Ok,
sure,
humans
invented
blockchains.
But
why
do
they
have
to
mess
it
all
up?
In
this
week’s
issue
of
The
Protocol
newsletter,
we’ve
got
lots
of
humans
doing
things
in
blockchain
–
some
quite
impressive,
not
all
so
successful.
There
was
the
messy-and-ultimately-suspended
sale
by
Taproot
Wizards
of
its
inaugural
“NFTs-on-Bitcoin”
collection
“Quantum
Cats,”
and
Wednesday
brought
news
of
a
reported
hack
at
Ripple.
Our
Sam
Kessler
writes
about
the
“private
mempools”
that
Ethereum
users
are
relying
on
to
keep
transactions
from
getting
picked
off
by
front-running
“MEV”
bots,
and
Margaux
Nijkerk
reports
on
the
growing
use
of
“councils”
–
call
them
blockchain
boards
–
that
projects
are
creating
to
provide
adult
supervision
over
still-quite-adolescent
networks.
PLUS
–
January’s
leaders
and
laggards
among
the
CoinDesk
20
digital
assets.
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.
Network
news
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/4LQZWDCSRZG7JH4X2QNZOEMJNA.jpg)
ME-OUCH!
With
robust
development
and
NFT
minting
atop
once-sleepy
Bitcoin
tipped
to
be
one
of
blockchain’s
hottest
trends,
this
week’s
sale
of
the
“Quantum
Cats”
digital-art
series
from
the
Ordinals
inscriptions
project
Taproot
Wizards
was
supposed
to
be
the
cat’s
meow.
After
all,
it
was
only
a
couple
months
ago
when
Taproot
Wizards,
led
by
Udi
Wertheimer
and
Eric
Wall,
raised
$7.5
million
from
investors
amid
a
wave
of
euphoria
over
“NFTs
on
Bitcoin.”
And
earlier
this
month,
the
first-in-series
“Genesis
Cat”
fetched
a
fur-fluffing
$254,000
at
the
venerable
auction
house
Sotheby’s.
Remaining
Quantum
Cats
were
set
for
a
fixed
sale
price
of
0.1
BTC,
or
about
$4,300
at
the
current
bitcoin
market
price.
But
when
the
Taproot
Wizards
minting
website
opened
on
Monday
to
whitelisted
buyers,
there
was
more
sour
milk
than
catnip.
Frustrated
claimants
filled
up
the
Taproot
Wizards
Discord
channel
with
screenshots
showing
web
glitches
and
hung
transactions.
“This
has
got
to
be
one
of
the
worst
mint
experiences
I’ve
ever
seen,”
one
user
wrote.
Taproot
Wizards
suspended
the
process
after
about
1,000
of
the
3,000
images
were
sold,
according
to
project
officials,
delaying
the
remainder
until
Tuesday,
and
then
subsequently
delaying
it
again
until
Thursday.
“We
didn’t
live
up
to
your
expectations
of
us
and
to
our
expectations
of
ourselves,”
Wertheimer
posted
on
X.
At
this
point
nobody’s
talking
about
purr-fection.
BLOCKCHAIN
BOARDS:
“Trust
the
humans”
might
be
the
new
mantra
for
Ethereum’s
top
layer-2
projects.
As
our
Margaux
Nijkerk
reported
this
week,
that
principle
stands
at
the
core
of
a
new
trend
in
the
blockchain
industry,
where
overseers
of
various
networks
are
establishing
groups
of
people
to
help
steer
protocol
changes
and
ensure
security.
The
goal
of
these
“protocol
councils,”
sometimes
called
“security
councils,”
is
to
nudge
the
nascent
networks
toward
increasing
decentralization,
by
gradually
removing
them
from
under
the
control
of
their
original
developers.
Before
cutting
the
cord
completely,
where
the
networks
essentially
run
automatically,
or
subject
to
some
sort
of
democratic
process,
the
thinking
is
that
a
panel
of
well-meaning
humans
can
serve
as
the
ultimate
guardians
–
able
to
step
in
quickly
when
emergencies
arise,
or
providing
the
final
sign-off
on
major
protocol
changes.
Polygon,
the
Ethereum
layer-2
network,
has
a
13-person
“Protocol
Council.”
Arbitrum,
another
major
Ethereum-focused
layer-2,
has
a
“Security
Council,”
while
Optimism
also
has
a
“Security
Council.”
A
member
of
the
Polygon
council,
Mehdi
Zerouali,
who
is
the
director
of
Sigma
Prime,
a
blockchain
security
firm,
told
CoinDesk
that
“This
is
a
necessary
evil.”
-
The
XRP
token
dropped
5%
after
report
of
a
potential
$112M
hack
at
Ripple.
Chris
Larsen,
Ripple’s
executive
chairman,
later
clarified
in
a
post
on
X
(formerly
Twitter)
that
there
had
been
a
breach
to
his
“personal
XRP
accounts,”
but
not
to
Ripple
itself.
(Link) -
The
Ethereum
blockchain’s
biggest
upgrade
since
early
2023
went
live
on
the
second
of
three
test
networks,
bringing
the
much-anticipated
“Dencun”
project
and
its
“proto-danksharding”
feature
a
step
closer
to
reality. -
Speaking
of
Ethereum,
co-founder
Vitalik
Buterin
wrote
in
a
new
post
that
developers
should
“tread
carefully”
before
mixing
crypto
and
AI.
(Link)
(Also,
by
the
way,
it’s
his
30th
birthday.) -
Worldcoin,
the
blockchain-based
identity
project
backed
by
OpenAI’s
Sam
Altman,
might
change
the
shape
of
its
Black
Mirror-esque
Orb
to
make
the
eyeball-scanning
device
look
“more
friendly.”
(TechCrunch) -
Police
in
Germany
have
provisionally
seized
50,000
BTC
worth
$2.17
billion,
calling
the
action
its
largest
cryptocurrency
seizure
ever,
according
to
a
police
statement.
(Link) -
Alleged
crypto
Ponzi
scheme
“HyperVerse”
raked
in
nearly
$2B,
hired
actor
as
fake
CEO,
U.S.
authorities
alleged.
(Link) -
Heather
“Razzlekhan”
Morgan,
who
along
with
her
husband
was
charged
in
2022
with
conspiracy
related
to
a
heist
of
billions
of
dollars
worth
of
bitcoin,
is
the
subject
of
a
new
feature
film
being
developed
by
Amazon
MGM
Studio.
(Decrypt)
Protocol
Village
Top
picks
of
the
past
week
from
our
Protocol
Village
column,
highlighting
key
blockchain
tech
upgrades
and
news.
-
Farcaster,
the
decentralized
social
media
platform
on
Ethereum
where
Vitalik
Buterin
sometimes
posts,
has
introduced
a
new
feature
called
“Farcaster
Frames.”
In
a
Jan.
26
post
on
X,
Farcaster
co-founder
Dan
Romero
noted
that
Frames
“make
it
easy
to
ship
an
MVP,
no
app
install
required,”
adding
that
they’re
“mobile
first,
feed
first,
distribution
first.”
The
Spindl
blog
described
the
experience
as,
“a
new
Web
3
primitive
that
Web
2
could
never
really
power:
an
easy
way
to
run
app
X
while
a
user
is
still
inside
app
Y,
with
little
coordination
between
X
and
Y.” -
Anza,
a
new
software
development
firm
focused
on
the
Solana
blockchain
ecosystem
and
founded
by
a
group
of
executives
and
core
engineers
from
Solana
Labs,
announced
its
launch
in
a
blog
post:
“It
will
build
a
forked
version
of
the
Solana
Labs
validator
client
called
Agave,
as
well
as
contribute
to
other
major
protocols
within
the
Solana
ecosystem.” -
Stellar
Development
Foundation
published
a
blog
post
on
Tuesday
revealing
a
new
target
date
of
Feb.
20
for
the
Protocol
20
upgrade
that
will
introduce
smart
contracts
to
the
Stellar
blockchain
as
part
of
the
“Soroban”
project.
The
upgrade
was
delayed
from
the
originally
targeted
Jan.
30
after
a
bug
was
found. -
Immunefi,
a
bug
bounty
and
security
services
platform
for
Web3,
published
its
“Crypto
Losses
in
January
2024”
report,
revealing
that
the
ecosystem
lost
$126
million
of
funds
due
to
hacks
and
scams.
According
to
the
team:
“This
represents
a
6x
increase
when
compared
with
January
2023
at
$21
million.” -
Linera,
a
layer-1
blockchain
protocol
pioneering
microchains
to
give
users
their
own
blockspace,
announced
deployment
of
its
Devnet,
“a
significant
stride
in
its
mission
to
redefine
Web3
scalability,”
according
to
the
team:
“With
its
unique
blockchain
model,
the
company
is
enhancing
user
experiences
for
projects
that
require
support
for
a
vast
number
of
active
users
and
real-time
interactions.”
The
project
is
led
by
Mathieu
Baudet,
a
veteran
of
the
former
Meta/Facebook/Novi
crypto
program.
Inside
the
‘Private
Mempools’
Where
Ethereum
Traders
Hide
From
Front-Running
Bots
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/2FMTIL2XIRF2VII3UGBLXARUW4.jpg)
Ethereum
users
are
increasingly
seeking
out
“private
mempools.”
(Dea
Andreea,
Unsplash)
Ethereum
is
swarming
with
bots
that
are
programmed
to
front-run
transactions.
The
bots
exploit
the
brief
window
of
time
between
when
transactions
are
submitted,
and
when
they’re
officially
finalized,
to
copy
trades
from
other
users,
quickly
execute
them,
and
in
doing
so
eat
into
any
would-be
profits.
It’s
a
practice
called
maximal
extractable
value
(MEV),
and
it’s
a
huge
nuisance
to
novice
crypto
traders
and
to
veterans
alike.
But
Ethereum’s
transaction
pipeline
has
undergone
a
quiet
shift
over
the
past
two
years
as
more
of
the
chain’s
users
have
embraced
“private
mempools”
to
execute
their
trades
–
bypassing
the
blockchain’s
“public”
transaction
lobby
to
avoid
broadcasting
trades
to
the
whole
world
before
they’re
finalized.
This
helps
to
prevent
MEV
and
help
users
get
better
settlement
for
their
transactions.
While
there
are
obvious
benefits
to
this
stealthier
mode
of
using
Ethereum,
experts
say
private
mempools
carry
risks
of
their
own.
“I
think
most
everyone,
including
myself,
expects
there
to
be
more
private
transactions
moving
forward,
not
less,”
Matt
Cutler,
CEO
of
MEV
firm
Blocknative,
told
CoinDesk.
“I
think
the
big
question
in
my
mind
is,
would
more
private
transactions
be
a
good
thing
or
a
bad
thing
for
the
network?”
Money
Center
Fundraisings
-
ZkLink
a
multi-Chain
ZK
Rollup
and
layer-3
protocol,
has
successfully
completed
a
$4.68
million
sale
on
CoinList
in
its
latest
Community
Token
Sale. -
Ithaca
Protocol,
a
composable
option
protocol,
raised
$2.5
million
in
a
pre-seed
funding
round,
co-led
by
Cumberland
and
Wintermute
Ventures,
according
to
the
team. -
BBO
Exchange,
a
decentralized
exchange
for
trading
perpetual
contracts,
has
raised
a
pre-seed
funding
round
of
$2.7M
leaded
by
Hashed
and
Arrington
Capital,
alongside
participants
like
Consensys
and
CMS
Holdings.
Deals
and
Grants
-
Colosseum
has
emerged
from
the
Solana
Foundation
as
a
new,
independent
organization
that
will
run
future
Solana
Foundation
online
hackathons,
an
accelerator
program
and
venture
fund
to
invest
in
Solana
builders,
according
to
the
team:
“Founded
by
Matt
Taylor,
Clay
Robbins
and
Nate
Levine,
Colosseum
will
be
a
new
arena
for
the
next
wave
of
Solana
projects.
Hackathon
winners
who
are
accepted
into
Colosseum’s
Accelerator
Program
will
receive
$250,000
in
pre-seed
capital.
The
inaugural
event
starts
on
March
4,2024
and
interested
builders
can
sign
up
here.” -
The
foundation
supporting
decentralized
crypto
exchange
dYdX
has
requested
$30
million
in
funding
from
the
project’s
governing
decentralized
autonomous
organization
(DAO)
to
be
spent
over
the
next
three
years.” -
Nym
Technologies,
a
privacy-focused
project,
announced
the
first
recipients
of
grants
from
the
Nym
Innovation
Fund,
according
to
the
team.
They
include
“three
privacy-preserving
technologies
utilizing
the
Nym
mixnet:
StarShell
wallet
for
the
Secret
Network,
Nodies
DLB
for
privacy-enhanced
RPC
networks
and
PasteNym
for
private
text
drops.”
Data
and
Tokens
CoinDesk
20
Slid
2.9%
in
January,
Though
Bitcoin
Eked
Out
Gain
Our
colleagues
at
CoinDesk
Indices
earlier
this
month
unveiled
a
new
“CoinDesk
20”
index,
positioned
as
the
new
benchmark
for
crypto-markets
performance
–
the
blockchain
industry’s
version
of
the
Dow
Jones
Industrial
Average.
It’s
a
market-capitalization-weighted
selection
of
the
biggest
digital
assets
in
the
CoinDesk
Market
Index
(CMI).
Through
the
first
30
days
of
January,
the
CoinDesk
20
slid
5.1%,
underperforming
the
Standard
&
Poor’s
500
Index,
a
benchmark
for
the
stock
market:
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/5SM4XPN7UNA4ZI5AUZ4S6F4I5E.png)
Luckily
for
The
Protocol
readers,
we
can
track
the
leaders
and
laggards
in
the
CoinDesk
20
each
month
to
monitor
who’s
up
and
who’s
down
among
the
biggest
blockchain
projects,
at
least
in
the
eyes
of
crypto
traders.
Big
losers
in
January
included
XRP,
which
tumbled
18%;
Polygon’s
MATIC,
down
16%;
and
Filecoin’s
FIL,
off
16%.
The
big
winner
was
the
proof-of-work
blockchain
Ethereum
Classic’s
ETC,
which
gained
14%
despite
the
project
being
a
bit
of
an
afterthought
in
crypto
developer
circles.
Bitcoin
(BTC),
by
far
the
biggest
member
of
CD20,
with
an
$854
billion
market
cap
that’s
roughly
equivalent
to
all
other
blockchains
combined,
managed
to
eke
out
a
gain,
its
fifth-straight
month
in
the
green.
So
did
Ethereum’s
native
cryptocurrency,
ether
(ETH):
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/GUNFP7GDTJBPFHXFUGC6LEKXGQ.png)
