The Protocol: How to Engineer Harder Money, or Just Make Your Own

Bitcoin’s supply growth is set to automatically drop by 50% when next week’s “halving” arrives, Ethereum is pondering a cut in ETH issuance, and meme coin issuers are just no-holds-barred spinning up new ones. What’s clear is that blockchain tech enables all sorts of monetary strategies.

The new meme coin generator called “Pump” is used to spin up new tokens for yuks and trading. It’s getting lots of use.
Pioneering restaking protocol EigenLayer launches on Ethereum mainnet.
Top picks from the past week’s

Protocol Village

column of blockchain project updates: Saga, Open Campus, EOS, Farmsent, Ordz Games
>$250 million of blockchain project fundraisings.

Network News

Side-by-side charts showing impact of the proposal to adopt a new Ethereum issuance curve. (Ansgar Dietrichs and Caspar Schwarz-Schilling/Ethereum Magicians Forum)

SOUNDER MONEY? Earlier this year, a pair of Ethereum Foundation (EF) researchers put forth a proposal to reduce the pace of new issuance of ether (ETH) tokens. It was part of a concerted plan to reduce incentives for new stakers – the investors who lock cryptocurrency into the blockchain as a way of helping to secure the network. The freshly minted ETH is a crucial component of the rewards these investors hope to receive, in the form of staking yields. As the researchers’ thinking went, there’s already enough stakers to provide effective security for the blockchain, and in fact any additional increases in the level of participation could enable the unwanted dominance of fast-growing third-party staking platforms like Lido. A side benefit of the proposed change would be to harden ether as a form of money, since the total supply of the cryptocurrency wouldn’t grow as quickly – effectively tapering ether’s inflation rate. The current issuance rate “dilutes ETH holders beyond what is necessary for security,” the researchers wrote. They estimated that the proposal would reduce ETH staking yields by nearly a third. Now, though, some members of the community are pushing back, as reported by CoinDesk’s Margaux Nijkerk. There are questions over whether there’s really a need to change the tokenomics of ether and, in the extreme, whether the Ethereum Foundation plays an outsize role in influencing code upgrades on the decentralized network. Viktor Bunin, a protocol specialist at Coinbase Cloud, wrote on the social-media platform X, “If it’s not broke don’t fix it.”

MEME COIN GENERATOR GO BRRR… In last week’s The Protocol, we made the point that blockchain teams have, generally speaking, succeeded in coopting the über-power of printing one’s own money, long reserved for governments and banks. An integral element of the process are the various “launchpads” that teams use to spin up their new tokens. In an article this week, CoinDesk’s Shaurya Malwa highlighted a project called Pump, which in the short period since going live last month has already earned $5 million in fees – partly due to the meme coin frenzy on the Solana blockchain. “Selling shovels in a gold rush was one of the surest ways to make profits, and it’s no different today in the digital asset world,” Malwa wrote. “While there are likely tens of thousands of tokens that have been released on Pump since its March launch, only a few have reached market capitalizations of more than $10 million. The largest tokens so far are Shark Cat (SC), a cat wearing a shark cap, and Hobbes, named after the cat of popular Solana trader Ansem, with valuations of $100 million and $35 million, respectively,” according to Malwa. Even so, Pump is on track to reap about $66 million of annual revenue, based on current usage and growth, DefiLlama data shows. Whether this token-generation business is legal, or approved by securities regulators, may depend on the circumstances, or the terms of use, or on the jurisdiction. But in the meantime investment bankers who used to lead elaborate offerings in exchange for Wall-Street-size fees (and Lambo-scale bonuses) are basically being replaced by apps.

EU vs. MEV. The European Union markets regulator flagged maximum extractable value (MEV), whereby blockchain operators reorder user transactions to maximize their own profits, as a potential form of market abuse, a stance that is worrying some industry watchers who say the case is not clear-cut, CoinDesk’s Sandali Handagama reports. “MEV by itself should not at all be considered as a market abuse and should not have a negative connotation,” Anja Blaj, a policy expert at the European Crypto Initiative (EUCI), told Handagama in an interview over WhatsApp.

BITCOIN HALVING FACTOID: On average, it has taken about 57 days after a Bitcoin halving for the network hashrate to recover to its pre-halving hashrate. (This is for the three halvings that have taken place since Satoshi Nakamoto launched the original blockchain in 2009. Bitcoin’s fourth halving is estimated to arrive next week, coincidentally and yet characteristically on the very meme-y date of April 20.) (Go here for a roundup of CoinDesk’s coverage on the upcoming halving.)

EigenLayer, the restaking protocol atop Ethereum that has shot to the top of the DeFi rankings with more than $12 billion of user deposits, launched on mainnet.

Christie’s auction house, famous for its $69 million sale in 2021 for the NFT artist Beeple’s “Everydays” collage, is now following rival Sotheby’s into the market for Ordinals inscriptions, colloquially known as Bitcoin NFTs.

Excerpt from Christie’s press release about the Ordinals inscriptions auction planned for April 9-16. (Christie’s)

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

1. Saga, a layer-1 blockchain protocol to launch layer 1s “for infinite horizontal scalability,” launched its mainnet on Tuesday, according to the team: “Utilizing an innovative blend of shared security, precise validator orchestration tools and a seamless automated deployment pipeline, Saga simplifies the process for devs to launch their own dedicated blockchains, termed Chainlets.

Schematic from Saga’s developer documentation. (Saga)

2. (PROTOCOL VILLAGE EXCLUSIVE) Open Campus, a decentralized platform focused on education, is launching EDU Chain, “an innovative layer-3 platform dedicated to evolving the world of education via blockchain technology,” according to the team: “EDU Chain is an L3 Rollup purpose-built to tackle challenges like access to quality education, unclear credentialing systems, and insufficient recognition and compensation for educators. EDU Chain is pioneering the ‘learn-to-earn’ model on blockchain, leveraging Open Campus’s vast network.”

Schematic of Open Campus Edu Chain’s “universe,” from the project’s documentation (Open Campus)

3. EOS presented “exSat,” a Bitcoin indexing layer on EOS, according to the team. “By utilizing EOS RAM to store Bitcoin state, that will be using a hybrid mechanism of PoW, PoS and DPoS to make sure it’ll stay synchronized and to enable crazy logic to run on Bitcoin.” According to a blog post: “This innovation enables decentralized state data indexing for Bitcoin ordinals and other ecosystem assets, utilizing EOS RAM for high-speed access and low-latency storage. By supporting full Ethereum Virtual Machine (EVM) compatibility, exSat offers a platform where developers can create complex smart contracts with lower gas fees, thereby significantly enhancing the scalability and utility of the Bitcoin ecosystem.”

The EOS Network Foundation’s Yves La Rose presents exSat at the BTC L2 Conference in Hong Kong (EOS)

Farmsent, a Web3 marketplace for farmers, has joined peaq, a layer-1 blockchain for DePIN and Machine RWAs, to decentralize global food trade, according to the team: “Farmsent links farmers directly with consumer-facing businesses around the world, skipping the centralized middlemen. The platform taps a DePIN of data-collecting devices, such as soil quality sensors, to track the quality and the provenance of the products. This results in a more transparent supply chain and cheaper products for the consumers due to the absence of middlemen. The project has already onboarded more than 160K farmers from Indonesia and Colombia.”

Visualization from Farmsent white paper of project’s potential roles in food distribution (Farmsent)

Blockchain-based gaming platform Ordz Games has unveiled its handheld gaming device, BitBoy One, at Hong Kong Web3 Gaming Expo, followed by a launch event at Paris Blockchain Week, according to a press release. “Inspired by the first-generation Nintendo Game Boy from 1989, the BitBoy, a portmanteau of ‘Bitcoin’ and ‘Game Boy,’ rocks a sleek translucent orange design, aims to bring Web3 gaming to the new age of DePIN, offering a unique blend of nostalgia, innovation and community. Players can earn Bitcoin through retro-style play-to-earn games, diving back into their childhoods.”

The new BitBoy One device from Ordz Games (Ordz Games)

Money Center

Fundraisings

Monad Labs, the development firm behind layer-1 blockchain Monad, has closed a $225 million Series A led by Paradigm with additional funding by investors including Electric Capital and Greenoaks.
Ellipsis Labs, the core developers behind the on-chain Phoenix exchange, announced $20 million in Series A funding, according to the team: “Led by Paradigm with participation from Electric Capital, the funding will accelerate Ellipsis Labs’ efforts to build DeFi products that can rival the performance of traditional finance.
LightLink, an Ethereum layer-2 blockchain that lets dApps and enterprises offer users

gasless transactions

, announced the close of a $6.2 million extended seed round with participation from MH Ventures and NxGen.

Deals and grants

Conor Daly with Polkadot-sponsored car (Polkadot)

The Polkadot community has decided through an on-chain community vote to select IndyCar racer Conor Daly as Polkadot’s Brand Ambassador for the Indianapolis 500, marking the first time a major athlete’s sponsorship has been chosen by a vote using blockchain technology.
Mantle, an Ethereum layer-2 network, has launched its

Mantle Scouts Program

, “to kickstart the growth of innovative projects on Mantle,” according to the team.
The DFINITY Foundation, a Swiss not-for-profit research and development organization and major contributor to the Internet Computer blockchain, announced the launch of the Olympus Acceleration Platform, describing it as “Web3’s first decentralized, on-chain global acceleration platform.

Data and Tokens

Risk vs. Reward of Attacking Ethereum

One way of thinking about the cost of attacking the Ethereum network is whether it would be justified by the rewards. And right now, from a defensive standpoint, the bulwark looks pretty formidable. As highlighted in a recent report by Coinbase Institutional analysts David Han and David Duong, Ethereum “currently holds a tremendous economic foundation for securing its network from a hostile majority attack.” The evaluation comes from comparing the total amount of ETH staked on Ethereum to the network’s “total value locked” (TVL), roughly representing DeFi deposits that are being protected.