Welcome to our May issue,
…or should we rather say, Mayhem issue? May has yet been another crazy few days in cryptoland - where to start?
Buckle up, this intro is a bit longer - let’s tackle some of the major events one by one in chronological order:
Ledger Connect
All hell broke loose around May 16th when Ledger announced a new service, Ledger Recover.
Ledger Recover lets users back up their devices’ private keys. The keys are divided into three encrypted parts and stored with three separate guardians, including Ledger. This has sparked some eyebrows, with users wondering if these keys could always have left their Ledger devices or if this feat is always just one firmware update away, and what this might mean for privacy. Behind all this? Ledger, already $575M strong, seeks more users and to make private key management a piece of cake for everyone, esp. people just starting out with crypto (#massadoption).
The news were exceptionally bad received by the community, especially crypto OGs and long time ledger users. Folks were worried that this introduced another attack vector which puts their private keys at risk of being compromised - by malicious actors or governments. This is especially worrisome since ledger is a closed-source, central entity.
After a heavy backlash, several Twitter Spaces, interviews, and public discussions, everything cooled down a bit:
Ledger acknowledged the bad comms & PR around their new feature and stressed the fact that Ledger Recover is an optional subscription for users who fancy a backup for their Secret Recovery Phrase. The update is also not mandatory and not not automatically enabled by any firmware updates. Interestingly enough, Ledger took the communities’ feedback by heart and plans to gradually open-source parts of their code/tech stack. They're kicking off with the whitepaper of the 'Recover' protocol, soon followed by unveiling the code of Recover's firmware. They also plan to gradually reveal more of their operating system.
While this is all your choice, for the time being, we’d recommend to not enable Ledger Recover and advise you to safely store your recovery phrase somewhere safe, best case: offline at a secured location. The service is for novel users after all and if you’ve got a ledger hardware wallet going so far, you should have a proper key management in place already - great job, keep it up, self-custody for the win!
China Whitepaper
Oh no, not another ban of crypto! Well, that’s what I would have probably thought when reading this. But, relax, not as bad as it sounds (hopefully).
China gave crypto the cold shoulder in 2017, freezing out exchanges and icing mining by 2021. But now, Beijing seems to be thawing, hinting at a crypto comeback with a shiny new Web3 Innovation and Development White Paper. This techno-tome predicts a Web3 wave on the horizon and plans to pour $14 million yearly into the bubbling pot of domestic Web3, Metaverse, and NFT until 2025. Meanwhile, Hong Kong is welcoming retail investors to the crypto party since June 1. - quite the turnaround (*take note, Gary, you can do this too*).
Binance Crackdown
Well, this isn’t quite May news, but oh well - it came in just in time for this newsletter (darn it!).
The SEC has chucked a legal thunderbolt at Binance, the crypto titan, and its boss, Changpeng Zhao, better know as CZ. Apparently, Binance has been playing fast and loose with U.S. laws, most important allegation is the sale of unregistered securities. Unfazed, Binance vowed to joust with the allegations, thumbing its nose at the SEC's tough-guy tactics. Read their official response here.
This lawsuit is like another spicy episode in the reality TV show of crypto regulation. If the SEC wins, it could shape the rules of the game for the digital assets playground. So, all eyes on this legal tussle!
The issue is far from over and will continue to unfold in the weeks (prop. months) to come, but if you need to catch up quickly, this Twitter thread summarizes everything that happened so far.
Wow, you made it through this massive intro, thanks for sticking around - since you’ve come this far, might as well finish the whole thing, right? Well then, let’s hop over to some company and network updates.
Let’s meet up
We’ve got tickets to some exciting conferences / events under the hood for the second half of this year:
Hacker House Berlin, Aug. 31st - Sept. 3rd (register)
Breakpoint Amsterdam, Oct. 30th - Nov. rd. (register)
Staking Summit Istanbul, Nov. 10th & 11th (register)
If you’re around and want to meet up, let us now - we’d love to connect with you IRL. Like last year, we’re stoked to be able to contribute to the Staking Summit as an ecosystem sponsor. While the event was a bit overshadowed by the FTX debacle last time, it was - and will be again - an invaluable chance to get together, exchange ideas, talk shop, share knowledge, learn, and most of al,l have fun. Its just great to meet all the different, fascinating personalities of the ever-growing Proof-of-Stake scene ... in real life, which, let’s be honest, just hits different than a zoom call.
Let’s work together
We scouring the job market for a Head of Finance and a Senior Systems Engineer. This is not a drill - we need a number-crunching maestro and a tech whisperer, stat! So, if you're ready to join a dynamic team and you have the financial prowess of a Wall Street wolf or the tech know-how of a Silicon Valley guru, hit us up.
Ethereum
Final(ity) Boss. On May 11th, the Beaconchain hit a small bump, struggling with finality for 3 epochs. No worries for end-users though, it was mainly an issue for stakers and developers. The next day, the hiccup returned for 8 epochs. But, the Beaconchain bounced back, back to finalizing.
The silver lining? Prysm and Teku came to the rescue with client updates and put everything back in order.
The only constant is change. Buckle up! Lido V2 upgrade is here and it's a real game changer. Here's why:
Withdrawals: Now, our Lido on Ethereum users can wave goodbye to their stETH at a 1:1 ratio (but don’t ahve to), creating an easy-peasy on/off ramp to the Ethereum world of staking.
Staking Router: With a shiny new design, it's easier to develop on-ramps for everybody - from lone wolf stakers to big DAOs and DVT clusters. Expect a true mosaic of validators!
Other exciting tweaks include a major revamp of the Oracle smart contract and off-chain daemon software to support withdrawals and bring in more Node Operators.
The star of the show? In-protocol ETH withdrawals! Thanks to the Ethereum Shapella Upgrade, unstaking ETH straight from Lido just became as simple as a walk in the park. This smooths out the Lido on Ethereum experience and boosts efficiency of Lido’s staked ETH in the Ethereum DeFi world.
The upgrade went live on the Ethereum mainnet on May 15th after a successful on-chain vote.
Solana
Validators unite(d). Solana's version 1.14 has stepped onto the scene! This upgrade, suggested by the tech wizards at Solana Labs, is now embraced by a whopping 97.4% of stake - hence the upgrade was adopted by the majority of validators, which run the software.
Why the buzz? Well, v1.14 is a real gift box, packed with new features that'll gradually roll out on Solana.
Key features include:
Get Estimated Fees RPC: This tool helps developers peek into the crystal ball of transaction fees.
Staking Program Tweaks: Squaring off against delinquent (= ’offline’/idle) stakes, improving delegation, and boosting the caching game.
Compact Vote State Update Instruction: Makes voting (= validating) as easy as pie.
Turbine Overhaul: Supercharged the block propagation protocol for a smoother ride.
This version is a delightful appetizer for more exciting updates in the pipeline. Keep an eye out.
Let’s chat(GPT). Solana Labs has developed an open-source prototype for a ChatGPT plugin, allowing users to engage with the Solana network directly through ChatGPT. Once ChatGPT plugins become accessible, users can view wallet balances, transfer tokens, and buy NFTs seamlessly. Blockchains and AI - yes, that’s actually a thing now and only expected to grow bigger over time, money’s on the line already.
Tendermint: Cosmos, Stride & Celestia
It’s happening. The LSM (Liquid Staking Module) is coming to the hub after Proposal #790 successfully passed. LSM will be enabled in the wake of an upgrade to the Hub, which is expected to happen in the ‘near future’.
But, uhm, what does LSM actually mean?
Well, get ready to directly liquid-stake your staked Atom! Sounds like magic, right? To dodge any liquid staking mischief, LSM's got governance-controlled safety nets in place. First off, there’s a cap on the total ATOM that can be liquid-staked - 25% of all staked ATOM. This isn't set in stone though, it can be tweaked via governance.
And for an extra layer of safety, validators looking for delegations from liquid staking providers need to self-bond a bunch of ATOM themselves.
With LSM, the Cosmos Hub is getting in shape for the thrilling future of the “Atom Economic Zone”. It's all about pooling resources and sharing the wealth, isn’t it?
Hello, world…from Neutron - the first consumer chain using RS (aka. Replicated Security) from the Hub (btw., Stride is looking to become the second chain to do so).
But what is RS? Glad you asked, anon - here we go:
Picture this: the Cosmos Hub is like a super-secure bank vault for new projects starting as Hub-secured chains.
Now, these "consumer chains" need this security - and they’re happy to pay for it. Like renting a safety deposit box, they share some of their revenue with the Cosmos Hub.The safety behind the services and infrastructure from Hub validators, like Staking Facilities :) It's a win-win, right?
So, for our friend Neutron, Cosmos Hub gets a sweet deal:
A quarter of all transaction fees
25% of the MEV revenue (that's like getting a cut of the lottery)
A cool 7% of the NTRN supply from the get-go
This not only fattens up Cosmos Hub's coffers but also cements ATOM's status as the big boss, the reserve currency of the interchain. The more it interacts, the stronger it gets.
Substrate: Polkadot, Kusama & Hydra
The more. The merrier. Ever heard of Referendum 118? It's like a popular reality TV show where validators vie for a spot in the active set. The latest twist? The idea to up the number of star spots to 400, and it's losing with ~70% voting against it.
Polka-dot your calendars. PolkadotDecoded is back in town! On June 28-29, the DotSama ecosystem is hitting Copenhagen for their grandest event yet. But if Denmark's a stretch for you, no worries - they'll beam all the action straight to your screen. So, grab a Danish pastry, put on some comfy socks, and join for this flagship digital get-together.
Network quick takes
Open. Source. Elusiv leading the way (again). Get ready to make your applications a privacy fortress! Elusiv is ecstatic to release their open-source, privacy-centric SDK on Solana, bringing privacy tech to developers' fingertips. This not-so-little tool will pave the way for mass adoption by simplifying the integration of privacy features, making transactions as secret as a ‘whisper’ in a crowded room. The journey has just begun, with private sending functions being the star of this first release. As Elusiv's WebApp expands, so will the SDK's functionality. To make privacy a Solana staple, Elusiv is stirring the pot with workshops, hackathons, bounties, and more! So, why not drop by their new developers page and join in the fun?
Decentralize. The Gelato Network is revving up with plans to bring in top-tier node operators, enhancing its power and decentralization. These operators will stake GEL tokens, thereby earning a piece of the network's revenue, but they'll be held accountable to maintain high standards. Future plans also include enabling GEL holders to delegate their stake, opening up revenue earning opportunities. A vote on this new node operator proposal is imminent, and with approval, the new system could be operational by June/July 2023. It's an exciting phase for the Gelato Network - learn more here.
Integrations. May has been a heck of a month for Wormhole. Sei is launching in June, and tBTC has successfully proposed to integrate with Wormhole. This could really shake things up for DeFi. Connect is making waves too, with fresh integrations from Scallop on Sui, Solana's Francium, Turbos Finance, Lync (a GameFi provider), and Morphis, a nifty non-custodial Sui wallet. Plus, Unique VC is now integrating Wormhole's tech for a transparent governance layer. And lastly, Wormhole is adding some thrill to the Encode summer hackathon by hosting workshops and offering a bounty for a unique cross-chain integration. Also, Bonfida’s SNS has teamed up with Wormhole to make your .sol domains cross-chain friendly! Don't blink, or you'll miss something — for more, check out this massive thread.
It’s live. Sui’s mainnet saw the light of day on May 3rd after months (if not years) of R&D work, numerous testnets, and dev as well as validator onboarding. Congrats to this monumental milestone! If you’re looking to stake your SUI, we’ve got you covered - learn how to stake in this easy to follow, step-by-step guide.
The team behind Ultimate is building a bank (read)
The European Union has just taken the crypto bull by the horns! The EU's beefed-up crypto rules, aptly named Markets in Crypto Assets (MiCA), have gained the final nod from member states. As this pioneering regulation package rolls out in phases from July 2024, the EU's sure to be the 'crypto sheriff' in the global digital currency wild west (read)
Worldcoin, a crypto project by OpenAI's CEO Sam Altman, just nabbed a $115M funding! It’s all about global identity using an 'orb' to scan eyes, proving you're a unique human, and rewarding you with Worldcoins. It's in beta, has 2 million people onboarded, and is prepping to launch a blockchain protocol. Watch out world, here comes Worldcoin (more)