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Paypal USD: Boon for Ethereum but not decentralization, says community

August 8, 2023 Coin Telegraph

BUSD

Proponents say PayPal’s PYUSD could see Ethereum become the money layer of the internet, while opponents argue that it’ll act like a poorly designed CBDC.

Paypal’s new Ethereum-based stablecoin, PYUSD has been seen as bittersweet news for the crypto community.

While it could finally see Ethereum find its place in mainstream adoption, it could also spell trouble for decentralization and personal control of assets, warns the community.

The new stablecoin, Paypal USD, was launched on Aug. 7 and is issued by Paxos Trust Co. — the firm behind Binance USD (BUSD). It’s built on Ethereum and “designed for digital payments and Web3,” with the firm saying it will soon be available to United States customers.

The launch has been seen as a boon for Ethereum adoption. Ethereum bulls Anthony Sassano and Ryan Sean Adams believe the ERC-20 stablecoin will push the blockchain closer towards becoming the money layer of the internet.

This is the Ethereum contract address for PayPal's stablecoin.

I can't believe i get to tweet that.

We've come so far. pic.twitter.com/S6kSqcV4ut
— RYAN SΞAN ADAMS - rsa.eth (@RyanSAdams) August 7, 2023

The number of daily active users on Ethereum currently hovers between 300,000-400,000, according to Etherscan.

However, Sean Adams noted that 430 million accounts actively use the online payment processor, which means that over 5% of the world’s 8 billion people could theoretically be onboarded onto Ethereum through PayPal’s new stablecoin.

Martin Koppelmann, the CEO and co-founder of Gnosis, added that by launching PYUSD on Ethereum’s base layer, Ethereum layer-2s will be able to interact with PYUSD too.

Others, including lawmakers, have seen it as another example of larger institutions embracing crypto, breathing new life into the traditional payments system.

In an Aug. 7 statement, Patrick McHenry, Chair of the United States House Committee on Financial Services said stablecoins like PayPal’s PYUSD “hold promise as a pillar of our 21st century payments system.”

#NEW: Chairman @PatrickMcHenry releases a statement following the announcement of PayPal's payment stablecoin launch.

Read more https://t.co/LOF9ayUNnG pic.twitter.com/sRfSfLYbXQ
— Financial Services GOP (@FinancialCmte) August 7, 2023

However, not everyone is convinced about PayPal’s new stablecoin.

Several smart contract auditors highlighted that PYUSD’s smart contract contains a 'freezefunds' and 'wipefrozenfunds' function which they claim is a textbook example of a centralization attack vector in Solidity contracts.

The new Paypal USD stablecoin has an "assetProtection" role which can wipe your balance in two transactions (first `freeze`, then `wipeFrozenAddress`)

In smart contract security we call this a "centralisation attack vector" pic.twitter.com/RsmqvsnKvi
— pashov (@pashovkrum) August 7, 2023

This concern was echoed by cryptocurrency researcher Chris Blec, who believes that PayPal will use the controversial functions where necessary.

Digital asset lawyer Sarah Hodder believes many characteristics of PayPal’s stablecoin resemble that of a censorship-enabled central bank digital currency. Another smart contract auditor noted that PYUSD’s smart contract can be changed by PayPal at any time.

I just read the PayPal USD terms of service.

- full KYC
- custody by Paxos
- tied to your PayPal login
- PayPal can reverse any transaction
- claimed to be fully backed by actual USD

All the censorship capabilities of a CBDC, but launched by big tech instead of the gov't.
— Sasha Hodder (@sashahodler) August 7, 2023

In October, PayPal was slammed for a controversial policy that could’ve seen users fined $2,500 for spreading “misinformation.” The firm later backpedalled, claiming the policy update was published “in error.”

Meanwhile, Blockchain engineer Patrick Collins took a slightly more neutral view, suggesting that PayPal’s PYUSD could have been “epic” but believes some of the engineering choices were suboptimal — such as choosing an outdated version of Solidity to program the contract, making the contract upgradeable and not making it gas efficient.

Sassano also explained in a separate post that while PayPal's stablecoin is centralized, Ethereum users are free to choose whether they wish to use it or not.

Yes, PayPal's stablecoin is centralized.

No, that doesn't make it any less cool that PayPal has a stablecoin.

Ethereum being a settlement layer for all types of value means that different types of assets will exist on the network & you get to choose which ones you want to use.
— sassal.eth (@sassal0x) August 8, 2023

PayPal said PYUSD will be rolled out within the next few weeks.

ETH is currently priced at $1,825 which is approximately the same price at the time of PayPal’s announcement about 10 hours ago, according to CoinGecko. Only minor fluctuations have been observed in ETH’s price since then.

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StarkNet makes Cairo 1.0 open source in first step toward community control

November 25, 2022 Coin Telegraph

Cairo

StarkNet has prioritized scalability over composability and transparency. But it’s now working on making its tech open source.

Zero-knowledge (ZK)-Rollup tech company StarkWare has officially open sourced its new programming language compiler, Cairo 1.0, which will soon be supported on Ethereum layer-2 scaling solution StarkNet in Q1 2023.

The news was announced by StarkWare — the company behind StarkNet — in a Nov. 25 Twitter post. StarkWare’s rollup technology and recursive proofs offer the potential to compress millions of transactions on L2 into a single transaction on Ethereum, however the project has been criticized for maintaining control over its IP, not least of all by its more open source focused competitor zkSync.

StarkWare described open sourcing Cairo as a “milestone move” in its quest to hand over more control and intellectual property rights to its community and developers. Cairo is a programming language written specifically to harness the power of zk rollups and validity proofs.

The day has come: a first look into Cairo 1.0, fully open-source

This is a big step towards open-sourcing the StarkNet stack

You can now get familiar with the new syntax, compile and run simple programs locally. #StarkNet support is coming soonhttps://t.co/0tdZDhopEP
— StarkWare (@StarkWareLtd) November 24, 2022

StarkWare stated that developers can now experiment with Cairo 1.0 by compiling and executing simple applications until it is fully supported on StarkNet in Q1 2023.

At that point Cairo 1.0 will enable faster feature development and allow for more community involvement, according to Starkware Exploration Lead and former Ethereum core developer Abdelhamid Bakhta.

“We’re continuing to open source the StarkNet tech stack, beginning with Cairo 1.0. We’re doing this in order to fulfill StarkNet's vision as a public good that anyone can use, and that the community can constantly improve,” he said.

“On a practical level this maximizes transparency about our code, and our coding process. And it strengthens the community’s ability to find bugs and improve the compiler. With each aspect of the tech stack that is open sourced, this sense of community involvement will grow and grow.”

Once in production, Cairo 1.0 will also enable blockchain developers to write and deploy smart contracts to StarkNet, according to StarkWare’s Medium post.

StarkWare added that because Cairo 1.0 makes every computation “provable,” StarkNet’s censorship resistance properties will be strengthened and it’ll also be better positioned to respond to Denial-of-Service attacks.

StarkWare’s STARK tech stack powers a number of Web3 projects including decentralized exchange (DEX) platform dYdX (although this is moving to its own chain on Cosmos), NFT-platform Immutable X and blockchain interoperability protocol Celer Network.

StarkNet has taken a gamble by using Cairo to speed up its solution, which is not natively compatible with the Ethereum Virtual Machine (EVM). However Ethereum software tooling firm Nethermind built a transpiler called Warp that converts Solidity code into Cairo code.

Competitor zkSync’s EVM-compatible mainnet is in the process of being launched.

But despite taking a more difficult path, StarkWare founder Eli Ben-Sasson recently told Cointelegraph that using custom built programming language like Cairo, as opposed to Solidity, was the only viable way to take full advantage of Ethereum scaling afforded by ZK rollups:

“I’m willing to bet that you won’t see a full blown ZK EVM that can put a million transactions inside a single proof on Ethereum. As we can easily do today and have been doing for months and years.”

The news comes as Starkware also recently deployed the new StarkNet token (STRK) on Ethereum on Nov. 17, which will be used for staking and voting purposes in addition to paying fees on the network.

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Decentralized exchange Uniswap v3 gets ‘Warp’ed’ onto StarkNet

October 10, 2022 Coin Telegraph

Cairo

Ethereum-native projects like Uniswap that are written in Solidity can now be transpiled to StarkNet via Nethermind’s new ‘Warp’ project

Ethereum development company Nethermind has announced it has “transpiled and compiled” decentralized exchange (DEX) Uniswap v3 on “Warp” — a project designed to allow Ethereum users to swap tokens on the more scalable Ethereum layer-2 network StarkNet.

The milestone was announced by team lead Jorik Schellekens in an Oct. 9 Medium post.

Nethermind describes Warp as a “Solidity to Cairo Transpiler” which enables Ethereum-based projects written in Solidity to transition its codebase onto StarkNet, allowing them to capitalize on cheaper fees.

Transpiling is the process of taking source code written in one programming language and transforming it into another language that has a similar level of abstraction.

In this case, Warp transpiles Solidity code to Cairo — the programming language used to write applications on StarkNet.

The Warp plugin is still technically under development according to Schellekens, but he added that Nethermind will soon have “Uniswap’s entire test suite running against a Uniswap implementation deployed on StarkNet.”

The milestone came following StarkNet’s new “contract creation from other contracts” capability, which is what enabled Warp to successfully transpile and deploy every Solidity file from Uniswap v3.

Schellekens noted the significance of this feat given the sheer size of Uniswap’s codebase, allowing projects of all sizes to get onto StarkNet.

“With Warp rapidly maturing, the barrier to entry for large and small projects alike to test out the capabilities of StarkNet is lowering.”

But Warp’s Solidity to Cairo translation hasn't been picture-perfect. Warp’s GitHub shows that there are still a number of Solidity functions that Nethermind developers haven’t figured out how to add to Cairo, while a few other key functions will either require “developer intervention” or will “likely never be supported” at all.

Nethermind said that they plan on advancing Warp’s features further to bring more Ethereum-based projects to StarkNet.

"We will continue working hard on features and repeat this experiment with a few other protocols, bringing new protocols to StarkNet at warp speed."

StarkWare, the company behind StarkNet, teamed up with Nethermind in Jul. 2021 to help build advanced features and infrastructure elements for StarkNet.

Nethermind and Warp are not affiliated with the decentralized exchange (DEX) Uniswap.

Solidity