Macauley Peterson

The proliferation of blockchain networks, both layer-1 and layer-2 rollups, has cast a spotlight on user experience limitations. These challenges are evident for even seasoned crypto-natives who want to move and use assets across chains.



Traditionally, developers deploy applications across multiple blockchain networks, each acting in isolation with its unique state and unable to directly interact with other deployments of the same application on different chains. Such a process is costly, time-consuming and contributes to what is known as “application fragmentation.”



The problem, as identified by the founders of Skatechain, is rooted in “redundant development efforts, liquidity fragmentation and toxic liquidity flow.” This fragmentation hinders the seamless operation and interaction of decentralized applications (<a href="https://blockworks.co/tag/dapps">dapps</a>) across various blockchains, resulting in inefficient operations, increased development costs and poor user experience.



Read more: <a href="https://blockworks.co/news/the-decline-of-crypto-market-liquidity-causes-and-potential-for-recovery">The decline of crypto market liquidity: causes and potential for recovery</a>



Skate, previously known as Range Protocol, seeks to establish the first universal application layer for all chains.



Skate proposes a “a hub and spoke model” that “relies upon transactions being matched and executed by users who sign intents, which are executed in real-time by using <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a> for faster finality,” according to a blog post <a href="https://skatechain.medium.com/introducing-skate-the-first-universal-application-layer-of-all-chains-2b67028b2780">published</a> Wednesday.&nbsp;



The multichain interaction would be done by a competing set of off-chain “executors,” analogous to “solvers” or private market makers in other contexts, with the protocol auctioning off the right to settle the transaction among this diverse set of “systematic entities,” according to Range Protocol’s CEO Siddharth Lalwani.



“The key aim of this is that we are centralizing it a bit in favor of providing a better UX,” Lalwani told Blockworks.



The project has launched its first <a href="https://nolliescan.skatechain.org/">testnet</a> built on the <a href="https://blockworks.co/tag/optimism">Optimism</a> Bedrock tech stack. Mainnet is expected to be live by the end of the second quarter, Lalwani said, with a pilot group of operators, before eventually moving to an Eigenlayer AVS.&nbsp;



Current liquidity and interoperability solutions aim to solve the apparent user friction at a network level, an approach Skate argues fails to get at the root of the problem: that each deployment still has differing states.



An application&#8217;s &#8220;state&#8221; refers to the current condition or status of an application at a specific moment in time, encapsulated by all the stored information and data that the application is managing. This includes everything from user data and current settings to the application&#8217;s own operational data — essentially any data that determines how the application behaves and appears to its users.



“Apps that integrate Skate can run on all chains with one single state,” the team <a href="https://x.com/skate_chain/status/1775454532111081944?s=20">claims</a>. “With a single deployment on Skatechain, apps will be able to interact with users on 1000s of chains.”



The idea, which it calls Universal Application Scope, is to keep the application logic and a unified state on Skate, while assets remain on their native chains. And not only on Ethereum and rollups, but even unrelated chains like Solana — the protocol is agnostic as to the underlying virtual machine environment.



That should provide a welcome benefit to dapp developers, according to Lalwani.



Read more: <a href="https://blockworks.co/news/crypto-infrastructure-lacking-apps">The crypto infrastructure is here, but where are the apps?</a>



“This ensures foundational needs of builders and users are met efficiently, allowing each chain to focus on creating value-added services and laying the building blocks for a <a href="https://blockworks.co/tag/modular-blockchains">modular</a> future,” Lalwani said in a statement.



In the background, the executors would make use of whatever the best settlement pathway for a given intent may be, bearing the latency risk in exchange for a small fee.



Backing from founders or core team members of a slew of recognized Web3 names including EigenLayer, Polygon, Manta, Axelar and Pendle signifies strong industry support for its concept.



Axelar Foundation director Georgios Vlachos, an angel investor, told Blockworks, &#8220;Range Protocol and Axelar share a common vision where applications are built and operate seamlessly across multiple platforms.&#8221;



A future version would aim to handle more complex interactions.



For instance, take a collateralized stablecoin protocol like Grai. When a user opens a vault using staked ether to mint/borrow GRAI on Ethereum, then does the same on a rollup like Arbitrum, each vault (or a “vessel” in Grai’s lexicon) is isolated. That means you can’t take some GRAI on Arbitrum and use it to pay off your Ethereum debt, without first bridging.



With the application logic on Skate chain, the user could see their <a href="https://blockworks.co/tag/liquidity">liquidity</a> and debt as a single vessel, regardless of where the underlying assets are located.



“You can put collateral, say, $100 from Base, $100 from Arbitrum, $100 from Monad, and then you can actually mint GRAI on, say, Mantle,” Lalwani said.



Updated Apr. 4, 2024 at 1:17 pm ET with comment from Axelar.



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Skate takes an app-centric approach to L2 fragmentation

David Canellis

Casey Wagner

Katherine Ross

<h2 class="wp-block-heading">Base has what other L2s don’t: a culture</h2>



Coinbase may be pulling off a move that runs opposite to crypto’s holiest cypherpunk ideals: fostering an unironic vibe around Base, its corporate-powered L2.



No matter how you look at it, Base is popping off. The rollup network, built on the OP Stack, is posting all-time high transaction counts, stablecoin volumes and unique addresses.



The rising popularity of its native AMM, Aerodrome, has helped push Base’s total value locked to $2.57 billion — more than double Polygon and Avalanche.



It took years for those other networks to attract all that liquidity and mindshare. <a href="https://blockworks.co/tag/base">Base</a> has done it in under eight months. And while Base still has only a small fraction of Optimism and Arbitrum’s TVL, Base is now firmly within <a href="https://l2beat.com/scaling/summary">spitting</a> distance of Blast, the L2 offering native yield to attract crypto natives.&nbsp;



Somehow, Base has developed its own culture. Base boasts bustling NFT markets where being “based” is a big deal.&nbsp;



Ethereum has <a href="https://blockworks.co/tag/bored-ape-yacht-club">Bored Apes</a> and CryptoPunks. Base, on the other hand, has Tiny Baseds Frogs, Based Fellas, and Primitives — the latter of which is a generative pixel art collection with “crypto-native” characters. All have seen millions of dollars of trade in the past week.



<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">Base isn’t a narrative, it’s a way of life. <a href="https://t.co/9kTi6Nosid">pic.twitter.com/9kTi6Nosid</a>&mdash; Toady Hawk (Noun 730) (@toady_hawk) <a href="https://twitter.com/toady_hawk/status/1772250265426464901?ref_src=twsrc%5Etfw">March 25, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Turns out, Ethereum layer-2s can be big enough to support their own communities</figcaption></figure>



The sudden popularity of <a href="https://blockworks.co/tag/friend-tech">friend.tech</a> was, in many ways, Base’s breakout moment. It gave the crypto crowd a familiar proof of concept with which to fool around as they waited for the bull market: Invest crypto in shares of your favorite social media accounts, like BitClout without its own blockchain or native cryptocurrency.&nbsp;



Friend.tech has died down but the spirit has lived on. Base creator Jesse Pollak, also head of protocols at Coinbase, has pushed to find <a href="https://base.mirror.xyz/V396L2doSesY_qokAIYZnVwMloDvcg1CQzWX05p3Ty4">ways</a> to fuse the network with Web3 social media app Farcaster and its programmable Frames.



Pollak has even been spotted in Base-flavored memecoin Telegram groups, <a href="https://twitter.com/moneyl0rd/status/1772310775807328391">spreading</a> based vibes.&nbsp;



Coinbase is so far successfully distilling all that buzz down into revenue. Gross <a href="https://app.blockworksresearch.com/analytics/base?dashboard=base-financial&amp;currency=USD&amp;interval=daily">profit</a> for Base nearly cleared $4.5 million over the past week alone, up from under $100,000 in the first week of January.&nbsp;



The secret source for crypto exchanges is diversifying from transaction revenues, and Base may be the killer ingredient for <a href="https://blockworks.co/tag/coinbase">Coinbase</a>.&nbsp;



About 60% of Coinbase’s revenue last quarter was transaction fees, more than $500 million. Base’s annualized profit right now, based on the past week, is about $235 million.&nbsp;



All Coinbase needs to do is keep the vibes high.



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



📉 Fees for Ethereum L2s are still very low after the Dencun hard fork, <a href="https://l2fees.info/">at or below</a> $0.01 on Optimism, Starknet, Arbitrum and zkSync Era.



💵 There’s again almost $150 billion in stablecoins sloshing around crypto markets, levels not seen since September 2022 (just before FTX).



🔢 Thanks to Hyperliquid, Arbitrum is still the no. 1 network for on-chain <a href="https://defillama.com/derivatives/chains">derivatives</a>: $4 billion over the past 24 hours to Ethereum mainnet’s $1.36 billion.



〰 <a href="https://www.coinbase.com/price/bitcoin">Bitcoin</a> hovers just below $71,000 while <a href="https://www.coinbase.com/en-gb/price/ethereum">ether</a> trades around the $3,600 level.&nbsp;



📈Coinbase <a href="https://www.nasdaq.com/market-activity/stocks/coin">shares</a> rallied during the pre-market trade, gaining 4% after <a href="https://blockworks.co/news/bitcoin-back-above-70k">closing almost 10% higher on Monday</a>.&nbsp;



<h2 class="wp-block-heading">⚖️ So, we’re all suing the SEC now?&nbsp;</h2>



Days after being hit with sanctions in a US district court, the Securities and Exchange Commission was served another lawsuit Monday, this time from co-defendants — the DeFi Education Fund and NFT issuer Beba.&nbsp;



The DeFi Education Fund seeks a court order declaring that Beba — “a small, family-owned business in Waco, Texas,” in the words of Chief Legal Officer Amanda Tuminelli —&nbsp;didn’t break US securities laws with its free airdrop.&nbsp;



The pair also claims that the SEC violated the Administrative Procedure Act, an allegation we’ve seen brought up in several suits between the regulator and crypto companies. Coinbase most recently evoked this argument in its <a href="https://blockworks.co/news/coinbase-appeals-sec-rulemaking-petition">March appeal to grant a petition for rulemaking</a>.&nbsp;



Going head to head with the SEC in court is no small feat. It’s time-consuming and expensive. Just ask Ripple, which spent $200 million and 38 months — and counting — <a href="https://blockworks.co/news/ripple-sec-legal-battle-continues">on their defense against the securities regulator</a>. That’s not even counting the penalties they will eventually owe.&nbsp;



Even bigger crypto firms that have opted to settle in the past are now choosing to fight. Kraken, which <a href="https://blockworks.co/news/crypto-has-appetite-to-sue-sec">settled charges associated with its staking program</a> a year ago, is defending itself against SEC allegations that it’s operating as an unregistered securities exchange.&nbsp;



Critics argue that under the SEC’s so-called “regulation by enforcement” regime, lawsuits are the only way for the industry to get answers. Going on the offense, though — filing suits before the SEC has a chance to issue an enforcement action — appears to be the latest trend.&nbsp;



If it works, the industry owes the DeFi Education Fund and Beba a huge thank you. If it doesn’t? Well, at least now we’ve all heard of Beba.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">🇺🇸 Why political memecoins matter&nbsp;</h2>



The US presidential race is well underway, and the momentum for political memecoins continues.



The group is based on politicians such as President Joe Biden and Donald Trump, with MAGA being one of the most popularly known ones. MAGA has a $248 million market cap, according to data from CoinGecko.



Solana-based BODEN is a Biden memecoin, as the name suggests. It quickly gained momentum, popping 850% in just 14 days. TREMP, which sits in the more diluted category of Trump-based memecoins, saw a 70% increase over the past 14 days, though it’s trading higher than BODEN at $0.427. BODEN sits at $0.318.



In an election year, political memecoins launch and trade purely on hype. There are also pretty clear bear and bull cases, which stand out in the broader memecoin market. Some bull cases center around the upcoming election and the potential for debates. Among the bear cases: there’s too much momentum, and too early in the election cycle, for traders to keep up.



<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">would love to hear anyone&#39;s bear case for political memecoins between now and the election feels like one of the easiest trades to make personally&mdash; DeeZe 🫡 (@DeeZe) <a href="https://twitter.com/DeeZe/status/1772156217990815866?ref_src=twsrc%5Etfw">March 25, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In all fairness, memecoins across the board show that there’s still an appetite in the market despite the risk of a rug pull and overall volatility.&nbsp;



Political memecoins prove one thing, however: <a href="https://blockworks.co/news/blackrock-ethereum-memecoins-tornado-cash-dusting">Crypto can both be taken seriously</a> and allow the unserious to continue — whether it comes in the form of Trump and Biden coins or, you know, a dog with a little hat. 



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



Welcome to The Works 👋 Your daily slice of crypto (and not-so-crypto) from around the Web. 🕸️



🧪Fred Ehrsam tested out Farcaster as a platform for research bounties, complete with a $1,000 prize. The results: “it worked pretty well!” <a href="https://twitter.com/FEhrsam/status/1772442811708621007">Read Ehrsam’s thread</a>.&nbsp;



⚡Researchers at Cornell University contend that crypto mining combined with so-called green hydrogen <a href="https://www.sciencedaily.com/releases/2024/03/240325172414.htm">could spur</a> “the foundation for wider deployment of renewable energy.”



🤝”Refurbished” crypto mining hardware will find new homes after the upcoming bitcoin halving renders them less profitable, <a href="https://news.bloomberglaw.com/crypto/bitcoin-halving-spurs-exodus-of-old-us-mining-computers-abroad">Bloomberg reports</a>.&nbsp;



🇬🇧 Speaking of bitcoin: in case you missed it, <a href="https://blockworks.co/news/london-stock-exchange-crypto-exchange-traded-notes">bitcoin exchange-traded notes are arriving</a> in London this spring. Get excited.&nbsp;



💸 BlackRock is positioning bitcoin as a portfolio diversifier to its clients, <a href="https://www.cnbc.com/2024/03/25/blackrock-says-bitcoin-will-be-a-good-portfolio-diversifier-despite-its-recent-rally-with-stocks.html">CNBC reports</a>.&nbsp;



<h3 class="wp-block-heading">The Morning Riff</h3>



<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’re cardano girls <a href="https://t.co/ebB6Qd0t2Q">pic.twitter.com/ebB6Qd0t2Q</a>&mdash; LILY (@lilybrodi) <a href="https://twitter.com/lilybrodi/status/1772288881901093250?ref_src=twsrc%5Etfw">March 25, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Cringy TikTok trend 🤝 Crypto Twitter. Some things really don’t change…including our mental health, I guess.&nbsp;



“This is the marketing Cardano needs,” one user <a href="https://twitter.com/Padierfind/status/1772296456004641084">replied</a>. Yes, because Cardano needs marketing that includes a (semi-joking) thirst trap aimed at Charles Hoskinson.&nbsp;



For his part, Hoskinson <a href="https://twitter.com/IOHK_Charles/status/1772392131648168152">replied</a> that he was “blushing” after watching the video. But, hey, it’s always a bonus to see women in crypto.&nbsp;&nbsp;



— Katherine Ross



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Based culture: Inside Coinbase’s L2 feat

Bessie Liu

Modular blockchain Eclipse has secured $50 million in a Series A funding round led by Placeholder and Hack VC, bringing its total funding to $65 million. 



Other investors including Polychain Capital, Delphi Digital, Maven 11, DBA and Fenbushi Capital also participated in the round.



Blockchain modularity refers to the different design layers of a blockchain stack. These include execution, settlement, consensus and data availability.&nbsp;



Read more: <a href="https://blockworks.co/news/monolithic-modular-blockchain-debate">A spicy salvo launched in the monolithic vs modular debate</a>



For blockchains like Bitcoin, Ethereum and Solana, this activity is carried out by the same set of nodes. Modular blockchains, on the other hand, divide these different functionalities into separate specialized layers.



Neel Somani, the founder of Eclipse, told Blockworks that he believes that there are no <a href="https://blockworks.co/tag/layer-2-2">layer-2s </a>on <a href="https://blockworks.co/news/lightspeed-yakovenko-layer-2-scaling">Ethereum today that are built for scale</a>.&nbsp;



“There are many theoretical solutions, and plenty of infrastructure being funded which will mitigate the issues of liquidity fragmentation in the coming years, but our view is that there is tons of low-hanging fruit at the execution layer which we will happily incorporate to provide a superior user experience on <a href="https://blockworks.co/tag/ethereum">Ethereum</a>,” Somani said. “Eclipse is intended to be the most performant layer-2.”



Eclipse is built using the Solana Virtual Machine (SVM) for execution, Celestia for data availability, and Ethereum for settlement and consensus.&nbsp;



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>



Although the Dencun upgrade <a href="https://blockworks.co/news/ethereum-dencun-upgrade-march-13">is just around the corner</a>, which will make data posting much more affordable through the introduction of EIP 4844. Somani notes that Eclipse will continue to use Celestia for data availability however, at least for the time being.



“Despite the Polymarket poll saying blobs will be practically free after Dencun, I find it unlikely that this will actually be the case,” Somani said.&nbsp;



The team may consider publishing some data to Ethereum following full Danksharding, like state diffs.&nbsp;



Read more: <a href="https://blockworks.co/news/ethereum-rollup-data-availability-alternatives">For Ethereum rollups, dealing with data remains a bottleneck</a>



Despite these considerations, Somani notes that publishing all transactions onto a data availability layer, even for <a href="https://blockworks.co/tag/zero-knowledge-rollup">zk rollups</a>, has advantages. This approach ensures transparency, enabling anyone to promptly verify if a zk proof system has been tampered with or compromised.



“We are constantly monitoring DA advancements on the Ethereum layer-1. At the same time, for infrastructure it&#8217;s always wise to place a premium on any dependencies that are stable and live today,” he said.



The company noted that it will launch mainnet in Q2 of 2024. It has so far released a devnet and testnet version of its protocol, with several <a href="https://blockworks.co/tag/dapps">dapps</a> already testing out its infrastructure. These <a href="https://blockworks.co/news/the-investors-guide-to-rarible">include NFT marketplace Rarible</a>, oracle infrastructure Pyth Network and lending protocol Solend.



Following its mainnet launch, the company said it would sponsor hackathons and accelerators and organize community events for its users.



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Eclipse secures $50M ahead of mainnet launch

Manta Pacific, a layer-2 network currently running on Optimism’s OP stack, has become the first such chain to adopt modular data availability (DA) using the newly launched Celestia mainnet.



The shift to Celestia for DA, instead of Ethereum mainnet, is expected to make transactions for Manta Pacific cheaper by at least an order of magnitude, according to core contributor Kenny Li, which should “future-proof” the chain even if demand for block space picks up in a future bull market.



Currently, a typical transaction costs around $0.24 on Manta Pacific, but Li anticipates that they can reduce that to less than $0.03 within a week or two, and a 25x savings after further adjustments in January.



Read more: <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">Celestia, the first modular data availability network, launches on mainnet</a>



Li, who co-founded p0x Labs, which is developing Manta Network, started talking with the Celestia team in the first quarter of 2023, after learning that Celestia was working on an OP stack integration, which timed out well with Manta’s launch plans.



“By coincidence, we were able to kind of get the stars aligned there — no pun intended,” Li told Blockworks.



Manta Pacific&#8217;s integration with Celestia utilizes data availability sampling (DAS), a mechanism that allows light nodes to verify data availability without downloading all data within a block. This method reduces costs by enabling more efficient data retrieval, effectively turning the <a href="https://blockworks.co/tag/rollups">rollup</a> into a validium.



Read more: <a href="https://blockworks.co/news/layer-2-secured-by-ethereum">So your layer-2 is ‘secured by Ethereum’ — what does that mean?</a>



The adoption of modular blockchain designs involve a separation of various tasks — such as consensus, execution, data availability and settlement — across different layers, rather than handling all functions within a single chain.



Since the <a href="https://blockworks.co/news/manta-network-layer-2">launch of the Manta Pacific testnet</a> in August, the Manta team <a href="https://blockworks.co/news/manta-ditches-op-stack">decided to switch to a zkEVM</a> based on the <a href="https://blockworks.co/tag/polygon">Polygon</a> Chain Development Kit (CDK).



Polygon’s own proof-of-stake chain will also <a href="https://blockworks.co/news/polygon-pos-to-validium">migrate to a zkEVM validium rollup</a>.



This transition, which should take place in the second quarter of 2024, will solve the user pain point of delayed withdrawals required by the fault proofs endemic to Optimistic rollups.



“Right now, we&#8217;re looking at, first, phasing it in such that one of our phases would essentially have a multi-prover model whereby we could fall back to the fault proofs on the OP stack if anything went wrong, but also being able to bring in the zk proofs so that we can have that fast finality for the users,” Li said.



Fault proofs on <a href="https://blockworks.co/tag/optimism">Optimism</a> are not yet live, so the integrity of transactions relies on trusting a centralized sequencer and community vigilance.



Manta also relies on one centralized sequencer to post data to Celestia, and Li analogizes the planned zk-prover fallback mechanism to the use of Celestia itself.



“The components we need to think about [are] resiliency, fallback options, contingency plans, and so with Celestia, the contingency here is that the fallback goes back to <a href="https://blockworks.co/tag/ethereum">Ethereum</a>” for data availability, Li explained.



Since DA is the main driver of transaction costs for the user, a multi-prover system should have a negligible effect.



P0x Labs, the team building the Manta Network, <a href="https://blockworks.co/news/investment-firms-dominate-week">wrapped up a $25 million Series A</a> funding round in July.



Manta Pacific joins Manta Atlantic, a Polkadot parachain expected to go live in early 2024, to collectively offer a multifaceted option for the development of Web3 applications.



Read more: <a href="https://blockworks.co/news/polkadot-rethinks-parachain-auctions">Polkadot rethinks the economics of parachain auctions</a>



Manta Atlantic focuses on zk solutions within the Polkadot ecosystem, but Li said there are synergies between the two coming.



“A lot of the zk components that we built out on the circuit side specifically are focused on on-chain identity, and so one of our goals right now is to bridge that on-chain identity over to the Pacific ecosystem so that people can verify without revealing any of their wallet addresses and stuff,” he said.



That would include roughly 100,000 <a href="https://blockworks.co/tag/kyc">KYCd</a> participants, he added.



<h2 class="wp-block-heading">Native yield on ETH and USDC</h2>



Manta Pacific offers its own spin on the idea pioneered by Mantle and <a href="https://blockworks.co/news/3-years-launch-eth-staking">Blast</a> to let users earn yield on their deposited ether and stablecoins while interacting with dapps on the layer-2 network.



Read more: <a href="https://blockworks.co/news/ether-liquid-staking-solution-meth">Mantle offers ‘mETH’ to the masses, as a ‘lighter weight Lido’</a>



Manta relies on <a href="https://docs.stakestone.io/stakestone/">StakeStone</a> a Liquid Staking Token (LST) protocol that accepts ETH and issues STONE, a non-rebasing Omnichain Fungible Token (<a href="https://layerzero.gitbook.io/docs/evm-guides/layerzero-omnichain-contracts/oft">OFT</a>) based on the <a href="https://blockworks.co/tag/layerzero">LayerZero</a> protocol, which can be used directly in DeFi dapps.



StakeStone supports leading staking pools and is compatible with upcoming restaking, such as <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>.



Similarly, USDC deposits are converted to the yield-bearing stablecoin (USDM) issued by <a href="https://mountainprotocol.com/">Mountain Protocol</a>. Manta will eventually enable bridging these tokens back out after an initial phase of about two months as part of a campaign, dubbed New Paradigm.



And that’s exactly how Li sees it.



“Kudos to Blast — they&#8217;ve got like 800 million <a href="https://blockworks.co/tag/tvl">TVL</a> [total value locked] from people who could otherwise be using those assets in ways that could provide more future value,” Li said, adding that Manta Pacific’s TVL is about $60 million after 3 days.



“I do know that many other [<a href="https://blockworks.co/tag/layer-2-2">layer-2s</a>] are also exploring this now as well, and I think while it&#8217;s interesting and novel at this moment, a year from now, I wouldn&#8217;t be surprised if it&#8217;s a commodity — the feature that everyone has,” he said.



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Manta Pacific adopts Celestia, embraces native Ethereum yield

Coinbase and its asset management arm teamed up to launch Project Diamond, a smart contract platform that allows institutions to trade and create new digital assets.



The goal is to allow institutions to manage digital assets “directly on-chain,” Coinbase <a href="https://www.coinbase.com/blog/coinbase-and-coinbase-asset-management-announce-project-diamond-a-smart">said</a>. However, only institutions outside of the US will be able to use it.



The platform uses both Base — Coinbase’s layer-2 blockchain — and Coinbase’s technology stack, which includes Coinbase Prime, Web3 Wallet and USDC. The platform itself is managed by Coinbase Asset Management.&nbsp;



Coinbase officially launched Base in August after unveiling the network back in February. Developers, however, were able to access Base back in July. The <a href="https://blockworks.co/news/coinbase-base-success-rea">network quickly saw success</a>.



Read more: <a href="https://blockworks.co/news/coinbase-l2-base-mainnet">Coinbase layer-2 network Base now live on Ethereum mainnet</a>



Back in November, the “first digital debt instrument on Project Diamond was successfully issued, distributed and matured on the platform” in a demonstration to Abu Dhabi Global Market’s Financial Services Regulatory Authority that it could join the RegLab sandbox.



The “digital discount note, denominated in USDC, was transacted within a single application at near-instant settlement speed on <a href="https://blockworks.co/tag/base">Base</a>.”



Project Diamond received “in-principle approval” from the FSRA of ADGM, meaning it will be able to test out Developing Financial Technology Services within the sandbox.&nbsp;



<a href="https://blockworks.co/tag/coinbase">Coinbase</a> joins the ranks of banks and other institutions looking to tokenize real-world assets. Earlier this month, Societe Generale — France’s third-largest bank — <a href="https://blockworks.co/news/green-bond-ethereum-issued">issued a green euro-denominated bond</a> on Ethereum.&nbsp;



The transaction amounted to 10 million euros — $10.8 million — and has a three year maturity.



Its tokenized bonds, SocGen said, will ensure “increased transparency and traceability as well as improved fluidity and speed in transactions and settlements.”



Its crypto unit also <a href="https://blockworks.co/news/socgen-euro-pegged-stablecoin">issued a euro-denominated stablecoin</a>, dubbed EUR CoinVertible, on Bitstamp.



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Coinbase uses Base to build digital asset platform for TradFi institutions

A new Ethereum layer-2 rollup, announced Monday, has already attracted $27 million in total value locked (TVL), but there’s a twist: It doesn’t yet exist.



The promised network, Blast, would launch as an optimistic rollup in February 2024, but its backers immediately began soliciting deposits into a smart contract “bridge.”



In the span of half a day, the contract has amassed enough ether (<a href="https://blockworks.co/price/eth">ETH</a>) and dai (<a href="https://blockworks.co/price/dai">DAI</a>) to put it at number 16 in rollup tracker L2Beat’s TVL <a href="https://l2beat.com/scaling/summary">rankings</a>, ahead of established names such as <a href="https://blockworks.co/news/ribbon-finance-governance-approves-aevo-brand-merger">derivatives DEX Aevo</a> and <a href="https://blockworks.co/news/offchain-arbitrum-developers">Arbitrum Nova</a>.



The <a href="https://x.com/Blast_L2/status/1726747087906464024?s=20">announcement</a> touts Blast as “the only Ethereum L2 with native yield for ETH and stablecoins,” meaning it taps into Ethereum staking yield by directing all ETH to <a href="https://blockworks.co/tag/lido">Lido</a> and uses DAI to tap <a href="https://blockworks.co/tag/makerdao">MakerDAO&#8217;s</a> growing US Treasury bill yield through its <a href="https://blockworks.co/news/dai-savings-rate-us">Dai Savings Rate</a> (DSR), currently at 5%.



Blast’s development team, led by pseudonymous <a href="https://blockworks.co/tag/blur">Blur</a> co-founder Pacman, raised $20 million from venture capital firms Paradigm and Standard Crypto, joined by a motley crew of <a href="https://x.com/Blast_L2/status/1726747123952263195?s=20">angel investors</a> and crypto influencers.



Early reaction has focused on the one-way nature of the “bridge” — once you cross you can’t exit until after Blast actually launches and withdrawals are enabled.



Normally, a bridge allows assets to flow both ways. This contract is <a href="https://app.safe.global/settings/setup?safe=eth:0x67CA7Ca75b69711cfd48B44eC3F64E469BaF608C">apparently controlled</a> by a five-key multi-signature wallet. However, of the five addresses, one contains no ether and has no transaction history, and the other four were recently funded by <a href="https://etherscan.io/address/0x62abcf00d56057edcbcd8122dc06ab6a1fa643dd">a single address</a>.



That calls into question the independence of the signing cohort.



According to Pacman, there&#8217;s no need to worry.



&#8220;The Blast Early Access bridge contract does use a multisig, and each signer is a unique contributor to Blast,&#8221; he told Blockworks. &#8220;This is the same security model that other L2s like Optimism, Polygon, and Arbitrum utilize — these L2s are all upgradeable via multisig as well.&#8221;



Blockworks also contacted Paradigm and Standard Crypto for comment.



L2Beat designated the project &#8220;<a href="https://l2beat.com/scaling/summary#upcoming">upcoming</a>&#8221; rather than &#8220;active&#8221; as a result of its current implementation.



<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">Following the recent rise of <a href="https://twitter.com/Blast_L2?ref_src=twsrc%5Etfw">@Blast_L2</a>, we&#39;ve decided to add it to our upcoming projects on our website, despite its whopping $87M TVL. We wanted to explain our decision. To the best of our knowledge, Blast is an upcoming rollup set to launch in Q1 2024 (according to their… <a href="https://t.co/8AG2e0gpAU">pic.twitter.com/8AG2e0gpAU</a>&mdash; L2BEAT 💗 (@l2beat) <a href="https://twitter.com/l2beat/status/1727268906090279209?ref_src=twsrc%5Etfw">November 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The use of Lido has drawn the ire of Ethereum community members concerned with centralization risk in staking providers, including Dankrad Feist, who <a href="https://x.com/dankrad/status/1726912734388765067?s=20">called it</a> “a very bad idea” on X.



“ETH and liquid staking derivatives are different assets with different risk profiles (and rewards), and users should have a choice about which one they want to use,” he said.



It should come as no surprise, given that Paradigm is an <a href="https://blockworks.co/news/lido-centralization-debate-ethereum">investor</a> in both Lido and Blur.



Critics also question the use of a multi-level-marketing style referral campaign, which doles out points, of unknown value, to incentivize sending invitations to prospective new users.



<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">Sounds like a textbook ponzi. I’m in. <a href="https://t.co/aDzWD5zrDO">pic.twitter.com/aDzWD5zrDO</a>&mdash; NoSleepJon 💤⏩ (@nosleepjon) <a href="https://twitter.com/nosleepjon/status/1726756844809384403?ref_src=twsrc%5Etfw">November 21, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The site explicitly promises an airdrop based on early access participation. Points earned are <a href="https://x.com/Blast_L2/status/1726747138217144780?s=20">expected</a> to be redeemable in May 2024.



Points systems have increasingly been used as a <a href="https://blockworks.co/news/ether-fan-nfts-incentivize-stakers">growth bootstrapping</a> mechanism by protocol developers — including Pacman’s <a href="https://blockworks.co/news/blur-airdrop-nft-trading">prior marketing of Blur</a> — and are widely seen as a precursor to an airdrop or something else of value.



Updated Nov. 21, 2024 at 12:15 pm ET with comment from Pacman and Nov. 22 at 5:57 am ET with additional context.



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Wannabe L2 Blast bursts onto scene promising high ETH yield — in 3 months

Ben Strack

A continued shift to DeFi-focused offerings could be a boon for crypto exchanges looking to diversify revenue streams and attract new users, industry executives say.&nbsp;



With another exchange-launched layer-2 network reportedly in the works, such chains, and other decentralized products, look poised to become more prevalent for centralized crypto giants.



<a href="https://blockworks.co/news/coinbase-l2-base-mainnet#">Coinbase launched Base</a> — an Ethereum layer-2 network built with Optimism’s OP stack — in August. The publicly traded company’s third quarter subscription and services revenue, which is generated from stablecoins, custodial fees, blockchain rewards and interest income, exceeded its transaction revenue for the second straight quarter.&nbsp;



Bitwise crypto equities specialist Alyssa Choo previously told Blockworks that Coinbase is <a href="https://blockworks.co/news/coinbase-q3-earnings-analysis">setting up its future as a “crypto super app,”</a> adding that monetizing Base is on the company’s radar.&nbsp;



Crypto exchange Kraken is mulling a similar layer-2 launch, CoinDesk <a href="https://www.coindesk.com/tech/2023/11/07/kraken-said-to-seek-partner-to-help-build-it-a-layer-2-blockchain-network/">reported</a> Tuesday.&nbsp;



“We’re always looking to identify and solve for new industry challenges and opportunities,” a Kraken spokesperson told Blockworks in an email. “We don’t have anything further to share at this time.”



Andy Bromberg, CEO of crypto wallet Beam, noted that <a href="https://blockworks.co/tag/layer-2-2">layer-2</a> networks have the potential to generate substantial profits for exchanges via grants and transaction revenue.&nbsp;



“If they believe in their ability to leverage this user base for long-term adoption and usage, launching a network becomes a logical step for them,” he said.&nbsp;



Coinbase did not specify the fees garnered from on-chain transactions in its third quarter shareholder <a href="https://s27.q4cdn.com/397450999/files/doc_financials/2023/q3/Shareholder-Letter-Q3-2023.pdf">letter</a>. But the company said layer-2s “can be likened to the transition from dial-up Internet to broadband.” Coinbase’s Onchain Summer <a href="https://www.coinbase.com/blog/celebrate-onchain-summer-with-coinbase">event</a> in August saw about 10 million NFTs minted across more than a million transacting wallets on Base, amounting to $500 million in assets on the platform.



Dan Reecer, head of operations at Wormhole Foundation, said looking to replicate such success would be appealing to Kraken.



“This additional revenue stream could further strengthen Kraken&#8217;s financial position and support its long-term growth plans especially as it likely eyes an [initial public offering] in the future,” Reecer said.&nbsp;



Kraken is among the crypto firms doubling down on “the full vision of crypto,” Bromberg said, noting that decentralized products expand a company’s reach beyond just custodial services, for example.



Kraken <a href="https://blockworks.co/news/kraken-acquires-staking-platform-staked">acquired staking platform Staked</a> in 2021 to offer a non-custodial alternative to its staking service — but <a href="https://blockworks.co/news/kraken-settles-sec-crypto-staking-program">ended on-chain staking for US clients</a> as part of a settlement with the US Securities and Exchange Commission. The exchange <a href="https://blockworks.co/news/kraken-nft-marketplace-launches">launched an NFT marketplace</a> in June.



Binance CEO Changpeng Zhao said in 2022 that while centralized exchanges offer a gateway to people entering the crypto space, <a href="https://blockworks.co/news/binances-cz-believes-in-a-decentralized-future#">DeFi is set to become more prevalent</a> in the coming years. The comments came less than two months before the collapse of FTX, which further shook confidence in centralized entities.&nbsp;



Binance offers BNB Chain, an ecosystem of layer-1 and layer-2 scaling solutions. It <a href="https://blockworks.co/news/binance-web3-wallet-custody">unveiled a Web3 wallet</a> Wednesday built to simplify user interaction with DeFi applications by integrating multiple blockchains.



CoinScan vice president Evan Steinhilb said Kraken could benefit from funneling its clients into the DeFi and self-custody realms via its own products, rather than directing them to competing offerings.&nbsp;&nbsp;



“Furthermore, offering a proprietary layer-2 enables a plethora of marketing angles and will likely expose many DeFi fanatics to Kraken just as they explore a new [layer-2] — as has been the case with Coinbase’s Base chain,” he said.



Read more: <a href="https://blockworks.co/news/coinbase-base-home-degens">The ‘crypto degen crowd’ has settled in on Coinbase layer-2, Base</a>



Layer-2 network offerings are surely making their way to become “table stakes” for big exchanges, Steinhilb said.&nbsp;



“I’m sure once there’s more regulatory certainty around tokens we’ll see more exchanges take the route that Binance and <a href="http://crypto.com/">Crypto.com</a> have taken,” he explained. “But in the meantime it’s more likely to look like Coinbase’s Base network.”&nbsp;



Still, Reecer said some exchanges may not wish to launch and maintain their own layer-2 networks.&nbsp;



He added: “It will come down to their team size and resourcing, as well as their value alignment with decentralized technology.”



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