Ethereum
Bitcoin ETFs Hit Record Highs With Billions of Entries, Highlighting Mainstream Crypto Adoption Amid Governance Queries
The biggest news this week is today’s Ethereum upgrade, Dencun, which marks the biggest technical change to the blockchain in over a year. Like that of CoinDesk Margaux Nijkerk reports: The upgrade could help reduce fees for Ethereum users through “proto-danksharding,” an upgrade designed to optimize the network for cumulative Layer 2 (L2) networks like Optimism and Arbitrum. On the other hand, some developers warn that this change could fragment the Ethereum ecosystem and set it down a path that risks costing it its competitive advantage over competing chains.
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ETHEREUM IMPROVEMENTS: The biggest Ethereum upgrade in over a year it finally happened. The update, Dencun, contains a series of code changes designed to improve Ethereum for developers and make it faster and cheaper for end users. The main one people are paying attention to is “proto-danksharding,” which will allow abstract “blobs” of data to be published on Ethereum alongside simple transactions. The idea of adding new lanes to the Ethereum highway via sharding is not new, but this first attempt at the technique focuses specifically on lowering fees for rapidly growing “layer 2″ chains. the main places through which people transact on Ethereum, which has seen its fees skyrocket in recent years as network traffic increases. Developers hope the change will increase network capacity, allowing L2 blockchains like Arbitrum, Optimism, and Coinbase’s core network to publish larger volumes of data to Ethereum without paying an arm and a leg to do so. Although blobs may help reduce gas fees for L2 users, there remains some uncertainty over the extent to which proto-danksharding will alleviate the chain’s fee problems: as any urban planner will warn, major Ethereum developers, adding lanes to a highway (or “shards”). https://www.coindesk.com/”blobs” to a blockchain) cannot reduce congestion as expected. Some developers also expressed his concern that Ethereum’s adoption of L2s and natives “Data availability“risks fragmenting the ecosystem, and could lose the basic chain of its competitive advantage against competing networks.
IN DEPTH ON DEPIN: Speeds are improving and fees are decreasing in blockchains, but we’ve been in the crypto “revolution” for 15 years and few use cases have caught on outside the narrow realm of memecoins and finance. One of the biggest trends helping to expand the crypto conversation beyond DeFi and infrastructure is that of “decentralized physical infrastructure networks,” or DePINs, which merge the physical world with blockchains to accomplish everything from from mitigating supply chain inefficiencies to deploying unused IT resources. Projects that connect blockchains to physical goods are not new: Helium, one of the most (infamous examples of a DePIN project, attempts to create a wireless network that rewards contributors for setting up WiFi hubs. Filecoin, a veteran data storage blockchain, rewards people for lending their unused hard drive space and remains a leading example of how blockchain technology can solve real-world problems. The DePIN moniker was on the tip of everyone’s tongue at last week’s ETHDenver conference, but one might be tempted to dismiss it as another marketing term meant to attract investors and users to ideas tired. But things to have has been changing in the DePIN space recently, with improved blockchain technology and AI hype – backed by a surge in investor dollars – fueling the rise of new projects like the compute-focused Akash and Render networks . If nothing else, the DePIN space is one to watch as it could help present an answer to an age-old question that has plagued crypto since its inception: where are the use cases?
Last week’s top picks our Village Protocol column, highlighting key blockchain technology upgrades and news.
Image shared by a representative of Burnt Banksy’s performance at the XION blockchain launch in Brooklyn on Wednesday. (Banksy burned)
Ethereum’s biggest update in over a year, Dencun, finally arrived on Wednesday after years of planning. It’s seen as a good thing. But perhaps not universally.
Proto-danksharding, the main change brought with the Dencun update (a portmanteau of two simultaneous updates: “Deneb” and “Cancun”), marks Ethereum’s first step on the path to “sharding”, a method of increasing the chain’s transaction capacity by adding new lanes to its proverbial blockchain highway.
The feature is specifically aimed at reducing fees for “rollup” Layer 2 networks – chains like Optimism, Arbitrum, and Coinbase’s core network that run on Ethereum and offer users the ability to make low-cost transactions without leave the ecosystem completely.
While many developers celebrate Dencun for its potential to accelerate Ethereum toward greater affordability, others fear it risks setting the ecosystem down a path that could, in the long run, come back to bite it.
“The Dencun upgrade is Ethereum’s response to clear needs for greater scalability,” Rich Rines, an early contributor to Core DAO, which develops blockchain infrastructure, said in a post at CoinDesk. With Dencun, Ethereum is “focused on strengthening Layer 2 solutions,” but “questions remain about whether this is a long-term solution.”
Rand Hindi, CEO of Zama (Zama)
Digital asset investment funds have seen a sharp increase in weekly entries this week, reaching a new record of $2.7 billion and bringing the total for the year to $10.3 billion, as reported by CoinShares. This influx is mainly due to Bitcoin (BTC), which contributed $2.6 billion to the week’s total. According to CoinShares, the new inflows mean the industry could potentially surpass its record annual inflow of $10.3 billion set in 2021, all less than three months into 2024. U.S.-based spot ETFs are actively acquiring thousands of Bitcoin coins daily, coinciding with a major price rally that saw Bitcoin hit a new all-time high of over $72,000. Additionally, Solana (SOL) saw inflows exceeding $24 million last week, indicating growing interest in cryptocurrencies beyond just Bitcoin.