The Protocol: Which Ethereum Layer-2 Project ISN’T Competing to Land Celo? – Yahoo Finance

It’s hard to cover blockchain tech without considering the impact of crypto winter. In this week’s issue of The Protocol, we highlight layoffs hitting key firms as well, and how blockchain projects are competing for new mandates – specifically big Ethereum layer-2 developers like OP Labs, Polygon and Matter Labs vying to provide the technology for the Celo blockchain’s new network; there’s only so many customers to go around.
This week’s feature by Camomile Shumba looks at how the crypto firms Chainlink Labs and Ripple are finding comfort in the idea that the future of finance end up as a hybrid of crypto and traditional finance, rather than total disruption or winner-takes-all.
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BLOCKCHAIN BAKE-OFF! In July, when the smart-contracts blockchain Celo proposed to ditch its independent “layer-1” status in favor of becoming a layer 2 network atop Ethereum, the people behind the project may have had little inkling of just how popular they would become. Now there’s suddenly a burst of competition among veteran layer-2 teams to supply the technology for Celo’s new system. The migration initially was supposed to rely on Optimism’s OP Stack software kit, which served as the template not only for Coinbase’s new Base blockchain but also the Binance-incubated BNB Chain’s new opBNB network. Then last month, Polygon injected itself into the mix, offering up its Polygon Chain Development Kit, known as Polygon CDK, as an alternative. As of last week, there’s yet another suitor to host Celo: Matter Labs, the creators of another rollup, zkSync, as well as the ZK Stack open-source software, which can be used to create new “hyperchains” on Ethereum. “The modular and open-sourced ZK Stack is the optimal L2 stack for Celo’s transition to Ethereum,” according to the Matter Labs proposal. “We hope to trigger an honest, open discussion amongst the Celo and zkSync communities regarding the tradeoffs between the ZK Stack, the OP Stack, Polygon CDK and other options.” Coming in the depths of crypto winter, the episode offers a reminder of the intensity of the consolidation trend, with the various networks scrambling to find fresh business.
PROOF-OF-PROOF: The crypto developer OP Labs rolled out software a year ago making it easy for companies to spin up their own distributed networks atop the Ethereum blockchain. But the option quickly became so popular that it attracted the likes of the big U.S. crypto exchange Coinbase, which used the platform to build its new blockchain, Base. As these things go, success leads to greater scrutiny, and in recent months, technical experts homed in on a crucial deficiency of the setup: Networks based on the OP Labs software were missing an element known as “fault proofs” that theoretically sit at the very core of their inherent “optimistic rollup” design; the lack of the security feature was likened to driving a fast car without airbags. OP Labs officials got the message, and recently had insisted that getting fault proofs into operation was a top priority – so much so that the project even had its own name, “Cannon.” On Tuesday, OP Labs finally delivered – or at least took its first step toward addressing the concerns, launching fault proofs on a test network known as OP Goerli Testnet. Such progress might keep critics at bay, at least for a while.
COLD CRYPTO: Transaction volumes across the crypto industry have slowed dramatically, and the signs of retrenchment are ubiquitous. Chia Network, founded by BitTorrent inventor Bram Cohen, laid off 26 employees, a third of its staff, and might now consider selling off some of 2.6 million unencumbered XCH tokens ($70 million worth) to raise funds. Chainalysis, the blockchain analytics firm, cut 15% of staff, out of an employee base said to be around 900. On Wednesday, the DeFi lending project Yield Protocol announced plans to wind down by the end of the year, “because there is currently not sustainable demand for fixed-rate borrowing.”
BAD BLOOD IN BSV: Christen Ager-Hanssen, the former CEO of nChain, which is focused on the Bitcoin SV (BSV) blockchain, posted on X that he had departed, adding that he was “convinced that Dr. Craig Wright is NOT Satoshi” and is “persuaded he will lose all his legal battles.” Calvin Ayre, a patron of the BSV ecosystem, wrote on X that “Christen is a grifter… He had no real plans for nChain other than stealing the silverware.” Wright posted: “Sorry to disappoint my anti-fans. I haven’t gone anywhere.”
TO ENSHRINE OR NOT TO ENSHRINE? Ethereum co-founder Vitalik Buterin was once an advocate for the proliferation of layer-2 networks, under a “minimal-enshrinement philosophy” – essentially keeping the main blockchain network as a “simple, beautiful protocol that tried to do as little as possible.” Now, however, he writes that “enshrining certain features in the protocol might be worth considering.”
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Highlighting blockchain tech upgrades and developments.
1. Nomic, a layer-1 blockchain with a decentralized, non-custodial Bitcoin bridge, said its nBTC Interchain Upgrade "empowers users" to bring native bitcoin (BTC) to anywhere within the Cosmos ecosystem.
2. Chainlink, the blockchain data oracle provider, has launched “Data Streams,” a new product designed to reduce network latency.
3. Polybase, a state zk-rollup protocol that natively supports modular data storage and indexing, has launched Polylang, a programming language described as “TypeScript for Zero Knowledge.”
4. Babylon unveiled at Cosmoverse its “Bitcoin Staking Protocol MVP.”
5. Namada, a layer-1 protocol specializing in multi-chain privacy, said it plans an “incentivized testnet” and an airdrop of NAM tokens to ATOM holders.
Deals and grants
Matter Labs, the developer team behind Ethereum layer-2 zkSync Era, announced a competitive audit contest focused on Web3 with Code4rena, a smart-contract security marketplace, with 1.1 million USDC available to participants and a minimum of $330,000 to be distributed. The 21-day event runs Oct. 2-23.
Vechain, an enterprise-grade layer-1 public blockchain, "will host a hackathon at Harvard in partnership with Boston Consulting Group and Web3 educational mobile app, EasyA" on Oct. 7-8, according to a press release.
Fireblocks, a crypto custody tech company, has acquired tokenization firm BlockFold, a "smart-contract development and consulting firm specializing in advanced tokenization projects for financial institutions," according to an emailed announcement.
Data and tokens
The XRP token price soared after a U.S. judge denied the Securities and Exchange Commission’s motion to appeal a July court loss in its case against Ripple Labs.
In 2021, many FTX employees were set to become fabulously rich because their holdings of Serum’s SRM tokens had shot up in value, author Michael Lewis writes in his new book, “Going Infinite.” Then-FTX CEO Sam Bankman-Fried (now on trial) got worried that the employees might not stay so committed to working hard, according to Lewis. So Bankman-Fried changed the rules of the token allocations, locking up the SRM tokens so employees would have to wait longer to sell. The rest is history: After the FTX bankruptcy in November 2022, the SRM tokens plunged in digital asset markets, and are now down 99% from their all-time high price.
In the chaos that followed the collapse of Sam Bankman-Fried’s FTX crypto exchange, a still-unknown party drained affiliated wallets of as much as $600 million. Until this past week, some $26 million of ether (ETH) had sat in a single wallet tagged “FTX Exploiter” by blockchain sleuths. But in the wee hours of Saturday, Sept. 30, just days before Bankman-Fried’s criminal trial was set to commence in New York, the blockchain account suddenly sprung into action, and the funds started moving – flowing quickly through a series of wallets that appeared to have no other purpose but as intermediary accounts; routing through Railgun, a privacy-enhancing protocol; and ultimately ending up at Thorchain, a decentralized cross-chain swap protocol; or reaching a smart contract labeled, “Metamask: Swap Router.” Using blockchain explorers, we traced the flow that one batch of 2,500 ETH took out of the long-dormant wallet. Here’s that visualization:
Oct. 2-4: Cosmoverse 23, Istanbul.
Oct. 5-6: ETHMilan conference.
Oct. 12-13: Bitcoin Amsterdam conference.
Oct. 20-21: Plan B forum, Lugano, Switzerland.
Oct. 25-26: European Blockchain Convention, Barcelona.
Nov. 2-4 Cardano Summit, Dubai.
Nov. 13-19: Devconnect, Istanbul.
Nov. 28: EOS native consensus upgrade with “instant finality.”
Dec. 1-3: Africa Bitcoin Conference, Ghana.
April 2024 (estimate): Next Bitcoin halving.
May 29-31, 2024: Consensus, Austin Texas
July 25-27: Bitcoin 2024, Nashville.
Rather than attempting to disrupt banks and other traditional payments systems, these high-profile blockchain developers are looking to court their business.
Corporate social impact sprawl is increasingly a feature of today’s commercial realities, not a bug.
A global central bank test lab has designed a prototype bitcoin monitoring system aimed at giving authorities a clearer picture on how, when and where the cryptocurrency is used. The Bank for International Settlements (BIS) project, codenamed Atlas, began at the Dutch central bank more than five years ago, but its potential value has been underscored over the last 18 months by a series of chaotic collapses across the crypto industry. Atlas created a "proof of concept" platform that sucks data from both publicly available "on-chain" crypto ledgers as well as harder to source "off-chain" data reported by only some exchanges and users.
Broader crypto markets dropped 0.7% in the past 24 hours, the CoinDesk Market Index (CMI) shows.
The Securities and Exchange Commission is making it tougher for investment advisors to choose custodians for digital assets. There is already evidence that the move could change what firms would benefit from rising institutional interest in cryptocurrencies. Institutional crypto platform Anchorage Digital and registered investment advisor Eaglebrook Advisors said on Wednesday that they had struck a partnership allowing Eaglebrook’s clients to hold assets in custody at Anchorage.
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A federal judge has rejected the U.S. Securities and Exchange Commission’s bid to appeal its ground-shaking loss against Ripple, the crypto company associated with the XRP token. District Judge Analisa Torres said in a brief ruling Tuesday that the SEC had failed to meet its burden under the law to show that there were controlling questions of law or that there are substantial grounds for differences of opinion. SEC served another L in the Ripple case.
Belgium's security service said it was working to "detect and fight against possible spying and/or interference activities carried out by Chinese entities including Alibaba".
SentinelOne (S) is improving its footprint among federal agencies through the availability of the FedRAMP-authorized Singularity DataLake solution.
Arvind Krishna maintains that AI will create more jobs than it kills, warning not to “mistake productivity with job displacement.”
Satya Nadella said during Google's antitrust trial that Microsoft was willing to pay Apple billions per year to make Bing the default search engine on Apple devices.
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Ripple’s Singapore arm has secured a license as a major payments institution from the Monetary Authority of Singapore, the company said, allowing it to keep providing digital payment token services in the fast-growing region.
Google’s Gmail said that it will now require bulk senders of more than 5,000 messages a day to begin authenticating their emails in 2024 to stay under a reported spam threshold.
NIO, XPeng (XPEV) and Li Auto (LI) report Q3 delivery updates. NIO, XPeng and Li witness a year-over-year rise of 75.4%, 35.3% and 296.3%, respectively.
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The number of affected vehicles makes the automaker among the most exposed in a push by regulators to recall 52 million air-bag inflators designed by ARC.
President Biden is providing $9 billion in forgiveness for 125,000 borrowers as loan payments resume.
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The Dow Jones Industrial Average dropped Thursday after initial unemployment claims. Rivian stock crashed 19% on a debt offering.

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