Tag: Ethereum News

EIP 7702 aims to improve account abstraction on the Ethereum network.

Ethereum co-founder Vitalik Buterin proposed Ethereum Improvement Proposal (EIP) 7702 to improve account abstraction for on-chain addresses.

EIP 7702 aims to improve how users interact with the Ethereum blockchain. It enables regular accounts to temporarily act like smart contracts for a single transaction, providing greater flexibility and security. This advancement could simplify gas fee management and transaction batching, allow improved security, and lead to a more user-friendly experience.

The Significant Impact of EIP 7702

The EIP was created by Vitalik Buterin, Sam Wilson, Ansgar Dietrichs, and Matt Garnett. The proposal introduces a new transaction type that temporarily transforms user accounts into smart contract wallets. This enables more complex operations, such as combining multiple actions into a single transaction, which improves the network’s efficiency and flexibility.

Based on the GitHub summary, it appears that EIP 7702 is a promising alternative to the current EIP 3074 due to its ability to address significant vulnerabilities. Buterin and co-authors presented their EIP with a focus on its quantum resistance, as there has been a longstanding concern about the threat of quantum computing in the cryptocurrency community. This initiative is seen as a proactive strategy to mitigate any potential quantum threats.

EIP 7702 streamlines transactions in decentralized exchange (DEX) systems, reducing the number of steps required and making it simpler and more cost-effective for users. This is a significant improvement over current limitations, and the community has responded positively to the new development.

Considering user security and autonomy is crucial for EIP 7702. The GitHub summary mentions that allowing users to sign transactions with temporary, specific permissions reduces the risk of key compromise. This feature not only enhances user confidence in the system but also ensures that the Ethereum network can effectively address current and future security challenges.

Jarrod Watts, the developer relations engineer at Polygon, recently noted on social media platform X that the proposed improvement to Ethereum is going to have a significant impact. Similarly, Uniswap founder Hayden Adams also commented on the proposal, stating that it will improve quantum resistance and compatibility with 4337.

The recent sale of 100 ETH for 291.267K DAI through CoW Protocol has made users question the security and transparency of the Ethereum network.

A suspected Ethereum Foundation address has made headlines after reportedly selling 100 ETH for 291.267k DAI through CoW Protol, a permissionless trading protocol that leverages Batch Auctions to find prices. 

The Ethereum Foundation, known for its significant role and contributions to Ethereum’s development, focuses on enhancing the ecosystem through various projects. However, the recent ETH sale from a suspected foundation address has raised concerns about the transparency of the foundation’s operation. 

According to reports, the suspected Ethereum address transferred these DAI to another address and continued to sell ETH for DAI via CoW Protocol.   

CoW Protocol Party Called “Solver.” 

Furthermore, CoW Protocol operates through a party called “a solver,” which is tasked with offering settlement solutions for batch auctions. Solvers compete with each other to present the most effective batch settlement solution. Successful submissions earn tokens as rewards.  

The protocol offers numerous benefits, including introducing a new trading method and functioning as a Meta DEX aggregator. It also ensures optimal price by selecting the most liquid venue for trades in a batch, offering a superior price across aggregators or Automated Market Makers (AMMs).     

Users on the X platform speculated that the sale could be part of routine asset management strategies, while others believe there are more motives behind the move.   

Some analysts argue that reducing the foundation’s ETH reserves could reduce market liquidity and decrease prices. In contrast, others see it as a strategic move to diversify assets and manage risk.    

Ethereum Foundation Holdings. 

Meanwhile, on March 31, 2022, the Ethereum Foundation held over $1.6 billion in Ether and $300 million in non-crypto investments, which represents 99.1% of the organization’s investment in digital assets. The report stated that the holdings included 39,168 ether already allocated to client teams developing on Ethereum.   

According to a March 21 report, the U.S. Securities and Exchange Commission (SEC) is investigating Ethereum following a 2022 software update known as Merge, which significantly changed transaction ordering on the network. The Merge allowed users to stake their Ether to earn interest. The SEC is concerned whether it is a security.  

Lido Finance holds over 28.5% of all staked Ether, as it remains the largest DeFi protocol category.

The largest liquid staking protocol on Ethereum, Lido Finance, has reached a significant milestone, hitting the $1 million validators mark. According to an X post, Lido Finance announced the achievement on April 29.   

1 million validators pic.twitter.com/fELATWQPIu

— Lido (@LidoFinance) April 29, 2024

The liquid staking protocol allows users to stake their Ether without locking tokens or investing in expensive infrastructure.   

In addition, Lido Finance enables users with limited capital to participate without needing 32 Ether to run their validator nodes on Ethereum. Also, users staking ETH through Lido can utilize their stETH tokens to engage in on-chain activities like trading and lending to ensure seamless participation in the ecosystem.   

Lido Finance Holds Majority of Staked Ether. 

Dune data shows that over 27% of the total Ether supply is staked. Lido Finance holds the majority (28.5%) of staked Ether, followed by 13.6% staked through Coinbase, a leading cryptocurrency exchange.  

According to DefiLIama, the total value locked (TVL) in DeFi protocols skyrocketed from $36 billion in the fourth quarter of 2023 to $97 billion in the first quarter of 2024. The total DeFi TVL is at $92.32 billion at the time of writing.  

The remarkable 65.6% quarter-on-quarter growth in DeFi TVL was fueled by Liquid staking protocols such as Lido. “This uptick was primarily driven by asset price appreciation and liquid restaking, led by Ethereum’s TVL growth of nearly 71%,” on-chain intelligence provider Messari said.  

Liquid staking protocols have gathered a cumulative TVL exceeding $47.7 billion. Lido leads with over $29.9 billion, followed by Rocket Pool at $3.86 billion.  

Lido Finance Continues to Lead

Liquid staking protocols dominate DeFi, with $47.6 billion TVL across 164 protocols. Lending ranks second at $30.7 billion, followed by cross-chain bridges with $21.8 billion TVL.  

Meanwhile, Ethereum co-founder Vitalik Buterin raised concerns about potential centralization risks with Lido in a September 2023 blog post. 

“With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators. To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” Buterin wrote.   

As at press time, the price of Lido-staked ETH was trading at $3,172.58, with a market cap of $29.76 billion 

Ethereum co-founder Vitalik Buterin has found himself entangled in a situation involving more than $1 million locked in the Optimism bridge.    

Optimism is a Layer-2 scaling network for Ethereum designed for simplicity, pragmatism, and sustainability. Its primary objective is to increase Ethereum’s transaction throughput while decreasing the cost of transacting on the network.  

Arkham, a blockchain intelligence firm, revealed that many crypto addresses hold significant funds in bridge contracts across various networks.    

Ethereum Wallets Struggle with Locked Assets

According to reports, a wallet address linked to vitalik.eth has received 50 ETH from Buterin’s Ethereum Name Service (BNS) address, with $1.05 million dormant for seven months. The amount is a fraction of his $781 million crypto holdings.  

Arkharm cited an example: a wallet linked with Bofur Capital has $1.8 million in wrapped Bitcoin (WBTC) stuck in the Arbitrum bridge for 27 months.   

“Bofur Capital’s 27 Bitcoin has been sitting in the Arbitrum bridge for over two years now and is now worth almost $2 million,” the blockchain firm said.  

Thomasg.eth, the pseudonymous founder of Arrow, a decentralized air transportation solution, has $800,000 in ETH stagnant in the same wallet.  

Also, six months ago, Coinbase tried to transfer $75,000 in USD Coin (USDC) to Ethereum using the Optimism bridge. Despite the transfer’s success, these funds remain unclaimed on Ethereum’s main layer, which hints at either an overlooked recovery process or an intended delay in claiming the transferred assets.   

The Role of Cross-chain Bridges

Cross-chain bridges such as Optimism play a vital role in blockchain ecosystems like Ethereum by enabling the transfer of assets across various blockchains without centralized control, which aims to address interoperability challenges in blockchain designs.    

The cases of Buterin and others highlight the complexities and risks of managing funds in decentralized environments. Owners of these wallets may have purposely left their assets within the bridges. However, funds may also become stuck due to technical issues.  

Furthermore, these bridges pose substantial security threats, becoming prime targets for cyber-attacks, which have resulted to the losses of million of dollars in recent years.

Pectra hard fork is expected to go live in late 2024 or early 2025.

Ethereum (ETH), the second-largest blockchain platform by market capitalization, is poised to implement an innovative change that could restructure users’ interactions with their digital assets. 

The assurance comes from a new “social recovery” feature that will be integrated into the planned Ethereum Improvement Proposal (EIP) 3074 upgrade.  

Key Points About Private Keys. 

Private keys are fundamentally the cryptographic passwords that allow users to access and manage their crypto holdings. It is a large, randomly generated string of alphanumeric characters with hundreds of digits. However, if these keys are lost or forgotten, the assets become inaccessible, resulting in a considerable loss for the owner.  

In an X post on April 11, Ethereum core developer Tim Beiko officially confirmed EIP-3074 as a new addition to the Pectra hard fork.  

To utilize the social recovery tool, users must first transfer ownership of their assets to an invoker contract through a digital signature. The contract will subsequently execute future transactions and function calls on behalf of the user.  

During the delegation of ownership, the message in the digital signature will grant users the ability to reclaim their assets should they lose or forget their seed phrase. Crypto commentator Cygaar explained this feature in an X post on April 11. The implementation of the “AUTH” and “AUTHCALL” opcodes will facilitate this.  

How the 3074 Flow Works.

The AUTH opcode will take a user’s signature and intended action and verify proper signing. Subsequently, the AUTHCALL opcode will execute the target contract to conduct the transaction but will designate the user as the call instead of the invoker contract, according to Cygar. 

Additionally, Domothy expressed concerns about the possibility of funds being drained if users delegate their assets to a malicious invoker contract. Nevertheless, he expects a few formally verified and fully audited invoker contracts to become available following the Pectra upgrade.  

Over the years, it’s estimated that billions of dollars worth of crypto assets have been lost due to users forgetting or misplacing their private keys. 

Interestingly, users won’t necessarily need any ETH in their wallet to facilitate transactions, as the entity controlling the invoker contract can cover the upfront cost. 

“This could be huge for gaining mass retail adoption,” Cygaar said. 

“Right now, in order to swap tokens on Uniswap, you have to first approve Uniswap to use your tokens and then run the actual swap. It’s not great,” he added.

According to an X post, the Pectra hard fork is expected to go live in Q4 2024/Q1 2025 and will include the popular EIP-7251 (maxEB), EIP-3074 (account abstraction), and a few other EIPs.

The Purge will implement history expiration to curtail the accumulation of historical data

Ethereum’s founder Vitalik Buterin has unveiled the next steps for the network’s major upgrade, known as the “Purge.”  

The Purge upgrade has been in development for months, showing Ethereum’s commitment to addressing some of the most pressing challenges facing blockchain technology.  

The Purge also represents a key phase in Ethereum’s evolution. It involves eliminating outdated and excess network data, thereby streamlining the network’s structure progressively.  

The Launch of EIP-6780 

Buterin mentioned that the introduction of Ethereum Improvement Proposal (EIP)-6780 during the Dencun hard fork significantly eliminated the presence of “SELFDESTRUCT” code functions, simplifying the protocol by reducing complexity and bolstering new security assurances. 

In addition to reducing historical data storage, the phase will significantly reduce the hard disk requirements for node operators and decreases the technical debt associated with the protocol. 

The Ethereum founder mentioned that following the implementation of EIP-6780, every Ethereum block would have an increased number of storage slots due to the removal of certain SELFDESTRUCT functions.    

Buterin further expressed aspirations for a future EIP to eliminate the SELFDESTRUCT code.  

Historic Data Accumulation

Through the introduction of EIP-444, the Purge will implement history expiration to curtail the accumulation of historical data. Consequently, nodes will gain the ability to prune historical blocks that exceed a one-year threshold.  

Historical data will only be necessary when a peer must match the chain’s latest state or when specifically requested. However, once new blocks are confirmed, a fully synchronized node will no longer require historical data older than 365 days.  

“Potentially, if each node stores small percentages of the history by default, we could even have roughly as many copies of each specific piece of history stored across the network as we do today,” Buterin said. 

During a virtual conference, the Ethereum creator also revealed that Geth has recently streamlined its codebase by removing thousands of lines of code, achieved through the discontinuation of support for pre-merge (PoW) networks. 

Buterin also addressed the necessity of purging precompiled Ethereum contracts. These contracts execute complex cryptographic functions beyond the capabilities of the Ethereum Virtual Machine (EVM).  

He further mentioned that following the Dencun update, the implementation of an 18-day storage window for blobs will effectively decrease node data bandwidth to 50 gigabytes. 

The upgrade is expected to significantly reduce the transaction costs of Ethereum-based layer-2 protocols and enhance the network’s scalability and speed.

The highly anticipated Dencun upgrade will be launched on the Ethereum mainnet on March 13, and the crypto community is abuzz with excitement. The upgrade is expected to significantly reduce the transaction costs of Ethereum-based layer-2 protocols and enhance the network’s scalability and speed.

What to Know About The Dencun Upgrade

The Dencun upgrade is one of Ethereum’s biggest steps in transitioning from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) network. The upgrade follows the Shapella upgrade in April 2023, which occurred after the Merge, an event that joined the PoW Ethereum mainnet with the PoS beacon chain.

Dencun will use an approach called proto-danksharding or ephemeral blobs (EIP-4844) to scale Ethereum’s layer-2 rollup efficiency. Proto-danksharding aims to reduce storage demands by implementing temporary storage space and providing access to off-chain data. This process will cut layer-2 protocol transaction fees by 10x or more, enabling the Ethereum network to have higher transactional throughput, possibly processing up to 100,000 transactions per second.

The event is a hard fork encompassing nine Ethereum Improvement Proposals (EIPs). The name of the upgrade is a combination of the Cancun upgrade of Ethereum’s execution layer and the Deneb upgrade on the consensus layer.

The upgrade was initially scheduled to go live in October 2023, but certain circumstances caused developers to delay the launch. The event was moved to Q1 2024 with a three-phase implementation plan.

ETH Rallies Amid Dencun Anticipation

Dencun was first deployed on the Goerli testnet on January 17. Although the launch experienced some issues during this phase, developers eventually finalized the upgrade. The second deployment was on January 30 on the Sepolia testnet. The event was successful and void of issues.

On February 7, Ethereum developers announced the launch of the Dencun upgrade on the Holesky testnet. It is worth mentioning that the Ethereum Foundation intends to cease support for the Goerli testnet one month after the upgrade goes live on the Ethereum mainnet.

Meanwhile, ether (ETH) has rallied significantly amid excitement and anticipation of the upcoming upgrade. The crypto asset has recorded a 60% rise in the past month and 15% gains over the last seven days. At the time of writing, data from Cryptocurrencies to Watch showed that ETH was trading above $4,000.

Jake Chervinsky, crypto lawyer serving as chief legal officer for blockchain venture capital firm Variant Fund, says he is a lot less confident about the potential approval of a spot Ethereum exchange-traded fund (ETF) because of the United States Securities and Exchange Commission’s (SEC) against cryptocurrencies.

Less Confidence in Ethereum ETF Approval

According to Chervinsky’s tweet, the SEC received “a ton of political blowback” for approving spot Bitcoin ETFs in January, even though a court order had forced the agency to make the decision.

The court order was the outcome of a lawsuit against the SEC brought by asset management firm Grayscale after the Commission denied its application to convert a Bitcoin fund into a spot ETF. After more than a year of litigation, a federal appeals court ordered the SEC to reevaluate Grayscale’s application. This decision drove the approval of ten spot Bitcoin ETFs, including Grayscale’s GBTC, in January.

Following the spot ETF approvals and launch, the bulls have taken over the market, with bitcoin’s (BTC) price jumping more than 45%. There is strong BTC demand from U.S. investors, and the ETFs are breaking their trading volume records daily.

Chervinsky believes approving a spot Ethereum ETF would only add to the frenzy and propel the market further.

“Now animal spirits are in control of the market, and an ETH ETF would only add to that,” he said. 

BlackRock’s Presence Unlikely to Spur Approval

The legal expert explained that the SEC has a legal argument that may be wrong but “passes the laugh test” by a margin enough to justify a denial of several pending applications for spot Ethereum ETFs, “and we know the SEC is willing to take wrong legal positions in court to satisfy political priorities,” he added.

The applicants include the world’s largest asset manager BlackRock, Invesco/Galaxy Digital, VanEck, Fidelity, Hashdex, and Ark Invest/21Shares. The SEC has moved the deadline for deciding on the applications to May.

Almost all the applicants for spot Ethereum ETFs are among the issuers of the spot Bitcoin ETFs; hence, the crypto community believes the presence of these firms, especially BlackRock, would spur the SEC to greenlight the new products.

However, Chervinsky insists BlackRock’s remarkable ETF approval record is a result of a collaborative relationship with the SEC, and the firm will withdraw its Ethereum ETF application if the agency says so.

Gas fees for the Ethereum network are skyrocketing to levels last seen in May 2022, according to data from data scientist hildobby’s dashboard on the crypto analytics platform Dune. The fee surge could be attributed to the ongoing memecoin frenzy that has spanned the past few weeks, and looks like it is not slowing down anytime soon.

Ethereum Gas Fees Spike

Ethereum gas fees, used to compensate validators for verifying transactions on the blockchain, are usually influenced by the number of transactions on the network at a given time. Busy periods lead to a significant fee spike, and the memecoin rally is the current catalyst.

In the Ethereum network, gas fees are measured in gwei – a denomination of ether (ETH). At the time of writing, gas prices were up as much as 80 gwei, levels seen last at the same period in 2022.

One memecoin leading the current mania is Pepe Coin (PEPE), a token named after the popular internet meme Pepe the Frog. Pepe’s price has rallied more than 3,500% since its launch on April 17, 2023, as investors keep flocking to the digital asset with hopes of repeating history like in the cases of Dogecoin (DOGE) and Shiba Inu (SHIB).

Within a week after its launch, PEPE’s market cap rose to over $137 million and currently sits at roughly $710 million. The explosive price hike turned early investors into millionaires and lured more people into the Ethereum network. 

Increased Revenue and Scalability Issues

Other memecoins that are hot at the moment include Floki (FLOKI), Baby Doge Coin (BABYDOGE), and Tamadoge (TAMA). Other digital assets like Troll (TROLL), Aped (APED), and Bobo (BOBO) have surpassed the top gas-burning altcoins to become the top 10 spenders.

In addition, the soaring gas fees can also be linked to a Maximal Extractable Value (MEV) trading bot that has been executing memecoin trades on a large scale. The bot, dubbed jaredfromsubway.eth, has been the top gas spender in the past three months, spending over $19.4 million on fees in more than 346,000 transactions.

While the higher gas fees bring in more revenue, it also underscores the network’s need to fix its scalability issues and find a solution to balance profitability and usability.