The Protocol: EIGEN Riches Tempt Ethereum Devs, Even as ETF Approval Nears

A sudden jolt of optimism over the prospect that U.S. regulators might soon approve spot Ethereum ETFs has sent the ETH price soaring – up 21% this week in its best performance since August 2021.

But beneath the surface, there's been tension in the Ethereum developer community over the largest smart-contracts blockchain's future and progress toward decentralization. The sniping became especially acute with the revelations this week that two of the Ethereum Foundation's biggest stars have accepted multimillion-dollar token incentive packages from EigenLayer, the pioneering restaking protocol that has been flagged as possibly posing a systemic risk to Ethereum. Read on.

ALSO:

• After top Ethereum devs exchange words, co-founder Vitalik Buterin praises the blockchain's culture of freedom to express "negative feelings," then bangs out 3,000-plus word post from a location in Kenya.
• Conflict-of-interest accusations fly after Ethereum Foundation researchers acknowledge being on the EigenLayer dole.
• CoinDesk's annual Consensus conference IS NEXT WEEK IN AUSTIN, TEXAS. We took a spin through all the planned panel discussions, Protocol Village Stage programming and side events (yay!) related to blockchain tech and, well, let's just say… there is a lot. (Yours truly will be emceeing Protocol Village Stage for 1.5 full days as well as interviewing Ordinals/Runes creator Casey Rodarmor.)
• Roundup of coverage on this week's big rally in the ether (ETH) price.
• Top picks from the past week's Protocol Village column: Sui, StarkWare, Gnosis, COTI, Bitfinity.
• $170 million+ of blockchain project fundraisings: Farcaster, Kelp, Param Labs, Monad Labs, WealtherXM

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

Network news

Ethereum Foundation's Dankrad Feist, the namesake of "danksharding" and a central figure in this week's drama in the Ethereum community (Bradley Keoun)

MEV SNIPING! It's not clear exactly what started it all, but top Ethereum developers locked horns on the social-media platform X, in an intense and almost uncomfortable-to-observe debate touching on the practice of maximal extractable value, or MEV – essentially, the use of sophisticated trading bots to frontrun user transactions at the point of execution. On May 16, Ethereum core developer Péter Szilágyi tweeted about his despair over the lack of progress in pushing to solve some of the blockchain's most vexing issues. "Voila, the banking system recreated," he wrote. One of his points was that Ethereum had "glorified" MEV, remarking, ostensibly in sarcasm, that it was "futile to fight against MEV, so might as well lean hard on it, right?" (As chronicled in last week's issue of The Protocol, even U.S. government officials now appear to characterize MEV as standard operating procedure on the blockchain.) Ethereum Foundation researcher Dankrad Feist retweeted Szilágyi's post with the comment, "This is such a lazy take if you can't also tell me what your supposed solutions are that let local block producers extract MEV." A back-and-forth ensued, and then Ethereum co-founder Vitalik Buterin chimed in, tweeting that "I'm really proud that Ethereum does not have any culture of trying to prevent people from speaking their minds, even when they have very negative feelings toward major things in the protocol or ecosystem." Buterin, who is known to write long, interrupted his work on a project in Kenya to bang out a 3,000-word-plus essay breaking down the issues, concluding: "I also do not think that the situation is anywhere near as hopeless as Peter's tweets imply."

ET TU, DANKRAD? The Buterin tweet referenced in that ^^^ episode touched off an entirely separate donnybrook. The pseudonymous crypto influencer Cobie responded to Buterin's tweet, asking the very pointed question of how he felt about "core developers or researchers taking life–changing $ packages from projects built on Ethereum to become 'advisors,' when those projects may have conflicted incentives with Ethereum, either now or in the future." At first it wasn't quite clear what the comment referred to. But then, as reported by CoinDesk's Margaux Nijkerk, a top Ethereum Foundation developer, Justin Drake, disclosed that he had taken on a role advising EigenFoundation, with "a significant token incentive which could easily be worth more than the combined value of all my other assets (mostly ETH)," and a value of "millions of dollars of tokens vesting over 3 years." EigenFoundation supports the restaking protocol EigenLayer, a controversial project partly because experts have warned of its potential systemic risks to the Ethereum blockchain. Shortly after that, Feist (also mentioned ^^^) confessed that he, too, had accepted a paid role at EigenFoundation. The news set off a debate on crypto twitter about whether advising the EigenFoundation would constitute a conflict of interest. "Even if you pinky promise to not let this cloud your judgment, and do it on a personal capacity, that's impossible," wrote Lefteris Karapetsas. One clever jokester deadpanned that the Ethererum researchers were "restaking themselves now."

ALSO:

• JUST IN: Bitcoin Is Coming to Ethereum Stalwart MetaMask: Sources
• Craig Wright, the Australian computer scientist who has claimed repeatedly to be Bitcoin inventor Satoshi Nakamoto, lied "extensively and repeatedly" in both his written and oral evidence in a major court case in the U.K., according to a scathing judgment in the case.
• Eclipse Labs, the primary developer behind the modular Ethereum layer-2 network Eclipse, which is powered by Solana Virtual Machine and Celestia data availability and claims to be ultrafast, appointed Vijay Chetty as its new CEO. His predecessor, Neel Somani, stepped down last week amid sexual assault allegations, though he described them as false.
• Alexey Pertsev, developer of the coin mixer Tornado Cash, filed an appeal with the s-Hertogenbosch court of appeal after being found guilty of money laundering on Tuesday , a spokesperson for the court said.
• Cryptocurrency exchanges Coinbase, Kraken and other crypto firms have joined an alliance aimed at responding to and preventing online fraud and scams, including so-called pig butchering schemes.

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

Throughput-Latency graph comparing Mysticeti-C performance with state-of-the-art consensus protocols (Arxiv)

1. Sui Foundation, supporting the Sui blockchain built around the Move smart-contracts language, announced the successful testnet deployment of Mysticeti, "a new consensus protocol that reduces consensus time on Sui by 80% to 390 ms, making it the fastest consensus layer in the industry," according to the team.

2. StarkWare, the main developer firm behind the layer-2 blockchain Starknet, shared Wednesday plans for its own zero-knowledge rollup compatible with the existing Ethereum infrastructure, a setup commonly known as a zkEVM. The zkEVM, called Kakarot, already in testing, will be available via the Starknet Stack, a set of software tools that make it easier for developers to spin up their own customized application-specific chains.

3. Gnosis unveiled "Metri," an on-chain self-custodial wallet operating within the Gnosis ecosystem allowing a wider set of users to access a realm of decentralized finance applications, according to the team.

4. COTI V2, describing itself as a "privacy-centric layer 2 on Ethereum," unveiled its devnet, featuring Garbled Circuits, "an innovation that offers blockchain privacy 1,000x faster and 250x more efficient than current solutions," according to the team.

5. Bitcoin layer 2 Bitfinity has introduced its Ethereum Virtual Machine (EVM) to bring smart contracts Bitcoin protocols and harness Runes to enable Bitcoin DeFi apps. Built on the Internet Computer (ICP) protocol, Bitfinity integrates with the Bitcoin network and allows asset bridging to other blockchains. Internet Computer's tech stack will allow applications that use Ethereum's smart contract programming language Solidity to access Bitcoin-based tokens.

What to Expect at Consensus 2024: Spotlight on Blockchain Tech

Cosmos co-founder and Informal Systems CEO Ethan Buchman is scheduled to speak on the "bitcoinization of Cosmos" at Consensus 2024. (Bradley Keoun)

Bitcoin layer 2s. Ethereum restaking. Interoperability. AI. DePIN. Next-generation cryptography.

These are just a handful of the cutting-edge blockchain tech topics on the agenda at CoinDesk's Consensus 2024 conference, which runs Wednesday, May 29, through Friday, May 31, in Austin, Texas.

For blockchain developers, it's red meat. The three days are packed with opportunities to learn about the hottest crypto tech on Bitcoin, Ethereum, Solana, Cosmos and XRP Ledger – from the world's top experts.

We took a spin through the agenda to identify stages and sessions likely to interest blockchain developers and people interested in the technology. Please check out our guide!

Go here for the full post by Bradley Keoun

Money Center

Fundraisings

• Farcaster, a blockchain-based social-media project, has secured $150 million in a fundraising round led by Paradigm, with participation from a16z, Haun, USV, Variant and Standard Crypto, according to a post by founder Dan Romero.
• Kelp DAO, a liquid restaking platform, closed a $9 million private sale led by SCB Limited and Laser Digital (Digital asset arm of Nomura Global), according to the team.
• Param Labs, an independent game and infrastructure development company behind the game Kiraverse, and 3-D asset creation platform Pixel to Poly, announced a fundraise of $7 million in an investment round led by Animoca Brands.
• OKX Ventures announced a strategic investment in Monad Labs, which is developing a "developer-forward smart contract platform that is poised to revolutionize the decentralized digital landscape," according to the team.
• Lightspeed Faction, a blockchain venture capital firm, has announced a $7.7 million Series A investment in WeatherXM AG, a core contributor to theWeatherXM Network.

WeatherXM's "M5" bundle (WeatherXM)

EDITOR'S NOTE: This blog post by the influencer Cobie on abusive crypto fundraising practices is getting a lot of traction. Also check out this detailed post on node sales by Impossible Finance's Calvin Chu.

Deals and grants

• Phantom, the leading crypto wallet in the Solana ecosystem, has bought Web3-focused browser extension wallet Bitski, the companies said on Tuesday.
• The decentralized funding protocolPolimec "has launched to aid community-funded Polkadot projects with a transparent, regulatory-compliant way to raise funds and issue tokens," according to the team.
• Pyth, a blockchain oracle project, is "launching their Ecosystem Grants Program with 50 million PYTH (worth ~$22M at today's prices) dedicated towards this activation," according to the team.
• RootstockLabs announced that the fifth wave of their grants program has commenced, "offering more opportunities for Web3 entrepreneurs to build on Bitcoin." According to the team: "In addition, RootstockLabs is committing an extra $3 million to enhance the Rootstock ecosystem, supporting the grants program and strategic integrations with leading protocols and developer tools.
• The Hashgraph Association has signed a strategic partnership with the Qatar Financial Centre to launch a $50 million Digital Assets Venture Studio, according to the team.

Ether market roundup

• Ether ETFs Filing Process Sees Abrupt Progress, Though Approval Not Guaranteed: Sources
• Ether Market Cap Adds Close to an Entire Solana Blockchain in a Single Day
• Ether Has 1 in 5 Chance of Tapping $5K by End-June, DeFi Options Protocol Lyra Says
• Ether ETF Hopes Drive Futures Open Interest to Record $14B
• Fidelity Drops Staking Plans in Updated Ether ETF Filing
• Ether Rally Prompts Over $300 Million ETH Inflow to Crypto Exchanges: Nansen
• MOG, PEPE Rocket as Traders Search for Ether Beta Bets

Data and Tokens

• Izzy Englander's Millennium, Paul Singer’s Elliott Among Bitcoin ETF Holders
• ZkSync, Ethereum Layer-2 Network, Hints at Airdrop By End of June
• Solana Meme Coin Factory Pump.Fun Compromised by 'Bonding Curve' Exploit
• Donald Trump-Themed Meme Coins Breed Crypto Millionaires as MAGA Token Surged
• Crypto Derivatives DEX Aevo's Token Jumps 10% as Binance Labs Discloses Investment

Calendar

May 29-31: Consensus, Austin Texas.

May 29-31: Bitcoin Seoul.

June 11-13: Apex, the XRP Ledger Developer Summit, Amsterdam.

July 8-11: EthCC, Brussels.

July 25-27: Bitcoin 2024, Nashville.

Aug. 19-21: Web3 Summit, Berlin.

Sept. 19-21: Solana Breakpoint, Singapore.

Sept. 1-7: Korea Blockchain Week, Seoul.

Sept. 30-Oct. 2: Messari Mainnet, New York.

Oct. 9-11: Permissionless, Salt Lake City.

Oct. 21-22: Cosmoverse, Dubai.

Oct. 23-24: Cardano Summit, Dubai.

Oct. 30-31: Chainlink SmartCon, Hong Kong

Nov 12-14: Devcon 7, Bangkok.

Nov. 20-21: North American Blockchain Summit, Dallas.

Feb. 19-20, 2025: ConsensusHK, Hong Kong