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EXPLAINING CRYPTO’S BILLION-DOLLAR BRIDGE PROBLEM
By Corin Faife@corintxt Apr 11, 2022, 8:00am EDT
What are blockchain bridges, why do they keep getting hacked, and can we ever stop it from happening?
nOn March 23rd, the Ronin blockchain network underlying the popular NFT-driven game Axie Infinity was hit with a hack that saw the attackers walk away with an eye-popping $625 million in cryptocurrency.
The Ronin hack was the largest amount of money that had ever been stolen from the type of service called a “bridge,” which connects one blockchain to another so that value can be sent between them. Unfortunately, it was far from the only hack to hit a bridge: less than two months previously, another bridge platform called Wormhole was exploited for close to $325 million, and about six months before that, more than $600 million was stolen from another cross-chain bridge called Poly. (In a surprising twist, the hacker later returned Poly’s stolen funds.)
In short, bridges are the weak point in a lot of cryptocurrency systems, and hackers are targeting them for more than $1 billion in little over a year. So it’s worth laying out exactly what they are, why they’re important, and how crypto companies can try to plug the billion-dollar hole in their pockets.
If you don’t have time to read further, the short answer to the first part is “yes, they’re vulnerable but maybe less so over time.” For the second part, the story is more complex.
(We’re assuming you know what a blockchain is already; if not, you can start here.)
SO WHAT IS A “BLOCKCHAIN BRIDGE”?
Essentially, it’s a system for connecting different blockchains, allowing users to exchange one kind of coin or token for another. Every cryptocurrency runs on its own blockchain: there’s Bitcoin, Ethereum, and newer currencies like Tether, Ripple, Solana, and so on. There’s no simple way for these different blockchains to interact — they might all use the concept of “addresses” to send and receive currency transactions, but you can’t send ETH directly to a Solana address.
A blockchain bridge is what developers have built to make that crossover a little smoother. If you’re holding ETH and you need Solana’s SOL to sign up for a game, you can send your ETH into a bridge, get SOL in return, and use the same method to convert back when you’re done playing.
WHY ARE BRIDGES PARTICULARLY VULNERABLE TO HACKS?
The short answer is that they’re handling a lot of complex requests and holding a lot of currency — and unlike the blockchains themselves, there’s no standard for how they’re supposed to keep everything secure.
Picture a blockchain bridge as an actual bridge between two islands. Each island has different rules about the type of car you can drive (maybe there’s an EV island and a regular gas island), so they won’t let you drive your car from one side to the other directly. In fact, you drive up to one side of the bridge, leave your vehicle in a parking garage, walk across, and pick up a rental car on the other side. Then, when you’re done driving around the other island, you bring your rental back to the bridge, walk across, and they hand you the keys to your car.
That means for every rental car driving around the island, there’s another car parked in the garage. Some are stored for hours, others for days, others for months, but they’re all just sitting there, and the company that operates the bridge has to keep them all safe. Meanwhile, other unscrupulous people know exactly how many cars are in the garage and are looking for ways to steal them.
Functionally, this means bridges are receiving incoming transactions in one type of cryptocurrency, locking it up as a deposit, and releasing an equivalent amount of cryptocurrency on another blockchain. When bridges get hacked, the attacker is able to withdraw money from one side of the bridge without putting anything in the other side.
Bridges are particularly tempting targets because of all the complex code, creating lots of opportunities for exploitable bugs. As CertiK founder Ronghui Gu explains: “If you’re trying to create a bridge between N different cryptocurrencies, the complexity of that is N squared,” — which means N more chances for bugs to creep in.
Crucially, these different cryptocurrencies aren’t just different units of money: they’re written in different programming languages and deployed in different virtual environments. Figuring out how these things should interact is very hard, especially for on-chain bridges that convert between multiple different coins.
HAVE BRIDGES MADE CRYPTOCURRENCY LESS SECURE OVERALL?
Probably not. Attackers are targeting bridges right now because they’re the weakest point in the system — but that’s partially because the industry has done a good job securing the rest of it. Kim Grauer, director of research at Chainalysis — a company that has produced research on DeFi thefts — told The Verge that bridge hacks are taking the place of the previous generation of damaging hacks against exchanges like Coincheck, BitMart or Mt Gox.
“IF YOU LOOKED AT OUR ECOSYSTEM JUST A FEW YEARS AGO, CENTRALIZED EXCHANGES WERE THE MAIN TARGET OF HACKS.”
“If you looked at our ecosystem just a few years ago, centralized exchanges were the main target of hacks. Every hack it was, ‘Centralized exchange goes down again,’ and the industry worked hard to have solutions that allowed us to overcome these hacking problems,” she says. “We’re seeing a lot of DeFi hacking, but I think the pace of it is actually slowing down. Definitely the rate at which this hacking is going on can’t continue for the industry to grow.”
ISN’T THE WHOLE POINT OF THE BLOCKCHAIN TO PREVENT THIS KIND OF ATTACK?
The problem is that many bridges aren’t on the blockchain at all. The Ronin bridge was set up to work “off-chain,” running as a system that interfaces with the blockchain but exists on servers that are not part of it. These systems are fast, flexible, and relatively lightweight — reducing some of the “N squared” complexity challenges — but can be hit with the same type of hacks that affect web services anywhere on the internet. (“This is not really blockchain,” Gu says. “These are ‘Web2’ servers.”)
Without the blockchain to settle transactions, the Ronin bridge relied on nine validator nodes, which were compromised through a combination of code hacks and unspecified social engineering.
There are other bridge systems that operate as smart contracts — basically, the “on-chain” alternative. It’s less likely that an attacker could subvert the code of an on-chain system through social engineering, and getting majority power over the network is extremely unlikely. The drawback is that the smart contracts themselves are highly complex, and if bugs do exist, it can be hard to update the system in a timely way. (Wormhole used an on-chain system, and the big theft occurred after hackers spotted security updates that were uploaded to GitHub but had not been deployed to the live smart contract.)
HOW DO WE STOP BRIDGES FROM GETTING HACKED?
It’s hard. The answer that came up time and time again was “code auditing.” In the type of case described above, where a project’s development team might be working across different programming languages and computing environments, bringing in outside expertise can cover blind spots that in-house talent might miss. But right now, a surprisingly large number of projects don’t have any auditor listed.
“I WOULDN’T CALL IT NECESSARILY A BUBBLE, BUT IT’S CERTAINLY A GOLD RUSH.”
Nick Selby, director of assurance practice at specialist security auditing company Trail of Bits, said that this is partly because of how fast the market has sprung up. Most companies are under huge pressure to grow, scale, and build new features to fend off competitors — which can sometimes come at the expense of diligent security work.
“We’re in, I wouldn’t call it necessarily a bubble, but it’s certainly a gold rush,” says Selby. “I think a lot of times, executives who are trying to innovate in the space will look at the desired feature outcome and say, ‘Well, this [product] does have the features I want. Therefore, it’s good.’ And there’s a lot of things they’re not looking at, so they’re not seeing them, which is where the code audit comes in.”
https://www.theverge.com/23017107/crypto-billion-dollar-bridge-hack-decentralized-finance
Thank you for the reply. Good luck to you and enjoy the weekend.
Proof of work — using computers to complete transactions using electric grid
Im a small fish. What is POW? Thanks. Nice grabs by the way.
4400 ethereum destroyed in one hour
https://thedefiant.io/ethereum-record-burn-nft-drop/
I have 10 coins at 120$ average bought another 60 today just because POW is going away and I can see this at 20k+ in 5 years
Also bought 250 QNT because CBDCS are coming and we should be in a position to
Make money off them
Also a nice bag of WTK nice small cap with x100 potential ex ripple/swift executives
Why would you wait until now to load?
ETH goes past $4000 in less than 2 weeks. The future is clear.
The race for semiconductors: Are crypto miners taking the lion's share?
ELENA PEREZ
8 HOURS AGO
Semiconductors are making headlines again this year but to what extent can the shortage be attributed to crypto miners?
Over the last couple of years, the world has been grappling with the lack of semiconductors, which are the substances that conduct electricity between metals and isolates. The most famous semiconductor is silicon.
If correlating this concept to electronic devices, then the key semiconductors are processors and other microcircuits that are present in almost all devices that people use every day, from smartphones to cars.
In 2021, semiconductors hit a world record in terms of sales. Electronics production also boomed, with hundreds of millions of complex semiconductors being devoured by gaming consoles. The number of GPUs produced grew to unseen levels, with major manufacturers like Nvidia seeing all-time highs in terms of production.
Despite all this, electronics prices skyrocketed and manufacturers of related goods were struggling to find semiconductors.
Crypto miners: Guilty or innocent?
It has become customary to not only mention but to blame cryptocurrency miners for the global shortage of GPU cards and semiconductors. To their credit, miners would buy up huge swaths of graphics processing units, sometimes emptying whole stores at once.
Some countries that are feeling the shortage of cards acutely are already fighting against cryptocurrency mining.
At the same time, the manufacturers, themselves, do not take such a definite position. AMD CEO Lisa Su said in June 2021 that miners are far from guilty for the lack and even complete absence of certain GPU cards. She said that their influence on the market is generally minimal and does not exceed 5%–10% of the total demand.
Andy Long, CEO of White Rock Management, a digital asset technology company situated in Switzerland, agreed with Su that mining isn't entirely to blame:
“GPUs are still in high demand to power Ethereum and other altcoin mining. Nvidia's published estimate for the percentage of traditional GPUs going to miners is in the single digits, but the true figure is likely higher than that — somewhere around 20%.”
Another important factor behind the shortage of GPU cards is the COVID-19 pandemic. The supply chain showed that due to the many employees who began to work at home, the number of buyers increased so much that graphics processors — a crucial component in home computers — simply disappeared from sale.
However, the situation with miners’ appetite for GPU cards began to change noticeably at the beginning of this year.
Firstly, the change is due to Ethereum (ETH) switching to the proof-of-stake (PoS) protocol, which is slated to take place in the summer of 2022.
Currently, the Ethereum blockchain is maintained by miners solving cryptographic puzzles and subsequently receiving a reward, the value of which is calculated according to the hash rate of each individual GPU.
This is called proof-of-work (PoW). As soon as Ethereum switches to the new protocol, miners will no longer be needed as crypto holders will validate block transactions based on the number of tokens they stake.
Since GPU cards will no longer be needed for Ether mining, once Ethereum 2.0 goes into effect, the demand for them will reduce drastically.
This shift in demand is already very noticeable. In the first two months of 2022, Nvidia’s GPU card sales are down by 75% compared to 2021 as large mining companies that used to purchase such cards have stopped buying. This also means that Nvidia will be forced to redirect GPU cards to the gaming sector and cut prices.
There are other reasons for the price decrease. Since April of this year, the United States has reduced import tariffs on the supply of goods from China by 25%. America is one of the main players in the GPU market, where companies such as Nvidia, AMD and Intel operate, so the tariff cuts have led to lower prices for GPU cards.
Buyers’ interest in the cards is also declining against the backdrop of a gradual return of people to offices after two years of remote work and the need to have a modern computer at home to comfortably perform work duties.
“Dedicated mining cards are also a larger part of the picture now,” said Long, “These are cards without video output that are solely for data processing. We first saw these in 2017 with the launch of dedicated Pascal architecture cards such as the P106 and P104. Now the Nvidia CMP range explicitly targets the miners — with some dedicated high-end SKUs only available to those willing to place orders in the tens of millions of dollars. The shortage in dedicated gaming cards is as much to do with simple supply and demand for the core purpose of gaming — and also “HPC” type applications where people use gaming cards for rendering and AI tasks.”
The deficit is not over
The solution to the problem of the shortage of GPU cards sounds simple: Producers need to make more cards to meet the demand. However, in practice, this is not the case. One of the problems is the supply of silicon wafers, which are used to produce the chips. In 2019, the demand for wafers was rather low, but in 2020, after the whole world went into quarantine, the demand for computers, tablets, TVs and other equipment that requires chips rose sharply. The demand for wafers has increased so much that Sumco Corp, the second-largest manufacturer of wafers, said that its production is booked until 2026.
However, the production of processors, GPU cards and memory cards requires more than just silicon wafers. After the start of war actions in Ukraine, world manufacturers of semiconductors faced a shortage of neon, which is necessary for the operation of the laser systems used to create the chips. The problem is that the two Russian companies, Ingas and Krion, produce 45%–54% of the world’s supply of neon-containing gas mixtures. How global manufacturers will look for a way out of this situation is not yet clear.
In March 2022, some experts believed that the semiconductor shortage could end in 2023. In particular, the head of Micron Technology, one of the biggest producers of computer memory and computer data storage, believes that starting this year, manufacturers will be able to build up a significant stock of chips as well as arrange supplies. In 2023, there will be no such problems and global companies will largely be able to reach the level of production that they had before the pandemic.
But the situation in Ukraine can stop this recovery and redouble the deficit of chips, forcing the price to rise with renewed vigor. Recently, Intel has claimed that it has stockpiled and continues to monitor supply disruptions while trying to find alternative sources of neon. Samsung stated that some factories may face shortages, the Dutch ASML, which produces scanners for printing chips that are used by TSMC and Samsung, didn’t hide their concerns and said that over the next two years, producers could face a shortage of major machinery equipment.
So what will happen to semiconductors in the nearest future, and therefore to equipment? The GPU market could likely recover from the COVID-19 pandemic and the declining demand from miners, but global events are once again putting manufacturers to the test with the lack of components for the production of equipment. Of course, it is worth believing that the business will find the raw materials and build new supply chains, but no one can predict how soon this can happen. In any case, the shortage of semiconductors seems to continue, and GPU card prices will go up again, but in this case, the miners will have had nothing to do with it.
https://cointelegraph.com/news/the-race-for-semiconductors-are-crypto-miners-taking-the-lion-s-share
Agreed!! I'm in that one too. Plus a couple of meme's running on the xrp ledger one is @ 8 zeros.
Wire transfered 85k two days ago still not in my account we need better system … $XRP
NICE!! try and nail a pullback. Regardless it's a good place to be.
I just need gas money to get home.
Would you like to adopt a 51 year old man with a bad knee?
Buying my first 100k worth of eth this week
Vitalik Buterin is worried about Ethereum — Here’s how the community responded
EZRA REGUERRA
17 HOURS AGO
As Vitalik Buterin expressed worries about profit-focused players on Ethereum, the community responded with various perspectives.
Ethereum co-founder Vitalik Buterin expressed his concerns about the blockchain’s future in a recent interview, and attendees of the recent ETHDubai event voiced mixed sentiments toward his perspective on crypto’s perils.
In an interview with Time magazine, Buterin pointed out some of his worries regarding the network, including it being populated by players who are only after profit and deviate from the original vision of an egalitarian platform. “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable,” he said.
Commenting on Buterin’s woes, Sergej Kunz, co-founder of 1inch Network, expressed that he disagrees highly with the Ethereum co-founder. Kunz said that while there are “scam projects” trying to get money from retail investors, there are also good projects that need really funding and can get that funding from venture capitalists trying to make a profit. Citing 1inch as an example, Kunz explained that:
“We see angels and investors. They helped us. They gave us money to fully concentrate, to work on this startup. [...] We work to improve the space, to create something unique and improve the whole financial system.”
Aleksei Pupyshev, a developer at GTON Capital, believes there should be a balance between profit and not-for-profit initiatives within the space. He thinks that while there are many projects supporting charity and solving health-related issues, rewards can motivate people to come into the industry.
“We need more motivation for people who are exploring, and they are exploring by investing.”
On the other hand, Siva S, chief technology officer of Ozone, feels the problem is tied to the growth of the platform. According to him, as the crypto ecosystem grows, more traditional finance players who are profit-focused will come in and want “some sort of control.” However, he believes that as long as core concepts like consensus stay relevant, developers will still be happy to build on top of Ethereum.
Meanwhile, Raullen Chai, co-founder of IoTeX, shares the same concerns as Buterin. He’s also worried that crypto pioneers won’t be able to stick to their visions for their platforms. He explained:
“I do have the same concern here. I’m not sure if the crypto OG folks can stick to their vision. I hope they can, and I don’t see a fix for this problem, unfortunately.”
Charles Hoskinson, also an Ethereum co-founder, expressed his belief in decentralization during a recent talk at Binance Blockchain Week. In his keynote speech, he said that “If you’re just here to make money, you lose all the things that make the technology special.”
https://cointelegraph.com/news/vitalik-buterin-is-worried-about-ethereum-here-s-how-the-community-responds
You and I will get along just fine Mr. Loanshark. Nice to meet you.
RT
Unchain the colors before my eyes...
Stackem up!
Cheers! Much Appreciated… Hey Agreed AP Welcome To The Club! RT $ETH $ETHE
Thanks AP and Kick. Looking forward to good things here.
RT
Hey Thanks & Congrats! $ETH $ETHE
Welcome to the club. cheers
I bought my first $1000 worth of ETH this morning. Will be adding more as soon as I can.
Remember Tomorrow
The “Merge” $ETH $ETHE
1K $ETHE @7.76 Add More $ETH Premium World Computer
People who use GPU's(graphic cards) and or ASICS(application specific intergrated circuits) to mine or solve mathematical equations that verify the blockchain. Miners are rewarded with ETH for their efforts.
Vitalik Muses on How PoS Could Have Come Sooner
With The Merge Coming Ethereum's Chief Scientist and Muse Takes Stock
By Samuel Haig
March 31, 2022
Dive
All eyes are on Ethereum’s coming transition to Proof of Stake (PoS) consensus. It’s a historic moment in the history of crypto.
Vitalik Buterin, Ethereum’s co-founder and muse, weighed in this week with his thoughts on what’s to come, and poignantly, the significance of decisions not made in the network’s evolution.
In an article titled ‘The Roads Not Taken’ and published on March 29, Buterin acknowledges that the move to PoS could have happened much earlier in the network’s lifespan.
The chain merge between Ethereum’s mainnet and the Eth2 beacon chain, dubbed The Merge, is expected to reduce new Ether emissions by 90% and cut the network’s energy consumption by more than 99% by doing away with Proof of Work (PoW) consensus.
Vitalik argues that Ethereum’s greatest challenges and criticisms have emerged from the difficulty of balancing two contradictory visions. To hear Buterin tell it, Ethereum must be “a highly performant and functional platform for building advanced applications” but also a “pure and simple blockchain.” In other words, complex and simple at the same time.
But how? In his article, Buterin shared his thoughts on key elements of Ethereum’s next phase and how the network got to where it is today.
Gasper is Coming
Ethereum’s shift to its ‘Gasper’ Proof of Stake (PoS) model and away from Proof of Work (PoW) will kick miners off the network. Instead, ETH hodlers that lock up coins and operate a node will be tasked with validating transactions moving forward.
Ethereum’s environmental footprint will dramatically shrink alongside its block rewards under PoS consensus. Coupled with the fee burn introduced with EIP-1559 last August, many analysts believe Ethereum will become deflationary once it moves to PoS — meaning that more Ether will be burned than created, and possibly paving the way for significant price gains.
But Gasper is simultaneously a “complex” and “very powerful system,” Buterin writes. He acknowledges that adopting simpler versions of PoS could have enabled “large improvement[s]” for the network’s energy consumption and supply issuance at a much earlier date.
“If we had been more modest at the beginning, we could have focused on achieving a more limited set of objectives first.”
Vitalik Buterin
He cites NXT PoS, which has existed since 2013 and could have been leveraged for Ethereum written into the code when the network was launched. “If we had been more modest at the beginning, we could have focused on achieving a more limited set of objectives first,” he said.
Buterin adds that switching to a simpler model for PoS at an earlier date could have reduced the scale of both the network’s ecological externalities “and anti-crypto mentality as a result of environmental damage “
However, Vitalik argues that Gasper is highly complex because “it tries to accomplish much more than [alternative algorithms] do,” enabling greater operational functionality for Ethereum moving forward. He asserts that adopting PoS consensus from launch would have been “a mistake.”
Sharding is Key
Sharding describes horizontally dividing up a database to improve the efficiency of how data is processed. In the context of Ethereum, sharding will reduce congestion and increase the number of transactions that it can process by sharing the computational load across a network of smaller chains, dubbed shards.
Currently, Ethereum’s Layer 2 networks are on track to become its shards following future upgrades that will be shipped after The Merge.
In contrast to PoS, the design for a sharded Ethereum has become increasingly simple as research progressed in recent years. Its current scaling roadmap will culminate when Ethereum opiates as a unified settlement layer where all shards execute in parallel within a single block, dubbed danksharding.
Buterin says more complex sharding designs have existed for several years but likens them to little more than “ideas and mathematical models.”
“Danksharding is a complete and almost-ready-for-implementation spec,” Buterin said. He adds that taking time to progressively simplify sharding “was absolutely the right move.”
Despite his preference for a less complex sharding model, Vitalik acknowledges that “more ambitious research also has a very important role to play” in identifying new directions for research that often yield “reasonably simple” innovations.
Supply Distribution and the Question of Liquidity
Ethereum became just the sixth ever initial coin offering in 2014 when it raised funds from the public in exchange for a share of its native tokens; they were distributed when the network went live the following year.
Ethereum’s issuance model meant that a significant portion of Ethereum’s supply would already be liquid when the network went live, unlike Bitcon’s model that will distribute the entire supply of BTC as block rewards to miners. Alongside the 60M Ether earmarked for ICO participants, 12M ETH was distributed to Ethereum’s roughly 100 foundation members and early contributors at launch — a move called a ‘pre-mine’.
The Ethereum co-founder acknowledges criticisms of the pre-mine. Buterin accepts that distributing three-quarters of pre-mined rewards before Ethereum was live “left far too little [ETH] for later contributors.” He also highlights that within six months of the network going live, “the need to sell to financially survive” resulted in the Ethereum Foundation retaining just a third or 1M Ether to pay contributors with moving forward.
“The problems were related: the desire to minimize perceptions of centralization contributed to a smaller pre-mine, and a smaller pre-mine was exhausted more quickly.”
Vitalik asserts there is no clear answer as to how the early distribution of Ether could have been better handled.
Buterin ponders the “‘DAO from day 1’ route popular among some DeFi projects today,” where a share of block rewards are temporarily transferred into a development fund over a specific period (for example, 2 ETH per block for two years). But he speculates that the model would have led to criticism that the network appeared overly centralized.
“Even if the dev fund had been fully credibly neutral, the people who yell about Ethereum’s pre-mine today may well have just started yelling twice as hard about the DAO fork instead.”
Looking Back at the Ethereum Virtual Machine
The Ethereum Virtual Machine (EVM) enables smart contract execution, which is the heart and soul of the network. Buterin notes that it launched in 2015 without many functions that were originally planned for it.
He argues that excluding most of the features that did not make the final cut “have proven to be very good decisions” that prevented security vulnerabilities and kept it simple and accessible.
“Sometimes, good ideas just take years to arrive at and there is no better way around that,” he said, noting that many of the functionalities left out have since been addressed with more elegant solutions.
Vitalik notes that EVM could have also been shipped in very different forms, comprising either a higher-level language catering to greater variables, or a copy of an existing virtual machine — such as the computational frameworks offered by WASM or LLVM — to enable greater composability with coding languages already used in computing.
Ethereum’s co-founder asserts that basing EVM off an existing virtual machine was proposed and rejected many times, concluding that “there probably was never a viable path for the EVM that’s radically different from what we have today.”
Buterin criticizes EVM as a higher-level language due to the added complexity its structure would have taken. But he concedes that an opportunity was missed for an approach offering “the best of both worlds.”
Citing EIP-2315, Ethereum’s chief scientist notes that “some EVM changes could have given us a lot of those benefits while keeping the basic EVM structure roughly as is.”
https://thedefiant.io/vitalik-buterin-ethereum-2-0-proof-of-stake/
Ethereum “Diamond Hands” Filled Their Bigs Through The Dip
by Best Owie 1 day ago in Blockchain Art, Ethereum Reading Time: 2 mins read
Ethereum holders have been filling up their bags while the broader market had panicked through the dip it seems. The digital asset which had suffered from crashes and dips that had hit the market had seen its value fall as low as $2,500. However, these ‘diamond hands’ holders had remained unfazed given that data showed that they continued to accumulate ETH tokens all through the market dip.
Ethereum Holders Load Up
Ethereum holders, especially those who have held for longer, are more likely to add coins to their holdings while the market is in a downtrend. This was the case during the last downtrend given that these holders had continuously added to their bags this time around. In the more than three months that Ethereum saw its value continue to decline, these investors just continued to purchase ETH.
Data from IntoTheBlock showed that long-term holders of the digital asset had purchased more than 4 million ETH during this time. The whole lot came out to a total of about $12 billion that these holders had picked up.
In the report, it is noted that these were holders that had previously held their ETH tokens for more than a year. With each dip, these investors had accumulated more tokens, successfully pushing their collective holdings to a new yearly high. Although the amount held by these wallets has dropped in the past few days, they still hold the majority of the supply. A total of 59% of all ETH supply are held by wallets that have had their tokens for more than a year.
What Is Driving This?
One of the most obvious reasons that have sparked renewed interest in Ethereum ownership has been the “Merge”. This important upgrade is expected to take place sometime this year and will completely change the way the Ethereum network currently operates.
Moving from proof of work to proof of stake, the network will not only become safer and more scalable, but it will significantly cut down the amount of energy that is required to carry out mining activities on the network. This will drastically reduce the carbon footprint of the network.
As the Merge draws near, more investors are filling up their bags in wait for what is expected to be an inevitable uptick in the value of the digital asset.
Ethereum has now been on an uptrend since this week, meaning the investors who purchased tokens during the downtrend are now in profit. Investor sentiment towards the upcoming merge has grown increasingly positive.
https://www.newsbtc.com/news/ethereum/ethereum-diamond-hands-filled-their-bigs-through-the-dip/
King of the dapps is about to take off. 10k incoming?
SERENITY
From taxes to electricity, blockchain adoption is growing in Austria
VERONIKA RINECKER
1 HOUR AGO
The blockchain technology landscape is shifting in Austria, with public institutions and private firms experimenting with the tech.
Austria has been actively transforming into an attractive location for providers of blockchain-based products, with the government itself experimenting with the technology and trying to create a legal basis upon which companies can use it.
With regard to blockchain-based applications in the economy, however, Austria is still in the experimental phase, with most firms still running pilot projects. Still, politicians and economists alike see potential for select industries.
Public administration reform via blockchain
The Austrian government is quite open to blockchain innovations, cryptocurrencies aside, and has supported various projects in the public and private sectors.
In 2019, a consortium of public administration institutions founded the Austrian Public Service Blockchain (APSB). Active participants in the APSB — i.e., operators of their own blockchain nodes — include the Austrian Economic Chamber, City of Vienna, Federal Computing Center, and Vienna University of Economics and Business Administration. One participant, Kontrollbank, is still in the set-up phase.
Meanwhile, private sector blockchain infrastructure is developing in parallel, and the Blockchain Initiative Austria (BIA) association was founded at the beginning of 2021 to advance this purpose. Austriapro — a developer of electronic business standards — is working together with the Austrian Blockchain Center to support the establishment of a secure infrastructure for private-sector blockchain use in Austria. Association members will jointly operate the blockchain nodes in the form of a “consortium chain.”
The first pilot project of the APSB and BIA involves data certification and notarization. Here, digital fingerprints of files are placed on the blockchain to be able to prove the unaltered nature of the data at a later point in time.
In addition, the Austrian Economic Chamber has provided companies and startups with information about blockchain tech, including a detailed guidebook to help determine whether blockchain makes sense for specific applications.
To more strongly promote the technology in the economy, the Austrian Economic Chamber set up a blockchain working group. Its participants primarily exchange information on blockchain topics, discuss current initiatives and best practices, and regularly organize events.
Increasing interest from traditional financial institutions
The blockchain market in Austria and its areas of application are constantly changing. In addition to the government, fintech companies and small financial institutions are also pushing ahead with the technology.
Areas of application include, but are not limited to, crypto trading, mining, and custody and payment services, as well as financing via initial coin offerings, initial token offerings and security token offerings.
Recently, however, the decentralized technology has also piqued the interest of traditional financial institutions. For example, Raiffeisen Bank — Austria’s second-largest bank — began experimenting with its own euro-pegged stablecoin in the fall of 2020. Employees can already use it to make purchases at the company’s in-house cafeteria.
Raiffeisenbank cooperative banks are also big on innovation. Volksbank Raiffeisenbank Bayern Mitte, for example, has been offering Bitcoin (BTC) investment consultants since 2021. It also intends to offer cryptocurrency trading services to clients sometime this year.
Oesterreichische Nationalbank (OeNB), Austria’s central bank, is also experimenting with blockchain. In 2021, a new research project known as the Delivery vs. Payment Hybrid Initiative, or DELPHI, launched in Austria. Its goal is to test the issuance of federal bonds against the issuance of a digital euro. Participants in DELPHI include the OeNB; the Austrian Federal Financing Agency, which manages the country’s public debt; and OeKB CSD, which specializes in the central custody of securities and is a subsidiary of credit institution Oesterreichische Kontrollbank.
In the process, Austrian financial institutions are researching how to onboard and settle federal bonds using blockchain technology. The OeNB also plans to develop a central bank digital currency.
The listing of a Bitcoin product on the Vienna Stock Exchange in September 2020 was another important step, marking the world’s third official regulated market to list such a product. As a result, both Bitcoin and Ether (ETH) products from the Swiss issuer 21Shares AG can be traded on the exchange. In August 2021, the Vienna Stock Exchange also announced the listing of crypto exchange-traded products from ETC Group.
Electricity sharing as the energy model of the future
Wien Energie, Austria’s largest energy supplier, is currently testing the possible uses of blockchain and smart contracts in electricity sharing models. Together with the startup Riddle & Code, the Austrian electricity provider developed blockchain infrastructure in June 2021 that enables the peer-to-peer trading of electricity.
People can join together to form a residential P2P energy community and sell their self-produced solar electricity to each other via the blockchain. Typically, the feed-in, distribution and resale of energy via the electricity grid see high fees charged. But with the electricity sharing model, this process can take place without intermediaries, thanks to the blockchain.
Wien Energie plans to expand its solution through smart grids, which decentralized suppliers will use to feed in energy based on the determined supply and demand within a grid.
Salzburg AG and Verbund AG, two leading energy companies in Austria, are also working on blockchain-based peer-to-peer trading solutions.
Crypto tax reform on the rise
Austrian crypto investors are facing new tax regulations. A tax exemption that investors previously enjoyed disappeared on March 1, and crypto income will now incur a 27.5% tax, regardless of how long the assets are held. The new tax applies to all cryptocurrencies acquired since Feb. 28, 2021.
Austrian crypto investors are facing new tax regulations. A tax exemption that investors previously enjoyed disappeared on March 1, and crypto income will now incur a 27.5% tax, regardless of how long the assets are held. The new tax applies to all cryptocurrencies acquired since Feb. 28, 2021.
The new crypto tax reform is another step toward treating cryptocurrencies the same way as the traditional stock and bond markets. With these new regulations, the state wants to create more legal clarity for investors and, thus, inspire confidence in the new technology. However, it remains to be seen whether the Austrian government will succeed in pushing forward new business models and applications in the blockchain sector.
https://cointelegraph.com/news/from-taxes-to-electricity-blockchain-adoption-is-growing-in-austria
Game Recognize Game: Tom Brady Says Autograph NFT Site 'Wouldn't Have Been Possible' Without Vitalik
Vitalik Buterin wasn't sure who Tom Brady was, but that didn't stop one GOAT from reaching out to another.
By Kate Irwin
Mar 20, 2022
2 min read
Vitalik Buterin didn't immediately know who Tom Brady was. In fairness, the soon-to-be Hall of Fame quarterback never made the cover of Time. Which is how this all started.
Poking a bit of fun at himself over his own April cover story, Buterin tweeted a collection of tweets that all had one thing in common: that he looked like Tom Brady ... a not-quite-as-good version of Tom Brady.
“My best guess,” the Russian-Canadian Ethereum creator wrote, “was that he was the actor from Mission Impossible.”
Brady, a few days after unretiring, responded, thanking Buterin for “everything you've built in the world of crypto, otherwise @Autograph wouldn't have been possible.”
“Hope I get to meet you someday you’re the [GOAT],” Brady added, using the emoji to signify "Greatest Of All Time," words many often associate with the quarterback.
Buterin thanked Brady for the kind words.
Entrepreneur and Vayner Media CEO Gary Vaynerchuk, a huge New York Jets fan, also chimed in.
Brady has been a loud and visible advocate for cryptocurrency, investing last year in FTX alongside his wife, Gisele Bündchen. And earlier this year, his sports and entertainment NFT platform Autograph raised $170 million from investors, including Andreessen Horowitz’s a16z fund and Kleiner Perkins.
https://decrypt.co/95545/tom-brady-says-autograph-wouldnt-have-been-possible-without-vitalik
Maybe lil bit; main ones got that symptom is Block One after SOL put them to shame; $2 coin,,,, billions spent.
e
I agree with you, that there is a lot of big money, now being invested in ETH and BTC...I have been reading and hearing about the interest by large investors at all the major brokerages and funds for over a year now! Yes, most of the smaller coins will not make it, in my opinion. I do however like BAT and JASMY, which are run by people who have previously been successful in business, and have already been attracting major support for what their coins and businesses can provide...
Below is an interesting article:
Why Ethereum Is Outperforming Bitcoin Again
by Best Owie 2 hours ago in Bitcoin, Ethereum Reading Time: 3 mins read
https://www.newsbtc.com/news/bitcoin/why-ethereum-is-outperforming-bitcoin-again/
Where is all this money coming from; if you look at all the VC money hitting so many projects. Never forget EOS's 4 billion. I just sold it, no Voice no much anything,, soo much wasted money on coins that'll never mount anything amongst the thousands of of them,...
I took coin bureau''s lead just holding btc/eth/sol/matic. I'v had vet since .002 n seriously thinkn dumping it to. Stick with blue chips, lol
e
Nearly $6 Billion in ETH Burned as Ethereum 2.0 Edges Closer
The second-largest cryptocurrency, Ethereum, has officially destroyed more than 2 million ETH via a burn mechanism introduced last year.
By Liam J. Kelly
Mar 21, 2022
3 min read
Ethereum’s burn mechanism is hotter than ever, as crypto’s second-largest network has officially destroyed over 2 million ETH since the mechanism was introduced last August.
According to Watch the Burn, a dashboard monitoring the burn mechanism, the network has destroyed a total of 2,000,996 Ethereum since its inception. In dollar terms, that’s more than $5.82 billion removed from circulation forever.
Implemented in the London hard fork, EIP-1559, the technical name for the burn mechanism, was just one of several updates made to the network.
This specific “Ethereum Improvement Proposal” restructured the network’s fee structure.
Instead of all the fees paid to execute various operations on Ethereum going to miners, EIP-1559 essentially split these fees into a base fee and tips (the latter of which would go to miners).
It is the base fee that is burned, which is another way of saying that that cryptocurrency is destroyed and removed from circulation.
This burn mechanism has also fueled the “ultra-sound money” meme.
The meme follows that when there is a spike in activity on Ethereum, it is possible that the destruction of the circulating supply could outpace the amount issued via block rewards.
This creates a deflationary effect in which there are fewer and fewer Ethereum on the market to buy.
During a fireside chat during this year’s Camp Ethereal, Joe Lubin, Ethereum co-founder and CEO of ConsenSys (which funds an editorially independent Decrypt) again reminded that yet another upgrade will bring this particular meme into even greater focus.
Burned Ethereum and the ‘Consensus Layer’
Alongside the London Hard Fork, Ethereum is also inching towards its most comprehensive upgrade yet.
Recently rebranded to “Consensus Layer,” Ethereum 2.0 would improve the network’s transaction speed, lower costs, and “will lay to rest Ethereum’s carbon or energy footprint problem,” according to Lubin.
The upgrade will shift Ethereum away from a proof-of-work (PoW) consensus mechanism, something that Bitcoin also uses to validate transactions, to a different model called proof-of-stake (PoS). The latter mechanism is more environmentally-friendly as it demands less computing power to achieve comparable levels of security.
That’s not all either.
“Another exciting thing about moving to proof-of-stake is that proof-of-work requires a lot of issuance of ether [the term used to describe Ethereum the cryptocurrency rather than the network] in order to incentivize these people with heavy infrastructure, to lend their resources and validate transactions on the network,” said Lubin. “So if you have very light infrastructure, then you can issue much less ether per block that's constructed."
Less issuance means that there will be fewer Ethereum distributed onto the market.
This, plus the burn mechanism at work now, means that Ethereum will “be burning more ether every single day than is issued, because much less ether will be issued to secure the network,” said Lubin. “And so ultra-sound money is about to come into existence.”
All of these changes are slated for launch “by Q2 or possibly slipping into Q3” according to the Ethereum co-founder.
https://decrypt.co/95574/nearly-6-billion-eth-burned-ethereum-2-0-edges-closer
ETH 2.0 vs BTC Lightening.
Good news for both going into Summer!
imo
e
At least when ETH 2 gets going. maybe Q2.
ETH eye on supply and fly,by May..
Ethereum 2.0 Coming in Q2, 'Will Lay to Rest' Energy Concerns: Joe Lubin
By Liam J. Kelly
Mar 17, 2022
5 min read
Despite delays, Joe Lubin stands by his estimate that Ethereum 2.0 will arrive in Q2 "or possibly slipping into Q3” of this year.
ConsenSys CEO and Ethereum co-founder Joe Lubin is still confident that the next era of Ethereum will arrive within the next few months.
In an interview with Decrypt last December in Miami, Lubin predicted Ethereum 2.0 would come "by Q2 or possibly slipping into Q3" of this year. Last week, during a fireside chat at the Camp Ethereal crypto event in Wyoming, Lubin stuck with that predicted timing.
"The merge is happening, surprisingly, on that same timeframe," said Lubin. "So my estimate stays the same. We have a team working strongly, heavily on it."
He cited a key event to bolster his prediction.
The next step will transition the current Ethereum mainnet (let's call that Ethereum 1.0) to a sort of ghost network currently operating in parallel (technically called the Beacon Chain, it will evolve into Ethereum 2.0). The mechanics of this transition led the Ethereum Foundation in January to rebrand the "Ethereum 2.0" name in favor of "consensus layer," or in Lubin's words, the "consensus chain."
Beacon Chain isn't executing real transactions right now, but is instead creating a home for validators (computers that validate crypto transactions) to lock up their hard-earned Ethereum. It’s laying the groundwork for Ethereum’s shift from its current method of verifying transactions using proof-of-work (PoW) to a different method called proof-of-stake (PoS).
Bitcoin also uses a PoW mechanism and has caught global criticism for its enormous energy usage. There are no immediate plans to change this.
Under the new mechanism, Ethereum validators, like PoW miners, are rewarded for ensuring the network is processing correct transactions. Right now, this reward pays out 5.54% in ETH to stakers, according to data pulled from Staking Rewards.
However, if validators get caught adding fraudulent transactions to the Ethereum blockchain, they get penalized. This penalty is monetary and gets drawn from the 32 Ethereum needed to stake in the first place in order to become a validator.
On Tuesday, Ethereum developers announced that they had successfully trialed this Merge event on a public testnet called Kiln. A testnet is essentially a crypto sandbox where developers test new upgrades or changes to a protocol without causing serious damage to an actual blockchain network. "And it seems to have worked," tweeted core developer Tim Beiko. "Post-merge blocks are being produced by validators, and they contain transactions!"
It's a small celebration for an incredibly technical task, one that is made even more pressurized given Ethereum's current market cap of $337 billion.
Once it's executed on the mainnet, Ethereum 2.0, now rebranded the "Consensus Layer," will be alive and kicking.
What will Ethereum 2.0 do?
Alongside the various bets surrounding the exact launch date, Crypto Twitter threads have spilled much digital ink explaining and debating what this upgrade will mean for the network and its users.
Ethereum 2.0 will bring about several key changes, namely creating an environment where shard chains and rollup technologies can increase the speed of transacting as well as lowering costs—in theory.
If you ask Lubin, Ethereum 2.0 will indeed bring lower energy usage and lower gas fees, though many in the crypto community have their doubts about the latter.
"The merge will lay to rest proof-of-work, will lay to rest Ethereum's carbon or energy footprint problem, that all goes away," Lubin said at Camp Ethereal. "Orders of magnitude less expensive, energetically. And another exciting thing about about moving to proof-of-stake is that proof-of-work requires a lot of issuance of ether in order to incentivize these people with heavy infrastructure, to lend their resources and validate transactions on the network. And so if you have very light infrastructure, then you can issue much less ether per block that's constructed."
After making Ethereum cheaper and more environmentally friendly, Lubin added that the upgrade will also turn the world's second-largest cryptocurrency into "ultra-sound money." The term is a play on the idea that gold and Bitcoin are sound money because their supply is capped and cannot be changed. "Ultra-sound money goes a step further."
The shift to Ethereum 2.0 will result in a much lower emissions rate, which means fewer Ethereum will be given to validators for securing the network because their operating costs are much lower. Running a traditional PoW mining outfit, for instance, comes with an enormous overhead and only makes sense if the reward is worth it. Without that overhead, validators remain incentivized to do their job even if the rewards are cut. This, in turn, means there will be a smaller supply of new ETH entering the market.
At the same time, Ethereum's latest EIP-1559 improvement introduced a burn mechanism that destroys a certain amount of ETH with each transaction.
These two changes create an environment in which tons of ETH is being destroyed on one end, while fewer ETH is being created on the other. Instantly, a dramatic deflationary pressure emerges.
"When the merge happens," said Lubin, "we're going to be burning more ether every single day than is issued, because much less ether will be issued to secure the network, and so ultra-sound money is about to come into existence."
Lubin's comments amounted to a compelling case for the future price of ETH, though he was careful to add for the audience at Camp Ethereal, "This is not financial advice." And Decrypt does not dispense investment advice either.
https://decrypt.co/95368/ethereum-2-merge-launch-lay-to-rest-energy-usage-concerns-joe-lubin
Awesome! I Will Share It On Social Media Thanks Again $ETH $ETHE
Sweet! Thanks, Great & Exciting Info and I’m Looking Forward To It All $ETH $ETHE
Two Attacks On Proof-of-Stake Ethereum - Cornell University
https://arxiv.org/abs/2203.01315 Joachim Neu, Ertem Nusret Tas, David Tse
We present two attacks targeting the Proof-of-Stake (PoS) Ethereum consensus protocol. The first attack suggests a fundamental conceptual incompatibility between PoS and the Greedy Heaviest-Observed Sub-Tree (GHOST) fork choice paradigm employed by PoS Ethereum. In a nutshell, PoS allows an adversary with a vanishing amount of stake to produce an unlimited number of equivocating blocks. While most equivocating blocks will be orphaned, such orphaned `uncle blocks' still influence fork choice under the GHOST paradigm, bestowing upon the adversary devastating control over the canonical chain. While the Latest Message Driven (LMD) aspect of current PoS Ethereum prevents a straightforward application of this attack, our second attack shows how LMD specifically can be exploited to obtain a new variant of the balancing attack that overcomes a recent protocol addition that was intended to mitigate balancing-type attacks. Thus, in its current form, PoS Ethereum without and with LMD is vulnerable to our first and second attack, respectively.
Ethereum Incubator ConsenSys Raises $450 Million at $7 Billion Valuation
By Jeff John Roberts
Mar 15, 2022
4 min read
Ethereum software factory ConsenSys raised an additional $450 million, doubling its valuation as it builds out MetaMask, Infura and other products.
In brief
* ConsenSys will use its new funding to bring in more people from
traditional finance.
* The company's flagship products are MetaMask and Infura.
Ethereum software incubator ConsenSys announced on Tuesday that it has raised a $450 million Series D round led by ParaFi Capital and a host of other prominent names, including Microsoft and Softbank.
The new round values ConsenSys at more than $7 billion—double the valuation it received after a $200 million round just four months ago.
Consensys launched in 2014 as a home for startups seeking to tap the potential of a then-new blockchain called Ethereum, and earned a reputation for both innovation and a chaotic work culture. In the last two years, the company appears to have its stride thanks to the emergence of two flagship products: the Web3 wallet MetaMask and the crypto infrastructure platform Infura.
These days, ConsenSys has two divisions: ConsenSys Software Inc (CSI) and ConsenSys Mesh, which funds and incubates crypto startups. (ConsenSys Mesh funds the editorially independent Decrypt.) According to founder and CEO Joe Lubin, ConsenSys will use the funding to further build out MetaMask and Infura, as well as other Ethereum software tools it supports.
"It's about growing the company organically and bringing the best and brightest into our ecosystem," Lubin told Decrypt in an interview last week about the new funding. "There's a lot of people from the world of Web2 technologies and traditional finance who are dying to get in."
MetaMask has grown dramatically in the last year—recently hitting 30 million monthly active users—and so has Infura, but they are very different products. The former is primarily a wallet used by consumers to navigate Web3 while the latter is a suite of developer tools for building and maintaining crypto applications.
It creates a potential strategic challenge for one company to be serving both consumers and enterprise at once, but Lubin says he views MetaMask and Infura as complementary, in part because the wallet relies heavily on Infura to stay up and running, and will do so even more as it grows.
Lubin added that MetaMask will be ramping up its efforts to serve institutional clients and to provide more tools to link it to credit cards and other elements of the traditional finance industry. Part of this will entail MetaMask launching a DAO (decentralized autonomous organization) and issuing a token to support new features of the wallet, though ConsenSys has provided few details about when this might take place.
In the meantime, ConsenSys—along with much of the crypto industry—will be watching closely to see when Ethereum will pull off its long-anticipated "merge" to proof-of-stake, which entails updating the blockchain to no longer use energy-intensive proof-of-work mining.
According to Lubin, who is also a co-founder of Ethereum, early indications suggest the proof-of-stake transition is set to go smoothly, and will occur later this month or in early April. As Decrypt reported last week, 10 million ETH is already staked in Ethereum 2.0.
At ConsenSys, Lubin says he remains committed to the ethos of decentralization that animates Ethereum. His top priorities include the "progressive decentralization" of MetaMask, and expanding Infura to serve "20 or 30" different blockchain protocols.
On a personal level, Lubin says he has learned to adapt as ConsenSys has evolved from a chaotic extension of Ethereum's early days into a big company whose backers include the likes of JP Morgan and Microsoft. Asked whether he tries to model his leadership style after any prominent CEOs like Elon Musk or Tim Cook, Lubin replies: "None of them. My model for the ideal CEO is a chameleon who can agilely adapt to the environment and move quickly."
Also investing in ConsenSys's new funding are Temasek, Anthos Capital, Sound Ventures, C Ventures, Third Point, Marshall Wace, TRUE Capital Management, and United Talent Agency’s venture fund, which also invested in the Series C round.
https://decrypt.co/95090/consensys-funding-ethereum-metamask-series-d
Ethereum Staking Protocol Swell Raises $3.75M as Locked ETH Tops $26B
By Sam Kessler
Mar 14, 2022 at 9:00 a.m. EDT
Updated Mar 14, 2022 at 9:25 a.m. EDT
Swell is attempting to make it easier to stake on Ethereum and eventually other blockchains.
Ethereum reached a major milestone last week in its highly anticipated transition to proof-of-stake, with 10 million ETH (about $26 billion) now locked in the Ethereum 2.0 staking contract.
Against that backdrop, a new staking protocol, Swell, has joined the ranks of projects helping investors get staking rewards for stashing their ether. The team announced Monday a $3.75 million seed round co-led by Framework, IOSG Ventures and Apollo Capital.
Ethereum, like most other blockchains, relies on a distributed network of volunteers to keep itself secure. While the network originally took after Bitcoin by employing a resource-intensive proof-of-work (PoW) model for validating transactions, it is in the midst of transitioning to a more efficient proof-of-stake (PoS) model, where one can stake 32 ether to become a network validator and deploy a node.
In exchange for lending compute power to help secure Ethereum, validators get a percentage of the fees generated as users transact on the network.
ETH staking 101
Currently, it costs 32 ETH (about $82,000) to become a validator, though Swell and others are looking to lower that barrier to entry. Swell’s minimum commitment is 1 ETH. Significantly, the protocol will provide stakers with liquidity by granting them an interest-bearing token representing their stake.
Similar liquid staking solutions to Swell already exist – the most popular being Rocket Pool and Lido. Both products already make it easy for users to enter and exit their staking positions, and they allow minimum deposits much lower than Swell’s 1 ETH. Rocket Pool requires a minimum deposit of just .01 ETH, and Lido doesn’t have a minimum at all.
Swell says its main advantage is in making it easier for users to earn additional interest through in-app “vaults.”
“We do everything for the user,” Swell co-founder and Chief Technology Officer Lecky Lao said of the project’s vaults feature. “After they stake, they get an NFT they can optionally put into a vault if they want to get some extra yield from DeFi farming. Basically, we reduce the entry barrier for the beginner.”
Swell plans to launch its beta on the Ethereum mainnnet in April. Later, the company says it plans on expanding to other blockchains, starting with Avalanche and Polygon.
https://www.coindesk.com/business/2022/03/14/ethereum-staking-protocol-swell-raises-375m-as-locked-eth-tops-26b/
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