Bessie Liu

Ethereum scaling solution Offchain Labs is partnering with blockchain infrastructure company Espresso Systems to bring Timeboost — a transaction ordering technology — to life.&nbsp;



The teams will also work on integrating both Timeboost and the <a href="https://blockworks.co/news/espresso-systems-decentralized-sequencer-testnet">Espresso Sequencer</a> with the Arbitrum technology stack.&nbsp;



The Espresso Sequencer is a decentralized sequencing layer that layer-2s can choose to opt into, Ben Fisch co-founder and CEO of Espresso Systems told Blockworks.



“Having Offchain Labs’ support of this vision is a strong signal to us and to the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> community that even teams with strong technology affiliations of their own will continue to prioritize permissionless approaches to coordination and technology,” Fisch said.



What is Timeboost?



Timeboost is intended to improve existing first-come-first-serve (FCFS) tendencies and <a href="https://blockworks.co/news/draft-mev-dydx-chorus-one">become more optimized for maximum extractable value</a>, or MEV.



Existing <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> chains do not earn any value from MEV, Timeboost is designed so that these chains can internalize the value of ethical MEV whilst simultaneously preventing harmful behaviors such as front-running.&nbsp;



This means that rollup solutions that want to capture value from ethical <a href="https://blockworks.co/tag/mev">MEV</a> practices like arbitrage, Ed Felten co-founder and chief scientist of Offchain Labs told Blockworks.&nbsp;



“It does this by using a special type of sealed-bid auction so that transactions can bid for position within a block. Because the auction is sealed-bid, users cannot front-run others’ transactions,” Felten said.



Timeboost collects fees generated by the chain so that it can identify and manage revenue disposition, Felten explains.&nbsp;



“Transactions submitted to the chain can optionally carry a bid, which is a premium that the transaction is agreeing to pay for each unit of layer-2 gas it uses, above the regular layer-2 gas price,” he said.&nbsp;



Within a block, bids are sorted from highest to lowest, and higher transaction bids will be placed in an earlier sequencer block.



The team at Offchain Labs has been looking into Timeboost transaction ordering for over six months and has <a href="https://arxiv.org/pdf/2306.02179.pdf#:~:text=TimeBoost%20is%20transaction%2Ddata%2Dindependent,created%20by%20an%20FCFS%20policy.">published</a> technical papers on their progress.&nbsp;



“We are now working alongside Offchain Labs on further research around Timeboost and undertaking implementation and integration of the module,” Fisch said.



Fisch added: “The final version of Timeboost will likely be a modification of the protocol described in the paper, favoring a discretized approach to ordering rather than continuous.”



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Offchain Labs, Espresso Systems link up on transaction ordering tech

Blockchain infrastructure provider Skip Protocol has released a new software development kit (SDK) aimed at giving block builders modular control over the order of transactions.



Named The Block SDK, the new toolkit features a set of primitives for the Cosmos SDK and ABCI++, which allows chains to customize their blocks.&nbsp;



Cosmos chains today rely primarily on a conventional block construction method called CometBFT which has limited applicability.



The typical implementation of CometBFT block construction faces vulnerabilities linked to maximal extractable value or MEV. This presents challenges like transaction frontrunning and sandwich attacks.&nbsp;



The Block SDK is designed so that individual blockchains can turn their blocks into so-called lanes, each with its own unique functions, according to Maghnus Mareneck, the co-founder of Skip.



“The lanes have their own verification, inclusion and ordering rules.They can be tailored towards transactions related to MEV, Oracle updates, light client updates [for example], you can configure each lane to treat transactions differently, and you can order lanes relative to each other,” Mareneck told Blockworks.



<h2 class="wp-block-heading">Building blocks</h2>



Usually, when using a blockchain, a transaction is submitted from the frontend, orderflow, or relayer and stored in the mempool.&nbsp;



The mempool is eventually executed as a block, wherein the transaction will be iterated in order and executed against the transaction.&nbsp;



According to Mareneck, it’s at the mempool layer that Skip’s new kit has an impact.&nbsp;



A transaction that comes into the mempool layer is normally added to the end of a long list of transactions, he explained. With The Block SDK, transactions are filled in different places and matched to different lanes.



“The mempool then becomes a block proposal and sent to all validators. Because the validators have the same sort of mempool structure, they can see if the proposer did the right thing with each transaction,” Mareneck said.



<h2 class="wp-block-heading">Orienting block space for apps</h2>



The overall purpose of this new SDK, Mareneck argued, is to accelerate the thesis that app chains are powerful, especially when compared to monolithic blockchains wherein all functionality exists on the base layer.



“[App chains] can orient their block space to their application,” he said. “If you’re a super high-speed order book chain, you might require a different mempool structure than a generalized smart contract chain [for example].”



The Block SDK is live on mainnets among several smaller blockchains in the Cosmos ecosystem, according to Mareneck.



He said the Skip team is also in conversation with larger app chains on Cosmos, including Cosmos and Neutron, about adapting its toolkit.



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Skip introduces a new way to build blocks on Cosmos

Sebastian Sinclair

Bitcoin just processed more transactions in a single day than at any point in its 14-year history — thanks to Ordinals.



The daily <a href="https://bitinfocharts.com/comparison/bitcoin-transactions.html#alltime">number</a> of Bitcoin transactions surged beyond 568,300 on Sunday — nearly 78,000 more than its previous peak during the top of the 2017 bull run.&nbsp;



Over 307,000 of those transactions were Ordinals, the most on a single day ever and a 16% jump on the previous record set on Saturday, per a <a href="https://dune.com/dgtl_assets/bitcoin-ordinals-analysis">Dune dashboard</a>.



That means Ordinals contributed around 54% of Bitcoin’s daily transactions at its all-time record.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1698" height="592" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=1024&amp;h=1024" alt="" class="wp-image-53941" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=1698 1698w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/Screen-Shot-2023-05-01-at-12.34.09.png?w=80 80w" sizes="(max-width: 1698px) 100vw, 1698px" /><figcaption class="wp-element-caption">More Bitcoin transactions than ever before (source: <a href="https://blockchair.com/bitcoin/charts/transaction-count" target="_blank" rel="noreferrer noopener">Blockchair</a>)</figcaption></figure>



<a href="https://blockworks.co/news/cant-ignore-bitcoin-nfts" target="_blank" rel="noreferrer noopener">Debuted in January</a>, Ordinals allow data such as audio, art or even <a href="https://blockworks.co/news/play-doom-bitcoin">video games</a>, to be attached (or “inscribed”) to individual satoshis, BTC’s smallest unit.&nbsp;



The result is a unique digital asset in the same vein as an Ethereum-based NFT, for example. Although, the relevant data exists entirely on the Bitcoin blockchain, rather than hosted externally, as is often the case.



More than 2.39 million Ordinals have been inscribed to date, per Glassnode, which said it has seen a “marked character shift” in Bitcoin mempools this year (Bitcoin mempools store unconfirmed bitcoin transactions).



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We can see a shift in preference as it relates to inscription types. Image Inscriptions 🟧 dominated until very recently, but have been surpassed by text based 🟦. Over 2.39M Inscriptions have been added to the <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> ledger, adding 9.3GB in data, and paying 212 <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> in fees. <a href="https://t.co/KZPy074WoP">pic.twitter.com/KZPy074WoP</a>&mdash; glassnode (@glassnode) <a href="https://twitter.com/glassnode/status/1652804155839500288?ref_src=twsrc%5Etfw">April 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Text-based Ordinals inscriptions are apparently growing in number.</figcaption></figure>



Ordinals aside, most other bitcoin transactions right now are monetary in nature, often triggered by crypto exchanges, according to Glassnode.



“Importantly, Inscriptions represent approximately 30% to 40% of mined transactions — 10% to 20% of fees paid,” Glassnode said.



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Bitcoin Just Processed More Transactions Than Ever Before

Bitcoin network activity is buzzing. And that’s driving a healthy uptrend in transaction fees.



Select on-chain metrics shows the world’s oldest crypto still has the juice to compete with younger chains on the block, including on a per-transaction basis.



Using a 50-day simple moving average (SMA) to track the total transaction count on the Bitcoin network, the metric is now at its highest point in more than two years, data from <a href="https://cryptoquant.com/asset/btc/chart/transactions/transaction-count-total?window=DAY&amp;sma=50&amp;ema=0&amp;priceScale=log&amp;metricScale=linear&amp;chartStyle=column" target="_blank" rel="noreferrer noopener">CryptoQuant</a> shows.



While there have been outliers based on specific days (see just after FTX’s demise), the moving average helps to smooth out inconsistencies in the data, providing a clearer picture.



The last time transactions had clocked a 50-day SMA transaction count above 318,000 was on Feb. 28, 2021 — at a time when bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) had just completed its first run up near $60,000.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1595" height="853" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=1024&amp;h=1024" alt="" class="wp-image-52750" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=1595 1595w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/CQ-BTC.png?w=80 80w" sizes="(max-width: 1595px) 100vw, 1595px" /><figcaption class="wp-element-caption">Bitcoin Transaction Count; Source: CryptoQuant</figcaption></figure>



In almost every instance in the last two years, bitcoin has crossed an average count of 320,000 transactions on its network, price has followed suit in a big way.



Looking at first quarter performance in 2019, bitcoin rose from $3,732 on March 4 to $5,300 on April 30 only after transactions had crossed the given threshold. The same occurred again two years later when prices jumped from $34,000 on Jan. 12 to $57,000 by Feb. 21.



There are exceptions, of course, including in February and August 2020 — though in both those instances the 320,000 count preceded strong run ups in bitcoin’s price.



Transaction fees paid to bitcoin miners are up about 70% year-to-date, an important metric <a href="https://blockworks.co/news/bitcoin-mempool-surges-new-life-for-blockchain">for network security</a> over the long term in the face of declining block rewards due to <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">the quadrennial halving</a>.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1200" height="600" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=1024&amp;h=1024" alt="" class="wp-image-52752" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/2023-04-19-transaction-fees.png?w=80 80w" sizes="(max-width: 1200px) 100vw, 1200px" /><figcaption class="wp-element-caption">Transaction fees trending up; Source: Blockchain.com</figcaption></figure>



Another metric used to judge the buzz of network activity includes daily active addresses. Data shows, again using a smoothed moving average, the figure stands at five-month highs.



“Key on-chain metrics, such as daily active addresses, addresses with a non-zero balance, and unique on-chain entities holding at least one BTC, all evince the growing adoption of Bitcoin as a store of value and means of payment,” market analysts at Bitfinex told Blockworks via email.



Bitcoin <a href="https://blockworks.co/news/new-bitcoin-ordinals-marketplace">inscriptions are helping</a> to drive some of that activity, though interest has likely been due to several factors, <a href="https://blockworks.co/news/bitcoin-mirror-bear-market">including market structure</a>.



Those include the tailwind effects of the US banking crisis, uncertainty in macroeconomic conditions and renewed investor interest in digital assets with a <a href="https://blockworks.co/news/shapella-institutional-interest-blockchain">return to confidence</a>.



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Bitcoin On-chain Pattern Shows Potential for Further Price Gains

Ornella Hernandez

The Coinbase Wallet now has an updated order preview screen that lets users simulate the outcome of a transaction on a decentralized application (dapp) before hitting confirm.



The wallet is a general purpose dapp not limited to interacting with the Coinbase exchange. The new “Transaction Preview” feature gives users an estimate of how their token balance will change once they buy a token or an NFT, based on a simulation of the transaction on the blockchain.



The company tweeted that the goal of this feature is to provide users with a “better understanding of how a dapp or smart contract will interact with your wallet” and “greater peace of mind.”



<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">1/ By automatically simulating the code that would execute when you authorize a transaction on an EMV-compatible network, we provide you with an estimate of which assets will leave your wallet and any assets you’ll get back in return.&mdash; Coinbase Wallet (@CoinbaseWallet) <a href="https://twitter.com/CoinbaseWallet/status/1593375216293511168?ref_src=twsrc%5Etfw">November 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



This feature may come in handy for retail users wary of bad actors in the space, given the amount of scams and frauds that have plagued the crypto world this year.&nbsp;



The recent <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">FTX saga</a> is one in a string of events that shed a light on the risks of centralized finance, but those who self-custody can fall victim to fake investment opportunities and romance-linked fraud, if they’re not careful. 



Over <a href="https://blockworks.co/news/frauds-and-scams-top-1b-since-2021-ftc-says" target="_blank" rel="noreferrer noopener">$1 billion was traced in losses in crypto-related scams</a> between the start of 2021 and the first half of 2022. Most victims were targeted on Instagram, Facebook, WhatsApp and Telegram and then tricked into making transfers on crypto exchanges like Coinbase.



Ethereum wallet Argent also has a preview trade screen with a transaction summary, but Coinbase Wallet adds additional information for users, such as an alert if a URL is associated with a phishing attempt.&nbsp;&nbsp;



Auston Bunsen, co-founder of infrastructure provider QuickNode said the preview feature will make it &#8220;significantly harder&#8221; for hackers and scammers to steal funds from Coinbase Wallet users. He added that it &#8220;gives more visibility and power to users to protect their funds — making self-custody even more attractive in the wake of FTX.&#8221;



For institutional customers, Coinbase has another screening tool that helps mitigate the risk of transacting at scale. Called the Know Your Transaction (KYT) API, it enables clients to determine if an entity or transaction is facilitating illegal or fraudulent activity. It also generates risk scores for user addresses, using the <a href="https://blockworks.co/news/google-signals-major-crypto-push-with-ethereum-solana-support" target="_blank" rel="noreferrer noopener">Google Cloud</a>.



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Coinbase Wallet Feature Takes Aim at User Safety

Ben Strack

<div id="highlights-block_61b7b42b719c2" class="highlights">
 <ul>
 <li>Both banks will use Baton Systems’ Core-FX distributed ledger technology </li>
 <li>Technology allows the bank to settle funds on-demand with HSBC in more currencies than CLS Group allows, according to co-head of macro at Wells Fargo Corporate and Investment Bank</li>
 </ul>
 
</div>



Wells Fargo and HSBC are using blockchain technology for the first time in the settlement process of cross-border payments.



The two financial services titans will jointly use a shared settlement ledger to process US dollar, Canadian dollar, British pound sterling and Euro transactions, the firms announced Monday.&nbsp;



The companies have plans to extend the platform to settle additional currencies and could choose to add more participants, introducing a central Financial Market Infrastructure provider.



The platform runs on <a href="https://batonsystems.com" target="_blank" rel="noreferrer noopener">Baton Systems</a>’ Core-FX distributed ledger technology.



Adopters of the technology are no longer restricted by currency-specific cut-off times and can agree with their counterparties on when and how often they settle. It allows for multiple settlements a day and a settlement process that can be completed in three minutes.



Riskless settlement, or payment-versus-payment (PvP) settlement, has previously only been achievable with legally enforceable settlement finality through <a href="https://www.cls-group.com/products/settlement/clssettlement/">CLS</a><a href="https://www.cls-group.com/products/settlement/clssettlement/" target="_blank" rel="noreferrer noopener"> </a><a href="https://www.cls-group.com/products/settlement/clssettlement/">Group</a>.



Market participants prefer to settle via PvP because the currencies are simultaneously settled — eliminating the risk of a firm having made a payment to a counterparty that then defaults on its obligations, said Alex Knight, head of EMEA at Baton Systems



But access to PvP settlement through CLS is restricted to CLS member firms and only available across 18 currencies, he explained.



“Today’s announcement means that all [foreign exchange] businesses can now access PvP settlement protection across all currencies,” Knight told Blockworks. “We’ve used distributed ledger technology to achieve this, delivering a level of transformation that’s well overdue.”



<h3 class="wp-block-heading">Traditional finance embracing the space?</h3>



Banks currently transmit files to CLS and then get funds settled the next day between accounts held at CLS, said Mark Jones, co-head of macro at Wells Fargo Corporate &amp; Investment Bank, adding that the funds are held up during the waiting period. 



“This new technology would allow us to settle funds on-demand with HSBC in any array of currencies we choose,” Jones told Blockworks. &#8220;[It] also provides greater visibility into transactions and funds flow because both of our operations teams at [Wells Fargo] and HSBC are utilizing the same dashboard at the same time.”



Large banks sharing technology infrastructure with shared transaction visibility is a new concept, the Wells Fargo executive added.&nbsp;



David Tawil, president of multi-strategy crypto asset fund ProChain Capital, said that banks that do not look to implement blockchain and accept cryptocurrency more broadly could be hurt over the long term.



“I know that right now it’s incredibly difficult for those banks to participate in cryptocurrency broadly because of the lack of regulation,” he said. “But certainly there should be education and development going on inside of those banks to be able to act and get involved once they are allowed to.”



Tawil argued that financial institutions should work together to figure out how they can use blockchain technology collectively to facilitate transactions and perform other processes across their systems.&nbsp;&nbsp;



“Right now the decentralized aspect of this is a runaway train without them,” he noted. “If they don’t have a pre-planned way to go ahead and transition to getting onto that locomotive, they certainly could be left behind.”



Knight said that Baton Systems is in discussions with nearly all of the large foreign exchange banks about its technology, noting that some are evaluating its impact on their businesses.



<h3 class="wp-block-heading">Continuing to adopt</h3>



Mark Williamson, global head of FX partnerships and propositions at HSBC, said in a statement that the firm will continue to grow its FX Everywhere network, which has settled roughly 3 million intra-bank trades worth about $2.5 trillion since it launched in 2018. 



HSBC also intends to position itself to be able to transact in new forms of regulated digital currencies, such as central bank digital currencies (CBDCs), he added.



Wells Fargo labeled cryptocurrencies as a “viable investment asset” <a href="https://www.wellsfargoadvisors.com/research-analysis/reports/rationale-cryptocurrencies.htm" target="_blank" rel="noreferrer noopener">in a report</a> published earlier this year. It noted that crypto could see continued growth, further compression in price volatility and a possible role as portfolio diversifiers over the long term.



“We are now utilizing blockchain technology, and expect that trend to continue to grow,” Jones told Blockworks. “As it relates to the crypto ecosystem, it’s clearly evolving fast and we are paying close attention to how the regulatory structure unfolds around it.”



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