Bessie Liu

Blockchain scaling and privacy infrastructure company Espresso Systems will release its third testnet of the Espresso Sequencer for OP stack builders.



The testnet, named Cortado, will include work for an Optimism Request for Proposal (<a href="https://github.com/ethereum-optimism/ecosystem-contributions/issues/63">OP RFP</a>) that aims to decentralize sequencers.&nbsp;



Rollup solutions today run their own sequencers that have their own execution environments. These sequencers are responsible for ordering transaction information that is then sent to a virtual machine.



To ensure there is no single authority that orders these transactions, projects such as Espresso Systems are exploring ways to diversify these sequencers.&nbsp;



The initial release will be a locally hosted demo version of an OP stack rollup running on Espresso that enterprises can test.&nbsp;



Over the coming weeks, a publicly hosted canonical OP stack testnet will be released. This testnet will be similar to the testnet <a href="https://blockworks.co/news/shared-sequencer-tech-goes-live">Doppio</a>, which went live in July, according to Jill Gunter, chief strategy officer at Espresso Systems.



This publicly hosted testnet will be deployed in partnership with Caldera. The one-click rollup deployment allows developers to choose the different layers to build a blockchain.



<h2 class="wp-block-heading">Decentralizing sequencers before decentralizing fraud proofs</h2>



A popular narrative within crypto circles raises the concern that without fraud-proofs — a mechanism that can challenge the accuracy of a transaction — shared sequencing solutions will still have to include potentially fraudulent transactions in a rollup sent to the layer-1.



<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">Optimistic rollups without fraud proofs are just google sheets with extra steps <a href="https://t.co/KavMYbuN8T">https://t.co/KavMYbuN8T</a>&mdash; joseph.eth (@josephdelong) <a href="https://twitter.com/josephdelong/status/1690537453961064448?ref_src=twsrc%5Etfw">August 13, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Gunter told Blockworks that decentralizing a sequencer does not mitigate the need for fraud proofs, but the two play separate important roles.&nbsp;



“Decentralizing the sequencer will help mitigate the risk that this centralized entity running the sequencer is going to be persistently ignoring transactions or leaving them out,” Gunter said.



Although it’s understandable that there are debates as to whether or not the development of shared sequencers should be prioritized before fraud proofs have even been shipped, Gunter believes that all of these different aspects play an important role in ensuring that blockchains become more decentralized.



“Eventually these things will all need to be on the roadmap,” she said. “A big part of what our motivation has been at Espresso Systems is to help rollups accelerate the roadmap towards mainstream adoption.”



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A shot of Espresso, please: Blockchain scaler to offer third testnet integration

Darren Kleine

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.”



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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?

Sebastian Sinclair

The native token of Bitcoin layer-2 protocol Stacks (STX) has seen its value soar this year with its performance continuing to carry over into March, edging it to a top spot this week.



Following the buzz generated by the <a href="https://blockworks.co/news/play-doom-bitcoin">Ordinals on Bitcoin</a>, which opened the floodgates for non-fungible token use cases on the world’s oldest blockchain, STX is riding shotgun.



Stacks and Ordinals are different and separate protocols, both utilizing the Bitcoin blockchain. Stacks allows for the creation of complex dApps, while Ordinals provide a simple way to inscribe data in Bitcoin blocks.&nbsp;



STX is changing hands for $0.83, up 2.7% in the past 7 days, despite a lackluster performance in the broader digital asset market (BTC itself is down -6.5%) over the same period. In year-to-date terms, STX has climbed about 300% — most of that coming in late February — alongside a $900 million injection in its total market cap over the same period.



Perhaps most notably, it&#8217;s up about 200% against BTC in the past month.



As the bitcoin halving steadily approaches, investors like Hal Press, founder of crypto investment firm North Rock Digital, believe there exists a “relatively untapped” market opportunity for the project.



“The team is very strong, ecosystem is growing and tokenomics are favorable,” Press said in a <a href="https://twitter.com/NorthRockLP/status/1629490053692149760?s=20" target="_blank" rel="noreferrer noopener">tweet</a>, last week. “Relatively few active funds own the token but many more will as we approach the halving.”



STX has the potential to play a similar role for the halving as the Ethereum liquid staking solution Lido DAO did for the Merge, Press said in an accompanying <a href="https://medium.com/@halp1120/stacks-thesis-62ce0599c77f" target="_blank" rel="noreferrer noopener">blog post</a>. Lido’s stETH, <a href="https://blockworks.co/news/liquid-staking-derivatives-shanghai-upgrade">and other liquid staking derivatives</a>, let users engage in the operation of Ethereum&#8217;s proof-of-stake chain and earn daily rewards in return.



During the lead-up to the <a href="https://blockworks.co/tag/ethereum-merge">Ethereum Merge</a> in July and August of last year, LDO saw a 600% boost in its token price over a six-week period.



Andrew Kang, founder of crypto investment firm Mechanism Capital, agrees with Press’ assessment. Stacks appeals to long-term investors, including bitcoin holders and venture funds, from an allocation perspective, he said.



Since lightning does not have its own token, Stacks has emerged as the primary focus for capital flows that are tied to the halving and the BTC economy, Kang said in a <a href="https://twitter.com/Rewkang/status/1630031466858967040?s=20" target="_blank" rel="noreferrer noopener">tweet</a> responding to Press’ statements.



While Ordinals and STX have no connection to each other, the bitcoin community has developed a growing interest in NFTs and DeFi, <a href="https://www.blockworksresearch.com/">Blockworks Research</a> analyst <a href="https://twitter.com/swmartin19" target="_blank" rel="noreferrer noopener">Sam Martin</a> said.



NFTs (Ordinals) on the Bitcoin blockchain may also bring more financial use cases to the network and drive more demand for block space, Ho Chan Chung, head of marketing at on-chain analysis platform CryptoQuant told Blockworks.



“As a result, this will increase miners&#8217; fees and bolster their long-term sustainable growth.” That could also drive other projects seeking to piggyback on whatever the current narrative might be surrounding bitcoin’s ecosystem.



On the other hand, inscribing non-fungible characteristics to satoshis could negatively affect privacy and fungibility, Chung said.



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STX Price Stacks Up Well, Outperforming Bitcoin

Shalini Nagarajan

<div id="highlights-block_62bc3419ee5ae" class="highlights">
 <ul>
 <li>Asiff Hirji will join as an advisor, and Manas Mohapatra comes onboard as general counsel</li>
 <li>The announcement comes as several crypto heavyweights announce layoffs due to difficult market conditions</li>
 </ul>
 
</div>



Blockchain startup Trust Machines has hired former Coinbase executive <a href="https://www.linkedin.com/in/asiff-hirji/">Asiff Hirji</a> and former BNY Mellon deputy general counsel <a href="https://www.linkedin.com/in/manasmo/" target="_blank" rel="noreferrer noopener">Manas Mohapatra</a>.



Hirji, who served as president and chief operating officer at Coinbase between 2017 and 2019, joins the company as an advisor. He has held multiple director positions across various industries, briefly worked in an advisory role for venture capital firm a16z and currently holds a similar position at Warren Buffett-backed Nubank.



Mohapatra joins Trust Machines as general counsel. Among other roles, he’s previously worked as associate general counsel for Twitter for more than four years and as a senior attorney for the US Federal Trade Commission.



Another staff addition is <a href="https://www.linkedin.com/in/igorsyl/" target="_blank" rel="noreferrer noopener">Igor Sylvester</a>, who will be joining the company’s engineering team. Prior to this role, he worked as a software engineer at Reddit and led a machine-learning team at Facebook.



“I’m excited to share that Trust Machines continues to attract world-class talent during this bear market to help build the world’s largest ecosystem of Bitcoin applications,” Muneeb Ali, CEO of Trust Machines, said in a statement.&nbsp;



Launched in early 2022, the company was co-founded by Ali — who also founded <a href="https://cms.blockworks.co/?s=Stacks" target="_blank" rel="noreferrer noopener">Stacks</a> — and Princeton University computer science professor JP Singh. It <a href="https://finance.yahoo.com/news/trust-machines-raises-150m-funding-212500209.html" target="_blank" rel="noreferrer noopener">raised $150 million</a> in February, counting Breyer Capital, Digital Currency Group and GoldenTree among participant investors.



The name &#8220;trust machines&#8221; is a&nbsp;play on Turing machines — the first computer invented by Alan Turing at Princeton.



The company said it plans to make further key hires in the second half of this year. New hires in the cryptoasset industry have dwindled as more companies announce cost-cutting measures and slow down hiring efforts in a challenging macroeconomic environment. Heavyweight names such as <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">Coinbase</a> and <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/">Gemini</a> have announced plans to cut staff.



But not everyone in the industry appears to be significantly affected. Earlier this month, Immutable’s co-founder Robbie Ferguson <a href="https://cms.blockworks.co/now-is-not-the-time-to-take-our-foot-off-the-pedal-says-immutable-co-founder/" target="_blank" rel="noreferrer noopener">told Blockworks</a> it was on a hiring spree and “now is not the time to take our foot off the pedal.”&nbsp; Exchanges OKX and Bitget too have announced plans to <a href="https://cms.blockworks.co/latest-in-crypto-hiring-okx-bitget-among-companies-boosting-headcount/" target="_blank" rel="noreferrer noopener">significantly boost</a> their headcounts.



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