Greetings from The Protocol, your weekly summary of the key updates in cryptocurrency technology development. I’m Ben Schiller.
In this edition:
- Ethereum’s Final Pectra Test Goes Live
- Hyperliquid Simplifies Token Transfers for DeFi
- Celo Successfully Migrates to Layer-2 Network
- Bitcoin DeFi Expansion Faces Fork Challenges
This article is included in our latest weekly newsletter, which delves into the technology underlying cryptocurrency, one block at a time. Subscribe here to receive it every Wednesday.
Network Updates
IT’S LIVE! ETHEREUM PECTRA TEST: The final rehearsal for Ethereum’s anticipated Pectra upgrade was conducted on Wednesday, marking a significant testing phase for the blockchain’s most extensive changes in over a year. This test on the newly established Hoodi testnet was particularly scrutinized, especially after two previous tests on the Holesky and Sepolia test networks did not achieve proper finalization. In response, developers introduced Hoodi as a fresh testing ground for ecosystem participants, especially staking providers, before the Pectra upgrade is implemented on Ethereum’s mainnet. The test involved introducing several code changes designed to enhance user and developer experiences on Ethereum. One noteworthy modification permits smart contract capabilities within wallets, enabling wallet developers to create new user-friendly features, including the ability to cover transaction fees using cryptocurrencies beyond just ether (ETH). Testnets act as mock versions of the main blockchain, allowing developers to trial significant code adjustments in a low-pressure environment, ensuring issues are resolved before they hit the mainnet. Hoodi was the last of three testnets to simulate the Pectra upgrade. Developers previously agreed that if all goes smoothly on Wednesday, Pectra would be monitored for around 30 more days before being deployed on Ethereum’s mainnet. — Margaux Nijkerk Read more.
HYPERLIQUID SIMPLIFIES TOKENS FOR DEFI: The decentralized finance (DeFi) sector is a significant source of value and revenue generation for crypto initiatives, yet its complexity sometimes entangles users in a network of blockchains, bridges, wallets, and tokens. A recent technical update from Hyperliquid aims to streamline this process for both developers and users, allowing for the direct linking of tokens on the HyperCore and HyperEVM platforms. HyperCore is the native platform for trading spot assets, while HyperEVM is a network that executes smart contracts on Ethereum under the Ethereum Virtual Machine (EVM). Tokens classified as “Core spot” on HyperCore can connect with their EVM counterparts, termed “EVM spot.” Once linked, users can transfer these assets through straightforward actions, such as a “spotSend” on HyperCore or a standard ERC-20 transfer on HyperEVM. By enabling direct movement of tokens between platforms without needing a third-party intermediary, developers can create products that simplify asset transfers, making it more accessible for newcomers while remaining efficient for seasoned users. — Shaurya Malwa Read more.
CELO MIGRATION TO LAYER-2: The Celo blockchain has completed its long-anticipated shift to an Ethereum layer-2 chain, concluding a nearly two-year journey, according to the main entities involved in the network. This migration began in July 2023 and included a community vote in July 2024, amid fierce competition from several layer-2 networks, ultimately won by Optimism, for the opportunity to integrate with the Celo ecosystem. Similar to other layer-2 networks, this advancement offers faster and cheaper transactions on top of Ethereum’s mainnet. The new framework runs on Optimism’s OP Stack, a customizable structure that empowers developers to establish layer-2 networks based on Optimism’s technology. As per Rene Reisberg, CEO of the Celo Foundation, this migration marks the first of its kind within the Ethereum ecosystem and could serve as a model for other EVM-compatible blockchains aiming to transition to layer-2 operations. — Margaux Nijkerk Read more.
BITCOIN DEFI FACES FORK CHALLENGES: Bitcoin developers seeking to enhance the blockchain’s DeFi functionalities are likely contemplating zero-knowledge (ZK) proofs, which aren’t presently supported and necessitate a so-called soft fork or an updated software version for inclusion. This poses a significant challenge, according to Edan Yago, a Bitcoin veteran and core contributor to the BitcoinOS (BOS) smart contract system. “Forking a blockchain, especially one valued at $2 trillion, is akin to open-heart surgery,” he explained in an interview. ZK proofs represent a cryptographic technique that validates statements while preserving privacy by withholding specific information. Although this capability is absent in Bitcoin’s software, proposed implementations like OP_CAT and OP_CTV could facilitate its introduction. Yago believes that developers should explore methods to integrate ZK proofs into Bitcoin without resorting to forks. “Developers need to prove that innovative engineering can’t achieve this any other way,” he stated. The goal of BOS is to accomplish this via BitSNARK, a Bitcoin rollup protocol part of a broader family of technologies designed to scale the original blockchain. This concept followed Robin Linus’s introduction of BitVM in October 2023, which suggested a framework for enabling Ethereum-like smart contracts on Bitcoin. BitcoinOS has now made open-source what Yago describes as a “fully production-ready” BitSNARK protocol, granting developers access to ZK verification on Bitcoin and allowing connections to other blockchains such as Ethereum, Solana, and Cardano. — Jamie Crawley Read more.
In Other Updates
- In a two-hour conversation with Senior Anchor Christine Lee, Strategy Executive Chair Michael Saylor discusses the concept of a U.S. Bitcoin strategic reserve, the sleepless nights caused by securities holders, and the idea of his own economic immortality. —Christine Lee reports.
- Crypto startup Plasma has unveiled the technical aspects of its blockchain, aimed at facilitating swift and efficient global stablecoin transfers, utilizing a HotStuff-inspired consensus mechanism. — Omkar Godbole reports.
Regulatory and Policy
- U.S. Senator Kirsten Gillibrand (D-N.Y.), one of the key Democrats advocating for crypto legislation, cautioned the industry against pushing for a “diluted” version of the long-anticipated stablecoin legislation currently progressing through the Senate. She emphasized the need for stringent regulations to encourage innovation and shield investors from potential banking crises akin to the fallout from Silicon Valley Bank in 2023 and the collapse of the crypto exchange FTX in 2022. – Cheyenne Ligon reports.