Jack Kubinec

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



Crypto’s chattering class has been beefing over transactions per second (TPS) lately, a metric that’s often used in the abstract to demonstrate a blockchain’s throughput. Solana boasts a higher TPS than its main rival, Ethereum.



The most recent social media go-round was ignited by the news that Firedancer, a high-performance client being developed by Jump Crypto and meant to push Solana’s TPS lead even further, had <a href="https://blockworks.co/news/lightspeed-newsletter-solana-firedancer-testnet">entered its testnet phase</a>. Jump chief scientist Kevin Bowers said in a <a href="https://blockworks.co/tag/solana">Solana</a> Breakpoint talk that Firedancer had <a href="https://x.com/SolanaCompass/status/1837025861201269027">hit</a> 1 million TPS in synthetic testing.&nbsp;



A crypto VC then <a href="https://x.com/QwQiao/status/1837210195774296303">posted</a> about Solana shipping a “1m tps client” while the Ethereum world was consumed in archaic debates about “whether eth is money,” and the engagement bait went down hook, line, and sinker.



Namik Muduroglu, part of the founding team for the yet-unreleased layer-2 MegaETH, <a href="https://x.com/NamikMuduroglu/status/1838622154872512961">posted</a> a GitHub screenshot noting that the Solana protocol is currently limited to around 81,000 TPS at a maximum and that MegaETH’s block times would be shorter than Solana’s, meaning transactions could be processed some milliseconds faster.&nbsp;



Solana folks shot back, arguing that the 81,000 TPS parameter can be changed and pointing out that MegaETH is, to paraphrase Chris Brown, hating from outside the [existent blockchain] club.



As an idea, TPS is pretty easy to grok — how many transactions can a blockchain process every second? One million is a nice, large, round number, but things get more complicated in practice.



For one, TPS is often cited aspirationally. Firedancer’s 1 million TPS came in a testing environment, without actual user transactions. Unreleased blockchains <a href="https://www.theblock.co/post/278182/monad-10000-tps-devnet-launch">Monad</a> and <a href="https://www.theblock.co/post/274816/founders-fund-backed-layer-n-hits-120k-tps-in-testing-ahead-of-february-public-testnet">Layer N</a> also drew media coverage for TPS numbers that came in testing.&nbsp;



Solana’s own TPS is heavily affected by whether or not one includes “vote” transactions which come from validators processing blocks. To this point, developer João Mendonça pointed out to me that TPS can measure a blockchain’s demand and capacity. Vote transactions don’t demonstrate demand, but they do show capacity, Mendonça argued.&nbsp;



This is all separate from block times, which measure how quickly new blocks are created. Solana’s block time is 400 ms, which is a figure that can get faster with better hardware, the Solana Foundation <a href="https://solana.com/">says</a>. Muduroglo implied that MegaETH wants to push block times closer to 10 ms.



But TPS also assumes demand for transactions in the first place. Solana Foundation institutional head Nick Ducoff <a href="https://x.com/nickducoff/status/1839310190992306293">told</a> me on X that higher TPS is meaningful for use-cases like high frequency trading, an algorithm-driven style of trading can involve making tons of transactions very quickly.&nbsp;



This comports with Solana’s vision for a decentralized Nasdaq — but that would require many more firms deciding they want to do such business onchain.



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Debates flare up over blockchain TPS in testing environments

Jeff Albus

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Howdy!



I am touching grass today, so Jeffrey is stepping in with the story of how transactions make it to the blockchain.



It’s admittedly a little funny that all this complex infrastructure predominantly helps degens buy memecoins. It reminds me a bit of how liquor goes through a whole long distillation process just to get diluted by cranberry juice or coke. But I digress:&nbsp;



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



<h2 class="wp-block-heading">The lifecycle of a Solana transaction</h2>



Solana tends to be so fast and efficient that transactions can feel instantaneous. But there&#8217;s actually a lot more happening under the hood than users may realize.&nbsp;



It also works a bit differently from other chains, which tend to struggle with congestion and high fees due to their reliance on mempools.



Solana&#8217;s approach goes something like this:



<ol class="wp-block-list">
<li>Transaction Creation and Submission</li>
</ol>



A user initiates a transaction via a wallet, dapp, or other interface. Details of the transaction are immediately sent to an RPC (Remote Procedure Call) node through the JSON RPC API. Think of RPC nodes as intermediaries that help access and relay on-chain data. Unlike Ethereum, where RPC nodes are sometimes also validators, Solana’s RPC nodes are mainly non-voting validators focused on accessing onchain data.



 2. Leader Selection



Meanwhile, a leader is selected to produce the next block in the blockchain. In <a href="https://blockworks.co/tag/solana">Solana</a>, the leader schedule is determined by the proof-of-stake mechanism, where validators take turns being the leader based on their stake.



<ol class="wp-block-list" start="3">
<li>Packet Ingress and QUIC</li>
</ol>



The RPC node establishes a fast and secure connection to the leader node’s Transaction Processing Unit (TPU) using a communication protocol designed for quick and reliable data transfer called Quick UDP Internet Connections (QUIC). This protocol ensures that data packets are delivered securely, reducing delays and improving overall network performance.



<ol class="wp-block-list" start="4">
<li>Transaction Processing Unit (TPU)</li>
</ol>



The TPU processes transactions in multiple stages, each handling a specific part of the process to ensure efficiency and security:



<ul class="wp-block-list">
<li>Fetch Stage: Transactions are grouped into batches of 128 packets to manage them more efficiently.</li>
</ul>



<ul class="wp-block-list">
<li>SigVerify Stage: Each transaction&#8217;s signature is checked for validity to ensure it hasn&#8217;t been tampered with. Duplicates are removed to prevent redundant processing.</li>
</ul>



<ul class="wp-block-list">
<li>Banking Stage: This is where the real work happens. Transactions are executed in parallel, meaning multiple transactions can be processed at the same time without waiting for each other. This stage ensures that all the necessary checks and updates are performed on the involved accounts.</li>
</ul>



<ul class="wp-block-list">
<li>Broadcast Stage: Once processed, the TPU broadcasts transactions to the network, informing all nodes of the new transactions.</li>
</ul>



<ol class="wp-block-list">
<li></li>
</ol>



<ol class="wp-block-list" start="5">
<li>Gulf Stream Protocol</li>
</ol>



Unlike Bitcoin, Ethereum, and others, Solana uses a transaction forwarding protocol called Gulf Stream, which eliminates the need for a traditional mempool queue. In legacy systems, unconfirmed transactions sit in the mempool until miners include them in a block, often causing delays and congestion. The Gulf Stream Protocol, however, preemptively forwards transactions to upcoming leaders if the current leader is overloaded. This ensures high throughput and low latency, preventing congestion and maintaining network efficiency.



<ol class="wp-block-list" start="6">
<li>Proof of History (PoH) and Commit</li>
</ol>



Proof of history (PoH) is a method of timestamping transactions, ensuring they are ordered correctly, without the need for traditional time synchronization. This solves problems faced by other systems in maintaining transaction order and consistency. Verified transactions are then committed to the ledger and broadcast across the network, enabling all validators to update their ledgers accordingly.



<ol class="wp-block-list" start="7">
<li>Cluster Synchronization</li>
</ol>



Next, validators within Solana clusters synchronize their states to maintain a coherent and updated ledger. Solana clusters are groups of validators working together to maintain the ledger. Synchronization between these clusters ensures that all validators have a consistent view of the blockchain. This process ensures that each node’s ledger is up-to-date and agrees on the current state of the network.



<ol class="wp-block-list" start="8">
<li>Finalization and Confirmation</li>
</ol>



Validators are nodes that process and verify transactions. Once a supermajority of validators confirm the block, the transaction is finalized and permanently recorded to the blockchain. Solana’s optimized handling ensures this process is swift and reliable.



So, next time you send or receive a transaction on the Solana network, remember it&#8217;s not just one click and done. There&#8217;s a lot of tech wizardry going on behind the scenes that makes it all possible.



— Jeffrey Albus



<h2 class="wp-block-heading">One Good DM</h2>



A message from Hardhat Chad, founder of Ore:


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXc6tflljwKlRFLV_7kOlRNFyrywiTuWjwt2DghKNkDLma0rM0a55NFml1Bv2iDH1Z-0v30Qi_VYhUOZPqwDnJJ2bDoSms-SFyTGY3E0JWEBrUdAqD6o9yyLUq0Tv9jffu1CHRCS6rNrItG175m3WuPnEZTs?key=eU0Hu2vL_exWFz0zpDcfew" alt=""/></figure></div>


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The lifecycle of a Solana transaction

David Canellis

If you&#8217;re a celebrity, Bored Ape Yacht Club is out — and memecoins are in.



BAYC was <a href="https://blockworks.co/news/bayc-flips-cryptopunks-as-opensea-volume-recovers-markets-wrap">arguably</a> the most successful project to find traction with the mainstream. But they’re passé these days, as <a href="https://www.coingecko.com/en/nft/bored-ape-yacht-club">shown</a> by flatlining floor prices.



Meanwhile, celebrity memecoins have found crossover appeal, something most cryptocurrencies don’t really have.&nbsp;



The idea that memecoins are devoid of utility is shortsighted. Memecoins are critical benchmarking software for blockchains — placeholders for “real” economic activity that might eventually come once more of traditional finance ports over to blockchain rails. For that to happen, those rails must be able to handle more than a few hundred thousand people trading memecoins with silly names at the same time.



And at this point, siding against the memecoin discourse risks misunderstanding some of the most engaged people in crypto today, even if they’re more responsive to absurd and pointless projects.



The celebs are just meeting crypto where it is right now: fast DEXs, cheap blockchains, gambling apps, Twitter, Telegram and Discord.&nbsp;



Without pearlclutching, it’s hard to find much fault in that.



So it really isn’t cringe that Iggy Azalea or Caitlyn Jenner have their own memecoins. At least, not in the same way that Katy Perry’s <a href="https://www.instagram.com/katyperry/p/BeXchJzFkhJ/">CrYpTo ClAwS</a> were, or Kim Kardashian’s unfortunate Instagram ads for SafeMoon clone EthereumMAX, or even Randi Zuckerberg’s painful WAGMI music video.



Those stunts felt far more “how do you do, fellow kids” than anything Jenner or Azalea’s camp have done.&nbsp;



<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 are making more and more great progress <a href="https://twitter.com/search?q=%24Jenner&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$Jenner</a> only on <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> stay tuned for our first CEX listing!!!! But for now, trade here: <a href="https://t.co/4hMHlYU4lO">https://t.co/4hMHlYU4lO</a> <a href="https://t.co/gFZM4N9Onw">https://t.co/gFZM4N9Onw</a>&mdash; Caitlyn Jenner (@Caitlyn_Jenner) <a href="https://twitter.com/Caitlyn_Jenner/status/1800888890477424672?ref_src=twsrc%5Etfw">June 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Is it tasteless? Sure. But for the regular crypto fan, this looks about right</figcaption></figure>



Where countless memecoins have pumped, dumped and flatlined — the classic rug pull trajectory — Caitlyn Jenner’s Ethereum memecoin is chugging along.



It even flipped her original memecoin on Solana. Jenner <a href="https://blockworks.co/news/empire-newsletter-caitlyn-jenner-ethereum-memecoin">launched the Ethereum version</a> only a few days after the Solana one. Solana JENNER had just peaked at over $30 million market cap after a 1,000%-plus rally.



Supposedly, Jenner’s camp had been swindled by an alleged serial memecoin fixer, and the Solana-version of the coin should have never been endorsed. That made the Solana token — which was now rapidly losing value — an unofficial dud.



Read more from our opinion section: <a href="https://blockworks.co/news/important-trend-in-crypto-memecoins">The most important trend in crypto? It’s always been memecoins</a>



To help boost interest in the newer token, Jenner pledged to direct a 3% transaction tax on the new Ethereum-based JENNER to the Trump campaign, should it reach a $50 million market cap (current value: $5.8 million compared to the original’s $3.6 million).



Tens of thousands of addresses hold the current suite of celebrity memecoins. But to be clear, these are not big cryptocurrencies. Memecoins overall — including majors like dogecoin and floki — have over a $52 billion market cap, but still make up less than 5% of the crypto market, excluding bitcoin.



Jenner’s two tokens, alongside Iggy Azalea’s MOTHER and Andrew Tate-endorsed DADDY, make up less than 1% of the total memecoin market.&nbsp;



Memecoins are fodder for grumpy takes, even <a href="https://x.com/vitalikbuterin/status/1798293391144366184?s=46">from Vitalik</a>, who has rules about what celebrity involvement in crypto should look like (mostly, they should be <a href="https://blockworks.co/news/crypto-leaders-insist-on-memecoin-utility">long-term public goods</a>). Or, memecoins make crypto look immature, and are extractive in a way that detracts from investment in more legitimate, technologically-sound projects with venture capital backing.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18406167/embed#?secret=7VKsCwQjA0" data-secret="7VKsCwQjA0" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Toggle log view on the chart, otherwise MOTHER and DADDY completely dwarfs the others, including Waka Flocka’s memecoin, which debuted overnight</figcaption></figure>



For true believers, crypto means everything, from the greatest value transfer in history to the solarpunk revolution and an anarcho-capitalist coup.&nbsp;



But crypto also means nothing. It’s agnostic. A free-for-all. It’s what we do with the technology that gives it meaning.&nbsp;



Without overintellectualizing the warm, fuzzy community feeling attached to buying and selling memecoins alongside internet strangers, memecoins do have technological utility: They stress-test blockchains in a way that few token classes have ever done.



NFT game CryptoKitties taught us that Ethereum needs to scale with layer-2s. Ordinals showed us that practically any EVM chain can be easily overwhelmed by sudden popularity, and memecoin mania proved that Solana’s transaction routing really needs work.



So welcome to the new celebrity crypto meta. These celebs may not realize it, but how they’re embracing the joys of memecoin launches might actually be giving crypto the right kind of boost to improve the infrastructure in the long run.



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


<div class="wp-block-post-author-biography">David is an Editor based in the Netherlands focused on data-driven journalism. Previously, he wrote for TheNextWeb&#8217;s crypto vertical before launching Protos in 2021. He&#8217;s a reformed hardline Bitcoiner passionate about permissionless and decentralized networks. Contact David at david@blockworks.co</div>


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Vitalik is wrong: Crypto really needs dumb memecoins

Bessie Liu

Swiss non-profit organization NEAR Foundation has launched “Chain Signatures,” enabling users to sign transactions on supported blockchains from a single NEAR account. 



Chain Signatures enables accounts and smart contracts on NEAR to sign transactions for different chains. At launch, this will include Bitcoin, Ethereum and Cosmos network chains, as well as DogeCoin and XRP Ledger. It will soon support Solana, TON Network and Polkadot, according to the team.



By enabling Chain signatures, DeFi protocols can utilize assets from other chains without requiring a cross-chain bridge. This is possible because Chain Signatures are designed to be account-based rather than bridge-based.



Read more: <a href="https://blockworks.co/news/near-foundation-top-level-domain">NEAR Foundation applies for .near top-level domain</a>



According to Kendall Cole, director of research and development company Proximity Labs — which supports projects on NEAR and Aurora — Chain Signatures can potentially unlock new use cases for DeFi protocols.



“Users can use XRP as collateral to borrow USDC, or trade DOGE for SOL. This is particularly innovative for non-smart-contract chains like Bitcoin, DogeCoin and Ripple because none of the major bridges support these chains today,” Cole said.



NEAR protocol documents <a href="https://docs.near.org/concepts/abstraction/chain-signatures">show</a> that Chain Signatures link NEAR account addresses to other blockchains <a href="https://eprint.iacr.org/2021/1330">using</a> an Additive Key Derivation. This mechanism enables the single master key to be derived into multiple subkeys. 



When a user wants to transact between different blockchains, a deployed multichain smart contract will make a signature request for the transaction on the target blockchain network, and a Multi-Party Computation (MPC) service will sign the transaction.&nbsp;



Read more: <a href="https://blockworks.co/news/mpc-wallets-security">MPC wallets have a trade-off. Is it worth it?</a>



Once the signature is obtained, the smart contract will return it to the user, allowing the user to send the signed transaction to execute it on the target blockchain.&nbsp;



“Smart contracts on NEAR will be able to custody assets on any chain (since they can sign transactions on any chain via chain signatures), and maintain user balances similar to how single chain lending protocols or <a href="https://blockworks.co/tag/dexs">DEXs</a> do now,” Cole explained. 



The Chain Signatures MPC network will be launched in partnership with <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>, which will secure the network <a href="https://blockworks.co/news/eigenlayer-flips-aave-tvl">using its restaked ETH</a>. At launch, there will be ten node providers, including a handful of Actively Validated Services (AVS) infrastructure providers.&nbsp;



“Post-launch, EigenLayer will be used to provide economic security to the network and transition the MPC network to a permissionless version. To participate in the MPC network, prospective node operators will need to re-stake their ETH and will be penalized if they maliciously authorize any transactions that did not originate from a NEAR account,” Cole explained.



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NEAR launches tool for signing transactions on Bitcoin, Ethereum and more

A new brand of crypto collectibles — similar to Bitcoin <a href="https://blockworks.co/news/bitcoin-ordinals-ethereum-flippening">Ordinals</a> — has apparently hit Avalanche, and it’s responsible for more than <a href="https://app.blockworksresearch.com/analytics?search-field=asc-20">95%</a> of its daily on-chain transactions.



The transaction count on Avalanche’s C-Chain (responsible for handling smart contracts) over the past week has set new all-time highs, reaching an estimated <a href="https://app.blockworksresearch.com/analytics?category=avax">2.3 million</a> transactions per day on November 19. Avalanche has historically seen around 450 thousand per day on average.



Like Bitcoin Ordinals, Avalanche&#8217;s &#8220;ASC-20&#8221; tokens use inscription to put information onto a blockchain, Jacob Everly, a technical product manager at Ava Lab, told Blockworks.&nbsp;



“Bitcoin Ordinals involves assigning numbers to Satoshis (sats), which are stored in the witness portion of the Bitcoin transaction. With ASC-20s, the user transcribes information within the Call-Data of a transaction so that information is stored on-chain for a reduced cost compared to the ERC-20 token standard,” Everly said, referring to Ethereum-based tokens.



“The surge in ASC-20s led to the Avalanche Primary Network, which consists of over ~1500 consensus-participating validators, to average 40-plus transactions per second and even approach 100 per second at some moments,” Everly noted.&nbsp;



The block time-to-finality has, however, held firm at roughly one second, Everly added. “Average gas price hovered around 80 nAVAX, resulting in a rough average cost of $0.05 per ASC-20 transaction,” he said.



According to Blockworks Research analyst Dan Smith, there have been over 6.8 million transactions that have interacted with ASC-20 tokens so far.



Still, it appears too early for ASC-20s to be actively traded, as there doesn&#8217;t seem to be any specialized marketplaces as yet (there&#8217;s also no handy portal to view what has been minted). The number of individual users responsible for all the transactions is also unclear. 



Despite the significant jump in transaction count, daily average transaction fees and unique active addresses <a href="https://app.blockworksresearch.com/analytics?category=avax">remain unchanged</a>, Blockworks Research data shows.



In any case, Avalanche is not the only network aside from Bitcoin seeing activity spikes due to inscription minting.



Polygon’s PoS chain also saw similar <a href="https://app.blockworksresearch.com/analytics?category=matic">activity</a> last week , and just like Avalanche, transaction fees and daily unique addresses have remained relatively stable so far.



Litecoin and <a href="https://blockworks.co/news/dogecoin-flips-ethereum-transaction-count">Dogecoin</a> also had their turn earlier this year.



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Avalanche gets the ‘Ordinals’ bump, sets new  transaction record

Darren Kleine

It was not too long ago that the key concern regarding Ethereum’s future was the desperate need for it to scale. High network activity and subsequent gas costs spawned an explosion of layer-2 solutions.&nbsp;



Thus, the most recent developments on Ethereum have been focused on infrastructure and how to reduce the load on the once heavily burdened network. Now, it finally seems to be ready for prime time.&nbsp;



But where did all the traffic go?



“The argument was always, well, if you increase throughput by a hundred X, which has happened, then you should increase transactions by a hundred X, but that hasn&#8217;t happened,” says the head of digital asset trading at GoldenTree, Avi Felman.



On the 1000x podcast (<a href="https://open.spotify.com/episode/7EA1qe6M53JGMMcyONOMSw">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/what-is-cryptos-bullish-catalyst-1000x/id1554930038?i=1000631076464">Apple</a>), Felman says, “you&#8217;ve just moved all the transactions from ether (<a href="https://blockworks.co/price/eth">ETH</a>) to <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, and you&#8217;ve barely increased the overall amount of transactions that are occurring.” 



“Everyone was kind of expecting it to look good on a deflationary basis,” Felman says, “but that&#8217;s just not going to be the case as long as activity is mostly on <a href="https://blockworks.co/tag/base">Base</a>, or mostly on Arbitrum&nbsp; or mostly on <a href="https://blockworks.co/tag/optimism">Optimism</a>.”



<h2 class="wp-block-heading">More lanes = more traffic?</h2>



Goldman Sachs executive director Jonah Van Bourg compares his expectations for <a href="https://blockworks.co/tag/ethereum">Ethereum</a>’s scaling solutions to the constant addition of freeway lanes in California. “Every time they add a new lane, it just brings more cars onto the freeway.”



“I thought the same thing would happen to ETH,” he says, but instead it’s looking more like the network of pipelines in the Permian Basin in Texas.



“Sometimes there&#8217;s just too much oil,” he says. “Everything&#8217;s bottlenecked. So then there&#8217;s this frenzy of pipeline building, which is effectively a scaling solution for an oil field. And then suddenly there&#8217;s just way too much pipeline capacity and not enough oil.”



Van Bourg explains that scaling solutions were overbuilt during a period of particularly high demand in Ethereum’s history. Now, capacity is much greater than demand, Van Bourg says, “so gas prices are just forced into the toilet.”



Read more: <a href="https://blockworks.co/news/ethereum-blockspace-profitability-negative-merge">Ethereum blockspace on track for first unprofitable month since the Merge</a>



Van Bourg expects the pendulum to “swing back the other way hard one day” when people realize, he says, “we have this thing that&#8217;s cheaper and better than AWS for our use case — and probably more permanent.”



“But that might be a year off, or six months off, or two years off, who knows.”&nbsp;



Van Bourg notes that negative sentiment regarding Ethereum on “crypto Twitter” might pressure holders to think short term. “You read tweets where people who have been ETH-bullish for five years are just like, ‘It&#8217;s over. Never buying this crap again.’”&nbsp;



“You look at your ETH and you look at these tweets and you&#8217;re probably saying to yourself, ‘Crap, I&#8217;m going to get out.’”



“Remind yourself,” he says, “that in 12 or 18 or 24 months when this thing is gassing higher and it&#8217;s trading $5,000 a token, those very same people will be talking about how ETH is the future, how it&#8217;s going to $50,000 a token, how they&#8217;ve been long all the way up.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG6568422498" width="100%"></iframe>







“It&#8217;s a gradient of outcomes,” he says. “It&#8217;s not black and white. ETH is not over. ETH is not the future. It&#8217;s this <a href="https://blockworks.co/news/ethereum-dencun-upgrade-progresses">constantly evolving shade of gray</a>.”



“You have to filter out the noise.”



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Ethereum’s scaling infrastructure is better than ever. So where’s all the traffic?

Without a hint of hyperbole, Blocknative CEO Matt Cutler says that account abstraction is “probably the biggest upgrade to the user experience on Ethereum as anything in the history of the network.”



It’s a difficult concept to fully grasp, Cutler admits. “It took a while for everybody to wrap their minds around it. I was super confused by it. I was reading the papers, and I couldn&#8217;t figure out what the hell was going on.”



On the Empire podcast (<a href="https://open.spotify.com/episode/06gGb49WT3N1yRAXLXhQqK?si=dc4f91a6a9544d00">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/empire/id1554930038?i=1000629188630">Apple</a>), Cutler explains a mental model for ERC-4337 account abstraction. Instead of changing already-existing infrastructure, “account abstraction introduces a new layer on top of everything else,” he says.



Read more: <a href="https://blockworks.co/news/ethereum-erc4337-account-abstraction-smart-contract">Ethereum’s ERC-4337 account abstraction smart contract is live</a>



With today’s Ethereum wallets, users sign transactions that are sent to the <a href="https://blockworks.co/news/mev-privacy-in-blockchain">public mempool</a>, Cutler says. Smart contract wallets based <a href="https://blockworks.co/news/what-is-decentralized-identity">on the new 4337 standard</a> add a “whole layer on top of that,” he says, where users express “intent” instead.



“These intents are programmable,” Cutler says. “Transactions on Ethereum today are these very fixed things, these very fixed rules that have certain characteristics or properties.”



Account abstraction allows for more flexible bundling of transactions according to user intent, Cutler explains. One advantage Cutler mentions is the ability to “abstract away” gas prices. “You could have your gas price paid in <a href="https://blockworks.co/price/usdc">USDC</a> or any ERC-20 — or even off-chain assets like a credit card or even credit card points or miles.”



This advancement “opens things up,” Cutler says, “for new types of transactions to happen” with bundlers. The bundlers are a “new class of builders,” Cutler says, that can take multiple user intents and “wrap them up, supply the gas and sign the transaction and submit to the network” via “alt-mempools.”&nbsp;



<h2 class="wp-block-heading">A Web2-like experience on Web3</h2>



Bundled user intents directed to alt-mempools allow wallets “to do much more powerful things on behalf of end users,” Cutler says. “You can provide Web2-like transaction experiences, but have it go on <a href="https://blockworks.co/tag/web3">Web3</a>.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG4323925502" width="100%"></iframe>







Cutler gives an example of an artist rewarding a superfan with exclusive experiences. The artist could just send the superfan an <a href="https://blockworks.co/tag/nfts">NFT</a>, but this would require the recipient to be “crypto aware” and have a crypto wallet, Cutler explains.&nbsp;



An artist could instead work with a platform like Spotify, using credit card numbers to act as <a href="https://blockworks.co/news/crypto-wallet-security-phantom-brandon-millman">account abstraction wallets</a>, he suggests. “You have a private key associated with your credit card wallet, and you can literally drop an NFT into a Visa card.”



When the superfan shows up for an event, Cutler says, the asset associated with their credit card’s abstracted account could give them access to a VIP area, for example.



“Suddenly these experiences get wide open,” Cutler says, “all enabled by Web3, but massively simpler for all members of the supply chain.”



Cutler suggests the blockchain industry needs to “<a href="https://blockworks.co/news/web3-innovation-adoption">meet users where they already are</a> — like existing credit card holders,” for example.



“These things that you already have and know and use and are familiar with will get superpowers,” Cutler says, “because <a href="https://blockworks.co/news/what-are-smart-contract-wallets">account abstraction</a> allows users to become conversant and usable — and secure in this Web3 environment.”



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Account abstraction serving up Web2 convenience to Web3 users: Blocknative’s Cutler

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 loading="lazy" decoding="async" 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 loading="lazy" decoding="async" 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 loading="lazy" decoding="async" 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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