Exploring the tech behind crypto

one block at a time

Was this newsletter forwarded to you?Sign up here.

Hi, Bradley Keoun here, editor of The Protocol.

The race to become the dominant “layer 2” blockchain for Ethereum – a venue for cheaper and faster transactions but relying on the parent network for security – has been ultra-competitive. But suddenly, these networks, from Arbitrum to Optimism and zkSync, are moving to make it easy for developers to copy their code or spin up similar networks. In today's issue, our Sam Kessler dives into why. We also feature Polygon’s spate of announcements recently, an 11th-hour compromise with the smartphone giant Apple that will allow the bitcoin-friendly app Damus to remain on the App Store and the controversy over Azuki’s latest hot-but-not-so-cool NFT mint.

Ethereum’s Layer 2 Teams Want You to Clone Their Code

With billions of dollars flocking over the past year to Arbitrum, Optimism, zkSync and other “layer 2” blockchain networks that work atop Ethereum, the smart angle among crypto futurists was that the winner (or winners) of this “rollup race” might eventually become the primary gateway by which most people access digital assets.

Initially, each team privately contrived of its own novel approach for building a “rollup” – a blockchain that settles transactions on Ethereum but is quicker and cheaper to use. When these rollup chains began going public in 2020, a cut-throat competition for users ensued, with dueling platforms hell-bent on convincing users that their technology was the best around.

But recently, the dynamic has shifted dramatically: The teams are starting to just give their technology away. After years of toil and costly research and development, most of the teams are suddenly open-sourcing their code – putting it out into the public for anyone to see, edit and upgrade. And now, some rollup teams are even releasing free tools for developers to clone their codebases wholesale.

Earlier this week, Matter Labs, the firm behind the zkSync Era rollup, launched an SDK (Software Development Kit) to help developers construct new blockchains using zkSync’s code. This follows in the footsteps of Optimism and Arbitrum, two of zkSync’s rivals, who rolled out similar toolkits in recent months.

By making their code open source and easy to replicate – ostensibly to appeal to crypto community norms and ideals – all of these layer 2 teams are theoretically making it easier for copycat chains to steal away their users.

Arbitrum is one of the Ethereum layer 2 networks that rolled out a new toolkit. (Danny Nelson/CoinDesk)

What’s going on?

Executives and industry experts say that the teams now see a future unfolding where there will be many layer 2 blockchains, possibly sharing liquidity and linked by common technology – mini-ecosystems termed superchains or hyperchains. The goal is subtly shifting from building the networks to providing the underlying technology; the teams may be hoping to lay the groundwork for new blockchain ecosystems in which they are uniquely positioned to capture a big chunk of the value.

Today’s incumbent layer 2 platforms won’t fall by the wayside in this new model. “You can think of these new chains as additional distribution channels. Other chain developers will market their chains and get more developers, but essentially, liquidity still flows back to the L2,” said Anurag Arjun, a Polygon co-founder who now runs the blockchain infrastructure firm Avail.

Understanding how victory is being re-defined in the Ethereum rollup race is therefore key to understanding what to expect for the next phase of the crypto industry.

A message from Bittrex, Inc.

Bittrex, Inc., et al., have established bar dates for submitting proofs of claim. Persons and entities that agree with their claim as listed in the Schedules [Docket Nos. 87, 91] or otherwise exempted need not submit a proof of claim. Otherwise, all persons and entities that assert a claim against Bittrex, Inc. and its affiliates must submit a proof of claim before the applicable bar dates outlined in the Bar Date Notice [Docket No. 107-3].

Network News

Sandeep Naliwal, co-founder Polygon (Polygon)

Polygon, the Ethereum scaling solution, tweeted earlier this week that it planned a major announcement Thursday on its “upcoming tech stack.” According to the post, a key goal of the new roadmap will be to “unify access to liquidity” for users of both of its live networks, including the new “Polygon zkEVM” layer 2 network launched in March during a live ceremony that featured Ethereum co-founder Vitalik Buterin. Polygon, once seen as the Ethereum scaling solution to beat, but now facing tough competition, said earlier this month that its 2.0 version would come with a vision for building “the value layer of the Internet.” There’s certainly been no shortage of announcements from the team lately. Just today, Polygon announced a partnership with the entertainment giant Warner Music Group (WMG) to launch an accelerator program for the next generation of blockchain music projects. Last week, Polygon proposed to make its primary “POS chain” compatible with zero knowledge (ZK) technology – a type of cryptography tabbed as one of the year’s hottest blockchain trends; the upgrade would turn the chain into something called a “zkEVM validium.” (Handy definition from the Bankless newsletter: “Validiums execute transactions offchain and maintain their data via zero-knowledge proofs offchain, too.”)On June 21, Polygon introduced a new AI interface powered by the buzzy ChatGPT to aid developers of applications on the network. It’s not always so dreamy, of course: The analysis firm Messari writes that Polygon’s POS chain is due to undergo an upgrade on July 11 known as the Indore hard fork to fix a “state sync bug that may arise” under the daunting scenario where “network reorganizations have lengths exceeding the sprintLength of 16 blocks.” There’s also the Damocles’ Sword of potentially heightened scrutiny of Polygon’s MATIC token by the U.S. Securities and Exchange Commission.

Apple vs. Bitcoin: The social media app Damus – popular among bitcoiners because of its support for payments over the blockchain’s Lightning Network – finally won approval from the smartphone giant Apple, narrowly avoiding ejection from the App Store. Apple had reportedly provided notice that the app might be kicked off – due to its “zaps,” which supposedly offer a way of tipping content creators with bitcoin (BTC); the apparent problem was that Apple saw the zaps as a prohibited form of payment to unlock content. A compromise was reached after Damus agreed to remove tipping on posts, though bitcoin-based tipping at the profile level will stay. The spat renewed questions of whether Apple has too much power over consumer applications, and in some ways played right into bitcoiners’ advocacy for a financial system that's resistant to censorship. The controversy even percolated to none other than former Twitter CEO Jack Dorsey, who now heads the Bitcoin-focused financial services firm Block. On Tuesday, Dorsey tweeted at Apple CEO Tim Cook: "Why doesn't Apple Pay support bitcoin @tim_cook?"

New NFTs look just like the OGs. The blue-chip NFT brand Azuki’s latest mint – a hotly anticipated auction – sold out quickly but ended in controversy. A public sale had been scheduled for Tuesday of the new “Elementals” collection – based around characters supposedly representing earth, fire, lightning and water. But the entire batch of 10,000 NFTs sold out during presale minting windows, raking in $38 million in just 15 minutes. That sounds like success, but the complaints soon started rolling in, with buyers and would-be bidders expressing frustration over the sale process and technical issues. The bigger issue appeared to be that the new NFTs looked nearly identical to the original “OG” Akuki collection, prompting complaints that the value was diluted through a massive increase in the supply; floor prices for the collection subsequently tanked. “It is always both challenging & exciting opening up the gate to the Garden,” Azuki tweeted afterward.

Also:

Protocol Village

Tezos logo (Tezos)

Money Center

Data Corner

(Coin Metrics)

Calendar

The Protocol: A newsletter from CoinDesk

Were you forwarded this newsletter? Sign up here.

Don't want this newsletter? Unsubscribe.

Copyright © 2023 CoinDesk, All rights reserved.

250 Park Avenue South New York, NY 10003, USA

See all of CoinDesk’s newsletters | Manage subscriptions | Opt out