XRP Blockchain in Focus After Ripple’s Partial Win in SEC Case

July 19, 2023

Exploring the tech behind crypto

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Hi, Bradley Keoun here, editor of The Protocol.

Sure, you’ve probably read all about Ripple Labs‘ partial courtroom win in its defense against U.S. Securities and Exchange allegations that its sales of XRP tokens amounted to illegal securities transactions. But now that some of the smoke has cleared (and the XRP price has shot up), what is the smart take on the primary blockchain in question, the XRP Ledger? In this week’s issue of The Protocol, CoinDesk’s Sam Kessler breaks it down.

We’re also highlighting Polygon’s proposed “POL” token, Coinbase’s important step forward on its Base blockchain, Celo blockchain’s existential strategy shift and the you-can’t-make-it-up or maybe actually I-saw-this-coming denouement of the cross-chain-router protocol Multichain. Enjoy!

XRP Blockchain Still Faces Centralization Caveats as Ripple Regulatory Threat Recedes

Ripple Labs CTO David Schwartz in 2021. (CoinDesk TV)

Last week’s news that Ripple Labs had scored a partial court victory in its battle with the U.S. Securities and Exchange Commission lifted a regulatory cloud that had hung over the project for years.

What remains, however, is the persistent criticism historically lobbed at XRP Ledger, the project at the heart of the case, by blockchain purists: that it’s too centralized, in its technological design.

A descendent of Bitcoin but built around concepts that date to the early 2000s, XRP Ledger, or “XRPL,” relies on a key tradeoff – allowing its central transaction-processing mechanism to be controlled by a much smaller handful of “validators” or key operators than found on many rival blockchains.

“Ripple basically said, ‘Hey, let’s make Bitcoin adoptable by institutions,’ so they created their own version of a decentralized currency that was faster and more consistent and cheaper,” according to a former Ripple Labs employee who asked not to be identified so he could speak more freely without upsetting old colleagues. “But it did come with a trade-off of greater centralization compared to Bitcoin.”

Benefits come in the form of security, speed and throughput, but the downside is that more centralized networks are more susceptible to the influence of major players, or prone to single points of failure.

Read the full piece by Sam Kessler

Network News

Polygon co-founder Sandeep Nailwal. (CoinDesk TV)

HYPER BLOCKCHAIN: Leaders of Polygon, the Ethereum scaling solution, unveiled plans for a new “POL” token to replace the existing “MATIC” – itself a holdover from the original project name ditched more than two years ago. Holders will have at least four years to exchange their MATIC for POL tokens, which could be deployed across all of Polygon’s growing number of networks. “POL should support exponential growth of the Polygon ecosystem and eventual ‘hyperblochainization’ of the world,” according to an undated white paper. Polygon has distinguished itself this year as one of the most prolific projects by volume of announcements, culminating in last month’s unveiling of the “Polygon 2.0” roadmap and a pivot toward zero-knowledge cryptography, a hot blockchain trend. (JUST IN WEDNESDAY: Polygon plans to decentralize its community treasury.) Previously viewed as perhaps the most dominant Ethereum scaling solution, Polygon now might be under pressure to step up the competition as rival “layer 2” networks gain steam, the newsletter Fintech Blueprint wrote earlier this month. According to that report, addresses on the network recently decreased to their lowest since January 2021 – possibly due to “all the attention and activity sent to the L2 networks setting on Ethereum, like Arbitrum and Optimism.”

1 BILLION USERS? Base, the planned Ethereum layer-2 blockchain being incubated by the big U.S. crypto exchange Coinbase, said July 13 it is now open to app developers – with plans to push toward general availability early next month. The project’s goals are nothing short of ambitious: “We’re building Base to bring the next million builders and billion users on-chain,” according to a blog post. Base is built using OP Stack, a software package developed by the existing layer-2 project Optimism to make it easier for builders to spin up their own networks (in keeping with a trend chronicled last month in The Protocol). Development teams that jump in now will get a non-transferable “Genesis Builder NFT” – a “permanent on-chain record of your early support,” according to the blog post. What that’s worth besides a souvenir and maybe confirmed access to a gated Discord channel isn’t clear; the team claims it has no plans to issue a token.

SPEAKING OF LAYER 2s…. Developers behind the standalone Celo blockchain have proposed to ditch their independent status and move onto Ethereum as a new layer-2 network, subject to a July 22 vote. Like Base, the relocated Celo chain would be built using OP Stack. The existential change could simplify liquidity sharing between Celo and Ethereum while boosting security and facilitating a seamless developer experience, according to a technical write-up. Celo is already compatible with the Ethereum Virtual Machine or EVM, meaning Ethereum developers can easily port over their existing apps or can create new ones using many of the same tools. While it can seem like new blockchains are constantly sprouting, consolidation isn’t unprecedented; earlier this year, the once-independent Helium Network migrated onto Solana.

RICH DAO. Mantle Network, an Ethereum layer-2 chain using EigenDA for data availability, launched its main network after six months of testing. The project is one to watch since the affiliated Mantle Treasury (formerly known as BitDAO) has the largest hoard among decentralized autonomous organizations, at $3.25B of liquid assets. The Mantle Network is the “only modular chain amongst a forest of monoliths,” strategic advisor Jordi Alexander said in a press release. Prices for the MNT token jumped.

Also:

The bizarre tale of Multichain finally comes to a climax, as the cross-chain router protocol suspends services following a months-long ordeal that included the CEO’s arrest by Chinese police, his sister’s attempt to recover the project’s crypto-wallet access by rummaging through a home computer and then a personal cloud server, $130M of abnormal withdrawals and then the sister’s arrest.
Code Wallet aims for fresh start on Solana after messy tale of Kik and KIN.
U.S. presidential candidate RFK Jr. vows to exempt bitcoin from capital gains tax if elected.
Mutiny, team behind “Zapple Pay,” launches beta version of its Bitcoin wallet built for Web browsers – avoiding restrictions (and frustrations) that come with distributing a smartphone app on Apple’s App store.
Venture capital funding for Web3 startups plunged to $1.8B in second quarter, down 76% from a year earlier.

Protocol Village

Highlighting blockchain tech upgrades and developments.

Chainlink co-founder Sergey Nazarov. (CoinDesk)

Chainlink, data oracle project, launches “Cross-Chain Interoperability Protocol,” or CCIP, connecting “blockchains and all of the bank chains.”
Binance, world’s largest crypto exchange, now allows users to deposit bitcoin (BTC) using the Lightning Network.
Nil Foundation, provider of software helping developers build zero-knowledge crypto apps, is working with Silicon Valley-based semiconductor startup Fabric Cryptography on general-purpose processor called Verifiable Processing Unit or VPU, optimized for ZK proofs.
StarkWare, zk-rollup developer, says it’s working on Starknet Stacks package that teams can use to spin up their own application-specific layer 2s, adding to growing field of blockchain-in-a-box offerings.
Gnosis, Ethereum sidechain, releases Gnosis Pay and Gnosis Card to enable traditional payments on Visa network directly from crypto wallets.

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Money Center

Fundraisings

Cosmic Wire, Miami-based Web3 startup developing 3D architecture tools and AI-backed avatars for metaverse creation, raises $30M in seed funding round. (Solana Foundation, Polygon)
RISC Zero, creator of infrastructure that helps developers build zero-knowledge proof software, raises $40M in Series A round to help bring Bonsai computing platform to market. (Blockchain Capital, Galaxy Digital, IOSG, RockawayX, Maven 11, Fenbushi Capital, Delphi Digital, Algaé Ventures, IOBC, Tribute Labs’ Zero Dao, Alchemy.)
P0x labs, developer of Manta Network, which is a modular system for zero-knowledge applications, raises $25M in Series A round. (Polychain Capital, Qiming Venture Partners)

Deals and grants

BNB Chain “Hackvolution” offers prizes up to $10K for developers on opBNB – layer-2 solution in BNB ecosystem built using Optimism’s OP Stack – and BNB Greenfield, a decentralized storage system.
Evertas, crypto insurer working with Lloyd’s of London, buys bitcoin mining specialist Bitsure for undisclosed amount.
Polychain Capital, blockchain-focused venture capital firm, has raised $200M for its fourth crypto VC fund, Fortune reported.

Data and tokens

Ethereum ICO participant transfers $116M ETH after 8 years of dormancy.
Stablecoin issuer Lybra Finance launches Arbitrum testnet amid quest to be more DeFi-friendly.
Solana’s largest protocol, Marinade, bets growth on ‘native’ SOL staking product.

Arbitrum, Optimism Are Dominating Layer-2 Race

A glance at the top projects on the website L2Beat shows how lopsided the market share is tilted toward the top three projects, based on total value locked (TVL) or collateral placed into protocols on the respective networks. (L2Beat)

Layer-2 blockchains ranked by their total value locked, or collateral that’s deployed in protocols on the network. (Source: L2Beat)

Calendar

July 17-20: Ethereum Community Conference (EthCC) 6, Paris.
July 13-Sept : BNB Chain “Hackvolution.”
Aug. 1 (estimate): Litecoin halving.
Aug. 15-16: Canada’s Blockchain Futurist Conference.
Sept. 11-13: Permissionless II conference, Austin, Texas.
Sept. 12: Ordinals Summit, Singapore.
Sept. 13-14: Token2049, Singapore.
Sept. 20-22: Messari Mainnet 2023, New York.
Sept. 25-27: Proof-of-Work Summit, Prague.
Nov. 2-4 Cardano Summit, Dubai.
Nov. 8-9: Binance Blockchain Week, Istanbul.
Nov. 28: EOS native consensus upgrade with “instant finality.”
April 2024 (estimate): Next Bitcoin halving.
Nov. 2-4 Cardano Summit, Dubai.
Nov. 28: EOS native consensus upgrade with “instant finality.”
April 2024 (estimate): Next Bitcoin halving.
May 29-31: Consensus 2024, Austin, Texas.

It is now more important than ever to set industry standards and align on practical short-term and long-term objectives through pointed conversations with the best legal minds and Washington D.C.’s most important decision makers.

Join us at State of Crypto: Policy and Regulation on October 24 in Washington D.C. for an unprecedented opportunity to evaluate, dissect and ultimately shape crypto regulatory frameworks that support a vibrant, secure and healthy future for the digital economy.