The Protocol: Crypto Fundraising, Job Losses, Juicy Payouts, Grants for Devs

As a seasoned blockchain enthusiast with years of experience under my belt, I find it incredibly exciting to see the rapid advancements in this ever-evolving space. The latest developments are truly remarkable.

This week, we delve into the world where innovation is key in shaping the future of finance. Yet, the pursuit of financial resources remains crucial. Whether it’s in digital form like tokens or traditional cash, a lack thereof can lead to job losses when teams run out. On the flip side, successful projects bring substantial rewards for developers, though not always consistently. Our coverage this week includes a report on funding for Bitcoin Core developers, the Optimism Foundation’s $42.5 million grant to crypto exchange Kraken, and a Stratos report on venture capital firms in the crypto sphere. Initially, I considered titling this, “The Finance Issue,” but it all unfolded naturally, so here you have it!

OTHER HIGHLIGHTS:

Polymarket is a huge success for Polygon – just not the fees. (Spoiler alert: That’s the whole point.)
Kraken’s decision to build its new layer-2 network on the OP Stack came with a juicy grant from the Optimism Foundation.
Layoffs hit Consensys and dYdX.
Profile of Sovryn founder Edan Yago.
Top picks from the past week’s Protocol Village column: Nil, Stacks, Space and Time, BOB, Optimism, Theta.
Nearly $60M of blockchain project fundraisings.
CoinDesk’s Sam Reynolds reports from Hong Kong – on Chainlink’s new big thing, and Animoca’s new big office.

Network News

Cumulative gas fees Polymarket on Polygon PoS in 2024 have totaled just over $27,000 this year, through Oct. 23. (Token Terminal)

Polymarket, the decentralized predictions market for the Polygon network, has been a significant triumph, yet surprisingly, it generated only $27,000 in fees on the PoS blockchain in 2024, according to CoinDesk’s Margaux Nijkerk. This might seem low, but Polygon Labs CEO Marc Boiron explained that this is due to the affordability of using the blockchain, which is one of its main attractions. Transactions on the Polygon PoS blockchain cost approximately $0.007, making it very affordable and a target for several teams. Boiron added that applications like Polymarket may not generate substantial income from transaction fees, unlike more transaction-heavy apps such as decentralized crypto exchanges. However, the interest in Polymarket lies primarily in its popularity and attention, rather than its financial returns. Boiron stated that an app can be incredibly successful on the Polygon PoS blockchain without users even realizing they are using a blockchain.

Did Kraken Acquire Funding from Optimism for Building its Layer-2 Network? Recently, it was revealed that the U.S. crypto exchange Kraken is developing a layer-2 network on the Ethereum blockchain using technology from Optimism, similar to Coinbase’s Base network. Known as Ink, this network is being constructed with the OP stack, a customizable toolkit for creating blockchains utilizing Optimism’s technology. The network is slated to launch in early 2025. It was previously speculated that Kraken might enter the layer-2 space by following Coinbase’s lead.

As a crypto investor, I found myself grappling with some unexpected news yesterday. ConsenSys, a significant backbone of the Ethereum network, unveiled their intention to let go of 20% of their workforce. They attributed this move to the broader economic conditions and persistent regulatory uncertainties, particularly the Securities and Exchange Commission (SEC) seemingly overstepping its bounds in our space.

ELSEWHERE:

DWF Labs, a crypto trading firm, said it fired one of its partners following social media allegations that one of its employees had spiked a woman’s drink at a Hong Kong bar.
In a press release, the company said it dismissed a partner from “management and operational roles effective immediately” and called the allegations “deeply concerning.” The company, which said it’s investigating the matter, did not name the partner.
U.S. President Joe Biden called Bola Tinubu, the president of Nigeria, on Tuesday to personally thank him for the recent release of detained American Binance executive Tigran Gambaryan. Gambaryan, head of financial crime compliance at Binance, was released on humanitarian grounds last week, eight months after he was first taken into Nigerian custody and subsequently charged with money laundering and tax evasion as a proxy for his employer. The charges were later dropped.
JUST IN: Inspired by Trump, Florida Official Eyes State Bitcoin Stockpile for Retirees
ICYMI: From Smuggling Gold Out of Africa to Bridging Bitcoin and Cardano — the story of Sovryn and BitcoinOS founder Edan Yago, a self-described “bitcoin accelerationist.”
HYPERSPEED: Starknet Claims to Shatter Transaction Speed Record Among Ethereum Layer-2 Networks

From Smuggling Gold Out of Africa to Bridging Bitcoin and Cardano

Edan Yago (Courtesy: BitcoinOS)

Between the ages of nine and eleven, Edan Yago secretly transported gold, which his mother had concealed on him, out of South Africa.

Under the apartheid regime, they imposed restrictions on financial transactions (capital controls) to maintain stability for the South African currency, the rand, during international sanctions. Simultaneously, they were pursuing certain relatives, labeling them as terrorists.

“Eventually, we were forced out of South Africa,” Yago told CoinDesk in an interview.

I hail from a lineage that has faced oppression unflinchingly. My ancestors have endured the brutalities of tyranny, some miraculously surviving events like the Holocaust, while unfortunately, others did not make it through.

With his educational background in neuroscience and data science, he found himself pursuing a profession in the field of Bitcoin. This digital currency, offering benefits such as wealth that isn’t easily seized by governments and transactions not subject to veto by central authorities, attracted him.

“Throughout, my focus has been on trying to develop tools for greater sovereignty,” Yago said.

Yago, who refers to himself as a “bitcoin enthusiast,” is the creator of Sovyrn, an autonomous platform for Bitcoin lending and trading that operates without central authority. He’s currently developing BitcoinOS, a comprehensive system for handling Bitcoin transactions and complex operations like smart contracts. This system, functioning as a “rollup,” aims to process a higher volume of transactions and more intricate tasks than the blockchain could manage on its own.

CLICK HERE FOR THE FULL ARTICLE BY AMITOJ SINGH

Report on Bitcoin Core Funding Highlights Just How Dependent the World’s Biggest Blockchain is on Volunteers

As an analyst, I find it quite intriguing to observe that even though Bitcoin’s market capitalization is 82 times larger than Polkadot, its ecosystem spending is significantly smaller. This suggests a more efficient use of resources within the Polkadot ecosystem compared to Bitcoin.

Two scholars affiliated with the group 1A1z, known for their work on Bitcoin and related libertarian technologies, recently shared an intriguing study investigating potential financing avenues for developers contributing to the decentralized Bitcoin protocol development without central funding.

The report lays out the premise: “Unlike most successful open source projects, it doesn’t have a corporate creator or foundational home. It has a market capitalization of around $1.2 trillion, but unlike most trillion dollar technologies, it has no ability to raise capital. Bitcoin is a commodity, but unlike gold it is running software that needs to be maintained. It has no company, no foundation, no treasury, no employees… no representatives of any kind. And yet it is live, running, production software, securing a large amount of value that needs to be maintained, patched and improved. But those that buy it, hold it, use it, or build on it have no obligation to fund it. It is a public good that suffers from a free rider problem.”

In this context, CoinDesk’s Protocol Village column has reported a few instances where Bitcoin Core developers received funding, notably from Arthur Hayes, who founded BitMEX, through his family office, Maelstrom – as seen here and here. Recently, we discussed the first-ever Bitcoin grant made via a donor-advised fund, facilitated by a partnership with Unchained. However, these instances seem rather scattered.

Some of the sobering findings from the report, written by Dan O’Prey and Mas Nakachi:

“Bitcoin currently is actively maintained by around 40 developers, many of them volunteers.”
“Many of these developers are volunteers; many are sustained not through steady employment but an ad hoc system of short-term grants.”
“Most could make more money as developer number 20,001 at Meta. But without them, Bitcoin would not be what it is and would not exist a decade from now.”
There are only five “core maintainers” for the project – meaning they have the ability to merge code proposed by core developers to the main branch of the Bitcoin Core software. “This relatively small number of people for such a valuable and monumental project may be quite surprising to many. Upon learning it for the first time, it also was surprising to us, longtime Bitcoiners that have benefited from the work of these developers.”

Arbitrum Foundation Biggest Investor in Crypto Deals <$5M, Stratos Report Shows

Stratos, a venture capital firm specializing in cryptocurrency, recently released their latest report titled “Crypto Venture Quarterly Report Q3 2024.” The information for this report was gathered from Token Terminal and Artemis. Here are some notable findings as presented by the team:

“Out of almost 3K funds and angels investing in crypto since 2023, less than 25 have proven their ability to invest at scale in winners. This means the crypto industry should consolidate and get smaller.
Crypto venture firms in aggregate will likely underperform holding BTC by a wide margin.
Of the ~$88B deployed into crypto venture, half of that was invested in the top 4 categories: Finance ($12.6B), Web3 ($12.5B), DeFi ($10.2B), and Gaming ($7.6B).
On an FDMC basis, the protocol layer takes the cake, representing $245B of $439B aggregate.”

Money Center

Fundraisings

Nillion architecture, from the project documentation (Nillion)

Privacy-focused blockchain project Nillion has raised $25 million in a funding round led by Hack VC and including backing from angel investors and strategic contributors from projects including Arbitrum, Worldcoin and Sei. Nillion builds its service around the concept of “blind computing,” the processing of data without having to reveal its contents, which allows for the creation of an ecosystem of applications co-operating without having to reveal sensitive information.
Also (Details in Protocol Village column): Sapien ($10.5M), Variational ($10.3M), Naphtha AI ($6M), Hana Network ($4M), KRNL ($1.7M), Rocketon Labs ($1.2M).

Deals and grants

Main quadrangle on Emory University’s Druid Hills campus (Wikipedia)

Add Atlanta-based Emory University to the list of institutional investors taking a shine to bitcoin (BTC). The university disclosed ownership of more than $15 million worth of shares of the Grayscale Bitcoin Mini Trust (BTC), according to a Friday filing with the U.S. Securities and Exchange Commission. According to a top ETF analyst, the announcement marks the first endowment to publicly report exposure to bitcoin. Emory also reported holding 4,312 shares of Coinbase, valued at $922,639 as of press time, CoinDesk’s Helene Braun reported. The university’s total assets stood at $21 billion as of August 2023, according to its most recent annual report.
Wall Street Financial Services Firm Lazard Plans to Create Tokenized Funds with Bitfinex Securities
Neo Blockchain Announces ‘Neo X Grind Hackathon’ With >$22M in Prizes (Details in Protocol Village.)
Lisa Neigut’s Base58 Gets First-Ever Bitcoin Grant From Donor-Advised Fund, Via UI Charitable on Recommendation of Donor Through Partnership With Unchained (Details in Protocol Village.)

Data and Tokens

Bitcoin Tops $73.5K, Climbing Just Shy of New Record High
Tokenized Treasuries Like Blackrock’s BUIDL Will Challenge Stablecoins But Won’t Fully Replace Them: JPMorgan
Bitcoin Liquidity Could Flow to Cardano Ecosystem With New BTC Bridge

Regulatory and Policy

Netherlands Starts Consulting on Crypto Tax Reporting Bill

FROM COINDESK’S SAM REYNOLDS IN HONG KONG: Chainlink Unveils ‘Chainlink Runtime Environment,’ Aiming for Better Blockchain Workflows

Chainlink’s Sergey Nazarov presents at SmartCon in Hong Kong on Wednesday. (Chainlink)

HONG KONG – On Wednesday, Chainlink revealed the Chainlink Runtime Environment (CRE), a tool aimed at software developers to construct unique applications spanning various blockchain networks.

The new offering was unveiled during Chainlink’s Smartcon, a side event to Hong Kong Fintech Week.

On the stage, Chainlink co-founder Sergey Nazarov expressed his belief that future historians would consider CRE (Chainlink’s proposed standard) as significant for integrating traditional finance (TradFi) with Web3, much like Cobol – a programming language from the late 1950s that initially automated finance – was in its time, and the Java Runtime Environment was in the 1990s for bringing finance online.

Nazarov explained during an interview with CoinDesk that the Chainlink Runtime Environment is essentially a unified platform where you can execute code to link together various blockchains, Oracle networks, APIs, messages, and payment systems, creating one integrated application.

In my research, I’ve noticed that as firms in Hong Kong are reducing their physical footprints, Animoca Brands has constructed an expansive workspace, equivalent to approximately ten tennis courts. This strategic move reflects their innovative approach to office space utilization amidst the changing business landscape.

Protocol Village

Here are some standout articles from our “Protocol Village” column over the past week, featuring significant updates and headlines in the realm of blockchain technology.

Diagram showing how Nil organizes execution shards (Nil)

Nil Foundation, the team behind Nil, an Ethereum layer-2 network powered by zkSharding, announced the launch of Testnet v1. According to the team: “Following the successful Devnet launch in July, Testnet v1 is a key milestone on the Nil product roadmap. This release includes several protocol upgrades, DevEx improvements, and concrete examples for how to use the network, including porting and integrating Uniswap V2 code to show how DEXs can work in sharded environments.” Telegram group here: https://t.me/NilDevnetTokenBot.
Stacks, a layer-2 blockchain project atop Bitcoin, confirmed on Tuesday the activation of its Nakamoto upgrade, designed to make transactions faster. The project’s official account on X posted that “Stacks transactions once confirmed are now at least as irreversible as Bitcoin’s,” and that there is a “significant reduction in transaction times.” The upgrade also will provide a “technical foundation for sBTC launching later this year,” according to the post.
Space and Time Labs, developer of a sub-second zero-knowledge coprocessor and blockchain indexer, has launched its SXT Chain testnet — “a blockchain using zero-knowledge (ZK) proofs for verifiable data delivery to smart contracts.” According to the team: “With ZK-proven data access, developers can tackle smart contracts’ challenge of secure, large-scale data handling. The testnet enables data-heavy applications, like on-chain credit scoring, using SQL interfaces with ZK verification.”
Ethereum layer-2 Optimism’s “Superchain” has added a Bitcoin-native project to its ecosystem for the first time, CoinDesk is first to report. BOB, a Bitcoin layer-2 project looking to expand development on the world’s oldest blockchain, has integrated with the Superchain ecosystem, built on Optimism’s OP Stack framework. The team is awaiting final approval of a pending grant from the Optimism Foundation of 500,000 OP tokens, worth about $870,000 at the current price, project officials told CoinDesk.
The University of Oregon’s Distopia Lab has begun using Theta EdgeCloud for AI research and model training, according to the team: “This collaboration marks Theta’s first U.S. academic partnership, following successful engagements with top South Korean universities. Led by Professor Suyash Gupta, the lab focuses on distributed systems, blockchain and federated learning. Theta EdgeCloud offers over 80 PetaFLOPS of distributed GPU compute power, enabling faster and more cost-effective AI research.

Calendar

Oct. 30-31: Chainlink SmartCon, Hong Kong.
Nov. 1-2: TON Gateway, Dubai.
Nov. 9-11: NEAR Protocol’s [REDACTED], Bangkok.
Nov. 10: OP_NEXT Bitcoin scaling conference, Boston.
Nov. 10-11: Aggregation Summit, Bangkok.
Nov. 11-14: Websummit, Lisbon.
Nov 12-14: Devcon 7, Bangkok.
Nov. 15-16: Adopting Bitcoin, San Salvador, El Salvador.
Nov. 20-21: North American Blockchain Summit, Dallas.
Dec. 5-6: Emergence, Prague
Jan. 21-25: WAGMI conference, Miami.
Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
Feb. 19-20, 2025: ConsensusHK, Hong Kong.
May 14-16: Consensus, Toronto.
May 27-29: Bitcoin 2025, Las Vegas.

2024-10-30 22:29