry, as many Bitcoin holders do not use their coins on decentralized finance (DeFi) applications "because it involves the cumbersome task of wrapping it using a bridge so that it can be processed by smart contracts on another blockchain such as Ethereum," commented Dominic Williams, founder and chief scientist at DFINITY, the foundation behind the Internet Computer blockchain, which is one of the companies working to unlock Bitcoin's potential for DeFi.

Internet Computer announced on Dec. 5 its mainnet integration with the Bitcoin network, serving as a Layer-2 where smart contracts can hold, send and receive BTC natively without the need for third parties or blockchain bridges, which was one of the targets of hackers in 2022 when billions of dollars were drained. According to the company, nearly every DeFi application building on Internet Computer's blockchain plans to incorporate Bitcoin due to the liquidity it provides.

Through smart contract functionalities for Bitcoin, users willing to participate on DeFi are able to send their coins to Bitcoin's smart contract address, and directly withdraw the coins from their wallets. "Soon you will be able to send a simple chat message, such as 'Happy Birthday! Here are 100,000 satoshis!' using a fully on-chain Web3 service such as Open Chat," noted Williams.

Enabling Web3 on the Bitcoin blockchain also means more trust in cryptocurrencies and DeFi applications, stated Alex Miller:

“The recent implosions in centralized entities like FTX will only serve to keep pushing forward interest in truly decentralized finance - where transactions are secured algorithmically at the consensus level and users don't have to trust third-party custodians to 'do the right things' with their coins. And given its history of pioneering decentralized trust, Bitcoin is the most logical place for people to conduct DeFi transactions."

Decentralized autonomous organizations (DAOs) could benefit from Bitcoin's smart contract functionality as well, according to Miller, but DeFi is likely to account for most of the growth. "People want to know that the blockchain they invest time and money into will be around in a couple of years, Bitcoin has a proven track record here. In bear markets, developers, and investors alike look for safer assets to concentrate on, and Bitcoin will always hold a unique distinction here. Looking to 2023, I think DeFi will be the biggest point of growth in our ecosystem."

In existence for nearly 14 years, Bitcoin has experienced several hard and soft forks driven by the crypto community. Coming upgrades may include the Covenants, which is described in Bitcoin Improvement Proposal (BIP) 119 and would restrict in a list the address where a user can send their funds.

Bitcoin SegWit adoption lags among major exchanges: Glassnode

February 4, 2022 Coin Telegraph

Binance

A Glassnode report reveals that cryptocurrency exchanges some major exchanges are still holding despite being heavy consumers of Bitcoin block space.

SegWit has come a long way since its first appearance during the 2015-2017 blocksize war. However, despite its relative success as a Bitcoin upgrade, crypto exchanges including Binance and Gemini are still not committed to using SegWit addresses for sending Bitcoin (BTC).

Implemented in 2017, segregated witness (SegWit) is a soft fork upgrade that separates “witness” data from the base transaction. In an “explain like I’m five” kind of way, SegWit allows for a safer and faster Bitcoin, making scaling the network easier.

While most exchanges and individuals were quick to upgrade their infrastructure to take on SegWit, reaching the 50% mark for Bitcoin transactions in 2019, the largest exchange, Binance has been dragging its feet.

Glassnode’s report states that Binance “had trivial SegWit adoption rates of only 10% up until the end of 2021.” However, it has finally “made an earnest effort to push SegWit adoption near the end of 2021.” Its adoption rate is currently at 50%, paling in comparison to Coinbase and FTX at 100%.

Altogether, crypto exchanges consume roughly 40% of Bitcoin block space. Crucially, however, Coinbase and Binance make up the lion’s share of block space, responsible for “25% of consumed block space” last month. If leaders such as Binance, or large players such as Gemini fail to fully adopt SegWit, Bitcoin will struggle to reach its true scaling potential.

Tomer Strolight, editor in chief at Swan Bitcoin, illustrates the argument:

“The fee savings provided by SegWit (and also batching and Taproot) will inevitably lead to their near-universal use. These have succeeded already in vastly reducing congestion and lowering fees. Ironically, however, their success to date means that we may have to wait until fees become a problem again to give the late adopters the kick in pants they need to fully switch."

Glassnode’s report also shares a more accurate measure for reading SegWit adoption, SegWit utilization. When applied to single entities, such as exchanges, it provides a more detailed picture.

Of the 18 major exchanges that Glassnode investigated, one-third are bona fide SegWit supporters at over 90% adoption levels. The second third–including Binance–are taking their best shot at adopting SegWit ranging from 50% to 80%, while the final six are still using Bitcoin addresses beginning with the number 1, rather than SegWit’s 3.

Here is the graph detailing the exchange SegWit ranking:

It’s unlikely that the laggard exchanges will upgrade to Taproot, the most recent Bitcoin soft fork, any time soon. As Strolight points out, we might have to wait until fees rise before they wake up.

BREAKING: The Bitcoin network welcomes Taproot soft fork upgrade

November 14, 2021 Coin Telegraph

Bitcoin mining

Taproot soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST) to improve the scripting capabilities and privacy of the Bitcoin network.

The Bitcoin (BTC) network successfully activated the Taproot soft fork following a 90% lock-in consensus from miners and mining pools between blocks 709,488 and 709,632. The milestone signifies the first major upgrade for Bitcoin since August 2017, which saw the launch of Bitcoin’s leading layer-two solution, the Lightning Network and Segregated Witness (SegWit).

The Taproot upgrade aims to improve the scripting capabilities and privacy of the Bitcoin network. To do this, the soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST). According to a Taproot-dedicated website run by prominent Bitcoin developer Hampus Sjöberg:

“[MAST] can help make smart contracts more efficient and private by only revealing the relevant parts of the contract when spending.”

Speaking to Cointelegraph, Sjöberg pointed out that Taproot activation shows that Bitcoin can do network upgrades again, which is extremely important for the longevity of the Bitcoin network. “I think that’s the greatest win,” he added.

Sjöberg, who is also a developer of a Bitcoin Lightning wallet Blixt Wallet, believes that the Taproot upgrade allows exploring off-chain capabilities, as to not put too much burden on the Bitcoin nodes of the network.

Taproot is a 100 years softfork.

Merging every contract and use-case under a single transaction type "Pay to Taproot" will in the long-run yield a more fungible and robust blockchain.

This is how you do it.
This is how you design a blockchain.
— Hampus Sjöberg ⚡ (@hampus_s) June 3, 2021

In addition, Sjöberg believes that MAST can also help improve the privacy of the older Lightning Network “if the Lightning implementations choose to adopt Taproot.” The developers of the various Lightning Network node implementations met in Zurich, Switzerland just a few weeks ago at the LN Summit 2021 to discuss possible upgrade paths:

“One of the things that were discussed in the meeting was whether it's best to upgrade Lightning in small iterations or do it as one big package.”

Moreover, Sjöberg explained how payment channels under normal circumstances can be made indistinguishable from normal transactions using Taproot for the Lightning Network:

“It's not possible to tell if a Taproot transaction is just a normal payment or if it belongs to a Lightning channel. This is important for the fungibility and thus the censorship resistance of Bitcoin.”

Taproot’s successful activation is attributed to Speedy Trial, a soft fork deployment method that requires 90% of the miners to signal the deployment of the upgrade. As explained by Sjöberg, “the signaling method works in periods of 2016 blocks, meaning that within a 2016 block period, 90%, or 1815 of the 2016 blocks have to signal for readiness.”

Back in June 2021, the Bitcoin miners achieved a 90% consensus for the first time and Sjöberg tweeted the announcement:

WE HAVE LOCK IN! #Bitcoin #Taproot

Video by: @TheGuySwann!https://t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
— Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021

However, the Taproot upgrade also marks the end of Speedy Trial deployments and future upgrades to the Bitcoin network will require provision for new soft fork deployment methods. "Taproot opens a world of possibilities, but the first thing I personally would like to see is a "MuSig 2" transaction." Sharing advice for fellow Bitcoin developers, Sjöberg said:

“While we should not take anything for granted in Bitcoin, I personally would like to eventually see "Cross-Input Signature Aggregation" as a future soft fork for Bitcoin.”

In Bitcoin's near 13 years of existence, the Bitcoin network has undergone numerous community-driven hard and soft forks. While the Taproot upgrade is yet to prove its worth in time to come, the Lightning Network continues to attain new heights.

On Sept. 28, the Lightning Network witnessed a 160% increase in the number of nodes in the span of 12 months in addition to seeing a jump of 170% in the number of channels since January 2021.

As of Nov. 11, Bitcoin’s network capacity prior to Taproot soft fork was at an all-time high of 3,220 BTC, nearly worth $210 million.

Moonshot to $90K — After Bitcoin Upgrade Taproot Activates, Crypto Advocates Expect the Price to Rally

November 12, 2021 Bitcoin.com

Bitcoin soft fork days away as Taproot upgrade closes in

November 7, 2021 Coin Telegraph

Bitcoin mining

The Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes).

Real-world use cases are one of the main adoption drivers for every crypto ecosystem, which also holds true for the Bitcoin (BTC) network. In the next seven days, the Bitcoin protocol will undergo a soft fork in the name of Taproot upgrade, which aims to improve the network’s privacy, efficiency and smart contracts capability.

Taproot is Bitcoin’s first major upgrade since August 2017, which saw the introduction of Segregated Witness (SegWit) and resulted in the launch of Lightning Network. While the previous fork primarily sought to fix transaction malleability and improve Bitcoin’s network scalability, the Taproot upgrade aims to revamp transaction efficiency, privacy and support smart contracts initiatives.

The Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes). On the same day in June 2021, Bitcoin developer Hampus Sjöberg tweeted the announcement:

WE HAVE LOCK IN! #Bitcoin #Taproot

Video by: @TheGuySwann!https://t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
— Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021

The Taproot soft fork will see the introduction of Merkelized Abstract Syntax Tree (MAST), which introduces a condition that allows the sender and receiver to sign off on a settlement transaction together.

In addition, Taproot will also implement Schnorr Signature, an algorithm that will allow users to aggregate multiple signatures into one for a single transaction, reducing the inherent visible difference between regular and multisig transactions.

Schnorr’s signature scheme can also be used to modify the user’s private and public keys, in a manner that can be verifiable to confirm the legitimacy of each transaction. According to the original Taproot proposal from January 2018 put forth by Gregory Maxwell:

“I believe this construction will allow the largest possible anonymity set for fixed party smart contracts by making them look like the simplest possible payments. It accomplishes this without any overhead in the common case, invoking any sketchy or impractical techniques, requiring extra rounds of interaction between contract participants, and without requiring the durable storage of other data.”

At the time of writing, Taproot.Watch, a website built by Sjöberg, shows that the Taproot upgrade will be activated on Nov. 14th after the successfully minting 1020 blocks.

Just last month, the Bitcoin network’s daily settlement value hit an all-time high after settling $31 billion worth of on-chain transactions.

Compared to the beginning of 2020, the network’s daily settlement volume has seen an increase of 40 times, supported by Bitcoin’s mainstream adoption in El Salvador and other jurisdictions.

There was $31 billion of value settled on the bitcoin network in a single day last week.

This is an all-time high for a single day of settlement value.

The global, decentralized payment system continues to become more dominant. (h/t @kerooke) pic.twitter.com/a6Q2FbPY3C
— Pomp (@APompliano) October 10, 2021

“[The Bitcoin network is] presently doing ~$190k per second. Compare this to $130k per second by Visa for US customers and $55k per second for Mastercard,” according to On-chain analyst Willy Woo.

Bitcoin Taproot Support Lags at 27% — Even Though Soft Fork Is Opt-in Supporters Beg Nodes to Update

July 6, 2021 Bitcoin.com

Soft Fork

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