The growth in the supply of Bitcoin will decrease by half when the upcoming “halving” event takes place next week. Ethereum is considering reducing the rate at which new ETH coins are produced, while creators of meme coins continue to launch new projects at an unprecedented pace. It’s evident that blockchain technology offers a wide range of possibilities for monetary management strategies.

In this week’s issue:

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Network News

The Protocol: How to Engineer Harder Money, or Just Make Your Own

Side-by-side charts showing impact of the proposal to adopt a new Ethereum issuance curve. (Ansgar Dietrichs and Caspar Schwarz-Schilling/Ethereum Magicians Forum)

SOUNDER MONEY? Earlier this year, a pair of Ethereum Foundation (EF) researchers put forth a proposal to reduce the pace of new issuance of ether (ETH) tokens. It was part of a concerted plan to reduce incentives for new stakers – the investors who lock cryptocurrency into the blockchain as a way of helping to secure the network. The freshly minted ETH is a crucial component of the rewards these investors hope to receive, in the form of staking yields. As the researchers’ thinking went, there’s already enough stakers to provide effective security for the blockchain, and in fact any additional increases in the level of participation could enable the unwanted dominance of fast-growing third-party staking platforms like Lido. A side benefit of the proposed change would be to harden ether as a form of money, since the total supply of the cryptocurrency wouldn’t grow as quickly – effectively tapering ether’s inflation rate. The current issuance rate “dilutes ETH holders beyond what is necessary for security,” the researchers wrote. They estimated that the proposal would reduce ETH staking yields by nearly a third. Now, though, some members of the community are pushing back, as reported by CoinDesk’s Margaux Nijkerk. There are questions over whether there’s really a need to change the tokenomics of ether and, in the extreme, whether the Ethereum Foundation plays an outsize role in influencing code upgrades on the decentralized network. Viktor Bunin, a protocol specialist at Coinbase Cloud, wrote on the social-media platform X, “If it’s not broke don’t fix it.”

MEME COIN GENERATOR GO BRRR… In last week’s The Protocol, we made the point that blockchain teams have, generally speaking, succeeded in coopting the über-power of printing one’s own money, long reserved for governments and banks. An integral element of the process are the various “launchpads” that teams use to spin up their new tokens. In an article this week, CoinDesk’s Shaurya Malwa highlighted a project called Pump, which in the short period since going live last month has already earned $5 million in fees – partly due to the meme coin frenzy on the Solana blockchain. “Selling shovels in a gold rush was one of the surest ways to make profits, and it’s no different today in the digital asset world,” Malwa wrote. “While there are likely tens of thousands of tokens that have been released on Pump since its March launch, only a few have reached market capitalizations of more than $10 million. The largest tokens so far are Shark Cat (SC), a cat wearing a shark cap, and Hobbes, named after the cat of popular Solana trader Ansem, with valuations of $100 million and $35 million, respectively,” according to Malwa. Even so, Pump is on track to reap about $66 million of annual revenue, based on current usage and growth, DefiLlama data shows. Whether this token-generation business is legal, or approved by securities regulators, may depend on the circumstances, or the terms of use, or on the jurisdiction. But in the meantime investment bankers who used to lead elaborate offerings in exchange for Wall-Street-size fees (and Lambo-scale bonuses) are basically being replaced by apps.

EU vs. MEV. The European Union markets regulator flagged maximum extractable value (MEV), whereby blockchain operators reorder user transactions to maximize their own profits, as a potential form of market abuse, a stance that is worrying some industry watchers who say the case is not clear-cut, CoinDesk’s Sandali Handagama reports. “MEV by itself should not at all be considered as a market abuse and should not have a negative connotation,” Anja Blaj, a policy expert at the European Crypto Initiative (EUCI), told Handagama in an interview over WhatsApp.

Interesting FACT ABOUT BITCOIN HALVENINGS: Historically, it has taken approximately two months for Bitcoin’s network hashrate to bounce back to its previous level after a halving event. This observation applies to the three halvings that have occurred since the inception of Bitcoin by Satoshi Nakamoto in 2009. Notably, the fourth halving is predicted to happen around April 20, an intriguing and fitting date given its meme status. (For a comprehensive coverage on this upcoming event from CoinDesk, click here.)

The Decentralized Finance (DeFi) project known as EigenLayer, which sits on the Ethereum network and boasts over $12 billion in user deposits, officially began operating on its main network.

Christie’s auction house, renowned for its record-breaking $69 million sale in 2021 for Beeple’s “Everydays” collage, is now joining rival Sotheby’s in entering the market for Ordinals inscriptions, commonly referred to as Bitcoin NFTs.

Excerpt from Christie’s press release about the Ordinals inscriptions auction planned for April 9-16. (Christie’s)

Protocol Village

Here are some top stories from the previous week in our “Protocol Village” column, featuring significant updates and developments in the world of blockchain technology.

1. Saga, a layer-1 blockchain protocol to launch layer 1s “for infinite horizontal scalability,” launched its mainnet on Tuesday, according to the team: “Utilizing an innovative blend of shared security, precise validator orchestration tools and a seamless automated deployment pipeline, Saga simplifies the process for devs to launch their own dedicated blockchains, termed Chainlets.

Schematic from Saga’s developer documentation. (Saga)

2. (PROTOCOL VILLAGE EXCLUSIVE) Open Campus, a decentralized platform focused on education, is launching EDU Chain, “an innovative layer-3 platform dedicated to evolving the world of education via blockchain technology,” according to the team: “EDU Chain is an L3 Rollup purpose-built to tackle challenges like access to quality education, unclear credentialing systems, and insufficient recognition and compensation for educators. EDU Chain is pioneering the ‘learn-to-earn’ model on blockchain, leveraging Open Campus’s vast network.”

Schematic of Open Campus Edu Chain’s “universe,” from the project’s documentation (Open Campus)

3. The EOS team introduced “exSat,” an indexing layer for Bitcoin on EOS, as per their announcement. By employing EOS RAM to store Bitcoin data, they plan to use a combination of PoW, PoS, and DPoS mechanisms to keep it synchronized and allow advanced logic to operate on Bitcoin. As mentioned in a blog post, “This groundbreaking technology enables decentralized indexing of Bitcoin state data for ordinals and other assets in the EOS ecosystem. It offers swift access and minimal latency through EOS RAM, and supports full Ethereum Virtual Machine (EVM) compatibility. Consequently, developers can create intricate smart contracts with reduced gas fees, substantially increasing the scalability and functionality of the Bitcoin network.”

At the BTC L2 Conference in Hong Kong, Yves La Rose of the EOS Network Foundation introduced exSat as a new offering. (Or) In Hong Kong during the BTC L2 Conference, Yves La Rose from the EOS Network Foundation unveiled exSat as a new proposition.

Farmsent, an online marketplace connecting farmers directly with global businesses, has partnered with peaq, a decentralized blockchain, to revolutionize the food trade sector. By cutting out intermediaries, Farmsent ensures farmers sell their produce directly to consumers, providing transparency and lower costs. Using Machine RWAs and DePIN’s data-collecting devices (like soil sensors), Farmsent ensures product quality and origin are accurately traced. With over 160,000 farmers from Indonesia and Colombia already onboarded, this partnership aims to create a more transparent global food trade system.

“According to Farmsent’s white paper, the project outlines various ways it could contribute to food distribution.”

At the Hong Kong Web3 Gaming Expo and Paris Blockchain Week, Ordz Games presented its new handheld gaming device called BitBoy One. Based on blockchain technology, this gadget is a fusion of the classic Game Boy design from 1989 and innovative Web3 gaming, as mentioned in a recent press release. The name “BitBoy” is derived from the terms “Bitcoin” and “Game Boy.” Boasting a stylish transparent orange appearance, it aims to introduce Web3 gaming into the era of Decentralized Finance (DeFi), offering a captivating mix of nostalgia, novelty, and community engagement. Players can relive their childhood memories while earning Bitcoin through retro-style play-to-earn games.

The new BitBoy One device from Ordz Games (Ordz Games)

Money Center

Fundraisings

Monad Labs, the development firm behind layer-1 blockchain Monad, has closed a $225 million Series A led by Paradigm with additional funding by investors including Electric Capital and Greenoaks.
Ellipsis Labs, the core developers behind the on-chain Phoenix exchange, announced $20 million in Series A funding, according to the team: “Led by Paradigm with participation from Electric Capital, the funding will accelerate Ellipsis Labs’ efforts to build DeFi products that can rival the performance of traditional finance.
LightLink, an Ethereum layer-2 blockchain that lets dApps and enterprises offer users gasless transactions, announced the close of a $6.2 million extended seed round with participation from MH Ventures and NxGen.

Deals and grants

Conor Daly with Polkadot-sponsored car (Polkadot)

The Polkadot community has decided through an on-chain community vote to select IndyCar racer Conor Daly as Polkadot’s Brand Ambassador for the Indianapolis 500, marking the first time a major athlete’s sponsorship has been chosen by a vote using blockchain technology.
Mantle, an Ethereum layer-2 network, has launched its Mantle Scouts Program, “to kickstart the growth of innovative projects on Mantle,” according to the team.
The DFINITY Foundation, a Swiss not-for-profit research and development organization and major contributor to the Internet Computer blockchain, announced the launch of the Olympus Acceleration Platform, describing it as “Web3’s first decentralized, on-chain global acceleration platform.

Data and Tokens

XRP

Risk vs. Reward of Attacking Ethereum

Considering the cost-benefit analysis of attempting to assault the Ethereum network, one might question if the potential gains would outweigh the expenses. Currently, from a defensive perspective, Ethereum appears robustly fortified. According to a recent report by Coinbase Institutional analysts David Han and David Duong, Ethereum’s economic foundation is strong, making it difficult for a hostile majority to mount an attack. The assessment is based on the significant amount of ETH that is currently being staked on Ethereum compared to its “total value locked” (TVL), which approximates the DeFi deposits being safeguarded.