First Digital USD

Jack Kubinec

Concerns about increased centralization on the Ethereum network have intensified, following Blocknative&#8217;s decision to discontinue its MEV-boost relay on Tuesday.



Relayers play a pivotal role in settling transactions on Ethereum. They ensure timely and efficient processing, bridging the gap between users and the blockchain by batching and broadcasting transactions. With the exit of Blocknative, the relayer landscape is becoming increasingly concentrated. At time of writing, only four relayers remain active on the network.



Following Ethereum&#8217;s transition to proof-of-stake, the roles of block proposing – the submission of transaction bundles to validators – and block building – organizing these transactions in a specific order – became distinct processes. MEV-boost software was developed to facilitate an efficient market between these proposers and builders. Following the Merge, a group of well-resourced Ethereum block builders, formerly including Blocknative, began running their own relays.



Today, nearly all Ethereum transactions use MEV-boost relays. 93% of Ethereum blocks created in the past 14 days made use of MEV-boost, according to data compiled on <a href="https://mevboost.pics/">mevboost.pics</a>. At the time that data was compiled, five entities were responsible for relaying 98% of the MEV-boosted transactions, per <a href="https://www.relayscan.io/overview?t=7d">relayscan.io</a>.



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">98% of ETH blocks are proposed by putting *complete* trust in 5 entities -bloXroute -Flashbots -Ultrasound (<a href="https://twitter.com/drakefjustin?ref_src=twsrc%5Etfw">@drakefjustin</a> et al) -Agnostic (<a href="https://twitter.com/koeppelmann?ref_src=twsrc%5Etfw">@koeppelmann</a> et al) &#8211; B̶l̶o̶c̶k̶n̶a̶t̶i̶v̶e̶ now it&#39;s 4. why? because proposals to pay Relays small % remained &quot;in the air&quot;😬💀 1/3 <a href="https://t.co/0ynLS3hunB">https://t.co/0ynLS3hunB</a> <a href="https://t.co/w47XPZTU8e">pic.twitter.com/w47XPZTU8e</a>&mdash; Uri // klarman.eth 🛡 (@uriklarman) <a href="https://twitter.com/uriklarman/status/1706716871024615723?ref_src=twsrc%5Etfw">September 26, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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According to Blocknative, it <a href="https://x.com/blocknative/status/1706685103286485364?s=46">dropped</a> its MEV-boost relay because continuing was no longer economically viable. The four remaining relayers collect no fees for their services, making this core piece of Ethereum infrastructure unprofitable for its operators. A recent Flashbots <a href="https://collective.flashbots.net/t/pbs-guild-proposal-v3-wip/2223">proposal</a> aims to start a “PBS Guild” which would solicit Ethereum community donations in part to reward relayers. Uri Klarman, CEO of relaying entity Bloxroute, believes that a relayer fee mechanism should be activated, however. He suggests that block validators anticipate this move.



“I heard from multiple validators, like, ‘Yeah, we don’t understand how you [haven’t charged] us until this point,’” Klarman told Blockworks. Flashbots did not immediately return a request for comment.



Klarman said relayer fees would require some level of consensus between the remaining relaying entities and, ideally, the Ethereum community. If the economic incentive problem isn’t fixed though, Klarman thinks the perceived centralization of MEV-boost relays could grow worse.



“In a year, if everything stays the same […] I think it&#8217;s very reasonable that there will be less relays then than there are today,” Klarman said.



Elias Simos, the CEO of Ethereum data platform Rated, told Blockworks he is ambivalent toward a future where Ethereum continues to rely on its four major relayers. 



“They’re demonstrably long-term actors in the space, so they have a lot to lose [if Ethereum is harmed],” Simos said. “But at the same time, is that enough?”



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Ethereum’s decentralization takes hit as number of relayers drops to 4

Ben Strack

Chase UK’s decision to ban crypto transactions for customers is “not a big deal,” an industry CEO told Blockworks.&nbsp;



Still, it’s a “nonsensical” decision that goes against the country’s crypto policy goals, as well as efforts by the firm’s parent company, according to Jesper Johansen, founder and CEO of crypto service provider Northstake.



Clients of the UK subsidiary of JPMorgan <a href="https://blockworks.co/news/chase-uk-crypto-ban#">will not be able to make crypto transactions</a> via bank transfer or debit card starting next month, the company said in an email to customers Tuesday.



Crypto-related transactions, including wire transfers to crypto exchanges, will be declined from October onwards, a Chase spokesperson told Blockworks, citing crypto scams targeting UK consumers.



“Firstly, this ban contradicts the UK government’s stated policy goal to develop favorable conditions and a supportive environment for crypto businesses to set up and scale their services,” Johansen told Blockworks. “Secondly, this ban contradicts JPMorgan’s ambitions to scale its own bank-led blockchain platform and JPM Coin.”&nbsp;



JPMorgan’s <a href="https://www.jpmorgan.com/onyx/onyx-digital-assets.htm">Onyx Digital Assets</a> network enables the tokenization of traditional assets, such as US Treasurys and money-market products. The company <a href="https://blockworks.co/news/jpmorgan-trade-on-public-blockchain-monumental-step-for-defi">used the Polygon blockchain to trade tokenized cash deposits</a> in November 2022.&nbsp;



Still, JPMorgan Chase CEO Jamie Dimon has repeatedly criticized the asset class, calling bitcoin a “hyped-up fraud” in January during an <a href="https://www.youtube.com/watch?v=qdIooHrQeK8">interview</a> with CNBC.



Caspar Sauter, co-founder of decentralized exchange D8X, noted that while Chase UK’s actions follow a trend in the banking sector, its approach “distinctly contrasts” that seen in other European regions.&nbsp;



NatWest is among the UK-based banks that have <a href="https://blockworks.co/news/uks-natwest-paysafe-distance-from-crypto-as-banks-roil">placed restrictions on customers</a> sending money to crypto exchanges.



Read more: <a href="https://blockworks.co/news/crypto-startups-uk-bank-accounts">Crypto startups find UK banks won’t give them accounts</a>



“Notably, these limitations are not mandated by UK regulations but are decisions made independently by the banks themselves,” Sauter told Blockworks.&nbsp;



Meanwhile, Swiss banks like Sygnum already offer digital asset banking services, Sauter added. State-owned Luzerner Kantonalbank shared plans to introduce similar offerings in the country.&nbsp;



Germany-based Deutsche Bank said earlier this month it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish digital asset custody and tokenization services</a> through a link-up with crypto infrastructure firm Taurus.



“It&#8217;s anticipated that a majority of European banks will embrace digital asset banking services in the coming years,” Sauter said.



Coinbase CEO Brian Armstrong called the move by Chase UK “totally inappropriate” in a Tuesday X <a href="https://twitter.com/brian_armstrong/status/1706787540215460155">post</a>. He added that the bank’s decision appears to not respect policy goals set by UK Prime Minister Rishi Sunak.&nbsp;



Sunak <a href="https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub">said</a> in an April 2022 statement that he wanted to make the UK “a global hub for crypto asset technology.” Andrew Griffith, the economic secretary to the UK Treasury, noted in April that <a href="https://blockworks.co/news/uk-could-see-live-crypto-regulation-within-12-months">crypto regulations would be finalized in the next 12 months</a>.



“This move by Chase illustrates the size of the hill that the UK government will have to climb to deliver on their stated policy goal for crypto businesses,” Johansen said.



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‘Nonsensical’ but ‘not a big deal’: Execs weigh Chase UK’s anti-crypto move   

Bessie Liu

As Chainlink looks to aggressively enter the cross-chain bridge space, co-founder Sergey Nazarov claimed that most bridges are “absolutely not secure.” 



In an interview with Blockworks, Nazarov said the crypto industry has a pattern of investing money into projects that do not have the capability to secure the ecosystem.



“The systems that are built in this industry promise a lot of things, but then they&#8217;re not able to secure the value one way or another,” he said. “Creating real <a href="https://blockworks.co/tag/security">security</a> is not so simple.”



<a href="https://blockworks.co/tag/bridges">Bridge infrastructure</a> has been particularly difficult to decentralize, Nazarov explained. This is because unlike forked blockchains, where developers can benefit from inventions around security research, bridges themselves are not blockchain-based systems.&nbsp;



“They’re a new invention, and so far no one has invented a secure way to do bridging,” he said. “Most bridges are a single server that transmits information and value between two chains, which is absolutely not secure.”



Because simple bridging itself is not secure, entities may begin to create what he characterized as a false appearance of decentralization by providing multiple servers — false decentralization because it is still under the control of one single entity.



To move on from this “decentralized theater,” bridges may turn toward creating “one monolithic network.” In this instance, multiple nodes — run by independent entities — will operate on one single network.&nbsp;



The problem with network architecture, however, is that if anything were to happen to the network, then all the nodes would shut down.



“It’s not scalable because you cannot pass all the transactions across all chains to one network, just like you cannot pass all blockchain transactions in the world through one chain,” he said.&nbsp;



As an alternative, Nazarov envisions a cross-chain communication platform that would be run by multiple separate networks that can also dynamically respond to risk.



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Drawing on the example of <a href="https://blockworks.co/tag/chainlink">Chainlink</a>’s own Cross-Chain Interoperability Protocol (CCIP), Nazarov notes that the protocol comprises three different networks on every bridge.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/chainlink-price-rally-ccip">Chainlink rallies hardest since May 2021 after CCIP release</a>



“There are two networks that validate and execute every transaction, then there’s a third network called the Risk Management Network, which doesn’t execute the transactions but approves or denies transactions based on risk parameters,” he said.&nbsp;



This means that the bridge creator — the bank or the decentralized app that relies on the bridge — can introduce and set risk parameters without ever needing to sign transactions or be involved in touching the value.



“That risk management layer can continue to evolve, so that when risks appear, community and application developers can adapt to those situations extremely quickly and keep how they manage risk updated,” Nazarov said.&nbsp;



Since its <a href="https://blockworks.co/news/chainlink-ccip-launch">launch at ETH cc in Paris</a>, CCIP has drawn the attention of various banks and financial institutions across the globe. Most recently, it has worked with banking partners such as BNP Paribas, BNY Mellon and <a href="https://blockworks.co/news/chainlink-anz-ccip">ANZ</a>, among others, to experiment with transacting tokenized assets across blockchains.



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Most bridges ‘absolutely not secure’: Chainlink co-founder

Katherine Ross

Former Terraform Labs CEO Do Kwon’s legal team pushed back against a deposition request from the SEC ahead of the discovery cut-off date.



“The Court should deny the SEC’s motion for the simple reason that it is currently impossible for Mr. Kwon to appear for a deposition in the United States,” Kwon’s team said in a Wednesday filing.



According to Kwon’s attorneys, the SEC waited until Sept. 14 to get the Letter of Request to the proper authorities in Montenegro, where Kwon is currently serving time for forging documents. <a href="https://blockworks.co/news/do-kwon-arrested">Kwon was arrested in March</a>.



Read more: <a href="https://blockworks.co/news/sec-charges-do-kwon-terraform-labs-with-fraud-misleading-investors">SEC charges Do Kwon, Terraform Labs with fraud</a>



The discovery cut-off date for the <a href="https://blockworks.co/tag/terraform-labs">SEC’s case against Terraform Labs</a> is Oct. 13, according to the documents.



“​​Mr. Kwon’s detention in Montenegro in March 2023 was widely reported. The SEC [&#8230;] first indicated to defense counsel that it wanted to take Mr. Kwon’s deposition in June 2023, and waited over five months after Mr. Kwon’s detention to submit a proposed Letter of Request under the Hague Evidence Convention to this Court, on August 30, 2023,” they continued.



The defense argued that <a href="https://blockworks.co/tag/do-kwon">Kwon</a> and his team did not oppose a deposition, but made it clear to the SEC that it would need to take place in Montenegro, which led the SEC to declare “we do intend to notice the deposition for a date certain in the United States.”



Read more: <a href="https://blockworks.co/news/terra-ceo-kwon-return">&#8216;Of course Kwon is welcome back,&#8217; says Terra interim CEO</a>



Kwon’s lawyers further state that a Montenegrin court “informally indicated” that it may hold a hearing on either Oct. 13 or Oct. 26 to ask Kwon the SEC’s drafted questions, but the SEC said it may deem that process “inadequate” to pursue a deposition of Kwon in the US after the discovery cut-off date.&nbsp;



The SEC, the lawyers said, is attempting to ‘have its cake and eat it too’ by saying the Montenegrin court can question Kwon but may not use it or may still push for a US-based deposition of Kwon while he’s in Montenegro.



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Do Kwon deposition in the US is ‘impossible,’ lawyers argue

Casey Wagner

During an almost five-hour long hearing, House Financial Services Committee members from both sides of the aisle grilled SEC Chair Gary Gensler on everything from crypto asset classification to his agency’s ambitious agenda. 



Gensler appeared on Capitol Hill for a <a href="https://blockworks.co/news/gensler-senate-banking-committee-testimony-crypto">second time this month</a> to face lawmakers’ questions on how he is running the SEC.&nbsp;



“It’s clear that you are working to consolidate your own power even though it means crushing opportunities for everyday Americans and frankly the financial future of this country,” Rep. Tom Emmer, R-Minn., said when addressing Gensler during the <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=408978">hearing</a>.&nbsp;



“Even the federal courts are highlighting the damage you, sir, are doing to our constituents, and they’re telling you that you don’t have the legal authority to accomplish your goal of squashing competition in the financial markets.”



Gensler opted to address digital assets head-on in his opening statement, reiterating a stance he has maintained throughout his entire tenure: Crypto companies are capable of registering compliantly, they simply don’t want to.&nbsp;



“There is nothing about the crypto asset securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws,” Gensler said during his prepared <a href="https://docs.house.gov/meetings/BA/BA00/20230927/116403/HHRG-118-BA00-Wstate-GenslerG-20230927.pdf">remarks</a> Wednesday. “Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds. Yet Congress included a long list of 30-plus items in the definition of a security, including the term ‘investment contract.’”&nbsp;



Rep. Ritchie Torres, D-N.Y., who also co-signed a bipartisan <a href="https://flood.house.gov/sites/evo-subsites/flood.house.gov/files/evo-media-document/sec-bitcoin-spot-etf-letter-signature-check.pdf">letter</a> sent to Gensler Tuesday regarding the agency’s reluctance to approve a bitcoin spot ETF, was one of the Democrats to take a somewhat rare stance against the SEC’s treatment of cryptocurrencies.&nbsp;



Rep. Torres asked Gensler whether or not an ‘investment contract’ requires an actual contract, to which Gensler replied with a quote from former Supreme Court Justice Thurgood Marshall about Congress’ definitions being vague.&nbsp;



“I do not go to MIT, but in the Bronx, if I ask whether any investment contract includes a contract, the answer is typically yes or no,” Torres responded.&nbsp;



When Torres asked Gensler whether purchasing a Pokemon card was a security, the SEC head said no.&nbsp;



“If I were to purchase a tokenized Pokémon card on a digital exchange via a blockchain? Is that a security transaction?” Torres asked.&nbsp;



“I’d have to know more,” Gensler answered.&nbsp;



The hearing comes amid increased bipartisan cooperation on crypto policy in the House. Five crypto-related bills managed to make it through committee markup and have been ordered to a full floor vote, potentially this fall.&nbsp;



The <a href="https://blockworks.co/news/republicans-crypto-market-structure-bill">Financial Innovation and Technology (FIT) for the 21st Century Act</a>, co-sponsored by French Hill, R-Ark., Glenn Thompson , R-Penn., and&nbsp; Dusty Johnson, R-S.D. and the Clarity for Payment Stablecoins Act, introduced by Patrick McHenry, R-N.C., have fairly promising bipartisan support in the House.



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Gensler: Bitcoin is not a security, but tokenized Pokemon cards may be

The Securities and Exchange Commission continues to postpone its decision on a spot bitcoin ETF. However, October might bring the clarity that fund issuers and the crypto industry have been eagerly seeking.



The regulator must decide whether it will appeal its August court loss in a case against Grayscale Investments in the coming weeks. The first ETFs holding ether futures could also hit the market next month.&nbsp;



The SEC published a filing Tuesday — weeks before its Nov. 11 deadline to do so — <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">postponing its decision date for the Ark 21Shares Bitcoin ETF</a> to Jan. 10. The disclosure signals the regulator could take the full 240 days it is allotted to rule on the product.&nbsp;



The securities regulator also backed up its deadline to approve, deny or delay its decision on a similar proposal by Global X by another 45 days.&nbsp;



It was unclear Wednesday afternoon whether the SEC would defer decisions on other planned bitcoin funds by BlackRock, Fidelity, Invesco, Bitwise, VanEck, WisdomTree and Valkyrie. The deadlines to next rule on, or postpone a ruling on those proposals, fall between Oct. 16 and Oct. 19 — with the ultimate clock expiring in mid-March.



“This SEC likely won&#8217;t approve a spot bitcoin ETF a minute sooner than it has to,” said Sumit Roy, senior analyst at ETF.com.



Hashdex Chief Investment Officer Samir Kerbage said during a Wednesday webinar that the SEC’s delay before its Nov. 11 deadline is likely due to a potential government shutdown.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/hashdex-bitcoin-etf?utm_source=CryptoNews&amp;utm_medium=app">How Hashdex’s planned bitcoin ETF differs from competing proposals</a>



Such a scenario would leave the SEC with a “skeletal” staff at the SEC, Chair Gary Gensler said during a House of Representatives Committee on Financial Services hearing Wednesday.&nbsp;



“I imagine they did this just to give clarity if the government stays shut down for a few weeks more until the deadline they would have, [because] they wouldn’t be able to issue an order either rejecting, approving or postponing,” Kerbage noted.



<h2 class="wp-block-heading">To appeal, or not to appeal&nbsp;</h2>



Roy noted the SEC’s priority, before weighing in on spot bitcoin ETFs, is likely deciding how it will respond to <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf?utm_source=CryptoNews&amp;utm_medium=app">Grayscale Investments’ court win against the regulator</a> in August.&nbsp;



<a href="https://blockworks.co/news/judges-grayscale-sec-ruling">A three-judge panel at the DC Circuit Court of Appeals ruled</a> that the SEC denying the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF, but allowing bitcoin futures ETFs to launch, was “arbitrary and capricious.”



The SEC’s decision to appeal the decision is Oct. 13.&nbsp;



“If it doesn&#8217;t [appeal], it could be because either the SEC realizes that it can&#8217;t block spot bitcoin ETFs any longer, or it&#8217;s decided to take another approach to blocking them — perhaps by bringing up custody as an issue, “ Roy told Blockworks.&nbsp;



In response to the Grayscale ruling, Bloomberg Intelligence analysts raised their odds of spot bitcoin ETF approval from 65% to 75% by the end of 2023.



Bloomberg Intelligence analyst James Seyffart said in an X <a href="https://twitter.com/JSeyff/status/1706804652862230808">post</a> Wednesday that the projected likelihood could be lower after the SEC’s early delay of its ruling date on the Ark 21Shares Bitcoin ETF.



“But the main catalyst for 2023 has always been what happens next with the GBTC court case,” he noted in the post. “If that can be put off till 2024, the odds go way lower. If not, our odds aren&#8217;t impacted drastically by this.”



Kerbage said he doesn’t expect the SEC to challenge the decision made by the DC Circuit Court of Appeals. If it chooses not to appeal, the SEC might request Grayscale to submit a new proposal for converting GBTC into an ETF. This would initiate a new 240-day review period.



“Based on the conversations we’ve been having, this is the most likely path, and that they’re going to find new reasons to reject if they want,” the Hashdex executive added.&nbsp;



Cinthia Murphy, director of research at ETF Think Tank, noted during the webinar alongside Kerbage that she expects the SEC to delay progress on this issue at all costs.&nbsp;



“I think they’re going to take whatever path buys them more time to keep pushing this process until something gives,” she said. “Whether it’s political pressure, whether it’s market pressure, something’s going to have to change for them to move the needle here.”&nbsp;



A spokesperson for the SEC declined to comment.&nbsp;



<h2 class="wp-block-heading">Beyond bitcoin</h2>



While the fate of planned spot bitcoin ETFs remains uncertain for now, the first ETFs to invest in ether futures contracts are expected to hit the market next month.&nbsp;



Valkyrie proposed in an Aug. 4 filing <a href="https://blockworks.co/news/valkyrie-eth-futures-etf">to change its bitcoin futures ETF</a> to one that also holds ether futures. Bitwise then revealed a plan to morph its Bitcoin Strategy Optimum Roll ETF (BITC) into the Bitwise Bitcoin and Ethereum Equal Weight Strategy ETF.&nbsp;



Bitwise decided to withdraw its application to convert BITC, according to a Sept. 22 filing.&nbsp;



The Valkyrie ether futures fund could go into effect — if not blocked by the SEC — on or around Oct. 3.&nbsp;



Volatility Shares said last month it planned to launch its Ether Strategy ETF (ETHU) on Oct. 12. A handful of similar products from <a href="https://blockworks.co/news/eth-related-etf-proposals">Bitwise, ProShares and others</a> could also come that day, or shortly after.



The SEC has also begun reviewing <a href="https://blockworks.co/news/21shares-ark-filing-for-spot-ether-etf">a proposed spot ether ETF by Ark Invest and 21Shares</a>, as well as one by fund group VanEck, though the regulator has months to consider such plans.



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October is shaping up to be a pivotal month for crypto ETF clarity

Friend.tech gained viral attention following its launch back in August. This buzz did not go unnoticed, leading to a ripple effect of emerging platforms eager to capitalize on its success and harness the potential of social finance, or SocialFi.



SocialFi refers to decentralized social media platforms that integrate elements of traditional social media with features common within the decentralized finance (DeFi) space. Such projects aim to give content creators control over their own data, increase freedom of speech, and offer the ability to monetize their presence using blockchain technology.



<a href="https://blockworks.co/tag/friend-tech">Friend.tech</a>, a flagship SocialFi application, enables users to buy access keys for private chat rooms connected to specific X profiles&#8217; personalities. These keys increase exponentially in price as more are purchased based on a bonding <a href="https://dune.com/beetle/friend-tech-bonding-curve">curve</a>. When a key is resold via the secondary market, Friend.tech and the tokenized profile’s owner each receive a 5% residual. The platform has been lucrative for some — with daily revenues currently in the hundreds of thousands.



As a result, new platforms — inspired by Friend.tech&#8217;s model — have started to spring up across various blockchains. Their growth indicates a promising start for the segment, yet the longevity of SocialFi remains an open question. Is this surge a short-lived trend fueled by Friend.tech&#8217;s initial success, or a glimpse of a more enduring future?



Hannes Feichtl remembers first looking into Friend.tech and thinking the platform’s decision to force users to deposit ether (<a href="https://blockworks.co/price/eth">ETH</a>) before using the app would hinder its growth. This did not prove to be the case and, when Friend.tech’s usage exploded, Feichtl decided to create his own version. The resulting app, Star Shares, drew <a href="https://dappradar.com/dapp/star-shares?range-ha=7d">20,000</a> daily transactions over the course of four days following its launch on Avalanche, per DappRadar.



It’s a story that has played out on other chains like <a href="https://dappradar.com/dapp/post-tech?range-ha=all">Arbitrum</a> and <a href="https://decrypt.co/198603/solana-friend-tech-fork-friendzy-volume-edges-towards-1m-after-just-one-week/">Solana</a>. Adrian Anderson, partnerships lead at the Mantle-native Fan.tech, compared the phenomenon to the post-Facebook explosion of social media platforms. Anderson suggests that long-term survival will belong to platforms that carve a distinctive niche, though he acknowledges that the Friend.tech &#8220;narrative is strong.&#8221;



Like the original, many of Friend.tech’s competitors sell tokenized “keys” for access to social media personalities. But much of the new app development seems to hinge on the belief that SocialFi is a concept worth getting in on, and specifics can come later.



“Getting something out and getting some initial user base early is really proven to be good,” Feichtl, who launched Star Shares before feeling like the product was finished, said. “You have to be early right now.”&nbsp;



Friend.tech’s rivals look to ensure that the perceived value of SocialFi remains once the initial buzz has faded. Feichtl remains unsure about SocialFi&#8217;s future structural components, such as bonding curves and private chats. However, he points to mainstream platforms like X, which some speculate are <a href="https://blockworks.co/news/twitter-x-rebrand-crypto">interested in crypto-monetization</a>, suggesting that Friend.Tech&#8217;s trajectory might be the right path.



“I think [SocialFi] will stick around one way or another,” Fiechtl said, adding that he doesn’t see many of the currently-launching projects succeeding. “Some are just taking the hype and making money off it, which is totally fine.”



After a <a href="https://blockworks.co/news/friend-tech-momentum-stalls">slowdown in late August</a>, Friend.Tech may be gradually regaining some of its initial momentum. For the past two weeks, the platform’s daily revenue has stayed mostly above $400,000, reaching as high as $1.1 million, according to <a href="https://defillama.com/protocol/friend.tech">data</a> from DeFiLlama. Currently, Arbitrum&#8217;s Post.tech appears to be leading the race as Friend.tech&#8217;s primary rival, recording 75,000 transactions in the last 24 hours, compared to Friend.tech&#8217;s 104,000.



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Friend.tech copycats eager to capitalize on social finance craze

James Cirrone

Even the largest miners and mining pools can occasionally make mistakes, as evidenced by Marathon Digital&#8217;s error early Wednesday morning.



The publicly traded company mined an invalid block. This means that Marathon submitted a block — which is made up of 2,000 transactions on average — that the rest of the network rejected because it didn’t align with common protocol.&nbsp;



If the other nodes on the network detect an invalid transaction within the block, they can come together to reject using the consensus mechanism built into Bitcoin.&nbsp;



Jameson Lopp, a bitcoin engineer and chief technology officer and co-founder of Casa, told Blockworks that Marathon mining an incorrect block doesn’t present a problem for the network. It’s more just a matter of forfeited profit.&nbsp;



“It&#8217;s not a problem for the network, it&#8217;s only a problem for the money because [Marathon] gave up over $100k in revenue,” Lopp said.&nbsp;



The issue with block 809478 was first <a href="https://twitter.com/0xB10C/status/1706937041739530556">flagged</a> by X user <a href="https://twitter.com/0xB10C">@0xB10C</a>, but BitMex Research pinpointed the error: Marathon misplaced two transactions within said block. This misordering led to the block&#8217;s rejection by other network participants.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">It appears as if MARA had transactions in the wrong order. The invalid block included this txn (A):<a href="https://t.co/IShJvlS8Ow">https://t.co/IShJvlS8Ow</a> Spending an output from this txin (B):<a href="https://t.co/Z6BNJQqcYd">https://t.co/Z6BNJQqcYd</a> However, txin B was included in the block after txin A, therefore the block was invalid… <a href="https://t.co/rWC0mM8tyG">https://t.co/rWC0mM8tyG</a>&mdash; BitMEX Research (@BitMEXResearch) <a href="https://twitter.com/BitMEXResearch/status/1706966754331652164?ref_src=twsrc%5Etfw">September 27, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Marathon confirmed what happened on Wednesday afternoon in a post on X, formerly Twitter. The company chalked the mistake up to an unforeseen bug that compromised its development pool, not its main production pool.&nbsp;



“We utilize a small portion of our hash rate to experiment with our development pool and research potential methods to optimize our operations,” the company wrote. “The error was the result of an unanticipated bug that came from one of our experiments.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We can confirm that Marathon did mine an invalid block. We utilize a small portion of our hash rate to experiment with our development pool and research potential methods to optimize our operations. The error was the result of an unanticipated bug that came from one of our…&mdash; Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) <a href="https://twitter.com/MarathonDH/status/1707067548661928108?ref_src=twsrc%5Etfw">September 27, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The incident, it further explained, was “unintended” and not meant to alter the inherent rules governing Bitcoin Core, the original and most widely adopted software client used to operate nodes on the Bitcoin network.



Marathon also took this opportunity to hype up its view that Bitcoin is secure, saying that this “underscores the robust security of the Bitcoin network, which rejected and rectified the anomaly.”



This isn’t something that’s only happened to Marathon, however.&nbsp;



BitMex Research <a href="https://twitter.com/BitMEXResearch/status/1148989508588883970?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1148989508588883970%7Ctwgr%5E6703e5bdba65dec59965dc85f4636a7b5141cfff%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fthenextweb.com%2Fnews%2Fbitmain-bitcoin-invalid-block-150000-mining-reward-lost">flagged</a> an invalid block seemingly mined by AntPool in July 2019. A similar occurrence was <a href="https://twitter.com/BitMEXResearch/status/1642151592609607685">noted</a> in April 2023 involving f2pool.



According to multiple <a href="https://bitaps.com/809478">blockchain explorers</a>, Foundry was the one to ultimately mine block 809478 correctly.



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Marathon Digital mines invalid block due to bug

Crypto exchange Kraken is expanding its business into stock trading, according to Bloomberg.



The Wednesday report says that the exchange is targeting next year for the launch, citing a person familiar with the plans.



“Kraken is always exploring how it can power the global adoption of cryptocurrencies. While we can’t comment on rumors or speculation, we’re looking to broaden and enhance our offering so clients continue to have secure and seamless access to Kraken’s full product suite,&#8221; a spokesperson from <a href="https://blockworks.co/tag/kraken">Kraken</a> told Blockworks via email.



The <a href="https://www.bloomberg.com/news/articles/2023-09-27/crypto-exchange-kraken-to-offer-trading-in-us-stocks-rivaling-robinhood-hood?srnd=cryptocurrencies-v2#xj4y7vzkg">report</a> further said that the expansion into US-listed stocks and <a href="https://blockworks.co/tag/etfs">ETFs</a> would be offered in both the US and the UK.&nbsp;



The crypto exchange will let eligible customers activate the service which will then lead them to see a mixture of crypto, stocks and ETFs. Kraken sought the necessary regulatory permits in the UK, and has reportedly applied for a broker-dealer license with the Financial Industry Regulatory Authority in the US.



“We don’t comment on FINRA membership applications,” a FINRA spokesperson said.



The move comes a year after the <a href="https://blockworks.co/tag/sbf-trial">infamous collapse of FTX</a>, which had also moved to offer stock trading. However, the exchange collapsed before the stock trading plans materialized.&nbsp;



A move into stock trading would also pit Kraken up against <a href="https://blockworks.co/tag/robinhood">Robinhood</a> and Public.com, which both offer stock and crypto trading services.&nbsp;



Robinhood, a publicly traded company under the ticker HOOD, announced that its <a href="https://blockworks.co/news/robinhood-crypto-revenue-decline">crypto transaction revenue dropped 18%</a> last quarter. The total transaction revenue for crypto fell to $38 million.



However, executives for the trading app company expressed “potential to grow [Robinhood’s] market share” during a recent earnings call.&nbsp;



Kraken’s reported move into US stocks comes as it also focuses on a European expansion.



The exchange <a href="https://blockworks.co/news/kraken-licenses-spain-ireland">secured an EU e-money institution license</a> from the Central Bank of Ireland and a virtual assets services provider license from the Bank of Spain earlier this week.



“In both <a href="https://blockworks.co/tag/ireland">Ireland</a> and <a href="https://blockworks.co/tag/spain">Spain</a>, we are excited to become part of their vibrant local fintech sectors. We also look forward to continuing our investments in Europe more broadly,” Kraken’s Curtis Ting said at the time.



Updated Sept. 27, 2023 at 3:46 pm ET: Added a comment from FINRA.



Updated Sept. 27, 2023 at 1:55 pm ET: Added a statement from Kraken.



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Kraken sets sights on stock trading: Bloomberg

Darren Kleine

Account abstraction and concepts like user intents &#8220;add a ton of design to the space,&#8221; Chase Chapman believes. But the development of off-chain scaling solutions, she notes, could create centralized layers in the system.&nbsp;



Dune headmaster Andrew Hong says he has spoken to a number of teams about the conundrum. Some apps, such as <a href="https://blockworks.co/tag/uniswap">Uniswap</a> or <a href="https://blockworks.co/news/cow-swap-mev-problem">CoWswap</a>, could implement <a href="https://www.educative.io/answers/what-is-gossip-protocol">gossip networks</a> for the sake of transparency, he suggests.



“You can have a node network without a blockchain,” he adds. “That&#8217;s kind of what databases are, to begin with.”



Speaking on the On the Other Side podcast (<a href="https://open.spotify.com/episode/101RCD9YhLhCFNLewVx5qP?si=6028ae8e6ed24675">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/91-intents-as-protocol-moats-w-andrew-hong/id1570685120?i=1000629396628">Apple</a>), Hong says he doubts that every application will provide this level of participation, mostly for practical reasons. 



“If I&#8217;m a game developer,” he explains, “and I need things to move really quick, maybe for those [elements], it stays centralized and there&#8217;s nothing users can really do to force things to be otherwise.”



“There is some risk there.”



Hong concedes that in some cases, the trade-off between better user experience and adoption for some “layer of centralization” is probably worth it.&nbsp;&nbsp;



“Let&#8217;s say I&#8217;m playing Magic the Gathering on-chain,” he says. In this hypothetical scenario, Hong says that while he might not be able to check the game’s logic as it operates on a centralized layer, he can verify that his <a href="https://blockworks.co/news/crypto-gaming-web3-argus-labs-web2">on-chain</a> cards are under his control.



“Some components? Yes, I really care,” he says. “Some other ones? It&#8217;s like, all right, worst case scenario, I still have my <a href="https://blockworks.co/tag/nfts">NFTs</a>.”



The user intent mechanism is an attempt to find a balance between what does and does not need to be on-chain, according to Chapman. “They&#8217;re minimizing the amount of unnecessary complexity on-chain,” she says.



“You still have the outcome of your transaction. You just don&#8217;t entirely know how it got there, which is probably the case for users anyway.”



The key is to ensure that users retain the option to act directly on-chain, Chapman says, by submitting transactions to the <a href="https://blockworks.co/news/mev-privacy-in-blockchain">Ethereum public mempool</a>. “But if they want to, they can basically opt into this intent-based system.”



Chapman mentions the example of Uniswap and the recently introduced <a href="https://blog.uniswap.org/uniswapx-protocol">UniswapX</a> protocol. “If you want to take advantage of an intents-based architecture, where you have gasless transactions and you might actually end up getting a better rate, you can use UniswapX,” she says. “If you are worried about censorship, for example, then you can use Uniswap.”



<h2 class="wp-block-heading">This is not a one-way path</h2>



The possibility that UniswapX could theoretically censor user activity is a “potential threat,” Chapman says. She then wonders if it’s possible to limit activities to only interact with smart contracts through user intents.



“That, to me, is where things get a little bit scarier,” she says. “It&#8217;s basically like, forced use of a centralized provider versus optional opt-in use of a centralized provider.”



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Hong notes that many mechanisms such as whitelists and airdrop lists are “already centralized ways” of limiting user activity. “Everything&#8217;s a balance,” he says. “Yes, if you centralize things so that you can only go through intents, there probably is a censorship risk to it.”



“People like to build,” he says. “I trust the community of developers to figure this out.”



Chapman retorts, “they&#8217;re gonna build it and then eventually get slapped by the CFTC — and then we&#8217;ll be like, oh shit, censorship is a problem in these systems.”



“And then we build backwards,” Hong replies.



“We can always go back to just the contract-based way of doing things,” he says. “This is not a one-way path.” Externally owned accounts (EOAs) and smart contracts are <a href="https://blockworks.co/news/ethereum-erc4337-account-abstraction-smart-contract">features that are “never going away</a>,” Hong says.&nbsp;



“There’s at least that saving grace.”



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Account abstraction: Finding a balance between on- and off-chain activity

Mitch Kochman

When I tell people I work in Bitcoin, the first thing I’m asked is what went wrong.&nbsp;



Once I have the privilege of explaining the fraud of Mr. Bankman-Fried and that it had nothing to do with Bitcoin — and represents, in fact, the antithesis of the ethos of decentralization that Bitcoin introduced — I’m then asked about the price, when I “got in,” and if we’ll ever see all-time highs again.



It’s not their fault. Mainstream media is focused on headlines that drive clicks — the overnight millionaires, the rapid price appreciation and crashes, missing the forest for the trees.



<h2 class="wp-block-heading">Bitcoin is a financial revolution</h2>



I unequivocally believe Bitcoin will go down as one of the most pivotal innovations in history.



In the US, Bitcoin attracts a certain cross section of people, usually consisting of those angered by the 2008 global financial crisis: Libertarians, technologists and grizzled former legacy finance professionals. They are people who are fighting for a cause, motivated because they see and understand the cracks in the existing financial system.&nbsp;



But around the world, those who truly need Bitcoin are finding it. As non-sovereign money, Bitcoin represents an escape hatch — a transfer of power away from government back to the people when control of the financial system is abused by those in power. Citizens are given the off-ramp to save their money in a currency that their government does not have the ability to produce more of and is more difficult to seize, a harder money.&nbsp;



A money’s hardness represents our ability to produce more of it. The harder money is, the better chance it has of holding value over time. Gold is a particularly hard money, as it is very difficult and costly to extract more of it than annual global production dictates. For centuries, the world transacted either in gold or in fiat currencies backed by gold.&nbsp;



Today, the majority of economies transact in central bank-backed fiat currencies, where the cost of production is nothing more than either the paper that it is printed on or adding a row in a database.&nbsp;



In the United States, the expansion of the money supply is decided by the Federal Reserve, behind closed doors by unelected officials. When the money supply is inflated to allow the government to spend more, the buying power of existing dollars is devalued. Nobel Prize winner Milton Friedman once said: “Inflation is the only form of taxation that can be levied without any legislation”



The money supply has steadily increased for decades, but the pace has accelerated since 2008. Then in 2020, the Covid emergency provided an immense expansion of the money supply. This liquidity injection into markets resulted in the largest monetary expansion in US history.&nbsp;



We are witnessing what happens when money is not hard, as the US dollar has rapidly lost purchasing power, and costs of everyday goods and services are on the rise. Inflation dominates not just headlines, but decisions made in the grocery store.



This puts citizens in an environment where they’re forced to outpace inflation. A dollar tomorrow is worth less than a dollar today. This compels Americans to be capital allocators and make “their dollar work for them.” They invest and reach further out on the risk curve, risking their savings in effort to maintain or even increase their buying power. Keeping up a side hustle of investing detracts from their ability to perform their primary job to the best of their abilities, therefore devaluing their contribution to the economy and society.&nbsp;



Even worse, inflation gives incentives for low time preference and spending in the present. With your dollar worth most in the present, it makes sense to spend rather than save, leading to the consumption-based culture we live in today. With consumers saving a lower percentage of their income each year, we spend more time worrying about the future and how we’ll one day be able to retire.



<h2 class="wp-block-heading">Bitcoin fixes this</h2>



Compare the fiat system with Bitcoin&#8217;s hardcoded monetary policy. Due to the economic incentives placed on actors in the Bitcoin ecosystem, there will never be more than 21 million bitcoin issued. New coins are created by the network every 10 minutes as miners confirm transactions. The issuance of coins is cut in half every four years and currently 6.25 BTC is issued every block.&nbsp;



The beauty of Bitcoin’s supply issuance is its relationship with network effects. As Bitcoin adoption grows over time, the demand for BTC increases exponentially with a growing number of users looking to acquire it. At the same time, the supply issuance decreases every four years. This supply/demand mismatch brings an increase in bitcoin’s price over time, giving the incentive to save rather than spend. This brings higher time preference among adopters, buying only what is needed today, knowing your savings will be worth more in the future. No more second job as a capital allocator trying to outpace inflation, as people save more and spend less time worrying about retirement.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/unbanked-crypto-trust-banking" target="_blank" rel="noreferrer noopener">Raise your hand if you fully trust your bank</a>



While the mainstream headlines speak of doom and gloom, Bitcoin is working. This last month saw all-time-highs in both mining hash rate and unique addresses being used. The network is becoming more secure and adoption is increasing despite Bitcoin’s price in USD, as more people are coming into the ecosystem.



The people who need Bitcoin most are still finding it, as adoption continues to grow exponentially in the Global South, particularly in countries like Turkey and Argentina where inflation has spiraled out of control due to government mismanagement of currency. While we’re far away from bull market highs of bitcoin priced in USD, Bitcoin continues to make all-time highs month after month when priced in Turkish liras and Argentinian pesos. The escape latch is working as designed for those who need it most, giving people the ability to protect savings and transact freely when the financial infrastructure around them is crumbling.&nbsp;



I can think of no more worthy way to spend my career than playing my role in pushing the adoption of this world-altering technology. Every day I’m inspired on the front lines, helping the innovators in this space. The rails and infrastructure are being set in place for the next billion adopters, and it’s a privilege to be a part of it. Block after block, Bitcoin is working.&nbsp;



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<div class="wp-block-post-author-biography">Mitch Kochman is Director of Platform Sales at BitGo, where he manages BitGo’s premier client relationships with exchanges, miners and payments platforms. He is predominantly focused and passionate about the Bitcoin-only ecosystem. Mitch has been with BitGo since 2022 and previously spent 11 years at IBM as a sales executive leading global software strategy at several major banks, the last of which being J.P. Morgan Chase. Mitch graduated from University of Maryland with a B.S. in Information Systems and Accounting.
</div>


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Don’t lose sleep over bitcoin price charts

The current monetary system “needs to evolve,” according to a speech from Agustin Carstens, the general manager of the Bank of International Settlements.



He did, however, note that the current monetary system works currently as it stands. The evolution includes the implementation of a central bank digital currency (CBDC).



Carstens&#8217; speech comes as some central banks, such as the Bank of Canada, have come forward to say that <a href="https://blockworks.co/news/canada-obstacles-to-cbdc">&#8220;significant” barriers remain before</a> it can issue a CBDC, and the need is not yet there. 



However, back in August, the Bank of Canada added that it is “committed” to being ready to focus on a <a href="https://blockworks.co/tag/cbdc">CBDC</a> “should the need arise.”



“Central banks have a responsibility to meet the public&#8217;s demands and drive innovation in money and the financial system more broadly. But they cannot do this alone. They must work closely with other stakeholders, including the private sector,” Carstens <a href="https://www.bis.org/speeches/sp230927.htm">continued</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/imf-global-ledger-cbdc">IMF advisor sees power in global ledger that works with CBDCs</a>



A retail CBDC has “potential” to meet the needs of the public, which are also evolving. This means, he added, that the “legal framework must keep up.”&nbsp;



According to a 2022 <a href="https://blockworks.co/tag/bis">BIS</a> survey, central banks <a href="https://blockworks.co/news/banks-exploring-potential-cbdc">exploring “some form” of CBDC</a> rose to 93%. By the end of the decade, it expects roughly 15 retail CBDCs alongside nine wholesale CBDCs to be rolled out.



Read more: <a href="https://blockworks.co/news/bis-cbdc-framework">BIS lays out steps for &#8216;secure and resilient&#8217; CBDC systems</a>



But before CBDCs can be launched, Carstens says that the legal framework has to be updated. An IMF paper published in 2021 said that 80% of central banks are either not allowed to issue digital currency or are unsure due to unclear legal frameworks.&nbsp;



Carstens said that it “needs to be rectified” due to the “mandate” that central banks have to meet the needs of the public.



In order to get countries close to the issuance of CBDCs, “different legal systems approach these questions in different ways. It is for each jurisdiction to decide whether to issue CBDC and how to balance the rights and obligations of its users at a national level.”&nbsp;



Carstens also added that “international coordination and cooperation is critical” and that digital currencies that don’t interoperate would be “unfortunate.”



His thoughts echo those of other regulators, such as the Monetary Authority of Singapore, which said in June that <a href="https://blockworks.co/news/digital-asset-networks-interoperable">interoperability was a focus area</a>.&nbsp;



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Legal frameworks ‘must keep up’ for CBDC implementation: BIS

It’s a story that spawns both bullish and bearish arguments, depending on who you ask.



Previously reported at Blockworks, the Eclipse mainnet plans to use a hybrid “best of all worlds” approach — combining Solana’s speedy execution with Ethereum’s secure settlement.&nbsp;



The idea is to take some of the best tech advantages of Solana and “tap into Ethereum’s liquidity,” Garrett Harper says on the Lightspeed podcast (<a href="https://open.spotify.com/episode/0k9QG1bDSEIh5YjazVsr4W?si=b16325a215e34288">Spotify/</a><a href="https://podcasts.apple.com/us/podcast/how-svm-adoption-impacts-the-solana-thesis-joe-mccann/id1697548240?i=1000629189012">Apple</a>).&nbsp;



“As an open-source zealot, I am all for this,” says Asymmetric CEO Joe McCann. Being that the Solana Virtual Machine (SVM) is open-source and can be applied anywhere, McCann says “that’s exactly what you should be doing.”



“It&#8217;s really cool that the guys at Eclipse are taking the SVM and trying to apply it differently than its core use case today with Solana.”



Read more: <a href="https://blockworks.co/news/eclipse-solana-virtual-machine">Eclipse is using Solana’s virtual machine to launch an Ethereum L2</a>



McCann asserts that the broader implementation of the SVM contributes to the Lindy effect — a theoretical phenomenon whereby a technology becomes more resilient the more it is utilized.&nbsp;



“If Eclipse is successful, what are they dependent on? The SVM. That thing has to continue to survive and exist and persist and improve and squash bugs and fix security patches and security bugs.”



McCann says the news is “incredibly bullish” for <a href="https://blockworks.co/tag/solana">Solana</a>’s underlying technology, “because now you&#8217;re also going to be getting pressure-tested potentially in a new environment, a new set of use cases that may not actually be the core use case of the SVM today.”



<h2 class="wp-block-heading">We’ll see what happens</h2>



6th Man Ventures founder and partner Mike Dudas cautions that Eclipse is an early stage project, noting that — as is often the case in blockchain — the narrative around the technology is “light years ahead of reality.”



“I&#8217;m excited to see how parallel processing works in an <a href="https://blockworks.co/tag/ethereum">Ethereum</a> environment, but there&#8217;s just a lot that has to happen before we&#8217;re going to see that,” he says.



“A lot of it is theoretical,” he says, adding, “we’ll see what happens.”



McCann warns that the vision for Eclipse exhibits a “path dependency that is multi-variate.”



“So many things have to go right,” he says, adding that he really hopes that it does. But Asymmetric “couldn&#8217;t get there on the investment side” during last year&#8217;s seed round, he says, “because I couldn&#8217;t size the risk of that.”



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“The path-dependent nature of how this thing actually plays out has so many branches in the way that it has to succeed that it was difficult for me at the time to secure an investment.”



In the long term, Dudas believes that Ethereum will exist as the largest layer-1 blockchain, at least in terms of liquidity. Solana has a chance to attract more users, he suggests, “depending on how payment use cases shake out.”



“We&#8217;re early stage venture investors like Joe, and we&#8217;re underwriting a number of different early stage approaches — the majority of which won&#8217;t work out,” he says. “I just wish that the dialogue was a little less extreme about, ‘Hey, this roadmap is certainly going to work and this is the path.’”



Ethereum currently holds an advantage in the amount of capital and developer talent invested in the ecosystem, Dudas says. Ethereum’s “meme of modularity” encourages people to experiment in “<a href="https://blockworks.co/news/eclipse-blockchain-scalability-trilemma-bell-curve">so many disparate ways</a>.”



“It really is actually remarkable and it&#8217;s beautiful to watch.”&nbsp;



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Blockchain tech narrative is ‘lightyears ahead of reality,’ says Dudas

Sebastian Sinclair

Casey Rodarmor, inventor of Bitcoin Ordinals, has proposed a new system for creating digital assets on the Bitcoin network, in a bid to offer a cleaner version to the current BRC-20 standard.



In a recent <a href="https://rodarmor.com/blog/runes/">blog post</a>, Rodarmor pointed out that BRC-20, while popular, leads to the unnecessary proliferation of “junk” UTXOs (Unspent Transaction Outputs), an issue he proposes to address with &#8220;Runes.&#8221;



Ordinal Theory, first introduced in January, is a technique that assigns numerical identifiers to &#8220;sats,&#8221; the smallest unit of bitcoin. The method utilizes a First-In-First-Out algorithm meaning the first sat recorded is the first one to be utilized or processed.



It paved the way for inscriptions — essentially Bitcoin NFTs — that skyrocketed in popularity in April, rising from 1.2 million to today’s 34.7 million units, according to the latest figures from a <a href="https://dune.com/dgtl_assets/bitcoin-ordinals-analysis">Dune dashboard</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Should bitcoin have fungible tokens? On the one hand, fungible tokens are 99.99% bullshit and scams, and weaken bitcoin&#39;s purity. On the other hand, they would bring an enormous amount of fee revenue, developers, and users to bitcoin. People fucking love tokens, they&#39;re like the…&mdash; Casey (@rodarmor) <a href="https://twitter.com/rodarmor/status/1706214717558272163?ref_src=twsrc%5Etfw">September 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Inscriptions have been criticized for increasing the complexity and cost of transacting on the Bitcoin network, and leading to <a href="https://blockworks.co/news/who-broke-bitcoin-ordinals">unintended consequences</a>.



The main problem, according to Rodarmor, is that this clutter complicates the system and makes it less efficient, leading to higher costs. Runes aim to simplify how fungible tokens can be issued, transferred and burned within the Bitcoin ecosystem.



Specifically, balances would be held by UTXOs, which can contain varying amounts of any number of runes. A transaction would also contain a protocol message if it has an output with a specific script, allowing for easy identification of transactions.



“Should such a thing exist? I don&#8217;t know. It&#8217;s about as simple as possible, does not rely on off-chain data, does not have a native token and fits nicely into Bitcoin&#8217;s native UTXO model,” Rodarmor mused.



The approach, Rodarmor said, could attract users and developers from systems with less efficient on-chain operations, thereby boosting Bitcoin&#8217;s popularity and encouraging broader adoption.



“On the other hand, the world of fungible tokens is a near totally irredeemable pit of deceit and avarice, so it might be a wash,” he said.



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Bitcoin Ordinals creator wants to clean up BRC-20 standard

Shalini Nagarajan

Crypto exchange Gemini is allocating $24 million toward expanding its operations in India over the next two years, led by APAC CEO Pravjit Tiwana.



The company initially <a href="https://blockworks.co/news/gemini-apac-crypto-exchange">revealed</a> back in April the launch of its engineering center in Gurgaon, near India’s capital Delhi, as a key component of its international business expansion strategy.&nbsp;



Tiwana emphasized in a <a href="https://www.gemini.com/blog/gemini-to-deepen-india-investment-over-next-two-years-with-plans-to-invest">statement</a> on Tuesday that this office will play a significant role in driving Gemini&#8217;s growth in the upcoming years.



Gemini cited India&#8217;s flourishing startup environment, boosted by the government&#8217;s <a href="https://www.startupindia.gov.in/content/sih/en/about-startup-india-initiative.html">2016 initiative</a> to promote entrepreneurship and transition from a job-seeking to a job-creating society, as a reason to establish its presence there.



This support includes tax advantages, streamlined compliance, simplified company formation and faster exit options.



As a result of this program&#8217;s launch, the government has formally <a href="https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1913977">recognized</a> more than 92,000 entities as startups within the country.



The teams based in this location will handle compliance, data pipelines, warehousing, security and payments-related tasks.



Gemini&#8217;s Gurgaon office is actively seeking to recruit software engineers, technical product managers, professionals in people operations and talent acquisition, finance, support and compliance roles.



As of September, the Gurgaon division has a workforce of over 70 employees.



This development occurs amidst growing unease among prominent crypto companies in the United States due to heightened regulatory oversight by US agencies.



<h2 class="wp-block-heading">India’s crypto scene gains momentum</h2>



While India was initially perceived as less hospitable to the crypto sector, the situation appears to be gradually changing.&nbsp;



According to a recent <a href="https://blockworks.co/news/chainalysis-global-adoption-index-india-lmi">Chainalysis report</a>, India stands out as a global leader in &#8220;grassroots crypto adoption.&#8221;



The report also highlighted that India has risen to become the second-largest crypto market globally in terms of total estimated transaction volume, surpassing several more affluent nations.



Also, India’s Prime Minister Narendra Modi at the B20 summit in August <a href="https://blockworks.co/news/indian-pm-modi-regulation-crypto">advocated</a> for an international framework to govern cryptocurrencies.&nbsp;



Gemini&#8217;s expansion into India aligns with its <a href="https://blockworks.co/news/gemini-eyeing-singapore">recent venture into Singapore</a> and its plans to augment its workforce in the city-state to exceed 100 employees in the upcoming year.



The company has indicated that the Singapore branch will serve as the focal point for its broader &#8220;larger APAC operations.&#8221;



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Gemini backs India’s tech ecosystem with $24M office investment

Binance has opted to completely withdraw from Russia by selling its entire local business there.



The crypto company has struck a sales deal with Russian-based exchange CommEX for an undisclosed sum, according to an announcement on Wednesday.



CommEX appears to have launched just this week, according to its Telegram channel. On its website, the exchange has provided a <a href="https://commex.zendesk.com/hc/en-us/articles/7823490968591">tutorial</a> guiding how Binance users can connect their accounts to the newly-launched platform.



The off-boarding process is expected to take about one year, and Binance said the assets of existing Russian users will be protected during this time.



Binance users will receive requests to transfer their assets to CommEX.&nbsp;



A portion of newly registered Russian users who have completed KYC (Know Your Customer) procedures will be redirected to CommEX right away.



Binance said that staying in Russia did not align with the company’s latest compliance strategy.



“Our highest priority is protecting our users and maintaining trust in our platform,” a spokesperson told Blockworks. “We have worked tirelessly to invest in the teams and systems that ensure user protection.”



The spokesperson declined to comment on why CommEX was chosen as the partner for the deal.



Binance said it would not have an ongoing revenue-sharing arrangement or the option to repurchase shares in the business following the sale.



<h2 class="wp-block-heading">Navigating compliance and leadership exits</h2>



Discussion about Binance considering an exit from Russia <a href="https://blockworks.co/news/binance-russia-us-sanctions">surfaced</a> last month, raising questions about its presence in the country.



This decision by the crypto exchange comes in the wake of allegations that it was involved in assisting nationals to transfer money abroad earlier this year, prompting Binance to take measures to align itself with international sanctions.



Furthermore, Binance recently witnessed the departure of two key executives, <a href="https://www.linkedin.com/in/gleb-kostarev/?locale=en_US">Gleb Kostarev</a> and <a href="https://www.linkedin.com/in/smerkis/">Vladimir Smerkis</a>, who had been actively involved in the Russian market.



In 2022, Binance <a href="https://blockworks.co/news/binance-blocks-newly-sanctioned-russians-launches-card-for-ukrainian-refugees">blocked</a> accounts linked to Russian officials&#8217; family members.&nbsp;



But this year, restrictions seemed to ease as Binance <a href="https://forklog.com/news/binance-vernula-podderzhku-tranzaktsij-s-kartami-rossijskih-bankov">allowed</a> Russian users to use local credit and debit cards for crypto purchases, except in USD.&nbsp;



More recently, Binance tightened its restrictions on peer-to-peer trading services for Russian users.

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