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Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Marc Hochstein, CoinDesk’s deputy editor-in-chief for features, opinion and standards.
IN THIS ISSUE:
Bitcoin gets a DEX, thanks to the Nomic bridge
Union Labs gets $12M to build more bridges
Base’s Jesse Pollak looks back on BALD
Justin Drake discusses Ethereum’s Beam Chain plan … and Solana
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Network News
STRENGTH FOR ETH: The Ethereum blockchain’s transaction revenue has increased substantially since Donald Trump’s U.S. election victory, Steno Research said in a Monday report. “This outcome is crucial for all on-chain activity,” wrote analyst Mads Eberhardt. The surge has led to higher staking rewards and more ether (ETH) being burned via transaction fees, the report said. “This combination strengthens Ethereum’s tokenomics,” Steno said, making ether a more appealing asset. Steno noted that the amount of USDT on the Ethereum network surpassed supply on the Tron blockchain for the first time in more than two years. This is a clear sign that on-chain activity is booming, resulting in greater demand for ether to facilitate transactions and higher transactional revenue. Read more.
BITCOIN GETS A DEX: Osmosis, a decentralized exchange (DEX) built for the Cosmos blockchain ecosystem, has opened a bridge to the Bitcoin network, as part of a pivot toward the world’s largest cryptocurrency. The decentralized autonomous organization (DAO) that governs Osmosis voted in favor of adopting Bitcoin bridge Nomic in June. The integration went live on Tuesday. Nomic’s bridge now enables users to deposit their BTC on the Bitcoin network in return for a token called alloyed BTC (allBTC) on Osmosis. “The novel thing with Nomic is that it’s all decentralized,” said Matt Bell, CEO of Turbofish, the team of developers behind Nomic. “The whole flow for users, from having Bitcoin in their wallet to the Bitcoin being on Osmosis, remains decentralized with Nomic. There’s no Bitgo or Coinbase in the middle.” In the big picture, Osmosis is one of several projects attempting to leverage the value tied up in BTC, by far the largest cryptocurrency by market cap, to bring liquidity to the broader crypto world. Read more.
UNION LABS GETS $12M: Union Labs, a project focused on helping blockchains communicate with each other, has raised $12 million in a Series A funding round led by Gumi Cryptos Capital and Longhash Ventures. The fresh round of funds will be used to expand Union’s core team, advance partner integrations, and contribute to ecosystem growth. The fundraising comes after Union raised $4 million in seed financing last year. Borderless Capital participated in the new round, along with angels from the Polygon, Celestia, Movement, and Berachain communities, Union Labs said Tuesday. Union’s core product is a modular, zero-knowledge (ZK) interoperability layer, designed to ease movement of assets between the Ethereum and Cosmos ecosystems. Its mainnet is supposed to go live in early 2025. Union is also interested in building in the Bitcoin ecosystem, “addressing the chain’s scripting limitations to enable secure asset transfers across Bitcoin L2s and the multichain ecosystem, enhancing DeFi on Bitcoin,” the team said. Read more
TO BALDLY GO… Critics say the Base blockchain, created by the Coinbase exchange, is too centralized. But if that were true, would anyone have been able to create BALD, a meme coin launched on Base last year whose name mocked Coinbase CEO Brian Armstrong’s shiny pate? “BALD showed that Base wasn’t going to be this place that was fully manicured, curated, controlled, and centralized,” says Jesse Pollak, Base’s founder. “Bald showed that Base wasn’t going to be this place that was fully manicured, curated, controlled, and centralized.” Too bad BALD also turned out to be a rug, as it were. Read more
ETHEREUM’S JUSTIN DRAKE SEES NO THREAT IN SOLANA
Ethereum developer Justin Drake said his comprehensive proposal to overhaul the second-largest blockchain’s consensus layer isn’t about catching up with a rival, it’s about sticking around for the long haul.
Drake unveiled the proposal, known as the Beam Chain, at Ethereum’s biennial Devcon gathering in Bangkok last month, at a tim when the network’s native token ETH is lagging behind its counterparts at other major layer-1 blockchains.
The Ethereum network enjoyed wide adoption over the last few years, making it more expensive and slower to use. In response, a cohort of layer-1s, known as “Ethereum killers,” emerged in 2020 to compete with Ethereum on transaction speeds, and Solana has been seen as the leader of the back.
Recently, activity on Solana has exploded, mainly thanks to the surge of memecoins on the blockchain, with users wondering whether it will overtake Ethereum as the “hot” chain.
But Drake said he doesn’t see Solana as a threat to Ethereum, and neither does he see the Beam Chain as a way to restore Ethereum’s edge in the short term.
The Beam Chain “is all about improving the long-term health and security of the consensus layer, it has nothing to do with performance,” Drake said in an interview with CoinDesk.
“Solana has no consideration for health. The only thing they care about is performance. They care about reducing latency and increasing throughput,” Drake added.
