Tech
From “node sales” to “address poisoning,” the money is in cryptocurrencies
What could be more crypto than raising tens of millions of dollars via a “knot sale?” In this week’s issue of The Protocol, we explain the blockchain industry’s new fundraising method, which explicitly relies on its decentralizing impact.
Tiered node sales, like this one from Sophon, mean the price goes up, the longer buyers wait (Sophon/edited from CoinDesk using PhotoMosh)
KNOTS FOR SALE: It is the latest innovation in the blockchain industry, not in technology, but in the way of raising money from investors. “Node sales” involve selling blockchain nodes directly to investors, a process that quickly brings in cash while seemingly giving projects an easy path to decentralization. Still a relatively new phenomenon in the rapidly evolving cryptocurrency industry, they are becoming increasingly common: Aethira decentralized GPU cloud infrastructure provider, disclosed last week to have distributed more than 73,000 node licenses worth over 41,000 ETH ($126 million). Other blockchain projects that raise funds through node sales include CARV, XAI Games AND Powerloom. The latest to hit the market is Sophon, an entertainment-focused blockchain ecosystem powered by zkSync technology, which relies on Celestia for data. The project attracted more than $60 million in one year knot sale last week, although its founders are semi-anonymous. Some sales mechanisms appear designed to ward off fear of missing out, or FOMO, such as a tiering system, where the price increases as more nodes are sold, and the use of exclusive whitelists that reserve advance spots for certain users. “Buyers are hoping to get high-quality projects,” says Calvin Chu, a former Binance researcher who helped start up Impossible finance, which facilitated some sales. As with many cryptocurrency-related investments, buyers are also hoping for juicy returns in the form of token rewards and possibly qualifying for any token airdrops.
“POISONING ADDRESS?” A cryptocurrency user has lost $68 million in wrapped bitcoin (WBTC) after falling victim to a type of exploit known as “address poisoning,” according to blockchain security company CertiK. As reported by Oliver Knight of CoinDesk, “Address poisoning is a technique that involves tricking the victim into sending a legitimate transaction to the wrong wallet address by imitating the first and last six characters of the real wallet address and depending on the sender to not catch the discrepancy in the intermediate characters. Wallet addresses can contain up to 42 characters.” In this case, the exploiter imitated a 0.05 ether (ETH) transaction before receiving 1,155 encapsulated bitcoins (WBTC) from the victim.
A Backwards-AND-Street broke out on X because of the blockchain project By Sui supply of tokens.
This year, Consensus will host its first in-person hackathon alongside the world’s #1 Web3 learning app, EasyA. It will be a three-day, multi-chain IRL hackathon with world-class sponsors, from Sui to Stellar to Polkadot and beyond, and will attract the world’s best developers to build the future of Web3 and raise funds for their projects.
Projects launched by EasyA alumni are worth over $2.5 billion. The EasyA Consensus hackathon will be the biggest hackathon of 2024 so far.
We still have a few spots open for hackers, so if you’re excited to participate, be sure to do so sign up here!
Last week’s top picks from our Protocol Village column, highlighting the main updates and innovations in blockchain technology.
Co-founder of Polyhedra and CTO Tiancheng Xie (Polyhedra)
1. Network of polyhedra launched a open source ZK test system, Expander, “which can generate evidence nearly 2X faster than alternatives, while improving the security and efficiency of the ZK evidence process,” according to the team. According to a blog post, “Expander can try 4,500 Keccak-f permutations per second on an Apple M3 Max machine.” Keccak-256 is a “cryptographic hash function standardized by NIST in Secure Hash Algorithm 3 (SHA-3) and is the hash function used by the Ethereum blockchain,” according to the post. The new demonstration system is based on that of Polyhedra Libra cardlead author of Co-founder of Polyhedra and CTO Tiancheng Xie.
2. MetaMask, the most popular crypto wallet for Ethereum, launches a new feature this week designed to help users avoid the consequences of maximum extractable value, or MEV. The new optional feature, called Smart transactions, will allow users to send transactions to a “virtual mempool” before they are officially cemented on-chain. According to Consensys, the company behind MetaMask, the virtual mempool will protect against certain types of MEV strategiesand will run behind-the-scenes simulations of transactions to help users get lower fees.
4. Aave laboratoriesthe lead developer behind Aave, a DeFi protocol, proposed develop its “V4” as part of a larger grant proposal, involving community feedback and testing, with a timeline starting this quarter and leading to full release by mid-2024. “Aave V4 would be built with a completely new architecture with an efficient and modular design, minimizing the impact on third-party integrators,” the proposal reads. A key change would be the introduction of a “unified liquidity layer” and a new oracle design with Chainlink.
5. Citi, JPMorgan, Mastercard, Swift and Deloitte are among the leading financial services companies coming together to explore shared ledger technology by simulating multi-asset transactions in US dollars. The research project, entitled Regulated Settlement Network (RSN) Proof-of-concept (PoC), will explore the potential of bringing commercial bank money, wholesale central bank money, and securities such as U.S. Treasuries and investment grade debt into a common regulated venue, according to a statement shared with CoinDesk. The Federal Reserve Bank of New York’s New York Innovation Center will serve as a technical observer.
Screengrab from proposal EIP-3074 (Ethereum.orgedited by CoinDesk using PhotoMosh)
As blockchain teams strive for the holy grail of mainstream adoption, making crypto wallets easier to use is suddenly at the top of the agenda.
Ethereum developers are moving forward with their discussions and the inclusion of some Ethereum improvement proposals (EIP) for the next big hard fork of the blockchain, Petra.
One of the proposals that has attracted support and concern from the Ethereum community is EIP-3074, a code change that should improve the user experience with wallets on the blockchain.
Georgios Konstatonopolous, Chief Technology Officer of Paradigm said about X that EIP-3074 “is a big deal. Wallet’s UX will be 10x better.”
PS THIS ONLY IN: Ethereum co-founder Vitalik Buterin proposed a “Alternative EIP-3074” called EIP-7702. It’s super technical, but Jarrod Watts, a developer relations engineer at Polygon, spoke highly of it tweet threads Speaking of which.
Diagram of the Lava network (Lava)