Macauley Peterson

Ethereum co-founder Vitalik Buterin advised the developer community to guard against overburdening the networks’ social consensus — the ultimate arbiter of what the Ethereum network canonically is.



Staked ether, so crucial to network security, is <a href="https://blockworks.co/podcast/empire/ce2b0780-b63d-11ed-a733-37c39b297731">poised</a> to become an important collateral asset in DeFi, through the use of liquid staking tokens (LSTs), such as Lido’s stETH and Rocketpool’s rETH. But it’s also expected to become useful in other contexts, thanks to bleeding edge tech, such as the restaking primitive from <a href="https://blockworks.co/tag/eigenlayer">Eigenlayer</a>, which will allow staked ETH to serve a dual function.



In his first <a href="https://vitalik.ca/general/2023/05/21/dont_overload.html">blog post</a> about Ethereum since March, Buterin extended the <a href="https://nakamoto.com/credible-neutrality/">credible neutrality</a> imperative to any attempt to leverage the Ethereum validator set — including, but not limited to restaking — warning against efforts to &#8220;recruit Ethereum social consensus for [an] application&#8217;s own purposes.”&nbsp;



In the form of a cautionary thought experiment using Harry Potter characters, Buterin outlined certain risks that could arise if proposals to rehypothecate staked ether are not carefully thought through.



Re-using validators’ stake can be done safely, he argues, so long as the social consensus isn’t relied upon as a backstop.



“If [&#8230;] you have the intent to rope in the broader Ethereum ecosystem social consensus to fork or reorg to solve your problems, this is high-risk, and I argue that we should strongly resist all attempts to create such expectations,” Buterin wrote.



As an example of a “high-risk” gamble, Buterin pictured a layer-2 created by “Hermione” that grows to become the dominant scaling solution. The fictional Ethereum wizard claims that her layer-2 is thus the most secure, “because if there is a bug that causes funds to be stolen, the losses will be so large that the community will have no choice but to fork to recover the users&#8217; funds.”



Arbitrum One currently has $5.77 billion in total value locked (TVL) <a href="https://l2beat.com/scaling/projects/arbitrum">according to</a> L2Beat, more than triple the size of the next largest scaling solution, Optimism.



Right now, there is no indication that a catastrophic bug in Arbitrum would prompt calls for Ethereum mainnet operators to take action. But since Arbitrum’s developer, Offchain Labs, also owns Prysmatic Labs — the company behind the second-largest Prysm consensus client — it’s not an absurd proposition, either.



Buterin doesn’t want a repeat of <a href="https://en.wikipedia.org/wiki/The_DAO_(organization)">The Dao</a>, or <a href="https://www.parity.io/blog/a-postmortem-on-the-parity-multi-sig-library-self-destruct/">the Parity bug</a>, both of which challenged Ethereum’s social consensus at a time when the network was much smaller.



In the former case, the network forked, leaving behind Ethereum Classic (<a href="https://blockworks.co/price/etc">ETC</a>), which continues to operate at a $2.5 billion market cap to this day. In the latter, the network did not fork, and 513,774 ether were locked forever. That was a painful choice, but it set a precedent for the future: Ethereum transactions are immutable, what Buterin refers to in his post as the blockchain&#8217;s “purity.”



“A blockchain’s ‘purity’ in the sense of it being a purely mathematical construct that attempts to come to consensus only on purely mathematical things, is a huge advantage,” he wrote.



He urged avoidance of “perverse too-big-to-fail mechanics,” to “preserve the chain&#8217;s minimalism, support uses of re-staking that do not look like slippery slopes to extending the role of Ethereum consensus, and help developers find alternate strategies to achieve their security goals.”



Eigenlayer co-founder Sreeram Kannan, was quick to agree, in <a href="https://twitter.com/sreeramkannan/status/1660388939369431042">a Twitter thread</a>:



“a) don’t build complex financial primitives on restaking — they can spiral out&nbsp;



b) don’t rely on Ethereum to fork for application layer errors — this is a super important principle



c) do not use subjective slashing — as it is subject to tyranny of the dishonest majority.”



There are “<a href="https://twitter.com/sreeramkannan/status/1595863276101177344">three underlying trust models</a> underpinning Eigenlayer,” according to Kannan. These are economic trust, decentralization trust and ETH validator commitments, and each with their own potential use cases.



But it remains to be seen which, if any, will be embraced by Ethereum validators.



Blockworks Research analyst <a href="https://twitter.com/purplepill3m">Ren Yu Kong</a> is skeptical that there will be a wide variety of restaking applications that will pass muster with Ethereum validators.



&#8220;I believe that there won&#8217;t be many projects out there that are worth a validator to restake with given the additional risks incurred for a small marginal return, and now Vitalik has highlighted an important additional ‘social consensus’ risk,&#8221; he said.



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Don’t Overuse Social Consensus, Vitalik Warns

David Canellis

Public blockchains have revolutionized how we view money. But they’ve also unlocked a brand-new form of financial voyeurism.



Instead of poring over SEC filings or Forbes lists, the crypto-curious can now ogle billionaires for kicks entirely on-chain.



Luckily, there’s no shortage of crypto billionaires. But most are practically anonymous, known only by their pseudonymous blockchain addresses.



There are, however, a select few crypto moguls who lay bare their portfolios for all to see, warts and all.



<h2 class="wp-block-heading">Ethereum co-founder Vitalik Buterin</h2>



Buterin was <a href="https://www.forbes.com/sites/ninabambysheva/2021/05/03/ethereums-27-year-old-co-creator-is-now-the-worlds-youngest-crypto-billionaire/?sh=6ff2ddeb7c94">crowned</a> the world’s youngest crypto billionaire by Forbes in 2021 — when ether (<a href="https://blockworks.co/price/eth">ETH</a>) cleared $3,000 for the first time. On-chain data can’t verify the ‘youngest crypto billionaire’ moniker, but it does seem to corroborate those numbers.&nbsp;



Buterin’s known crypto portfolio was valued at about $2 billion in May 2021, per Arkham Intelligence. ETH understandably made up about half of those holdings. But Buterin has been worth far more than that, in the throes of <a href="https://blockworks.co/news/bonk-solanas-own-dog-coin-sparks-joy-for-weathered-community">dog coin</a> mania.



Plucky dog coin fans and issuers have historically flooded Buterin’s Ethereum addresses with immense amounts of illiquid tokens. It’s a form of guerilla marketing — aiming to trick chain watchers into believing Buterin was deep in their useless memecoins.



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Vitalik Buterin was a prime target for dog coin marketers during the last bull run



And so, on May 12, 2021, Buterin’s crypto portfolio was worth more than $20.5 billion – which would have put him on par with the likes of Bridgewater’s Ray Dalio and Google’s Eric Schmidt.&nbsp;



Shiba Inu (<a href="https://blockworks.co/price/shib">SHIB</a>) made up $17.8 billion of those funds (87%), but there were myriad other dog coins including AKITA and HUSKY. The subsequent (and arguably inevitable) SHIB crash tanked their value considerably, and Buterin <a href="https://twitter.com/sandeepnailwal/status/1392562768692252673">donated</a> whatever was left to India’s Covid relief fund.



Buterin now holds about $484 million in crypto in his known addresses — practically all of it ETH. Arkham Intelligence indicates Buterin has sent $74 million in on-chain assets to crypto exchanges over the years, including Coinbase and Kraken.



<h2 class="wp-block-heading">Ripple co-founder Jed McCaleb</h2>



McCaleb’s crypto billions were dished out over nearly a whole decade.&nbsp;



Until last year, Ripple Labs had sent a steady stream of <a href="https://blockworks.co/price/xrp">XRP</a> to McCaleb’s infamous “<a href="https://bithomp.com/explorer/rEhKZcz5Ndjm9BzZmmKrtvhXPnSWByssDv">tacostand</a>” address, and he subsequently sold it on public markets.



Ripple initially had <a href="https://www.coindesk.com/markets/2014/08/14/jed-mccaleb-ripple-labs-strike-deal-to-avoid-9-billion-xrp-sell-off/">concerns</a> over how quickly McCaleb sought to dump his founder’s reward, which amounted to 9 billion XRP in total (worth $54 million when the case was settled, $4.2 billion today).&nbsp;



The settlement saw strict rules on how much XRP McCaleb would receive per year, starting with $10,000 every week in 2015 to 2 billion XRP ($844 million) each year after 2020.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1538" height="948" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=1024&amp;h=1024" alt="" class="wp-image-53224" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=1538 1538w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=417 417w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=423 423w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=355 355w, https://blockworks-co.imgix.net/wp-content/uploads/2023/04/image-3.png?w=80 80w" sizes="(max-width: 1538px) 100vw, 1538px" /></figure>



Jed McCaleb’s XRP sales peaked in 2021 (source: <a href="https://whale-alert.medium.com/chasing-crypto-whales-9a3578617a54">Whale Alert</a>)



McCaleb’s ‘tacostand’ now holds zero XRP, having received the last tranche of payouts in mid-2022.



Chain watcher Whale Alert estimated McCaleb had sold 5.7 billion XRP over eight years, raking in $3.1 billion. The firm found that McCaleb sold XRP for an average price of $0.55 per token, or about 19% above its current price.&nbsp;



Forbes today estimates McCaleb’s net worth at $2.4 billion, having gone on to found rival blockchain network Stellar.



<h2 class="wp-block-heading">TRON founder Justin Sun</h2>



His (<a href="https://markets.businessinsider.com/news/currencies/grenada-takes-a-stand--tron-blockchain-founder-justin-sun-loses-wto-rep-role-amid-sec-lawsuit-12317470">former</a>) Excellency held $6.3 billion in crypto at his portfolio’s peak in Sept. 2021.&nbsp;



That figure would’ve placed Sun in the top 500 richest billionaires in the world, in line with Lululemon founder Chip Wilson and Viking Global’s Andreas Halvorsen.



Sun has a reputation for degeneracy, and his portfolio at all-time high is supporting evidence.&nbsp;



About 95% of his portfolio was locked inside lending protocols Aave and Curve, earning yield, as markets closed in on their record highs — including 2.63 billion <a href="https://blockworks.co/price/usdc">USDC</a>, 478250 WETH ($1.86 billion) and 11,000 <a href="https://blockworks.co/price/btc">BTC</a> ($545 million).



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Justin Sun stakes his ETH with Lido



<ul>
<li>Today, Sun’s known crypto portfolio is worth $858 million.&nbsp;</li>



<li>303,660 Lido staked eth (<a href="https://blockworks.co/price/steth">STETH</a>) makes up $580 million, followed by $160 million in Sun’s stablecoin USDD.&nbsp;</li>



<li>He also holds 23,724 ETH ($46.76 million) and 6,802 <a href="https://blockworks.co/price/mkr">MKR</a> ($4.97 million)</li>
</ul>



Sun is indeed a prolific trader. The data indicates he’s sent $22.6 billion in crypto to exchanges over the years, more than half of it going to Binance.



<h2 class="wp-block-heading">Satoshi Nakamoto and other anons</h2>



Bitcoin’s mysteriously absent creator is believed to have mined anywhere from <a href="https://blog.bitmex.com/satoshis-1-million-bitcoin/">600,000</a> BTC ($16.75 billion) to <a href="https://bitslog.com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/">1.1 million</a> BTC ($30.7 billion) throughout the early years.



All those bitcoins are believed to have been spread out across hundreds of addresses, so tracking those funds directly is somewhat difficult.&nbsp;



If the higher estimate is true, Nakamoto would place in the top-50 billionaires in the world, just shy of Chanel chairman Alain Wertheimer.



The notorious “1Feex” address is another notable on-chain billionaire. Since Mar. 2011, the address has held close to 80,000 BTC ($2.25 billion) once controlled by Ross Ulbricht’s Silk Road marketplace.&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"><a href="https://t.co/mkmVORIfxD">pic.twitter.com/mkmVORIfxD</a>&mdash; Danny Brewster (@BtcDanny) <a href="https://twitter.com/BtcDanny/status/1364729604863389696?ref_src=twsrc%5Etfw">February 25, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Craig Wright claims to own the address tied to the Silk Road hack



It’s believed someone connected to the monumental heist has access to ‘1Feex,’ although claiming the BTC would no doubt bring a certain amount of unwanted heat.&nbsp;



That didn’t stop self-proclaimed Bitcoin creator Craig Wright from (unsuccessfully) claiming ownership of the funds during one of his court cases last year.



Just under a <a href="https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html">dozen</a> Bitcoin addresses not associated with crypto exchanges or other entities contain $1 billion or more. Curiously, no unattributed Ethereum addresses contain $1 billion or more ETH right now, according to <a href="https://etherscan.io/accounts">Etherscan</a>.



<h2 class="wp-block-heading">Coinbase CEO and other off-chain billionaires</h2>



Crypto billionaires with a majority of their wealth off-chain deserve a special mention.&nbsp;



<a href="https://blockworks.co/news/coinbase-ceo-armstrong-stock-sales-life-extension">Brian Armstrong</a>, Coinbase co-founder and CEO, currently holds about $590,000 in his known addresses, Arkham Intelligence data shows, almost all of it ETH.



Armstrong’s portfolio was worth $1.23 million at its peak in early February, comprised practically entirely of <a href="https://blockworks.co/price/dydx">DYDX</a>, the native token for the decentralized exchange of the same name. Forbes puts Armstrong’s current net worth at $2.5 billion.



Dallas Mavericks owner and prolific crypto backer <a href="https://blockworks.co/news/mark-cuban-to-be-deposed-next-month-in-voyager-ponzi-suit">Mark Cuban</a> boasts about $4 million. USDC makes up more than half, followed by STETH and wrapped ETH.&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">Mark Cuban (<a href="https://twitter.com/mcuban?ref_src=twsrc%5Etfw">@mcuban</a>) makes a case for why the American government needs to embrace crypto over than gold, which he calls “useless”. <a href="https://t.co/bdjbhxgdxd">pic.twitter.com/bdjbhxgdxd</a>&mdash; Bankless (@BanklessHQ) <a href="https://twitter.com/BanklessHQ/status/1366224417546792963?ref_src=twsrc%5Etfw">March 1, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Mark Cuban has been making the case for crypto for years



At all-time highs last August, Cuban held $7.16 million, but 86% of it was USDC locked inside Aave. ETH, ApeCoin (<a href="https://blockworks.co/price/ape">APE</a>), <a href="https://blockworks.co/price/ens">ENS</a> and Rarible (<a href="https://blockworks.co/price/rari">RARI</a>) made up the remainder, among others. Forbes estimates Cuban’s entire net worth at $5.1 billion.



Of course, there are plenty of other crypto billionaires out there, and the featured names may very well have unknown crypto holdings.&nbsp;



Still, it’s clear that some prominent figures put their crypto where their mouth is.



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On-chain Billionaires: Tracking Crypto Portfolios from Buterin to Nakamoto

Bessie Liu

<div id="highlights-block_632e0cfc94594" class="highlights">
 <ul>
 <li>The Surge will be a series of small events that will eventually make transactions cheaper and faster on the Ethereum network“Sharding is the next step that isn’t quite here yet,” Buterin said</li>
 <li>“Sharding is the next step that isn’t quite here yet,” Buterin said</li>
 </ul>
 
</div>



Soon after the genesis of Ethereum, plans were laid for the blockchain to move from a proof-of-work to a proof-of-stake network.



The long-awaited Ethereum Merge took place <a href="https://cms.blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/" target="_blank" rel="noreferrer noopener">last week</a>, where over 40,000 viewers tuned in to the livestream of the blockchain reaching a Total Terminal Difficulty of 58,750,000,000T — the fixed number of hashes that the Ethereum proof-of-work network had to mine before switching to proof-of-stake.



The Merge is just the first of many steps for Ethereum.&nbsp;



At Messari’s Mainnet conference in New York, Ethereum founder Vitalik Buterin told Zooko Wilcox-O&#8217;Hearn, founder and CEO of the Electric Coin Company, and Messari CEO Ryan Selkis it is still too early to tell if anything went wrong with the Merge.&nbsp;



“The transition actually went a lot more smoothly than pretty much everyone expected,” Buterin said. “But there are other metrics that will take years, or even more than a decade, before we know exactly how the details play out.”



Even still, Buterin said the technological transition is something that has been widely celebrated within the Ethereum community.



“It really does feel like the sky that has been cloudy for almost a decade is finally cleared,” he said.



<h3 class="wp-block-heading">So what’s next?</h3>



The next main area of focus now for Ethereum developers is solving scalability issues, its founder said.



“Sharding is the next step that isn’t quite here yet,” Buterin said.&nbsp;



By definition, sharding is a form of horizontal scaling that brings in additional nodes to handle more intense workloads. This next step, dubbed “the Surge,” is slated as an intended series of single events that will eventually allow the Ethereum network to process thousands or tens of thousands of transactions per second, up from 30 transactions per second in its current state.



The Ethereum layer-1 network will need sharding, as layer-2s can only process a certain number of transactions for every kilobyte of data on the Ethereum chain, Buterin said. Hence, upgrades to the layer-1 network that improve the amount of data that can be stored will also increase the scalability of layer-2s.



“There are a lot of smart people that are working on approaching the problem…at multiple layers of a stack from different angles,” Buterin said.&nbsp;



<h3 class="wp-block-heading">Is there a future for PoW blockchains?</h3>



The proof-of-stake network has significant environmental benefits compared to the proof-of-work alternative, and Buterin said all crypto networks “should” eventually move to a proof-of-stake technology.



“As proof of stake matures, I expect it to just increase in legitimacy more and more overtime,” he said. “I hope that Zcash moves over and I am also very hopeful that Dogecoin is going to want to move over the proof-of-stake at some point as well, especially now that there is a clear roadmap for how something like that can be done.”



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What’s Next for Ethereum in a Post-Merge World?

<div id="highlights-block_6322373f17356" class="highlights">
 <ul>
 <li>The Merge is estimated to occur shortly after 6:42 UTC (2:42 am ET)</li>
 <li>Major exchanges are planning to suspend processing for ether and Ethereum token deposits and withdrawals from shortly before the Merge until the dust settles</li>
 </ul>
 
</div>



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



<h4 class="has-text-align-center wp-block-heading"><a href="https://cms.blockworks.co/ethereum-community-exchanges-prepare-for-the-merge#live">Watch Livestream replay</a></h4>



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



Ethereum is about to hit a milestone. In a matter of hours, after years of planning, we will finally know whether <a href="https://cms.blockworks.co/tag/ethereum-Merge/" target="_blank" rel="noreferrer noopener">the Merge</a> was a success.



It’s a fundamental change to the blockchain, but one that was foreseen even before the genesis block. Co-founder Vitalik Buterin, announcing the Ethereum crowd sale in <a href="https://blog.ethereum.org/2014/07/22/launching-the-ether-sale" target="_blank" rel="noreferrer noopener">a 2014 blog post</a>, already had in mind a transition away from Bitcoin’s Nakamoto consensus based on proof-of-work, to something else.



“We may choose later on to adopt alternative consensus strategies, such as hybrid proof of stake,” he wrote. Buterin was specifically referring to the rate of ether issuance, and added the caveat lector, “​​however, we make absolutely no promises of this.”



For years the Merge was more in the realm of promise than reality — the so-called “difficulty bomb,” which will guarantee the transition to proof-of-stake, was <a href="https://www.coinbase.com/institutional/research-insights/research/market-intelligence/ethereums-merge-timeline" target="_blank" rel="noreferrer noopener">delayed six times</a>, most recently in April.



But now the clock is ticking, <a href="https://www.google.com/search?q=the+merge&amp;oq=the+merge" target="_blank" rel="noreferrer noopener">the pandas are touching</a>, and all stakeholders must be ready.



<h3 class="wp-block-heading">Exchanges’ actions</h3>



Major <a href="https://twitter.com/jump_/status/1569847560554090496" target="_blank" rel="noreferrer noopener">exchanges</a> such as <a href="https://www.binance.com/en/support/announcement/9a4805dffb8741a78f26075762a22a9c" target="_blank" rel="noreferrer noopener">Binance</a>, <a href="https://cms.blockworks.co/coinbase-preps-for-the-merge-warns-users-of-interruptions/" target="_blank" rel="noreferrer noopener">Coinbase</a>, <a href="https://help.ftx.com/hc/en-us/articles/9025415733396-Service-updates-for-ETH-Merge" target="_blank" rel="noreferrer noopener">FTX</a> and <a href="https://announcements.bybit.com/en-US/article/ethw-airdrop-blt36193d43ffc14c05" target="_blank" rel="noreferrer noopener">Bybit</a> all plan to suspend processing of deposits and withdrawals of ether and <a href="https://www.coingecko.com/en/categories/ethereum-ecosystem" target="_blank" rel="noreferrer noopener">Ethereum tokens</a> — the vast majority of all non-Bitcoin cryptoassets — around one hour before the Merge, until the coast is clear.



Ethereum developers will collectively breathe a sigh of relief once the first two “epochs” are finalized post-Marge — about 13 minutes — as seen on <a href="https://beaconcha.in/" target="_blank" rel="noreferrer noopener">Beaconcha.in</a>.



Exchanges are anticipating an Ethereum fork retaining proof-of-work, which will create duplicate ether, most commonly referred to as ETHW.



Binance, for example, states “If the ETHW chain persists, Binance will handle all technical requirements involved for all users holding ETH and WETH in their Binance accounts, and credit the forked token (ETHW) to eligible users’ Binance accounts at a ratio of 1:1.”



It’s unclear when that will occur or when withdrawals of any forked assets will be available.



As expected, the cost to borrow ether skyrocketed on DeFi platforms such as Aave, to over 100% annualized, prior to such borrowing being <a href="https://cms.blockworks.co/dreams-of-forked-ether-have-defi-dapps-preparing-for-nightmare-scenarios/" target="_blank" rel="noreferrer noopener">suspended as a precaution</a>.



On perpetual futures markets, the cost to short ether is similarly elevated, as speculators are taking short term positions to hedge long spot exposure, in the hopes of cashing in ETHW forked tokens. Yet, the price of ETHW IOUs has dipped to less than 2% of ether’s value, <a href="https://www.coingecko.com/en/coins/ethereum-pow-iou" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>.



<div id="live" name="live">&#8230;</div>



<h3 class="wp-block-heading">Where to watch and what to watch for</h3>



The largest Merge “viewing party” will likely be on the Ethereum Foundation’s <a href="https://www.youtube.com/watch?v=Nx-jYgI0QVI" target="_blank" rel="noreferrer noopener">YouTube channel</a>. Over 1,700 viewers were already waiting for the scheduled livestream around 6 hours before its expected start time.



<figure class="wp-block-embed aligncenter is-type-video is-provider-youtube wp-block-embed-youtube"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Ethereum Mainnet Merge Viewing Party" width="1024" height="576" src="https://www.youtube.com/embed/Nx-jYgI0QVI?start=7423&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



Expect a flurry of Twitter spaces and impromptu celebrations to crop up.



But watch out for scammers that aim to exploit the hype surrounding the event.



<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">📢Attention <a href="https://twitter.com/hashtag/Ethereum?src=hash&amp;ref_src=twsrc%5Etfw">#Ethereum</a> <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> users! Beware of fake accounts and Merge-related scams🕵️‍♂️ Most importantly, NEVER share your 24-word recovery phrase with anyone ❌ Learn more about the <a href="https://twitter.com/hashtag/EthereumMerge?src=hash&amp;ref_src=twsrc%5Etfw">#EthereumMerge</a> here 📚<a href="https://t.co/D4rIEgzvRR">https://t.co/D4rIEgzvRR</a><a href="https://t.co/y1qp3myxvR">https://t.co/y1qp3myxvR</a> Any 🤔? Comment👇 <a href="https://t.co/LQlY6fwxRa">pic.twitter.com/LQlY6fwxRa</a>&mdash; Ledger Support (@Ledger_Support) <a href="https://twitter.com/Ledger_Support/status/1569984346605379585?ref_src=twsrc%5Etfw">September 14, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As for the Merge itself, watch for blocks being produced, and the validator participation rate, John Calabrese, head of product at Nansen, told Blockworks.



“What we&#8217;re looking for is 66% participation rate — anything higher than that — and then blocks will go through. Anything lower than that, there may be problems,” Calabrese said.



The data aggregator <a href="https://eth2.tax/merge" target="_blank" rel="noreferrer noopener">eth2.tax</a> tracks those key stats.



There may be empty blocks produced in the first minutes, but that phenomenon should diminish over time.



<blockquote class="wp-block-quote">&#8220;The beacon chain has been out for over a year. So I think we&#8217;ve, we&#8217;ve had a lot of success already…So, I’m pretty confident,” he added.</blockquote>



<h3 class="wp-block-heading">Learn more while you wait</h3>



Blockworks has published dozens of articles about the Merge in 2022:



<ul><li><a href="https://cms.blockworks.co/smart-money-has-been-buying-the-ethereum-merge-narrative/" target="_blank" rel="noreferrer noopener">Smart Money Has Been Buying the Ethereum Merge Narrative</a></li><li><a href="https://cms.blockworks.co/ethereum-merge-may-spur-more-institutional-interest/" target="_blank" rel="noreferrer noopener">Ethereum Merge May Spur More Institutional Interest</a></li><li><a href="https://cms.blockworks.co/interest-in-ether-derivatives-surges-ahead-of-merge/" target="_blank" rel="noreferrer noopener">Interest in Ether Derivatives Surges Ahead of Merge</a></li><li><a href="https://cms.blockworks.co/new-crypto-staking-fund-targets-200m-as-ethereum-merge-nears/" target="_blank" rel="noreferrer noopener">New Crypto Staking Fund Targets $200M as Ethereum Merge Nears</a></li><li><a href="https://cms.blockworks.co/the-merge-completely-changes-ethers-investment-case-for-institutions/" target="_blank" rel="noreferrer noopener">The Merge ‘Completely Changes’ Ether’s Investment Case for Institutions</a></li><li><a href="https://cms.blockworks.co/the-flippening-will-ether-flip-bitcoin-in-the-next-year/" target="_blank" rel="noreferrer noopener">The Flippening: Will Ether Flip Bitcoin in the Next Year?</a></li><li><a href="https://cms.blockworks.co/miners-hive-blockchain-technologies-hut-8-prep-for-ethereum-merge/" target="_blank" rel="noreferrer noopener">Miners Hive Blockchain Technologies, Hut 8 Prep for Ethereum Merge</a></li><li><a href="https://cms.blockworks.co/what-could-happen-to-the-ether-price-following-the-merge/" target="_blank" rel="noreferrer noopener">What Could Happen to the Ether Price Following The Merge?</a></li><li><a href="https://cms.blockworks.co/ethereum-fork-may-be-doomed-to-fail-but-chandler-guo-is-all-in-again/" target="_blank" rel="noreferrer noopener">Ethereum Fork May Be Doomed To ‘Fail,’ but Chandler Guo Is All In. Again.</a></li></ul>



Find more articles covering the Ethereum Merge <a href="https://cms.blockworks.co/tag/ethereum-merge/" target="_blank" rel="noreferrer noopener">here</a>.



This story was updated on Sept. 15 at 2:10 am ET, with the latest estimated Merge time.



<hr class="wp-block-separator">
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Ethereum Community, Exchanges Prepare for the Merge

Ornella Hernandez

<div id="highlights-block_6319d73558517" class="highlights">
 <ul>
 <li>Metaverse trademark registrations through 8 months of 2022 have eclipsed all of 2021</li>
 <li>ENS is the top ETH collection with the most volume on OpenSea within the past seven days</li>
 </ul>
 
</div>



This week Blockworks looked at <a href="https://cms.blockworks.co/venture-capital-bullish-on-building-gamefi-in-a-bear-market/" target="_blank" rel="noreferrer noopener">the state of the nascent GameFi market</a> and how venture capital is keen on pouring money into it during a bear market.



Additionally, a new Solana NFT collection, y00ts, <a href="https://cms.blockworks.co/latest-solana-nft-collection-gives-ethereum-nfts-a-run-for-their-money/" target="_blank" rel="noreferrer noopener">has already generated</a> over $7 million worth of secondary sales since Monday despite minting delays.



Blockworks recaps other notable stories that caught the eyes of the Web3 Watch.



<h3 class="wp-block-heading">Metaverse trademarks are booming</h3>



4,150 trademarks relating to Web3 and the metaverse have been filed with the United States Patent and Trademark Office (USPTO) so far in 2022. This is slightly more than twice as many as the total metaverse trademark registrations in all of last year — 1866.



Three major brands have put in their own filings in the past week alone, including carmaker Ford, <a href="https://tmsearch.uspto.gov/bin/showfield?f=doc&amp;state=4804:24nzyj.5.1" target="_blank" rel="noreferrer noopener">with 19 trademark applications</a> for virtual cars, trucks, vans and clothing, as well as an NFT marketplace.



Sony Music filed trademarks for its Columbia Records logo to be used in association with NFT-backed media including art &amp; music NFTs, music and podcast production as well as artist management and music distribution services.&nbsp;



Luxury goods retailer Hermes also <a href="https://tmsearch.uspto.gov/bin/showfield?f=doc&amp;state=4804:24nzyj.6.7" target="_blank" rel="noreferrer noopener">filed trademarks</a> for its name to be linked to NFTs, an NFT marketplace, virtual clothing and footwear, fashion shows and cryptocurrencies. It also mentions plans to create game software featuring avatars, alongside plans for user authentication services for e-commerce transactions.



Metaverse and NFT-focused applications are growing all over the world. The European Union Intellectual Property Office (EUIPO) claims to have registered 205 applications using the term “metaverse” in 2022.



The number of NFT-specific applications was 1,277 in 2021, but as of September 2022 there have been 1,157 applications.



<h3 class="wp-block-heading">For hoops fans who fancy NFTs</h3>



The National Basketball Association (NBA) and the National Basketball Players Association (NBPA) <a href="https://www.nba.com/news/nba-nbpa-sorare-fantasy-game-release" target="_blank" rel="noreferrer noopener">teamed up</a> with French startup Sorare to launch a free-to-play fantasy basketball game this Fall.



Sorare is mostly popular in Europe for its NFT-based fantasy soccer game. After partnering with the Major League Baseball (MLB) association in July, it has now turned to basketball fans as it expands within the US.



This partnership makes Sorare the official NFT fantasy partner of the NBA and gives it the rights to use official NBA league and team logos across its products.



The fantasy game will be released in time for the 2022-23 season and plans to enable fans to buy and sell digital NFT cards representing their favorite players and teams, while putting together a line-up that can earn them points based on the real-life performance of NBA players.



The NBA is no stranger to NFTs and already counts on the Dapper Labs-run NBA Top Shot&nbsp; NFT marketplace where sports fans can buy, sell and trade video clips from basketball games.&nbsp;



<h3 class="wp-block-heading">GameStop links up with FTX</h3>



GameStop partnered with FTX, making the video game retailer FTX’s preferred retail partner in the US.



The partnership intends to “introduce more GameStop customers to the crypto exchange’s community and its marketplaces for digital assets,” a press release stated.&nbsp;



While additional details including the financial terms have not been disclosed, one known perk is that GameStop stores will begin selling FTX gift cards.



GameStop recently launched its own NFT marketplace and its own crypto wallet. When the company submitted its Q2 2022 earnings report on Wednesday, however, it noted that any recent financial success may not stem from these new products.



“Revenues earned from our digital asset wallet and NFT marketplace were not material to the condensed consolidated financial statements for the three and six months ended July 30, 2022,” its quarterly SEC filing <a href="https://gamestop.gcs-web.com/static-files/3a9d968d-b9f5-415a-877f-895d5ac83ed3">stated</a>.&nbsp;&nbsp;



Additionally, <a href="https://cms.blockworks.co/ftx-bringing-crypto-swaps-to-reddit/" target="_blank" rel="noreferrer noopener">FTX also recently partnered with Reddit and Arbitrum</a> to allow users to pay gas fees on Reddit’s “Community Points” tokens using fiat currency.



<h3 class="wp-block-heading">New blockchain game alert&nbsp;</h3>



The top Solana marketplace Magic Eden <a href="https://cms.blockworks.co/solana-marketplace-magic-eden-to-offer-ethereum-nfts/" target="_blank" rel="noreferrer noopener">recently expanded to the Ethereum blockchain</a>. One of its first ETH NFT mints on the Magic Eden Launchpad includes a collaboration with Web3 game studio Azra Games.



Azra, which recently closed a $15 million seed round led by Andreessen Horowitz (a16z), announced plans to launch a collection of profile picture (PFP) NFTs called “The Hopeful,” as part of its upcoming “Legions &amp; Legends” game.&nbsp;



This game is an ETH-powered collectible and combat role-playing game (RPG) set in a sci-fi fantasy universe. The company is led by Mark Otero, former General Manager of EA Capital Games, whose credits include Star Wars: Galaxy of Heroes.



Magic Eden recently shifted its focus to gaming by <a href="https://cms.blockworks.co/web3-watch-gamestop-opens-nft-marketplace-magic-eden-fund-focuses-on-web3-gaming/" target="_blank" rel="noreferrer noopener">launching a new venture capital fund</a>, dubbed Magic Ventures, that focuses on investments in Web3 games from third parties as well as its own. 



<h3 class="wp-block-heading">Vitalik polls crypto Twitter </h3>



Ethereum co-founder Vitalik Buterin has been <a href="https://twitter.com/VitalikButerin/status/1566763265291681793?s=20&amp;t=tUl1e0BorDII4mHyLfgsCg" target="_blank" rel="noreferrer noopener">tweeting</a> out a slew of polls lately — from personal random questions, like which crypto personality he respects the most, to what a fair price for a 5-letter .eth domain name is. 



In response to the latter, 91,130 participants chimed in and around 50% of the crypto community thinks that the fair price for a 5-letter .eth domain name for 100 years is less than $100. The same goes for .eth domain for 10 years.&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">What is a fair price that someone should have to pay to register and unconditionally guarantee ownership of a 5-letter .eth domain for 100 years?&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1566421042872164355?ref_src=twsrc%5Etfw">September 4, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



At the same time, Buterin has called for Ethereum Name Service (ENS) domain taxation, suggesting a 3% yearly fee on ENS domain names for the highest bidder.



For example, an investor with $500,000 as the highest bid on their domain should pay a $15,000 taxation annually to maintain ownership. According to him, this would demotivate people from hoarding domains they aren’t using.



ENS has been trading at the top of the secondary sales charts on OpenSea, as the ETH collection with the most volume within the past seven days.



It <a href="https://twitter.com/ensdomains/status/1565374366791057409?s=20&amp;t=QtnSDYyIgx2haUUm3qqE1Q" target="_blank" rel="noreferrer noopener">registered</a> 301,000 new .eth domains in August and touts a total of 2.17 million names so far.



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Web3 Watch: GameStop Partners with FTX and Sorare Creates NBA Fantasy Game

<div id="highlights-block_62db04c8949c1" class="highlights">
 <ul>
 <li>ETH prices have been on the rise all week, marking a 35% increase since July 15</li>
 <li>Ethereum Classic also soars, outperforming ETH with 80% returns in the past seven days</li>
 </ul>
 
</div>



The Ethereum community returned to Paris, France this week for one of Europe’s largest annual blockchain conferences in anticipation of a post-Merge ecosystem.&nbsp;



The Ethereum Community Conference (EthCC) followed the Metaverse Summit from July 16 to 17, also in the French capital.



In stark contrast to massive events such as Bitcoin 2022 in Miami, which had around 30,000 attendees and exhibitors, EthCC capped its attendance to 2,000 registrants. This four-day conference included headline speakers such as Vitalik Buterin, co-founder of Ethereum, and Eli Ben-Sasson, president and co-founder of StarkWare.&nbsp;



Vetted blockchain startups also pitched their concepts to top venture capitalists working in the space. Blockworks spoke to some attendees who shared their insights and observations on the Web3 and Ethereum ecosystems.



“If you didn’t read the news and just showed up at EthCC, you would have no idea we’re in a bear market,” said Alan Chiu, CEO of Enya, a core contributor to Boba Network, who also noted an uptick in gaming projects and high interest in cross-chain liquidity compared to last year.



“The projects that will thrive through this cycle and beyond are the ones that deliver real utility for users, coupled with a sustainable revenue model, and we’ve seen a number of those here,” he added.



Many of those projects shared a mission to advance the adoption of Web3. Sangmin Seo, representative director at the Klaytn Foundation, specifically noted a strong focus on the core components of technological infrastructure, UX/UI and governance models.&nbsp;



“Improving underlying technologies, educating new builders, and attracting more builders to participate will be key success factors for the future growth of the Web3 movement,” Seo said, adding that “demystification and the simplification of user experiences” should be priorities.



<h3 class="wp-block-heading">Ethereum developers ready for a post-Merge ecosystem</h3>



Conferences such as EthCC provide a space for community members to debate, create and play with people from other sides of the globe. According to Shaban Shaame, founder of the Spell of Genesis game producer EverDreamSoft, the metaverse also serves to unite distant people to connect around common objectives in cyberspace.&nbsp;



The current challenge within the Web3 metaverse industry, however, is finding a balance between centralization and decentralization. “The consensus is that the metaverse should be run by the community. The formula for the right governance allowing co-creation while protecting users from scams and intellectual property theft, is yet to be found,” Shaame said.



As many developers and builders are looking into scalability, gaming, privacy and governance within Web3, the much-anticipated <a href="https://cms.blockworks.co/the-investors-guide-to-the-ethereum-merge/" target="_blank" rel="noreferrer noopener">Ethereum Merge</a> dominated a large portion of conversations at EthCC.



The Merge intends to replace Ethereum’s proof-of-work mining protocol with proof-of-stake, allowing a potential energy reduction of 99.95%. The estimated date is slated for September 2022. Ethereum recently <a href="https://cms.blockworks.co/ethereum-activates-grey-glacier-hard-fork-merge-likely-in-september/" target="_blank" rel="noreferrer noopener">passed</a> the “Grey Glacier” hard fork upgrade without incident.



Vitalik Buterin presented his long-term vision for the Ethereum protocol in a Thursday presentation, placing emphasis on security, stability and decentralization. Part of the blockchain’s transition to becoming a “robust and powerful system” includes upgrading its monetary policy, Ethereum virtual machine improvements, reforming gas cost rules and its quantum resistance, according to Buterin.



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Vitalik Buterin" width="1024" height="576" src="https://www.youtube.com/embed/kGjFTzRTH3Q?start=1&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



Buterin also said Ethereum will be 55% complete as a result, comparing it to the perception of Bitcoin as being 80% complete. “By the end of its roadmap, Ethereum will be able to process 100,000 transactions per second,” Buterin said.



Those who listened to Buterin could also opt to drink a free Vitalik Cocktail, which was made up of 85% green tea and 15% red wine, a combination Buterin <a href="https://twitter.com/VitalikButerin/status/1511642234562752512?s=20&amp;t=njJ1iLfMptb0hDKr0JyUfw" target="_blank" rel="noreferrer noopener">tweeted</a> in April was “underrated.” 



<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">Last day of <a href="https://twitter.com/hashtag/EthCC?src=hash&amp;ref_src=twsrc%5Etfw">#EthCC</a> 🫂 Let&#39;s celebrate it with a 🍷of <a href="https://twitter.com/hashtag/Vitalik?src=hash&amp;ref_src=twsrc%5Etfw">#Vitalik</a> cocktail! See you at Café St Victor 👋 <a href="https://t.co/hdpeNQMggw">pic.twitter.com/hdpeNQMggw</a>&mdash; pujeet.eth not @StarkNetCC 🇫🇷 (@pujeetmanot) <a href="https://twitter.com/pujeetmanot/status/1550093052433293312?ref_src=twsrc%5Etfw">July 21, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Starkware’s Ben-Sasson told Blockworks in a phone call how “exciting” Vitalik&#8217;s speech was. “Vitalik has a knack of reading what the community is thinking about, so when he put emphasis on [layer-2s] in his speech, this said it all.&#8221;



He also said “it was wonderful to see the Ethereum ecosystem so full of energy, despite current conditions. It was a time to go connect and reconnect with people, with a great atmosphere.”



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Crypto Comes to the City of Light: EthCC Recap

Jack Kubinec

<div id="highlights-block_62bc42c09b064" class="highlights">
 <ul>
 <li>Few DeFi companies employ dedicated security personnel</li>
 <li>Industry experts believe bridges will become more secure as DeFi matures</li>
 </ul>
 
</div>



As investment in cryptocurrency grows, so does the incentive for criminal actors to exploit the DeFi (decentralized finance) space. Cross-chain bridge hacks have been the weapon of choice for crypto thieves in 2022. Bridge hacks have accounted for more than a billion dollars in stolen funds this year, according to research from blockchain analytics and compliance firm Elliptic.



Cross-chain bridges allow assets to be moved between different blockchain protocols, meaning the networks contain a large concentration of crypto assets. The recent string of bridge attacks has caused some industry leaders to question whether the benefits of bridges outweigh their risks. A top analyst at Elliptic believes bridge hacks are just growing pains that DeFi will eventually surmount.



<a href="https://cms.blockworks.co/defi-cross-chain-horizon-bridge-hacked-for-100m/" target="_blank" rel="noreferrer noopener">Harmony</a>, <a href="https://cms.blockworks.co/sky-mavis-ronin-network-bridge-exploited-for-over-600m/" target="_blank" rel="noreferrer noopener">Sky Mavis</a>, and <a href="https://cms.blockworks.co/in-second-largest-defi-hack-ever-blockchain-bridge-loses-320m-ether/" target="_blank" rel="noreferrer noopener">Wormhole</a> all suffered blockchain exploits exceeding $100 million this year. Mudit Gupta, Chief Information Security Officer at Polygon, believes bridge insecurity is an industry-wide problem.



“Most of the hacks are happening due to companies not having proper security experts and not knowing what to do themselves,” Gupta said in a Twitter DM. “There are very few DeFi companies with [dedicated] security personnel.”



DeFi protocols have proliferated rapidly in the past six years, but security infrastructure has not kept up with the now over-$900 billion industry. For this reason, hacks totaling in the hundreds of millions are not surprising.&nbsp;



On April 1, a trader tweeted their concern that a major Harmony Horizon Bridge exploit would only require a hacker to obtain two of the protocol’s five validator keys. In June, that exact scenario occurred — and Harmony was ransacked for $100 million.



<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">Since the current narative du-jour is bridges &amp; bridge hacks, I wanted to do some digging on the harmony bridge on Ethereum which secures ~$330m worth of tokens.&mdash; Ape Dev (@_apedev) <a href="https://twitter.com/_apedev/status/1510007663832223751?ref_src=twsrc%5Etfw">April 1, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Vitalik Buterin, co-founder of Ethereum, believes cross-chain bridges are inherently prone to security breaches.



“The fundamental security limits of bridges are actually a key reason why…I am pessimistic about cross-chain applications,” Buterin wrote in a lengthy January Reddit post. The influential founder went on to express his belief that assets should be held in the same blockchain ecosystem, rather than shuffled between chains.



Tara Annison, Head of Technical Crypto Advisory at the crypto research firm Elliptic, disagrees.



“We’re not going to live in a single chain world,” Annison said. It will always be necessary to move assets between blockchains, so “we shouldn’t characterize bridges in general as bad just because some have been hacked.”



Annison believes bridge hacks are caused by the concentration of value within cross-chain bridges, not by the bridges themselves.



<blockquote class="wp-block-quote">“If you think of wars, you try to bomb bridges to stop goods and services moving across,” Annison said. Recent cross-chain bridge hacks are not happening “because bridges are inherently weak infrastructure, it’s because they have a concentration of value.”</blockquote>



Annison believes that all crypto assets come with risk, and bridges are just the risk “flavor of the month” following stablecoins in May and NFTs before that. Bridges should become more secure as protocols become more technologically mature.



It remains to be seen if market participants agree.



Sky Mavis’ Ronin Bridge, which was compromised for $625 million in April, <a href="https://cms.blockworks.co/sky-mavis-reopening-ronin-bridge-with-enhanced-security/" target="_blank" rel="noreferrer noopener">reopened</a> this morning. Close to $9 million in assets have already left the chain, according to Messari.



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