Welcome to The Protocol, CoinDesk’s weekly roundup of the most significant developments in cryptocurrency technology. I’m Ben Schiller, and in this edition, we’ll delve into the latest happenings in the crypto landscape, including Ethereum’s highly anticipated Pectra test, advancements in decentralized finance (DeFi), and much more.
Key Highlights:
– Ethereum’s Pectra Test Goes Live
– Hyperliquid Enhances Token Transfers for DeFi
– Celo Successfully Migrates to Layer-2
– Bitcoin’s DeFi Expansion Faces Fork Challenges
Ethereum’s Pectra Test: A Crucial Step Forward
The Ethereum blockchain recently conducted its final test for the Pectra upgrade, marking a significant milestone in its evolution. This test, held on the Hoodi testnet, was vital after previous attempts on the Holesky and Sepolia test networks encountered issues that prevented finalization. The developers created Hoodi to provide an additional platform for testing, especially for staking providers and other ecosystem participants.
The Pectra upgrade aims to enhance user experience and developer functionality on Ethereum. One of the notable changes includes adding smart contract capabilities to wallets, which allows wallet developers to introduce features such as paying transaction fees with cryptocurrencies other than Ether (ETH). Testnets like Hoodi serve as vital testing grounds, enabling developers to identify and fix bugs before deploying upgrades to the mainnet. If all goes well, the Pectra upgrade is expected to go live on Ethereum’s mainnet within the next 30 days, pending the results of this final test.
Hyperliquid: Simplifying DeFi Token Transfers
In the ever-evolving world of decentralized finance (DeFi), Hyperliquid has rolled out a significant update aimed at streamlining token transfers. The DeFi space can often feel overwhelmingly complex, filled with various blockchains, wallets, and tokens. Hyperliquid’s latest improvements include direct linking between tokens on its HyperCore and HyperEVM platforms.
HyperCore serves as the native platform for spot assets, while HyperEVM is an Ethereum Virtual Machine (EVM) network that executes smart contracts. Users can now link “Core spot” tokens on HyperCore to their “EVM spot” counterparts on HyperEVM, facilitating easier transfers through simple actions like “spotSend” on HyperCore. This innovation is designed to make it easier for both experienced crypto users and newcomers to navigate the DeFi landscape without the need for complex intermediaries.
Celo’s Transition to Layer-2: A Historic Migration
The Celo blockchain has successfully completed its transition to an Ethereum layer-2 chain, concluding nearly two years of planning and development. This migration, which began in July 2023, was the result of a community vote and a competitive selection process that ultimately favored Optimism’s technology.
This upgrade promises faster and more cost-effective transactions, leveraging Optimism’s OP Stack, a customizable framework that enables developers to build layer-2 networks. According to Rene Reisberg, CEO of the Celo Foundation, this migration is a pioneering move within the Ethereum ecosystem and sets a potential precedent for other EVM-compatible blockchains considering a similar transition.
Bitcoin’s DeFi Expansion: Navigating the Fork Dilemma
As Bitcoin developers seek to enhance the blockchain’s DeFi capabilities, they are grappling with the potential need for a soft fork to introduce zero-knowledge (ZK) proofs. Edan Yago, a seasoned Bitcoin developer and key contributor to the BitcoinOS project, likened forking Bitcoin to performing “open-heart surgery” due to the immense value at stake.
ZK proofs offer a way to validate information while ensuring privacy. While these capabilities are not currently integrated into Bitcoin’s software, proposals like OP_CAT and OP_CTV could pave the way for their implementation. Yago emphasized the importance of finding innovative solutions that avoid a hard fork, and BitcoinOS has introduced the BitSNARK protocol, which aims to enable ZK verification on Bitcoin and facilitate connections with other blockchains, such as Ethereum, Solana, and Cardano.
In Other News
In a recent interview with CoinDesk Senior Anchor Christine Lee, Michael Saylor, Strategy Executive Chair, discussed the concept of a U.S. Bitcoin strategic reserve, the challenges faced by securities holders, and his vision of economic longevity.
Additionally, the crypto start-up Plasma has unveiled its blockchain’s technical features, designed to facilitate rapid and efficient global stablecoin transfers through a HotStuff-inspired consensus mechanism.
Regulatory and Policy Developments
U.S. Senator Kirsten Gillibrand (D-N.Y.), a prominent advocate for crypto legislation, cautioned the industry against supporting a diluted version of the forthcoming stablecoin legislation in the Senate. She argues that robust regulations are essential to foster innovation and safeguard investors, especially in light of past bank runs and the collapse of crypto exchange FTX.
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