The Protocol: Bitcoin Cry for Help Heard

Rosy predictions for bitcoin spot ETFs are paying off, with billions of inflows into the vehicles, helping to push the BTC price this week to a new all-time high above the old record around $69,000. The vindicated prognosticators may argue there’s now ample proof that if normies have an easy way of investing in crypto, they will. The question is whether newbies fully understand the vagaries of decentralized governance of decentralized networks, or grasp the reality that the technology is still very much in its adolescence. Maybe that’s the point of getting in now.

In this week’s issue of The Protocol:

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

No, this isn’t a Solana conference – but the Solana booth at last week’s ETHDenver conference, which was founded to focus on the Ethereum blockchain ecosystem. (Sam Kessler)

ETHEREUM’S BIG TENT: Ethereum conferences aren’t just for Ethereans anymore, CoinDesk’s Sam Kessler reports. Last week’s ETHDenver conference in Colorado, one of the year’s largest gatherings for developers and users of the Ethereum blockchain, drew in a cross-section of the blockchain industry. The broad swath of attendees might be a testament to Ethereum’s influence on other blockchain ecosystems, attracting onlookers from other crypto tribes. But it also might be a sign of rival systems looking to encroach on Ethereum’s success in making blockchains more programmable, with its vibrant ecosystem of software developers looking to create new applications. Bitcoin, in the midst of a developer renaissance with the advent of its own NFTs and decentralized finance (DeFi) services, had an impressive turnout of builders at the conference. So did Polkadot, the “hub-and-spoke” blockchain created by Gavin Wood, an Ethereum co-founder who used to market his new project as an improvement over the Ethereum model. Even Solana, the speed-focused network that’s long positioned itself as an “ETH Killer,” had a well-attended booth at Denver’s National Western Complex, the conference’s venue. John Paller, the conference’s founder and executive steward, told CoinDesk in an interview that there were “probably seven or eight layer 1s that are here, and we have probably 12 layer 2s.” According to conference officials, there were 20,000 “festival attendees.”

BITCOIN PSA: In last week’s issue, we highlighted how, despite robust demand to buy bitcoin by newly approved U.S. spot ETFs, and the surging BTC price (this week surpassing the previous all-time high around $69,000), the governance of the blockchain’s software is still dependent on largely volunteers, or on pro developers moonlighting – a labor of love, as it were. And the process is down to having only one editor, Luke Dashjr, to manage what he described as the “thankless and boring job” of handling all the new Bitcoin Improvement Proposals or “BIPs” that come over the transom. Well, his cries for help were heard, apparently. Ava Chow, one of the maintainers of Bitcoin Core, acknowledged in a post on the Bitcoin-Dev mailing list that it might be “prudent for us to look at adding more BIPs editors.” According to Chow: “this would significantly help get through the backlog of BIPs PRs, and responding to them in a timely manner to significantly reduce the friction of getting BIPs changes merged,” adding that “any new BIP editors should be people who have a history of following and being involved in Bitcoin development, as well as being known to evaluate proposals objectively, and of course, are willing to do the job.” As Bitcoin Optech newsletter put it dryly, “No clear resolution has been reached.”

ALSO:

Yes, this “Alien hoodie” from the NodeMonkes Bitcoin Ordinals inscriptions collection sold for more than $1 million. (NodeMonkes/X)

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

Schematic of Marathon’s “Anduro” network design, from the litepaper. (Anduro)

Wormhole’s “native token transfers” architecture. (Wormhole)

See the entire Protocol Village list from this past week here.

Steven Goldfeder, CEO of Offchain Labs, the primary developer behind Arbitrum, spoke last week at the ETHDenver conference. (Danny Nelson)

Ethereum developers are gearing up for the blockchain’s next big upgrade happening next week, called Dencun.

It’s supposed to issue in a new era of lower costs for “layer-2” blockchains, including so-called rollup networks that aim to offer faster and cheaper transactions than on the main blockchain. But just how much lower?

Dencun will be the biggest upgrade – technically a “hard fork” in blockchain parlance – that the network will undergo in almost a year.

The main component in Dencun is called EIP-4844, or more commonly “proto-danksharding,” which will bring in a new type of transaction class that reduces the costs of publishing veri of transactions on rollups, through the introduction of veri “blobs.” These blobs are a separate place in a transaction where rollup networks or other protocols could temporarily stash veri – sometimes described as a “side car” that doesn’t take up space in the main car.

As a result of more blobs, the costs for these layer-2 networks to stash veri on Ethereum will be significantly cheaper, and the reduction is likely to trickle down to users in the form of lower fees.

But how exactly it will all shake out is still ambiguous, according to many Ethereum experts. We asked leading layer-2 teams, including Polygon, Arbitrum, StarkWare and Coinbase’s Base, for their predictions post-Dencun.

Click here for the full interview by Margaux Nijkerk

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Regulatory, Policy and Legal

There’s so many ways to handicap the horse race between the various blockchains for relevance and market share – total value locked, transaction fees, network capacity, speeds, token prices, size of the developer community. Here’s another one: the number of users. This week, in the chart below, we feature Token Terminal’s veri showing daily active users. As with a lot of veri, there’s the potential for manipulation, but the veri shows the Tron blockchain in first place, followed by the Binance-incubated BNB Chain and then Polygon in third place.

Blockchains ranked by daily average users. (Token Terminal)