The Protocol: Using the Money Printer

One
thing
blockchain
teams
succeeded
in
long
ago:
coopting
the
money
printer,
from
the
initial
coin
offerings,
or
ICOs,
in
the
late
2010s,
to
the
current-vintage
“token
generation
events,”
or
TGEs.
In
the
old
days,
stocks
were
sold
by
investment
banks
to
clients
lucky
enough
to
get
an
allocation.
Nowadays,
hot
projects
just
airdrop
the
newly
manufactured
tokens
to
users
as
rewards,
and
they
start
to
trade.
This
week
saw
airdrops
from
the
cross-chain
bridge
team

Wormhole
and
the
“synthetic
dollar”
project

Ethena,
whose
tokens
suddenly
have
a
combined
circulating
market
capitalization
of
more
than
$3
billion.

This
article
is
featured
in
the
latest
issue
of


The
Protocol,
our
weekly
newsletter
exploring
the
tech
behind
crypto,
one
block
at
a
time.


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Protocol

podcast.

We’re
also
covering:

SYNTHESIZING
DOLLARS:
Back
in
February,
The
Protocol
wrote
about
the

perceived
risks
around
the
crypto
project
Ethena,
with
its
new
USDe
token
–
termed
a
“synthetic
dollar”
with

eye-catching
yields
(currently
35%)
from
funding
perpetual
futures
positions
on
derivatives
exchanges.
There
are
plenty
of
believers
in
the
project,
apparently,
or
at
least
plenty
of
speculators.
On
Tuesday,
Ethena
airdropped
some
750
million
ENA
tokens,
or
roughly
5%
of
the
overall
supply
–
for
a
first-day
circulating

market
capitalization
of
about
$1.2
billion.
(The
fully
diluted
valuation,
based
on
the
overall
supply,
works
out
to
about
$12
billion.)
The
success
of
the
airdrop
might
reflect
the
current
appetite
for
risk-taking
among
crypto
traders,
and
the
unbowed
willingness
of
crypto
structured-finance
alchemists
to
test
the
waters
for
products
with
ever-increasing
complexity.
Earlier
this
week,
a
separate
project,
the
derivatives
protocol
Cega,
unveiled
“Gold
Rush,
a
basket
options
strategy
involving
the
Ethereum
blockchain’s
ether

(ETH)
token
and
Tether’s
gold-backed
XAUT
tokens
as
underlying
assets,
alongside
a
safety
component
that
protects
users’
capital
from
a
30%
drop
in
the
assets’
prices,”
as

reported
by
CoinDesk’s
Omkar
Godbole.
“The
product
offers
an
annualized
percentage
yield
of
up
to
83%
to
investors
who
stake
ETH,
Lido’s
staked
ether
(stETH),
wrapped
bitcoin
(wBTC),
or
stablecoin
USDC
in
the
option
strategy
vault,
Cega
said.
The
yield
is
paid
out
in
the
form
of
the
coins
staked,
so
ETH
stakers
receive
ETH
in
yield,
providing
an
asymmetric
upside
in
a
bullish
market.”
The
hope,
of
course,
is
to
avoid
any
asymmetric
downside.

BLOBS,
BLOBS,
BLOBS.
The
Ethereum
blockchain
just
a
couple
weeks
ago
completed
its
landmark

Dencun
upgrade,
including
the
highly
anticipated
EIP-4844
proposal
that
created
a
dedicated
space
for
storing
data
–
known
as
“blobs,”
under
a
plan
to
reduce
fees
while
also
relieving
congestion.
But
it
didn’t
take
long
for
a
new
project
to
come
along
and
jam
up
the
so-called
blob
space,
sending
fees
soaring
and
providing
the
nascent
blob
market
with
its
first
big
stress
test.
As

reported
last
week
by
our
Margaux
Nijkerk,
Ethereum
gas
fees
for
blobs
spiked
“after
a
project
called

Ethscriptions
created
a
new
way
of
inscribing
data,
or
minting
inscriptions,
on
the
data
blobs,
called
‘blobscriptions.'”
In
a

blog
post
on
Thursday,
Ethereum
co-founder
Vitalik
Buterin
acknowledged
that
the
Blobscriptions
episode
had
pushed
the
new
blob-fee
market
into
“price
discovery
mode,”
but
he
added
that
the
data
fees
still
remained
far
cheaper
than
they
would
have
been
under
the
old
system
of
parking
data
as
“calldata”
in
a
regular
Ethereum
transaction.

Speaking
of
Buterin,
he
also

riffed
on
meme
coins.
“One
answer
to
this
conundrum
is
to
shake
our
heads
and
virtue-signal
about
how
much
we
are
utterly
abhorred
by
and
stand
against
this
stupidity.
And
to
some
extent,
this
is
the
correct
thing
to
do,”
he
wrote.
“But
at
the
same
time,
we
can
also
ask
another
question:
If
people
value
having
fun,
and
financialized
games
seem
to
at
least
sometimes
provide
that,
then
could
there
be
a
more
positive-sum
version
of
this
whole
concept?”
Spoiler
alert:
His
answer
was
not
yes/no.
(Fwiw
go

here
for
our
own
riff
last
week
on
the
meme
coin
frenzy
on
Coinbase’s
Ethereum
layer-2
chain,
Base.)

Top
picks
of
the
past
week
from


our
Protocol
Village

column,
highlighting
key
blockchain
tech
upgrades
and
news.

Schematic
showing
how
Celestia’s
Blobstream
works.
(Celestia)

1.
Celestia,
a
blockchain
data-availability
project,
said
its

Blobstream
product
–
for
relaying
commitments
of
Celestia’s
data
root
using
an
on-chain
light
client,
has
deployed
to
Arbitrum
One.
According
to
the
team:
“Developers
can
soon
deploy
Orbits
with
Celestia
underneath
on
Arbitrum
One
and
Base,
the
first
modular
DA
integration
with
working
Nitro
fraud
proofs.”

2.
Degen,
a
community
token
in
the
Farcaster
ecosystem,
and
Syndicate,
a
Web3
infrastructure
provider,
launched

Degen
Chain,
an
ultra-low-cost
L3
for
the
$DEGEN
community
built
with
Arbitrum
Orbit,
Base
for
settlement,
and
AnyTrust
for
data
availability.
According
to
the
team:
“The
chain’s
native
gas
token
is
$DEGEN,
making
it
one
of
the
first
community
tokens
with
its
own
L3.”

3.
Picasso
Network,
a
Cosmos-rooted
interoperability
network,
announced
an
integration
between
the
IBC
(Inter-Blockchain
Communication
Protocol)
and
Ethereum,
“enabling

seamless
asset
and
data
transfers
between
Ethereum
and
Cosmos”
for
the
first
time,
according
to
the
team:
“Picasso
selected
Osmosis,
the
DeFi
Hub,
to
serve
as
the
primary
destination
for
Ethereum
assets
and
liquidity
within
the
Cosmos.
This
integration
is
a
step
forward
in
bringing
‘IBC
everywhere,’
and
serves
to
connect
some
of
the
deepest
liquidity
reserves
and
most
promising
projects
in
the
Ethereum
and
Cosmos
ecosystems.”
The
team
plans
a
Solana-IBC
connection
later
this
month.

4.
Avail,
a
modular
blockchain
solution
designed
to
unify
Web3
and
optimize
data
availability
(DA),
has

partnered
with
dWallet
Network,
“a
pioneering
non-collusive,
decentralized
multi-chain
layer,
to
bring
programmable
native
Bitcoin
to
rollups
in
the
Avail
ecosystem,”
according
to
the
team:
“Leveraging
the
newly
unveiled
dWallet
primitive,
smart
contracts
using
rollups
built
on
Avail
DA
will
be
able
to
programmatically
manage
native
BTC
for
the
first
time
while
preserving
user
ownership.”

5.
PROTOCOL
VILLAGE
EXCLUSIVE:
The


Virtual
Society
Foundation
(VSF)
is
introducing
the

Somnia
Project,
consisting
of
an
L1
and
omnichain
protocols
tailored
for
the
metaverse,
“aiming
to
unite
disparate
virtual
realms
into
a
cohesive
society
capable
of
onboarding
millions
of
users,”
according
to
the
team.
“Developed
in
collaboration
with
Improbable,
Somnia’s
blockchain
boasts
transaction
speeds
>100K
TPS,
with
sub-second
finality,
and
affordability,
addressing
the
fragmentation
plaguing
the
metaverse
landscape
and
ensuring
equitable
value
distribution
among
creators.
Details
of
the
project
were
released
Wednesday
along
with
a

litepaper.
The
VSF,

unveiled
last
week,
was
initiated
by
Improbable,
a
British
metaverse-focused
startup
that

raised
$150
million
in
2022
from
investors
including
a16z
and
SoftBank.

IoTeX
Team
(IoTeX)

We
were
writing
about
various
meme
coin
trading
frenzies
for
all
of
March
–
first
on

Solana,
and
then
on

Base.
Or
maybe
it
was
really
just
one
big
meme
coin
trading
frenzy?
Whatever
the
case,
it
would
be
pretty
hard
for
us
to
feign
surprise
at
this
point
that
the
doggy-themed
SHIB
and
DOGE
ended
up
as
the
month’s
two
top-performing
tokens
of
the
month
in
the
benchmark

CoinDesk
20
index.
Ethereum’s
ETH
was
a
bit
more
muted,
gaining
just
3.9%
as
the
blockchain’s
big

Dencun
upgrade
went
as
smoothly
as
possibly
could
have
been
expected.
Solana’s
SOL
was
a
big
winner,
gaining
43%:

Bitcoin,
the
oldest
and
largest
cryptocurrency,
rose
14%,
extending
its
winning
streak
to
seven
straight
months
and
handily
beating
the
Standard
&
Poor’s
500
Index
of
U.S.
stocks
as
well
as
the
gold
price:

April
8-12:

Paris
Blockchain
Week.

April
18-19:

Token2049,
Dubai.

April
19
(estimate):
Next

Bitcoin
halving.

May
9-10:

Bitcoin
Asia,
Hong
Kong.

May
29-31:

Consensus,
Austin
Texas.

June
11-13:

Apex,
the
XRP
Ledger
Developer
Summit,
Amsterdam.

July
8-11:

EthCC,
Brussels.

July
25-27:

Bitcoin
2024,
Nashville.

Aug.
19-21:

Web3
Summit,
Berlin.

Sept.
19-21:

Solana
Breakpoint,
Singapore.

Sept.
1-7:

Korea
Blockchain
Week,
Seoul.

Sept.
30-Oct.
2:

Messari
Mainnet,
New
York.

Oct.
9-11:

Permissionless,
Salt
Lake
City.

Oct.
21-22:

Cosmoverse,
Dubai.

Oct.
23-24:

Cardano
Summit,
Dubai.

Oct.
30-31:

Chainlink
SmartCon,
Hong
Kong

Nov
12-14:

Devcon
7,
Bangkok.

Nov.
20-21:

North
American
Blockchain
Summit,
Dallas.

Feb.
19-20,
2025:

ConsensusHK,
Hong
Kong

Dec.
5-6:

Emergence,
Prague