Bessie Liu

Decentralized staking infrastructure SSV.network revealed that it will launch its mainnet in a bid to bring distributed validator technology to life.



In proof-of-stake networks, validators are responsible for locking in “stakes” to participate in the process of securing and adding new blocks to the blockchain.&nbsp;



Ethereum stakers, for example, need to lock in 32 ether in order to become a validator. For stakers who do not have 32 ether, they can turn to liquid staking providers to participate in network activities.&nbsp;



Today, most liquid-staked ether (<a href="https://blockworks.co/price/eth">ETH</a>) is held by a handful of players — most prominently, Lido, which holds over <a href="https://dune.com/hildobby/eth2-staking">32%</a> of the entire staking market share.&nbsp;



Centralized exchanges such as Binance, Coinbase and Kraken also possess a large slice of the cake, making up roughly <a href="https://dune.com/hildobby/eth2-staking">19%</a> of staked ETH in the ecosystem.



Enabling DVT would allow one validator to be run by multiple nodes, according to Blockworks research analyst <a href="https://twitter.com/WestieCapital?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">Westie</a>.



“This helps decentralize the staking infrastructure and helps keep uptime because only one node needs to be online and allows for more flexibility behind how validators are constructed,” he said.



In the case of SSV.network, each validator node would be run by a rotating set of registered operators governed specifically by SSV smart contracts.



Ten different staking dapps will be deployed on SSV at its mainnet launch. These include Stader, Ankr, Stakestar, 01node, Metapool, StakeTogether, XHash, Chainup, Coindelta and Claystack.&nbsp;



“Together with the partners and the community, SSV Network can usher in a new paradigm for <a href="https://blockworks.co/tag/ethereum">Ethereum</a> staking,” Alon Muroch, protocol lead at SSV said in a press statement. “Our goal is to onboard even more users who would be otherwise wary of trusting single entities, while not wanting to go through the relatively complex process of staking independently.”



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SSV.network to make centralized staking providers a problem of the past

James Cirrone

In laying out the bull case for ether on Wednesday, Fidelity’s digital assets subsidiary said dapps built on Ethereum are “capable of things that could not be done on Bitcoin’s network due to Ethereum’s superior programmability.”



Researchers who compiled the <a href="https://www.fidelitydigitalassets.com/research-and-insights/ethereum-investment-thesis">report</a> said investors could view ether (<a href="https://blockworks.co/price/eth">ETH</a>) as an “aspiring” form of money.&nbsp;



Ether, they wrote, will “likely face significantly more headwinds than bitcoin to become widely accepted as a form of money.”



Why? Unlike bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), which has a hard cap of 21 million, ether technically has “unlimited supply parameters” — even though there is a fee burning mechanism. It was <a href="https://blockworks.co/news/ethereum-deflationary-2-months">introduced by upgrade EIP-1559</a> in August 2021 and has led to deflationary periods for ether.&nbsp;



There’s uncertainty relating to future upgrades to Ethereum and the number of the tokens in circulation on an untethered schedule, according to the report. And the cumulative effect has been that ether’s supply has a slew of obstacles before it can be “reliably consistent to that of other store of value assets.”



“It seems unlikely that any other digital asset could improve upon bitcoin as a monetary good because bitcoin is viewed by some as the most secure, decentralized, sound digital money to this point, and any “improvement” would require tradeoffs,” the report said.



Fidelity acknowledged that Ethereum’s use of <a href="https://blockworks.co/tag/smart-contracts">smart contracts</a>, which unlocks a whole new layer of programmability, is ether’s “true differentiating factor.”



The other thesis Fidelity discussed behind ether’s value was its potential to generate yield through staking.&nbsp;



The act of staking ether on the network has changed dramatically since <a href="https://blockworks.co/news/ethereum-shapella-ok-despite-bug">the Shapella upgrade in April 2023</a>.



Fidelity said the payout structure for validators attesting to the blocks of each epoch and for block proposals proffer incentives to stake the maximum of 32 ETH. The base reward is proportional to validators’ effective balance.&nbsp;



The report also pointed out that base reward is inversely proportional to the number of validators.



“The rationale for this issuance formula is to ensure enough validator participation because higher yields are paid if the validator set is small, while also guaranteeing that unexpectedly high issuance will not occur if many validators participate,” the report said.



This balance, <a href="https://blockworks.co/tag/fidelity">Fidelity</a> argued, has allowed Ethereum to sustain yield payouts. Plus, there are forms of yield paid out by users including MEV and tips, which supplement the network’s payout burden. 



Fidelity’s ultimate conclusion was that increased activity on <a href="https://blockworks.co/tag/ethereum">Ethereum</a> does in fact drive block space demand, which in turn, generates cash flow for token holders. 



But, the report said there remain “complex, nuanced” factors, including protocol and scaling upgrades, that make Ethereum’s future uncertain for investors.



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Fidelity: How ‘does utility translate into value for ether the token?’

Coinbase’s layer-2 network, Base, was introduced on the Ethereum mainnet about two weeks ago. Since that time, decentralized apps have shown an eager interest in deploying their offerings on the network.&nbsp;



This rapid uptake might be attributed to Base&#8217;s immediate success; on the day of its launch, the network reported <a href="https://blockworks.co/news/coinbase-base-success-rea">over $150 million in total value bridged</a> (TVB).&nbsp;



That figure has since ballooned to more than $261 million, per a Dune Analytics <a href="https://dune.com/tk-research/base">dashboard</a>. This far surpasses the TVB of <a href="https://dune.com/tk-research/mantle">Mantle</a> and <a href="https://dune.com/angry/linea-mainnet-dashboard">Linea</a>, layer-2s that launched within weeks of Base.&nbsp;



<a href="https://blockworks.co/news/coinbase-l2-base-mainnet">More than 100 dapps were integrated with Base at launch</a> in an attempt to take advantage of the early hype.&nbsp;



Chainlink, for example, was brought on as a partner to provide price feeds for the new layer-2. Additionally, about a dozen wallets have integrated, including Coinbase Wallet, Rainbow Wallet, Trust Wallet and Safe.&nbsp;



Here are some other notable participants in the Base network.



<h2 class="wp-block-heading">1inch</h2>



The most recent entrant was 1inch, a decentralized exchange (DEX) aggregator, which deployed on Base Thursday at 10 am ET.&nbsp;



Specifically, the 1inch Aggregation Protocol and the 1inch Limit Order Protocol are now available on Base, according to the company’s <a href="https://twitter.com/1inch/status/1694711772895441366">thread</a> on X.&nbsp;



Uniswap v3, Balancer v2, and SushiSwap v3 are just some of the dozen plus protocols that users will have access to on Base through 1inch.&nbsp;



“Base is a very promising layer-2 solution, plus it’s incubated by such a major player,” 1inch co-founder Sergej Kunz said in a statement shared with Blockworks. 



The company noted that an added benefit of the integration was that 1inch could now be in a position to benefit from “Coinbase product integrations and easy fiat onramps.”



Separately, Matcha is another DEX aggregator that <a href="https://blog.matcha.xyz/article/trade-tokens-on-base-with-matcha">recently launched</a> on Base.



<h2 class="wp-block-heading">Friend.tech</h2>



This decentralized platform that has friends frantically buying and selling “keys,” previously described as “shares,” of one another&#8217;s social media pages is another dapp that’s native to Base.&nbsp;



Friend.tech, which <a href="https://blockworks.co/news/friendtech-social-token">has garnered 100,000 users as of last count</a>, launched on Base on Aug. 10.&nbsp;



The platform, described as an on-chain social app, saw its revenue peak at over $840,000 on Aug. 20.&nbsp;



In the last few days, the amount it has collected through fees has steadily declined to where on Aug. 22, just two days after reaching an all time high, revenue dipped to just over $161,000, according to <a href="https://defillama.com/fees/friend.tech">DeFiLlama</a>.



But for people using Friend.tech, accountants have told Blockworks that by trading “keys,” <a href="https://blockworks.co/news/friend-tech-taxes">taxable events are created</a>.



They added that anyone trading on Friend.tech should keep records of their transactions close, and report them at the end of the tax year.&nbsp;



<h2 class="wp-block-heading">Arkham Intelligence</h2>



Arkham Intelligence <a href="https://twitter.com/ArkhamIntel/status/1693978849976226223">announced</a> Tuesday that a core group of its services is now supported on Base.&nbsp;



Arkham users can now see “a complete token portfolio of your wallets on Base,” and “visualize transactions on Base from any cluster of accounts.”



The company’s pitch also mentioned that users can now track influencers on Friend.tech through its native platform.&nbsp;



Arkham got loads of media attention in early July for its <a href="https://blockworks.co/news/arkham-on-chain-intelligence-platform">bounty-based marketplace for on-chain intelligence</a>. The marketplace certainly received praise, but the criticism ended up being much louder and more prominent.&nbsp;



Many people circulated concerns about “on-chain doxxing,” since sleuths are paid for, among other things, exposing info about particular wallet addresses.



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Base boasts around 140 integrations two weeks after launch

Katherine Ross

Web3 wallet and app Kresus launched Kresus Marketplace, which it developed in collaboration with Polygon Labs. 



The marketplace is live as of Aug. 23, and aims to “introduce non-Web3 natives to new and highly curated projects.” It’ll be available on the Kresus SuperApp.



Through the marketplace, users will be able to explore dapps — decentralized apps — on Polygon’s ecosystem, while allowing projects on Polygon to interact with a new audience.



“With the support of Polygon Labs, we’ve created a dapp explorer that is intuitive and accessible, allowing users to discover the many faces of Web3 and make them part of their daily lives,” Trevor Traina, CEO of KresusLabs said.&nbsp;



Through the marketplace, Kresus is aiming to create a “safe, fun and inviting environment” for Web3 natives and those just getting started.



“[The marketplace] exposes users to blockchain-based applications within an environment whose UX is akin to Web2. As a result, the complexity of interacting with on-chain applications is reduced, making for a safer and richer user experience,” Kresus said in a press release.



Kresus told Blockworks that the marketplace is “just one example of how we are providing new users education through exploration.”&nbsp;



The team will roll out a number of additional tools “enhancing access to the <a href="https://blockworks.co/tag/polygon">Polygon</a> ecosystem,” including Kresus Connect which is a software development kit (SDK) enabling Kresus wallet connection to both Polygon wallets and <a href="https://blockworks.co/tag/dapps">dapps</a>.&nbsp;



“Along with the Kresus Marketplace and Kresus Connect we are launching the Kresus Affiliate program. For participating affiliates we will be offering $2 for every new Kresus wallet created through their links,” Kresus told Blockworks.



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Kresus Marketplace opens doors for projects on Polygon

Dapp (dencentralized app) development team Smol recently released MultiSafe, which enables users to keep the same address across multiple blockchains.



The newly launched dapp builds on the work of Safe, previously known as Gnosis Safe, which develops modular infrastructure for user access and management of their crypto holdings.&nbsp;



One of its most well-known products, Safe Wallet, is a smart contract wallet designed to simplify the user experience of having multiple owners or signers — known as a multisig.&nbsp;



The problem, according to Smol core contributor <a href="https://twitter.com/draper_forms">draper</a>, was that when people use different addresses for their Safe across different chains and layer-2s, things can get confusing.



“We built MultiSafe to be the simplest way for anyone to deploy a Safe on the most used chains and have the same address on all of them. Users can deploy a totally new safe or clone an existing one in just a couple of clicks,” draper said.



MultiSafe was officially announced on Aug. 11. At the time, the team wrote that its release “continues Smol&#8217;s mission of creating simple to use and functional dapps designed to solve crypto pain points.”



So how does MultiSafe work?



MultiSafe is designed so that users can deploy a new Safe across multiple different chains within seconds whilst keeping the same address.&nbsp;



“If you already have a safe, you can ‘clone’ that safe onto other chains and keep the original address,” draper explained. “Under the hood, MultiSafe is using Safe’s own factory system which allows anyone to deploy Safe related contracts to any chain.”



This is accomplished by taking advantage of Safe’s deterministic logic, they said. This means users will be given the same address as their existing Safe accounts on different chains.&nbsp;



The Smol team has already built and shipped seven different <a href="https://blockworks.co/tag/dapps">dapps</a> — and according to draper, is in talks with other teams about future projects. 



“We’re already getting a nice amount of interest from other projects and protocols for us to integrate with them,” draper said.



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Smol built an app to keep your cross-chain crypto under one address

Darren Kleine

While crypto enthusiasts are busily debating which blockchain architecture is better, the average end user of future decentralized applications probably won’t care what’s operating under the hood — nor should they, says Drift Labs co-founder Cindy Leow.



Arguments over whether monolithic, modular or appchain architectures are the best blockchain scaling strategies will fade into obscurity if Leow has her way.&nbsp;



On the Lightspeed podcast (<a href="https://open.spotify.com/episode/3V71LInITt3XycwePoKM3H?si=fanNH2Q_TLGKpoqw0FUvoQ">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/drift-can-this-solana-dex-compete-with-binance-cindy/id1697548240?i=1000624508730">Apple</a>), Leow explains to Blockworks that Drift Labs’ goal with the company’s perpetual swaps protocol is to “attract an audience that doesn&#8217;t need to know about whatever underlying blockchain it’s on.”



The Drift protocol “enables on-chain perpetual and spot trading with leverage,” according to the company <a href="https://www.drift.trade">website</a>. While it operates exclusively on <a href="https://blockworks.co/tag/solana">Solana</a>, Leow explains that the company’s mission is to become a “neutral player” in the crypto space.



Simple onboarding mechanisms like email logins, with a “magic link” that creates a wallet for the user in the backend will make things accessible for users who don’t spend their days learning about validators, anti-spam mechanisms or the latest network consensus solutions.



“Our philosophy with the branding and with the product is that eventually, you really don&#8217;t need to be a hardcore Solana user to use and love the app,” Leow says.



Leow notes that many of Drift protocol’s users are passionately dedicated to <a href="https://blockworks.co/news/solana-defi-frees-developers">Solana’s ecosystem</a>. “We love being part of the narrative,” she says, “but we want to get to the stage for the product that anyone clicking in from a TikTok ad for Drift should be able to use it, without knowing what Solana is.”



Leow says that to achieve true scalability, additional layers of abstraction will need to be added over the underlying blockchain technology.&nbsp;



<h2 class="wp-block-heading">Too much at one time</h2>



Drift protocol lead engineer Crisp Heaney agrees. “Over time, there should be more abstractions and it should be easier to interact with things without knowing the blockchain you&#8217;re on,” he says.



A common strategic misstep, Heaney says, is believing in the concept of abstraction but instead trying to do “too much at one time” by building on multiple chains. Competitors who are “super-focused,” building on a single chain are likely to draw more consumer demand, Heaney says. And if they’re better at delivering a good product, he says, “you’ve just lost everywhere.”



“Even though, in theory, you should keep abstracting, in practice, you need to be super-focused on where you spend your time,” says Heaney.



Heaney says he is a “big proponent” of going “all-in” on one place, “and making that place great — versus trying to hedge our bets and have Drift deploy on multiple chains.”



“It&#8217;s just really tough to do that and not lose to a more focused team,” Heaney says.



Leow says the company is working on putting themselves “front and center” for broader distribution opportunities. She mentions <a href="https://blockworks.co/news/you-know-xnfts">Solana’s Backpack wallet</a>, where the company built a xNFT leaderboard feature that drew people into using Drift.&nbsp;



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG7501108163" width="100%"></iframe>







“We found that that was a funnel for a lot of more <a href="https://blockworks.co/tag/nfts">NFT</a>-focused traders to actually come in and start using it via <a href="https://blockworks.co/news/where-are-the-web3-apps">Backpack</a>,” she says. “Our app has so many different functions, you need to build pockets of access in multiple different places.”



Heaney adds: “We&#8217;re just trying to make it as easy as possible to get to Drift.”



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Abstract away the blockchains behind decentralized apps — Drift Labs

Macauley Peterson

When things go wrong for a DeFi protocol, they tend to do so spectacularly.



Through the first half of 2023 alone, around $292 million has been lost across 85 DeFi security incidents, according to statistics from Beosin, a blockchain security firm.



“DeFi projects experienced the highest frequency of attacks and the highest amount of losses compared to other project types,” the firm <a href="https://www.beosin.com/resources/H1_2023_Global_Web3_Security_Report,_AML_Analysis_&amp;_Crypto_Regulatory_Landscape.pdf" target="_blank" rel="noreferrer noopener">wrote</a> in a research report released Tuesday.



Meir Bank and Philippe Dumonet are out to change that with their proposed ERC-7265 “Circuit Breaker” specification.



The ERC — or “Ethereum request for comment” — <a href="https://github.com/ethereum/EIPs/pull/7265" target="_blank" rel="noreferrer noopener">published</a> Monday, is devised as a “temporary halt on protocol-wide token outflows when a threshold is exceeded for a predefined metric.”



The authors studied the typical usage of DeFi dapps and found that it is rarely the case that a protocol experiences a sudden drawdown of upwards of 25% — except when there’s a hack or exploit in progress.



The proposal aims to reduce the attack surface of a protocol, by delaying or reverting value outflows beyond a configurable threshold.



Although some individual dapps have their own bespoke implementations of such limits, this is&nbsp; the first such serious attempt at a standardized circuit breaker, Dumonet, co-founder of DeReg told Blockworks.



“Security has been a massive plague both for the reputation and adoption of the space,” Dumonet said. “Nobody wants to risk their capital in something that has a high perceived chance of being lost.”



Dumonet notes that the approach does not introduce any new centralization risk to all but the most decentralized dapps, “which is unfortunately quite rare in DeFi.”



Meir Bank, co-founder of Hydrogen Labs and developer of Fluid Protocol is “a big fan” of fully decentralized protocols such as <a href="https://blockworks.co/price/lusd" target="_blank" rel="noreferrer noopener">Liquity</a>, he told Blockworks. But he predicts a future in which they predominate is five to 10 years away. “That&#8217;s just not what&#8217;s causing billions of dollars to be lost by real people, and all these companies to fire all their employees and go down, and good technology to be lost when these hacks happen and the companies can&#8217;t recover,” Bank said.



The project started during a hackathon at ETHGlobal Tokyo in April, inspired by the efforts of Cosmos DeFi dapp <a href="https://blockworks.co/tag/umee" target="_blank" rel="noreferrer noopener">Umee</a>, which implemented rate limiting. Bank set out to tackle the problem for Ethereum, to reduce risk of exploits that have affected many promising applications such as <a href="https://blockworks.co/news/euler-labs-risk-head-resigns">Euler</a> — the victim of the largest this year, per Beosin.



“We&#8217;re still hoping to get some more feedback from the Ethereum community,” Bank said.



One drawback could be the occasional “false positive” which could, in theory, be considered a denial of service attack on a protocol, he said. But the Circuit Breaker contains a host of customizable parameters to minimize this risk.



The pair hopes that their standard will be adopted by developers of existing dapps as well as new ones coming in the future.



“It&#8217;s easier for new protocols that are just launching to integrate that, but it&#8217;s also quite feasible for protocols that are already in the wild to let developers know and migrate into the system,” Bank said.



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DeFi ‘circuit breaker’ could drastically reduce hacks and thefts

DeFi has long been at home on smart contract-capable virtual machine protocols like Ethereum and Solana. Bitcoin has generally been perceived as a tool for storing value, at least until the recent Ordinals craze got people thinking about what it could become.&nbsp;



The <a href="https://blockworks.co/tag/defi">DeFi</a> realm that once existed outside of the <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> domain has been made available through solutions that operate on top of the protocol, with the advantages of security and liquidity built into the Bitcoin network.&nbsp;&nbsp;



Retro-fitting modern scaling mechanisms to the slow-moving “<a href="https://blockworks.co/news/gold-bitcoin-fed-winners">digital gold</a>” blockchain has proven technically challenging. But do people really want DeFi on Bitcoin?&nbsp;



DeFi apps with slick interfaces and robust smart contract options are commonplace elsewhere. But, according to Muneeb Ali, the most popular will inevitably find themselves on Bitcoin.



The co-creator of <a href="https://www.blockworksresearch.com/research/stacks-the-difficulties-of-scaling-bitcoin">Stacks</a> and CEO of Trust Machines spoke to Blockworks on the 0xResearch podcast (<a href="https://open.spotify.com/episode/1MxzoWU6keVk0SIjjS4hs8?si=32f7b7e5cc734085">Spotify</a> / <a href="https://podcasts.apple.com/us/podcast/stacks-is-bitcoin-defi-overhyped-underrated-or-a/id1651683074?i=1000617866673">Apple</a>) about the “Bitcoin thesis” — the long-standing argument among loyalists that says any useful application on another chain will eventually come to Bitcoin.



And any app or asset that makes its way to the network will also be more valuable, he says, “because they will benefit from the security of Bitcoin, the durability of Bitcoin, but above all the liquidity of Bitcoin.”



<h2 class="wp-block-heading">I’m very confident in the ‘yet’</h2>



Ali says market data previously demonstrated a lack of interest in building for such use-cases on Bitcoin, but that’s changing. “This year, with <a href="https://blockworks.co/tag/ordinals">Ordinals</a> and <a href="https://blockworks.co/news/defi-on-bitcoin">more recently with BRC-20</a>, part of the thesis is actually coming true.”



This is “literally the case” with <a href="https://blockworks.co/tag/nfts">NFTs</a>, he says. Once inscribed on Bitcoin, the market assessed some previously <a href="https://blockworks.co/tag/ethereum">Ethereum</a>-based tokens with hefty <a href="https://nftnow.com/guides/bitcoin-nfts-most-notable-ordinals-inscriptions/">prices</a> earlier this year.



Trailing Ethereum alone, “Bitcoin is now number two in terms of trading volumes of NFTs. And <a href="https://blockworks.co/tag/solana">Solana</a> is number three,” he says. “Six months ago, this would be unimaginable. Bitcoin was not even on the map.”



It hasn’t played out in DeFi — yet. “I&#8217;m very confident in the ‘yet’,” Ali says.



“Bitcoin is the more pristine capital,” Ali says. More people have bought into the idea of bitcoin as money or as a potential reserve currency, he says.



But not for much else.&nbsp;



That’s not the fault of Bitcoin, according to Ali. It’s mostly due to lack of infrastructure — tooling, wallets, and the developer community around Bitcoin — as opposed to a lack of interest, he says.



<h2 class="wp-block-heading">People will use Bitcoin</h2>



Ali argues there’s plenty of demand for smart contract solutions on Bitcoin. He gives the example of <a href="https://www.blockworksresearch.com/assets/rbtc">RSK</a>, or Rootstock, a smart contract competitor to Stacks that’s been building on the network for years. “They did their fundraising in Bitcoin and I think 25,000 <a href="https://blockworks.co/price/btc">BTC</a> came into that raise.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG2460699237" width="100%"></iframe>







Stacks differs from RSK in a few key ways, with its “novel consensus mechanism, ambitious plans for subnets,” and in particular, its “unique BTC bridge” that does not rely on “a trusted set of signers,” according to <a href="https://www.blockworksresearch.com/research/stacks-the-difficulties-of-scaling-bitcoin">Blockworks Research</a>.



Ali mentions examples of applications like privacy tumblers that have seen large volumes of bitcoin being used, despite them being “really clunky.”&nbsp;



“It&#8217;s the best you can do on [layer-1],” he says, “but it&#8217;s nothing close to a <a href="https://blockworks.co/news/zk-rollups-future-of-smart-contract-blockchains">zero-knowledge-based solution</a> that has great UX” — something that is more likely to be found on Ethereum or Solana. For now, anyway.



“If you start bringing those use cases,” he says, “it&#8217;s as obvious as putting two and two together that people will use Bitcoin.”



“The challenge really is in the infrastructure tooling, devs, and UX wallets,” he says. “I think that needs to be much more mature than the state we are in today.”



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DeFi is possible on Bitcoin, but does anybody want it?

They say the average web user spends about six seconds reading written content on a webpage before moving on. Load times, optimal design and, of course, interesting stories are crucial for keeping eyes stuck to any given page.



We are an impatient lot, accustomed to instant access to information.



Before you leave, consider the average blockchain dapp. That’s an application operating on top of an ostensibly decentralized network, like <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, for example.&nbsp;



For users to consider a network truly decentralized, it a) should be composed of a collective of disparate participants and b) must have no central agents who could otherwise control or censor things in a way that is detrimental to users.



If you’ve ever dabbled in the average dapp experience, it might remind you of the old 56k modem days — whoops, I probably lost a few readers with that comparison — the transaction times and user experience can be painfully slow and unresponsive, especially now that we&#8217;ve been spoiled by near-instant internet performance.



Remember waiting for a JPEG to slowly fill the screen line by line back in the late 90s? You probably do since I already lost the ones who don&#8217;t. Now, you can capture that nostalgic feeling with a similarly plodding experience using <a href="https://blockworks.co/news/nft-investing-guide">NFT</a> and <a href="https://blockworks.co/category/defi">DeFi</a> dapps!



The key difference being, a dapp ideally operates on a decentralized network, free from censorship and centralized influence. But do you care? Does anybody care?



<h2 class="wp-block-heading">Users prefer a slick experience</h2>



A lot of users don&#8217;t seem to care all that much, says Josh Bowen, CEO of Astria, who spoke to Blockworks on the <a href="https://www.youtube.com/watch?v=eZMAQIvgQt8">Empire podcast</a> along with the CEO of Espresso, Ben Fisch. Sadly, it seems that a slick user experience tends to trump the principles of <a href="https://blockworks.co/tag/decentralization">decentralization</a>.



“It’s a user demand question,” Bowen says, “Fundamentally, users prefer faster block times.”



“Maybe it&#8217;s somewhat cynical,” Bowen says, “but users, I believe, will trend towards something that provides a higher quality user experience” regardless of principle.



Users will naturally prefer consuming two seconds rather than twenty to complete a transaction, unaware of the trade-offs that enable the speedier option. “It&#8217;s one of these general difficult things of cryptography and security,” he says, “you become aware of them when they fail catastrophically.”&nbsp;



“Prior to that, everyone just assumes everything is going smoothly.”



By the time users realize they’ve accepted these trade-offs, it’s too late to do anything to fix it, Bowen says.



One trendy way to somewhat safely speed things up in a decentralized network is to use <a href="https://blockworks.co/news/rollups-speed-or-decentralization">rollups</a>. These are specialized blockchains that carry out tasks to alleviate the load on the main network. However, there is one aspect of rollup solutions that is centralized, and that is the sequencer responsible for organizing transactions. This is primarily done for the sake of performance.



Rollups like <a href="https://blockworks.co/tag/optimism">Optimism</a> and <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> operate their own sequencers, giving them a significant degree of direct influence over transaction ordering — a role that Bowen says <a href="https://blockworks.co/news/shared-sequencers-decentralization">should also be decentralized</a> instead of operating under the sole control of any rollup provider.&nbsp;



<h2 class="wp-block-heading">Does it really matter?</h2>



A word of warning: You’re going to see the terms ‘centralization’ and ‘decentralization’ an awful lot here but please, hang in there. You’ve made it this far.



It’s all a balancing act, Bowen says, “The job fundamentally is providing users with a good enough experience without requiring them to sacrifice the decentralization principles to get that better user experience,” he says.&nbsp;



If the only option available for a high quality experience is centralized, a good percent of users will choose it, he says. “So I think it&#8217;s important to provide them an option that is still decentralized while providing that good user experience.”



“I take a pretty cynical perspective in that, generally I assume users just, quite frankly, don&#8217;t give a damn about decentralization.”



Bowen feels that as the industry has progressed, people have become less motivated by the founding principles of blockchain technology. More often, speculative aspirations, the desire for speedy transactions and clout-chasing behaviors have prioritized ease-of-use and performance over the preservation of any fundamental values. He says it is up to builders in the space to “reinforce those primitives and provide good user experiences.”



Fisch argues that users do care about the benefits of decentralization, just not necessarily the principle itself. “If one of the founders of Arbitrum or Optimism shows up on TV in handcuffs and goes to jail… then yeah, I think everyone&#8217;s going to decentralize their sequencers really, really quickly.”



Ideally, he hopes it doesn’t have to come to such an event, instead moving toward “the ideals of the industry” without being threatened by external governing agencies.



Fisch adds that one advantage of decentralization that users already care about, whether they know it or not, is the composability enabled through the technology. “Users like the fact that all apps on Ethereum are composable with all other apps — and that comes from the fact that <a href="https://blockworks.co/news/measuring-decentralization-is-your-crypto-decentralized">Ethereum is a decentralized system</a>.”



“They&#8217;re all sharing the same system. They&#8217;re all interoperable.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG9649521123" width="100%"></iframe>







Perhaps decentralization wouldn’t be necessary, Fisch suggests, “if blockchains were all perfectly competitive with each other.”&nbsp;



Which brings things back to the core issue, he says: “Internet services are prone naturally to centralization due to network effects.”



“So you do have to decentralize the operation of the internet service if you want to have long-term resilience.”



Speaking of long-term resilience… you stuck around for this whole story?&nbsp;



Consider yourself above average. You just might be patient enough for a truly decentralized network experience.



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Follow Sam Bankman-Fried’s trial with the <a href="https://blockworks.co/tag/sbf-trial">latest news from the courtroom</a>.

Rollups Aren’t All That Decentralized. Does Anybody Care?

Morgan Chittum

<div id="highlights-block_621fcee3502cd" class="highlights">
 <ul>
 <li>Web 3 Equities will begin deploying capital in late March</li>
 <li>Investments are listed in five categories: blockchain infrastructure, DeFi, DAOs, DApps and NFTs</li>
 </ul>
 
</div>



Benjamin Cohen made “one of the biggest decisions” of his life last year — one that he remains “very confident in.” He left his full-time role at his family’s real estate firm to launch a <a href="https://cms.blockworks.co/?s=web3" target="_blank" rel="noreferrer noopener">Web3</a> investment fund, Cohen told Blockworks.&nbsp;&nbsp;



“My jump into Web3 is basically on [this] premise,” Cohen, the managing partner and founder, said.



<blockquote class="wp-block-quote">“I think it&#8217;s inevitable that blockchain technology and smart contract technology will become implemented in every single facet of our life. And we&#8217;re just at the beginning of it.”</blockquote>



Web 3 Equities is focused on digital asset investments — specifically pouring capital into “the future of Web3,” Cohen explained.



Investments are listed in five categories: blockchain infrastructure, decentralized finance (DeFi), decentralized autonomous organizations (DAOs), decentralized applications (DApps) and non-fungible tokens (NFTs.)&nbsp;



“We&#8217;re investing across the entire ecosystem, so it gives investors exposure to [more than] one segment [of the market],” Cohen said.



He declined to name specific investments during an interview with Blockworks, but&nbsp;alluded to the types of protocols that the fund will &#8220;take significant positions in.&#8221;



“We&#8217;re not trying to arbitrage and buy bitcoin at $38,000 and sell it at $39,500,” Cohen said.



<blockquote class="wp-block-quote">“We&#8217;re trying to identify projects, communities, protocols that serve a purpose in the Web3 ecosystem, that solve a problem using blockchain technology.”</blockquote>



The fund currently has $5 million assets under management — some of which comes from Cohen’s personal investments. Current investors include high-net-worth individuals, both crypto-native and newcomers to the space.&nbsp;



Web 3 Equities does not take venture investments and aims to offer its investors more liquidity than other crypto funds.



“We’re structuring this like a hedge fund so after a certain amount and lockup period, investors will be able to have liquidity and recall their funds. I think that&#8217;s a differentiated value proposition,” Cohen said.&nbsp;



Web 3 Equities will begin deploying capital in late March.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



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dApps