Wallet Hunter’s Post

Did you know L2s are currently paying 75% of their top line revenue to Ethereum for data availability? How It Works Today:  In the current structure, L2s act as execution engines, processing transactions. However, they rely on Ethereum for data availability, which involves storing and retrieving transaction data. This data availability service comes at a high price for L2s. Solution? Recognizing this cost burden, data availability solutions are emerging. Networks like Celestia and Eigen DA offer a more cost-effective way for L2s to manage their data needs. Celestia is a separate blockchain that can serve various execution environments. This means it can work with Ethereum (EVM), Solana (SVM), Cosmos (CosmWasm), Optimism, Arbitrum, and others, fostering a more interoperable future. On the other hand, Eigen DA is built specifically for Ethereum. The result: The impact of these solutions is already being felt. Manta Pacific, a recent L2 launch, is the first to leverage Celestia for data availability in a live environment. According to Kenny Li, co-founder of p0x labs (Manta's development team), Celestia has already saved Manta millions on data availability costs. These savings have been passed directly to Manta users, lowering their transaction fees. The takeaway: The high data availability cost for L2s, a key component of the Ethereum scaling solution, presents a challenge to long-term scalability. However, the emergence of dedicated data availability solutions like Celestia offers a potential silver lining.   If these solutions can significantly reduce L2 costs, it could revitalize the Ethereum ecosystem by making L2s more efficient and attractive to users, ultimately driving higher transaction volume and potentially boosting the value of Ethereum. This is one of the ways value accrues to the Ethereum network. If you want to know more on it's value accrual, there's a resource that goes into details about this and much more. See the first comment to grab a free copy of the resource.

Today, Circle Research published a spotlight on how Temporary ERC-20 approvals offer significant enhancements to security, cost savings, and user experience that are poised to benefit businesses and their customers in the decentralized finance sector. As on-chain innovations unfold, we see the introduction of temporary ERC-20 approvals, allowing token approvals that expire after a single transaction. This shift addresses longstanding challenges in the crypto space, where traditional approval mechanisms often exposed users to security vulnerabilities and additional transaction costs. Practical Applications for Businesses 1. Improved Security: Businesses, particularly in FinTech and DeFi, can integrate temporary approvals to secure user funds effectively. By limiting token permissions to single transactions, firms can significantly mitigate the risks of unauthorized fund access, a crucial factor for platforms facilitating savings, trading, or lending. 2. Reduction in Transaction Costs: For DeFi applications, adopting temporary approvals translates to lower gas (transaction) fees. This reduction means that businesses can offer more cost-effective services, ultimately attracting a broader user base while improving overall efficiency. By leveraging these savings, companies can enhance their offerings without putting extra financial strain on their users. 3. Streamlining User Engagement: Consumer-facing applications benefit greatly from the simplified process enabled by temporary approvals. Users can now perform necessary actions in a single step—no longer needing to approve a contract and then execute transactions separately. This streamlined experience leads to a higher satisfaction and retention rates, as users find services to be more intuitive. 4. Strengthening User Trust: In an era where security concerns loom large over on-chain operations, businesses adopting temporary approvals can position themselves as trustworthy entities. By reducing operational vulnerabilities, companies can communicate their commitment to security, thereby establishing a stronger bond with their clientele and differentiating themselves in the crowded market. The proposal of ERC-7674 signals a significant milestone in making decentralized finance safer and more user-friendly. For professionals and businesses engaged in the on-chain space, recognizing and adapting to these changes is vital. This development represents more than just technical progress; it embodies the core principles of decentralized finance—creating systems that prioritize security, transparency, and accessibility. #USDC #blockchain #innovation

Ethereum Dencun upgrade went live last week. The upgrade is kicking off Ethereum's "the Surge" era. It aims to reduce costs associated with transactions on L2. Here's everything you need to know about the Dencun upgrade 👇🏽🧵 What is the Dencun Upgrade? The Dencun upgrade aims to enhance the efficiency, security, and scalability of Ethereum. Dencun is a blend of the names of the planned hard forks for the Ethereum consensus layer (Deneb) and its execution layer (Cancun). At the core of this upgrade is Proto-Danksharding (EIP-4844), which aims to improve $ETH efficiency and scalability. EIP-4844 implementation is part of "The Surge" in the Ethereum Roadmap. What is Danksharding? Danksharding splits the Ethereum blockchain into smaller sections ("blobs") to enhance network capacity and reduce transaction fees by allowing parallel transaction and smart contract processing. What is Proto-Danksharding? Proto-danksharding (EIP-4844) builds on "blobs" by adding extra storage for Ethereum data, boosting scalability, and reducing gas costs for L2 rollups, thus making Ethereum more cost-effective for users. The advantages of "blobs" Danksharding and proto-danksharding enhance Ethereum's scalability by dividing the blockchain into smaller "blobs" for parallel transaction processing, which boosts capacity, reduces fees, and eases congestion. Blobs allow for efficient resource allocation and increased network flexibility, making it easier to adjust and integrate future scalability improvements. Ultimately, these changes will accelerate transaction speeds, lower costs, and foster the growth of dApps on Ethereum. Before this, L2 rollups had to submit their tx data as CALLDATA, requiring the tx to be processed by all ETH nodes. With EIP-4844, there's a new tx type called bloc-carrying tx that enables data to be temporarily stored, reducing storage overhead cost, reducing L2 tx fees. @marcov_91's Dune dashboard shows that tx fees on L2s are dropping significantly to below 10 cents. What's Next? > The specific goal of "The Surge" including the Dencun upgrade is to achieve 100,000 TPS on rollups by improving cross rollup standards and interop. > The next step on the road map after "The Surge" is "The Scourge" where the goal is to mitigate the centralization concerns in the PoS design, particularly around MEV and liquid staking/pooling.

As L2s become the preferred method of transacting on Ethereum, I hope we’ll see more institutional projects come online to leverage this dramatic drop in L2 gas fees. The implementation of true ZK-Rollups on L2s such as ZKSync I hope can one day become the defacto method for Rollups. This would be a tremendous technical and mathematical achievement. Not just for blockchain tech, but also for the science of zero knowledge proofs at scale

Bitcoin, long-celebrated as secure and decentralized digital cash, is evolving. With the introduction of covenants, Bitcoin can now incorporate powerful programmability directly into transactions, without requiring a network hard fork. In our latest ‘Covenants: Programmability of Bitcoin’ report by Zhiwei(Jeffrey) Hu and Harper Li, we delve into how covenants are transforming Bitcoin from digital cash to a fully programmable money platform. 🔍 Understanding Bitcoin Covenants Covenants allow the configuration of conditions and rules on future Bitcoin transactions. Unlike traditional Bitcoin scripts that only restrict fund unlocking conditions, covenants enable constraints on how those funds are spent. This advancement transforms Bitcoin from mere digital cash to a programmable money platform, unlocking a plethora of new use cases. 🌟 Key Applications Staking & Slashing: Protects against double-spend attacks in the Bitcoin staking process. Congestion Control: Aggregates payments into single transactions, aiding scalability. Secure Vaults: Enables custodial vaults with built-in account protections. Layer-2 Networks: Facilitates robust state channel designs for networks like Lightning. 🔧 How Covenants Work Covenants are implemented through two primary approaches: Opcode-Based: Introducing new opcodes (e.g., OP_CTV, OP_CAT) to directly inspect transaction data. Signature-Based: Using signatures to commit transaction data and enforce rules (e.g., SIGHASH_ANYPREVOUT). 📈 The Path Forward While covenants represent a significant breakthrough, they also introduce risks and challenges that must be carefully managed. Their implementation would require a soft fork upgrade of Bitcoin’s consensus rules. Additionally, combining covenants with other upgrades (e.g., Schnorr signatures, Taproot) can fully unleash Bitcoin’s programmability. 🏦 The Future of Finance Covenants are set to play a pivotal role in Bitcoin's future, transforming it into a fully programmable money platform. This evolution ensures Bitcoin remains competitive with newer blockchains while preserving its core strengths of security and decentralization. Read the full report👇 https://lnkd.in/g-gqeEP3

⚡ Transactions fast enough to power a city? The Ethereum network is set to undergo the Dencun Upgrade tomorrow! With EIP 4844 expect lower fees & higher throughput. 🔗 Learn more about Ethereum's latest upgrade: https://lnkd.in/g_-aqqFt #Ethereum #DencunUpgrade

Ethereum recently went through its biggest upgrade since its move to Proof of Stake. Let’s dive deeper into the Dencun upgrade, and what it means for advisors! The Dencun upgrade is a hard fork, meaning they changed a bit of the code of the underlying software. The upgrade is aimed at lowering transaction costs and data usage on Ethereum Layer 2 solutions. One misconception floating around is that this upgrade will lower the cost to transact on the Ethereum network, also called Ethereum mainnet. Unfortunately, this is untrue! Currently, most transactions are processed on Ethereum Layer 2 solutions like The Arbitrum Foundation and Optimism Foundation. And then they’re sent to the Ethereum mainnet for final settlement. With the recent Dencun upgrade, the transactions on these Layer 2 solutions will become much cheaper and less data intensive. The upgrade affects the cost and ease of settling transactions on Ethereum L2 solutions, and not the Ethereum mainnet. This is a nuance, but important for advisors to understand. Due to cheaper and easier transactions on Ethereum L2s, we may see more applications built on the Ethereum network. Whether it's tokenized assets, stablecoins, NFTs, income streams or DeFi, now it will be much cheaper and easier to transact on the Ethereum network. Moreover, we potentially have the opportunity for more people to run Ethereum nodes, resulting in greater decentralization. This upgrade directly affects the demand for space on the Ethereum network, which actually affects supply. As more transactions get processed on the Ethereum blockchain, more ETH gets burned! High demand + High Supply Burn = Potential Higher Price of $ETH 📈 So that is what the Dencun upgrade brings to the Ethereum network. And why it’s important for you as an advisor to understand this nuance!

Bitcoin’s Future Scalability: Arrogant Assumptions vs. Adaptability #cryptonews - A counter-argument against enhancing Bitcoin’s scalability is the claim that “most people won’t self-custody anyway, so why bother?” However, this argument is highly assumptive, arrogant, and flawed. It’s comparable to the logical fallacy that humans can’t help but make, like assuming that today’s weather is an indicator of tomorrow’s. The digital age has brought significant […] https://lnkd.in/d8GVSReJ

"Not every Bitcoin layer is made equal. Learn the difference." Anyone advising businesses around USING their #Bitcoin will be intrigued by this risk assessment framework that was created by the "Bitcoin Layers" research project, to demystify and document various Bitcoin sidechains and Layer 2 scaling protocols, and provide education. Look-up bitcoinlayers dot org What do YOU think of this project's usefulness and the future of Bitcoin scaling (link in comments)? e.g. I might look it up, thinking "who are the parties involved with operating the network and custodying my funds?"... For my colleagues less familiar with Bitcoin Layer 2's: These projects aim to improve Bitcoin’s scalability, reduce transaction costs, and expand functionality by enabling faster transactions, smart contracts, and decentralized applications. Since the Ordinals craze, the number of Bitcoin Layer 2 solutions has grown from 25 last year to over 85 now, including client-side validations, rollups, sidechains, and state channels, many of which are EVM compatible. (look-up House of Chimera Bitcoin Layer 2 Overview) I learned more from Jacob Brown's podcast with Janusz - defining Layer 2 solutions, the different camps of definitions, bridge mechanisms, trust assumptions, centralization versus decentralization, Fedimints and E-Cash, as well as the future of Bitcoin Layer 2 solutions. It's exciting that we'll all be speaking this new language of business! While some Bitcoiners may advocate for Lightning as the only Layer 2 solution, I evaluate technological innovations based on their merits, not ideology. The "Bitcoin Layers" risk analysis platform should be a dynamic record, updated continuously. For example, the Stacks analysis will need updates following the Nakamoto upgrade (August) and the sBTC release (October). I consider this resource will be invaluable for staying current with developments and improvements in the Bitcoin Layer 2 space. Enjoy and share! (link in comments) Follow me for more Bitcoin Builders Enterprise & Accounting Perspectives. 😎 ... I'm heading to the Bitcoin Builders Conference and BTC 2024 in Nashville and will have so much to report! 🛩 🍊 🟧Gordon Christian Rachael Jones Jo Rocca 🟧 Antonietta Fiorenza Brendyn Hadfield 🟧 Eniola Samuel Ian Banksia Andrew Noble Lucas Cullen Rodo N. Murray McPhee Tony Tao Christopher Perceptions Bayani Mills Krista E. Bruce Bates Michael Jagdeo Jonas Gerber 🟧 Ben Griffiths AJ Milne Alec O'Sullivan Kosala (Kosy) Aravinda Robert Sokolowski Keir Finlow-Bates Red Sheehan Ben Dickens Alexandros Ntolgkov CBA® (Study/Bitcoin) Chris Pollard Paulius Gutauskas

The USD value contributed to Lightning Network has about doubled from $158m a year ago to $320m this week. However, it appears there’s increased centralization risk over time with half of all Lightning Network capacity (~2,260 $BTC) controlled by 5 entities. While Lightspark’s implementation might be best in class, the Coinbase-Lightspark announcement (post below) seems to be in conflict with the Coindesk article (first link below) which is based on report from Protos (second link below), all reports out this week. These two articles provide a scathing account of departures or dial-down by Lightning developers and co-founders - confusing the messaging, direction, and future of #LightningNetwork. https://lnkd.in/ggT9m2CP https://lnkd.in/gmrAfV39