The Protocol: Another Episode in the Layer-2 Teams Drama

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The teams behind Ethereum‘s layer-2 solutions are clashing once more. This dispute revolves around Matter Labs, the innovators behind zkSync and its zero-knowledge (ZK) technology. Matter Labs recently applied for a trademark on the term “ZK,” which is commonly used to denote “zero-knowledge” cryptography, a key technology underpinning not just zkSync but numerous other blockchain projects. While Matter Labs asserted that this move aims to safeguard users, opponents such as Polygon and Starkware–rivals in the layer-2 sector–are vocal in their opposition. They argue that trademarking a public good does not align with the best interests of the Ethereum ecosystem.

In our weekly newsletter, we’ll summarize the recent developments in the layer-2 scene and share a collection of other noteworthy industry news.

ALSO:

Consensus 2024 wrap up.
Starkware, the Ethereum layer-2 team, unveils its plan to start scaling the Bitcoin blockchain, too.
Avail, the data availability spinoff from Polygon, shares it has raised $43 million in a Series A fuding round.
The team behind Bitcoin layer-2 network Ark has created a new company that will focus on faster and cheaper Bitcoin transactions, putting it head-to-head with the Lightning Network.

Network news

Matter Labs, the primary developer of zkSync Era in the Ethereum layer-2 sector, encountered significant opposition from other teams after announcing plans to file a trademark for “ZK.” This dispute lasted for a week and led Matter Labs to withdraw its application. Initially, Matter Labs argued that this step was essential to shield the Ethereum community against projects bearing similar names or token tickers.

Matter Labs has been under fire from competitors earlier, with Polygon leading the charge in August 2023. They accused Matter Labs of copying their Plonky-2 software system without proper credit. Other teams like Starkware voiced their displeasure as well. Gluchowski refuted the claims but acknowledged that his team could have been more transparent about attribution to open-source code. Polygon’s co-founder, Sandeep Nailwal, had previously criticized zkSync for not living up to Web3 principles despite their public statements to the contrary. Gluchowski initially stood by the trademark application but later abandoned it three days later.)

Consensus 2024 Review: The past week marked the 10-year anniversary of CoinDesk’s Consensus conference, which unfolded in Austin, Texas. Policy and regulation dominated discussions this year. The recent unexpected ETF approval for ether (ETH), the bipartisan vote to revoke SEC’s crypto accounting policy (SAB121), and the growing Democratic acceptance of cryptocurrencies were hot topics. Robert F. Kennedy Jr., an independent U.S. presidential candidate, attended and shared insights on crypto policy as well as his thoughts on former President Donald J. Trump’s hush-money trial verdict. The intersection between AI and blockchain was another major theme. Consensus dedicated a whole day (May 31) to exploring AI on the Gen C Stage. Lastly, attendees were left pondering whether we stand on the brink of a new bull or bear run for crypto markets, and the answer remains uncertain.

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

Starkware, the main developer firm behind the Ethereum layer-2 StarkNet, announced its plans to start scaling on the Bitcoin blockchain too, dedicating $1 million towards Bitcoin research and funding.
Polygon Labs, the main development firm behind the Polygon blockchain, shared that co-founder and Executive chairman Sandeep Nailwal will also be taking on the role as chief business officer. The team said that Naiwal “has been actively engaged in collaborating with developers and enterprises since Polygon’s inception,” and that the new role is a formalization of the work he already does with the team.
Linea, the layer-2 blockchain from ConsenSys, stopped producing blocks for an hour after an exploit on the decentralized exchange Velocore. After the issue was patched, the Linea team pledged that it would focus its efforts on decentralizing its network and sequencer as the blockchain matures.
Ether.fi, the largest liquid restaking protocol on EigenLayer, will let its users install a mobile wallet, called Etherfi Cash and use a Visa credit card that borrows USDC against their DeFi investments that can be paid off with crypto. The Cash visa card is expected to start rolling out in December.

Bitcoin Gets More Scaling

As a crypto investor, I’m always keeping a close eye on the developments within the Bitcoin ecosystem, and one issue that consistently surfaces is scaling. Recently, the team behind the Bitcoin layer-2 protocol, Ark, has made an exciting announcement. They’ve established a new company with the primary goal of delivering cheap and swift transactions for Bitcoin users. By focusing on this particular aspect, they aim to enhance the overall user experience and make Bitcoin more accessible to a larger audience.

At Ark Labs, our innovative team is introducing a fresh competitor to Bitcoin’s Lightning Network. We plan to address the scalability challenge of blockchain transactions through our unique solution.

According to the company’s announcement, they plan to achieve scalability through the creation of an “open version of the Ark Protocol” and the development of “user-focused services,” as reported by Jamie Crawley in CoinDesk.

The open implementation of Ark is expected to happen in 2024.

Read the full post by Jamie Crawley here

Money Center

Fundraisings

Avail, which spun out of Polygon and is known for its data availability solution, shared that they have raised $43 million in a seed round. The fresh round of capital will go towards building out its core products.
Stablecoin protocol El Dorado completed a $3 million seed round to build a crypto payments “superapp” for users in Latin America.
Connext has rebranded to Everclear to build a Clearing Layer for Web3, solving liquidity fragmentation for modular blockchains. Everclear secured $5 million from Pantera Capital and launched its testnet to reduce liquidity management costs across chains. According to Everclear, their system “can reduce the cost and complexity of solving and liquidity management across chains by as much as 90%.”
API3 has completed a strategic funding round led by DWF Labs, raising $4 million. The funding will enhance liquidity and support API3’s growth strategy, according to the company. API3’s Total Value Secured (TVS) has increased significantly to over $1 billion, the team says, as it has integrated with new chains like Optimism Superchain and Worldcoin.
SCRYPT, a provider of crypto asset financial services, has closed a $5 million strategic funding round led by Braza Bank. This funding will support SCRYPT’s expansion in LATAM and enhance its product offerings.

Deals and grants

Polygon Labs, the development firm behind Polygon, announced that it has acquired Toposware, a blockchain engineering firm focused on zero-knowledge technology. Sources close to the deal told CoinDesk that the acquisition was in the range of $30 million to $50.
Mantle EcoFund, with a capital pool of $200M, deployed $5M in its second capital call. “Seven Mantle Ecosystem SocialFi and gaming projects have received fresh funding: MetaCene, Blade Games, Co-Museum, Fingerlabs, L3E7, and DreamOS,” said Mantle. “The newly inducted projects within Mantle EcoFund portfolio underscore Mantle’s belief in the transformative power of SocialFi and gaming applications to onboard the next billion users to web3.”

Data and Tokens

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Regulatory and Policy

India Springs Election Surprise, Sends Equity Market Crashing With Uncertain Implications for Crypto
Epoch Times CFO Charged With $67M Fraud Scheme Involving Crypto Platform
Former Binance CEO CZ Begins 4-Month Prison Sentence in California

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2024-06-06 00:06