layer2

Web3 protocol Blast reaches $823M TVL despite bugs and controversy

Amid technical challenges and investor scrutiny, Blast’s staking model has propelled its total value locked to $823 million.

Web3 protocol Blast has reached $823 million in total value locked (TVL) just weeks after its controversial launch in mid-November, with a 26.5% gain over the past seven days, according to data from DefiLlama. 

Behind Blast’s speedy growth is its unique business model. The protocol is a scaling solution for the Ethereum network and offers native yields to users who stake their funds. Users staking are promised a 4% yield on Ether (ETH) and a 5% yield on stablecoins.

However, the protocol’s emergence has been marked by challenges and unpopular developments. On Nov. 30, Blast revealed that a user staking on the protocol saw $100,000 disappear after converting a deposit to Dai (DAI). The issue was caused by a misconfigured slippage parameter on the user interface, resulting in Blast paying the user $10,000 in compensation.

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Ethereum layer 2 bridging up sixfold year-on-year in Q1 — Alchemy

Layer 2s also saw increased development activity, with year-over-year smart contract deployment increasing by 160%.

Ethereum layer 2s, such as Optimism, Arbitrum and Polygon, increased in popularity in the first quarter of 2023, according to a report from Web3 development platform Alchemy. Over 635,000 Ethereum users bridged crypto assets to these networks from January to March, an increase of 44% over the fourth quarter of 2023 and 518% over the first quarter of 2022.

The report, titled simply “Web3 Development Report,” cited Dune Analytics as its source for this data. It showed that only 103,000 users made bridging transactions to layer 2s in the first quarter of 2022, whereas the same three months saw over 635,000 users perform these transactions.

Alchemy suggested that this increased activity may have been reinforced by successful airdrops from Optimism and Arbitrum in Q1, 2023.

In addition to increased asset bridging from users, layer 2s also showed greater activity from developers. Although the deployment of smart contracts related to layer 2s decreased by 30% relative to Q4 2022, it still increased by 160% when compared to Q1, 2022, the report said.

The crypto industry is coming off the back of a steep downturn in trading volume and crypto prices during 2022, with scandals like the UST depegging and FTX collapse causing many investors to shy away. But despite this negative sentiment, users still flocked to these new scalability solutions.

Related: 3 signs Arbitrum price is poised for a new record high in Q2

The Ethereum ecosystem as a whole also showed increased developer interest. Ethereum software development kits (SDKs) such as Ethers.js, Web3.js, Hardhat and Web3.py were downloaded 1.3 million times in Q1 2022. This became 1.9 million in the first quarter of 2023, an 8% increase. In addition, downloads of the MetaMask SDK, a tool used to develop apps that can interact with Ethereum wallet MetaMask, increased in each month of the first quarter.

Ethereum layer 2s have been offered as a solution to Ethereum’s scalability problem, which has been periodically causing high gas fees since as early as 2020. Some experts have argued that sharding the Ethereum network will also help to cut down on gas fees.

This story was updated on April 18 to clarify that the number of users bridging has increased by 518%, not the amount of assets bridged.

ERC-20 tool recovers $150M — Coinbase exec explains how

Will Robinson, vice president of engineering at Coinbase, explains the crypto exchange’s plan to increase its on-chain presence with new tools and the Base network.

In episode 15 of Cointelegraph’s Hashing It Out podcast, Elisha Owusu Akyaw talks with Will Robinson, vice president of engineering at crypto exchange Coinbase. They discuss the exchange’s vision for the future of the cryptocurrency industry, which is tied to its new Ethereum layer-2 network, Base. Robinson provides updates on the exchange’s latest tools, including an ERC-20 recovery function, wallet as a service and more.

The episode starts with Robinson explaining what his role entails. Robinson explains that he manages the developer product group responsible for internal crypto infrastructure, developer-facing products and protocol-facing efforts. Despite the regulatory activity and “drama in the market,” Robinson believes building in the crypto space has never been this exciting

“I think the world is moving on-chain by default. It is going to happen in fits and starts — on-chain is the new online.“

As part of Coinbase’s plan to build more on-chain tools, the United States-based exchange launched Base, an Ethereum layer-2 network. According to Robinson, Base is a product born out of the exchange’s sturdy movement internally to build more things on-chain. Robinson hopes that Base would become the default on-chain home for Coinbase to steer its users into the larger crypto ecosystem, while partnering with developers to build applications for mass adoption.

The cryptocurrency industry has seen multiple layer-2 networks, such as Arbitrum and Optimism, release their ecosystem tokens. Rumors on social media have tipped Coinbase to release a token for the Base network, but Robinson says there will be no token or airdrop.

Late last year, Coinbase launched an asset recovery tool for users who “mistakenly send unsupported tokens” to exchange addresses. According to Robinson says the ERC-20 recovery tool has been used by over 10,000 users who have recovered over $150 million in assets.

Related: Who watches the watchers? CryptoHarlem founder Matt Mitchell explains why surveillance is the enemy

Robinson also describes the concept behind the wallet-as-a-service product by Coinbase, which is attracting Web2 applications intending to add Web3 features such as digital collectibles or nonfungible tokens.

Listen to the latest episode of Hashing It Out with Will Robinson on Spotify, Apple Podcasts, Google Podcasts, or TuneIn. You can also explore Cointelegraph’s complete catalog of informative podcasts on the Cointelegraph Podcasts page.

Masa announces soulbound ID tokens for Coinbase’s Base Network

The token protocol can be used for a wide variety of applications, including membership badges, loyalty programs, decentralized captcha bots, and credit underwriting.

Masa Finance’s soulbound tokens will soon be available on Coinbase’s Base network, according to an April 4 announcement from Masa Finance. The new tokens will allow users to link identifying and reputational characteristics to their wallet addresses, making credit underwriting possible on the blockchain, the company said.

Masa had previously released its Soulbound Token protocol for Ethereum and Celer.

In its announcement, Masa stated that the protocol can be used for a wide variety of applications, including human-readable domain names, membership badges, loyalty programs, achievement badges, decentralized captcha bots and more.

It will release a Base SBT Developer Toolkit within the coming weeks that “will support the seamless deployment and interaction with SBTs on Base,” which will include a quickstart guide, Masa command line interface, software development kit, REACT developer tools and examples of how to build applications using Masa soulbound tokens.

Related: Coinbase wants devs to build inflation-pegged ‘flatcoins’ for ‘Base’ network

Coinbase is the largest centralized crypto exchange in North America. It launched its Base Network testnet on Feb. 23, planning to implement it as an optimistic rollup layer 2 for Ethereum. On March 23, Coinbase issued a Request for Builders asking developers to create several protocol types for Base, including an on-chain reputation system.

In response to this request, Masa began developing a Base version of its soulbound protocol, the company said in its announcement.

The announcement of Base Network’s creation has contributed to bullish sentiment within the Ethereum community, with some users expressing hope that it will lead to greater onboarding of Coinbase users to Ethereum. In an interview with Bloomberg Radio, Coinbase CEO Brian Armstrong claimed that “centralized players” on Base will need to implement some form of identity verification for users.

Arbitrum’s first governance proposal sparks controversy with $1B at stake

The Arbitrum Foundation announced that it was only ratifying an existing decision when it proposed a 750 million ARB tokens budget.

A proposal to fund the Arbitrum Foundation with 750 million ARB tokens — nearly $1 billion — raised controversy in the ARB community over the weekend after the foundation announced that the vote was only to ratify a decision that had already been made. 

The conflict comes after a few days the layer-2 protocol airdropped its governance token.

According to the AIP-1 proposal on Arbitrum’s DAO, the 750 million tokens would be used to cover “Special Grants, reimbursing applicable service providers […] and covering ongoing administrative and operational costs of The Arbitrum Foundation.” Over 70% of tokens taking place in the vote had been cast against the move at the time of writing:

Screenshot: AIP-1: Arbitrum Improvement Proposal Framework. Source: Arbitrum DAO. 

After facing backlash from community members, the foundation said in a forum post on April 2 that AIP-1 was a ratification, not a proposal. It added that somof the tokens were already sold for stablecoins. In other words, its billionaire budget and allocations would not be subject to an on-chain governance process. 

Nearly 50 million ARB tokens were moved on-chain in the past few days. The foundation said 40 million tokens had been allocated as a loan to a sophisticated actor in the financial markets space, while 10 million tokens have been converted to fiat currency for operational costs. 

The Arbitrum Foundation said the symbolic first governance attempt failed due to communication problems and decisions that were “clearly not articulated correctly,” writing:

“One of the mistakes in the drafting of AIP-1 was a failure to note at the outset that this proposal was intended to act as a ratification of the initial setup of both the Arbitrum DAO and the Foundation that has been created to serve the DAO. […] the point of AIP-1 was to inform the community of all of the decisions that were made in advance.”

Commenting on the governance forum, members of the community pointed out that Arbitrum’s team “has been dumping tokens that were initially informed to the community as locked tokens,” claiming that “all tokenomics page shows only User airdrop + DAO airdrop tokens as unlocked” with remaining “tokens to unlock in March 2024.”

Others highlighted that under the United States securities laws, the anticipated sale would be considered fraud and that U.S. citizens who have bought ARB tokens or claimed the airdrop “are eligible for legal remedies.”

“I will be pursuing this with my lawyers and expect to file a securities fraud lawsuit in the next few days. […] Immediately, the Arbitrum Foundation is advised to halt all illegal sales of the token that are being done without any authorization and against the provisions of the law,” said a community member.

Arbitrum’s blockchain holds 65% of the Ethereum layer 2 market share, according to data from the layer-2 analytics site L2Beat. The highly anticipated launch and airdrop of its native governance token took place on March 23, with hundreds of thousands of eligible users and DAOs claiming ARB. Overwhelming user demand led the airdrop claim page to crash shortly after its launch, Cointelegraph reported. 

Hodler’s Digest: FTX EU opens withdrawal, Elon Musk calls for AI halt, and Binance news

Update (April 2, at 21:03 UTC): This article has been updated to insert information about 50 million ARB tokens moved on-chain. 

Injective launches layer-2 testnet for Solana-based apps in Cosmos

The new testnet is one of the few networks that uses Solana’s Sea Level Virtual Machine (SVM).

Developers may soon be able to port Solana Web3 apps to the Cosmos ecosystem, bringing new users to these apps and providing a greater variety of uses for Cosmos blockchains. 

According to a March 30 announcement from the developer of Cosmos-based network Injective (INJ), the team has released a layer-2 testnet that utilizes Solana’s Sea Level Virtual Machine (SVM). This means that some Solana developers can now test their apps for use in the Cosmos ecosystem without needing to change the programming language or tooling used.

In a conversation with Cointelegraph, a representative from Injective said the name of the new network is “Cascade” and that it uses optimistic rollup technology.

According to the announcement, the new layer was created with the help of Eclipse, a company that provides customized zero-knowledge and optimistic rollups for developers.

Eric Chen, co-founder and CEO of Injective Labs, stated that the integration should help both the Solana developer community and Cosmos users:

“This new SVM rollup for the Cosmos IBC world will not only empower developers from Solana to deploy their DApps on Injective, but it will also create more opportunities for users to experience the best Web3 DApps in one integrated network.”

Injective stated that the testnet is currently private, but it is “offering a limited number of spots exclusively to select Solana developers” beginning on March 30.

The number of active Solana developer teams increased over 1,000% year-over-year in the third quarter of 2022, according to a report by Alchemy. The network features several apps with over 2,000 unique users, including the nonfungible token marketplace Magic Eden and DeFi protocol MeanFi, according to Web3 analytics company DappRadar.

However, Solana Web3 apps are written for use with the Solana SVM, which is used by few networks other than Solana itself. This makes it difficult for Solana developers to port their apps to other networks without extensive rewriting.

Related: Formfunction to shutter marketplace amid Solana NFT slump

Eclipse also created an SVM rollup for Polygon on February 23.

Cosmos is a group of interconnected blockchain networks developed using the same consensus engine and software development kit. They are connected through the Cosmos Inter-Blockchain Communication Protocol (IBC), and assets on one network can be transferred to others within the Cosmos ecosystem. Injective is one of the networks that make up this ecosystem, and the new SVM rollup is a layer-2 of Injective.

Injective Labs isn’t the only company trying to make Solana apps compatible with Cosmos. Nitro Labs also announced the development of an SVM rollup for the Sei network in September and released a decentralized exchange for its testnet in February.

The Cosmos ecosystem has been growing over the past two years. On March 11, Cosmos Hub governance approved the V9-Lambda upgrade that begins to implement Interchain Security (ICS), allowing members of the ecosystem to share validations resources. On March 29, Circle announced that it will launch USDC for Cosmos via the Noble Network.

Arbitrum airdrop hype helps zkSync addresses jump over 5X in a week

Airdrops were created as a marketing tool before the ICO era, rewarding traders for promoting the project and holding its token for a certain period.

Arbitrum, a layer-2 scaling solution for Ethereum, announced the airdrop of its ARB governance token on March 16, with eligible receivers expected to get the token by March 23. The hype around its airdrop has now helped another layer-2 solution, zkSync, to see significant week-over-week growth.

ZkSync is another layer-2 scaling solution for Ethereum, supporting nonfungible tokens (NFT), and atomic swaps and transfers of Ether (ETH) and ERC-20 tokens within the Ethereum network.

According to data from crypto on-chain analytic firm Nansen, more than 39,000 addresses have bridged over $871 million to zkSync in the last seven days. The number of addresses bridging to zkSync has swelled by 5x in the last week.

Ethereum layer 2 trading volume. Source: Nansen

After the Arbitrum airdrop, zkSync and StarkNet are regarded as the upcoming airdrops with the most potential value. On March 17, nearly 5,000 people deposited more than 536 ETH using the zkSync bridge, and almost 3,000 users deposited over 234 ETH using the StarkNet bridge.

Although zkSync neither has a native token nor announced any airdrop, the enthusiasm around the Arbitrum airdrop has led many proponents to believe they would be rewarded in the near future.

The hype around the airdrops comes amid multiple fake and scam airdrops being attempted by scammers using Arbitrum branding.

A crypto airdrop is a promotional tool for crypto projects to generate hype around the project. The crypto projects behind these airdrops often directly deposit digital tokens into the wallets of active blockchain community members as a gift. Many of these airdrops have specific preset eligibility criteria that reward users for spreading awareness around the project.

Airdrops have been popular since the early stages of the crypto ecosystem, with the first airdrop coming in 2014. Projects have relaxed marketing strategies in recent times owing to regulatory scrutiny.

Related: Ethereum layer-2 solutions may focus less on token incentives in the future

Not all crypto airdrops are equally valuable due to multiple factors, such as the people behind the projects and the project’s use cases — among others. However, Arbitrum, Optimism and zkSync are some of the early layer-2 solutions with proven records. This has attracted more traders to the Arbitrum airdrop, as it could prove to be more valuable than the usual crypto airdrops.

Coinbase launches its own layer-2 network for building decentralized apps

The network, known as Base, is designed to be a low-cost, secure, developer-friendly environment that Coinbase said will serve as a bridge to bring users into the crypto economy.

On Feb 23, crypto exchange Coinbase announced the launch of Base — an Ethereum layer-2 network. The company claimed that this new network will offer a low-cost, secure, developer-friendly environment for building decentralized apps (DApps) on the blockchain.

According to Coinbase, Base is designed to be a bridge for users into the crypto economy, offering access to other L1 ecosystems like Solana and making it interoperable with other chains. It will also provide access to Coinbase’s products, users and tools as well as easy fiat on-ramps and powerful acquisition tools. The company said it has no plans to issue a new network token.

Base will be built on the “OP Stack” used by Optimism. It will start off highly centralized, though Coinbase has released a detailed plan regarding how the network will decentralize over time.

In its announcement, Coinbase said that Base will be “fully open source and freely available.” The company said it is joining the OP Stack core dev team to “ensure it’s a public good available to everyone.”

According to the announcement, Coinbase will continue to integrate as an exchange with other networks, and Base itself will be “a bridge, not an island.” Coinbase intends Base to be an easy-to-use network for its customers to get familiar with using crypto, but it will encourage users to “start on Base, but go everywhere.”

In its decentralization plan, Coinbase said that it is working with Op Labs and the Optimism Collective to decentralize the Optimism ecosystem by creating a “Superchain” of connecting networks built on the OP Stack. The company judges that the current version of Optimism is a “Stage 0 rollup,” citing Vitalik Buterin’s post on the decentralization of rollups. By the end of 2023, Coinbase said it plans to have progressed Base to “Stage 1.”

Starkware commits to open source its ‘magic wand’ Starknet Prover

The prover is the crucial engine Starkware uses to roll up hundreds of thousands of transactions and compress them into a tiny cryptographic proof written on the Ethereum blockchain.

Ethereum layer 2 scaling solution StarkWare announced plans to open source its proprietary Starknet Prover under the Apache 2.0 license, which has processed 327 million transactions and minted 95 million nonfungible tokens (NFTs) to date. 

The prover is the crucial engine Starkware uses to roll up hundreds of thousands of transactions and compress them into a tiny cryptographic proof written on the Ethereum blockchain.

“We think of the Prover as the magic wand of Stark technology. It wondrously generates the proofs that allow unimaginable scaling,” said Eli Ben-Sasson, president and co-founder of Starkware.

Eli Ben-Sasson presenting at the Starkware sessions 2023. Source: Cointelegraph

Starkware has faced criticism from the crypto community and competing solutions such as ZK Sync and Polygon for holding onto the IP behind its tech, which contradicts blockchain’s open source and interoperable ethics.

Making the prover open source under the Apache 2.0 license will enable any other project or network — or even games or database developers — to make use of the technology, edit the code and customize it. The tech was released in 2020 and is already being used by ImmutableX, Sorare and dYdX.

A sneak peek of the Starkware sessions 2023. Source: Cointelegraph

Avihu Levy, Starkware’s head of product, was reluctant to commit to a time frame for open-sourcing the prover but said it would occur after the token launch and decentralization of Starknet itself. He agreed, however, that it would be possible this year.

“We want to move forward with a decentralized, permissionless network and that means that you need to have this critical component out there,” he revealed speaking to Cointelegraph.

Levy said the decision to open source the prover showed Starkware was increasingly confident about its technology and said it would also enable projects to be more confident about using it as a crucial part of their protocols.

“In StarkEx, it’s sometimes considered vendor lock-up or lock-in. So the commitment wasn’t just a business commitment it was a technology commitment to StarkEx,” he explained.

“This is a strong signal that you will have everything you need to run it yourself independent of Starkware.”

Starkware has already open-sourced its programming language and EVM competitor Cairo 1.0, Papyrus Full node and is in the process of open-sourcing its new sequencer.

Related: StarkNet overhauls Cairo programming language to drive developer adoption

Ben-Sasson launched the Starkware Sessions conference in Tel Aviv on Sunday, which organizers said was the largest layer 2 conference held so far.

“This is a landmark moment for scaling Ethereum,” he told about 500 developers and guests. “It will put Stark technology in its rightful place, as a public good which will be used to benefit everyone.”

The state of Solana: Will the layer-1 protocol rise again in 2023?

Despite the latest FTX-related crisis, Solana still has what it takes to win the layer-1 race, according to the head of strategy at the Solana Foundation, Austin Federa.

About two months after the FTX collapse, the Solana network is stronger than ever, according to Austin Federa, head of strategy and communications at the Solana Foundation. 

Federa defines the recent SOL token price crash as a short-term market reaction to the perceived connection between Solana and the defunct crypto exchange FTX. While FTX founder Sam Bankman-Fried was invested in many Solana-based projects, Federa pointed out he didn’t have any influence on the network’s operations and fundamentals. 

“The external perception was that there was a very close relationship between the Solana network and FTX, which wasn’t the case,” Federa explained in a recent interview with Cointelegraph. 

According to a recent report by Electric Capital, the Solana network has been experiencing a record inflow of developers contributing to the ecosystem. 

To Federa, developers are increasingly building on the Solana network because of its main value proposition: cheap and fast transactions.

“You can build new types of products and services that aren’t transaction-constrained,” he pointed out.

When asked to address the problem of outages that have plagued the network over the past year, Federa mentioned a number of technical upgrades that should improve the stability of the network in the months to come. One of them is the recent introduction of priority fees, which should reduce the amount of transaction spam on the network. 

Federa also mentioned Firedancer, a new validator client that is expected to go live on Solana’s mainnet by the end of 2023. 

To find out more about how Solana is recovering after the FTX collapse, check out the full interview on our YouTube channel, and don’t forget to subscribe!