Welcome to The Protocol, our weekly summary of the key updates in cryptocurrency technology. We are Margaux Nijkerk and Sam Kessler, journalists on the tech reporting team.
In this edition:
- EigenLayer Is Set to Introduce an Essential Feature
- RootstockLabs Gears Up to Launch SDKs for Bitcoin Layer 2s Utilizing BitVMX
- A Look into North Korea’s Preferred Crypto Laundering Mechanism: THORChain
- Bitcoin Developer Suggests Hard Fork to Shield BTC from Quantum Computing Risks
This piece is part of the latest edition of The Protocol, our weekly newsletter diving into the technology underlying cryptocurrency, one block at a time. Subscribe here to receive it every Wednesday.
Network Updates
EIGENLAYER’S CRITICAL FEATURE ON THE WAY: EigenLayer, the innovative restaking platform, announced last week that it will finally roll out its long-anticipated slashing feature on April 17, representing the protocol’s initial “feature-complete” release. This slashing functionality will enable Actively Validated Services (AVSs)—applications developed on EigenLayer’s restaking framework—to penalize non-compliant operators while rewarding those who adhere to specified conditions. EigenLayer was among the first to introduce restaking, allowing Ethereum holders to secure additional protocols by recommitting their staked Ether. Slashing was intended to be a key component of this model, granting applications the ability to impose penalties on bad actors by confiscating a portion of their capital. The absence of slashing at EigenLayer’s launch in 2024 allowed competitors to gain traction in the market. Symbiotic, a platform that permits the restaking of any asset, was utilized by early adopters such as Hyperlane and Ethena. — Sam Kessler Find out more.
SOFTWARE DEVELOPMENT KITS FOR BITCOIN LAYER-2S COMING SOON: One of the oldest initiatives within the Bitcoin ecosystem is progressing towards empowering developers to construct layer-2 networks on its computational layer. Rootstock is among several projects working to enhance Bitcoin’s utility and interoperability, leveraging a revised version of the BitVM programming language known as “BitVMX.” Speaking with reporters, founder Sergio Lerner revealed that RootstockLabs is mere weeks away from launching SDKs, which will equip developers with the tools necessary to create their own Bitcoin layer-2s using BitVMX. SDKs provide a set of resources that facilitate the development of applications on particular platforms. “We are very close to assembling all the components for developers to begin building their own solutions based on BitVMX,” Lerner stated in an interview. — Jamie Crawley Find out more.
NORTH KOREA’S TOP CRYPTO MONEY-LAUNDERING TOOL: In February, North Korea executed a massive $1.4 billion theft, marking the largest cryptocurrency heist on record. THORChain, a network for cryptocurrency swaps, has become integral to North Korea’s strategy for laundering this stolen money, facilitating the transfer of approximately 85% of the hacked funds. Unlike some blockchain services, the operators of THORChain have adamantly refused to block transactions associated with the Bybit hack, despite demands from the FBI and other governmental organizations. THORChain wallets such as Asgardex and Vultisig—methods commonly used for transactions on the network—have also remained unyielding. Blockchain security analysts estimate that THORChain’s leading wallet developers and validators, many of whom are publicly known and operate in regions with strict anti-money laundering laws, including the United States, have received over $12 million in fees associated with the heist. The U.S. Office of Foreign Assets Control (OFAC) has previously taken action against blockchain services linked to money laundering activities, such as Tornado Cash (which has since been removed following a court decision) and Bitzlato, an exchange. Legal experts and the cryptocurrency community continue to debate whether THORChain—a layer-1 blockchain—should be distinguished from other services, reigniting a vital question faced by nearly all crypto platforms: Is the network truly decentralized? — Sam Kessler Read more.
CAN BITCOIN WITHSTAND QUANTUM COMPUTING?: Bitcoin may be on the brink of its most significant cryptographic transformation if a newly proposed plan gains support. A draft Bitcoin Improvement Proposal (BIP) known as the Quantum-Resistant Address Migration Protocol (QRAMP) has been introduced by developer Agustin Cruz. This proposal details a strategy for an extensive migration of BTC from older wallets to those fortified by post-quantum cryptography. Quantum computing shifts away from traditional binary systems—ones and zeros—and exponentially increases computational capabilities through Quantum bits (qubits) that can exist in multiple states simultaneously. This dramatic enhancement in computing power poses a potential threat to the encryption standards relied upon by contemporary systems. The proposal indicates that at a specific block height, nodes operating the updated software would deny transactions attempting to utilize addresses protected by ECDSA cryptography, which could be vulnerable to quantum attacks. — Francisco Rodrigues Read more.
Other Updates
- The first Ripple (XRP) ETF launched on Tuesday. Additionally, Ripple announced an acquisition of multi-asset prime brokerage firm Hidden Road for $1.25 billion, representing one of the largest M&A transactions within the digital asset sector thus far. — Will Canny and Shaurya Malwa
- Galaxy Digital is planning to relocate its headquarters to Delaware and aims to list its shares on Nasdaq following a shareholder vote on May 9. This development follows Galaxy agreeing to a $200 million settlement with the New York attorney general’s office regarding the fund’s role in the 2022 Terra-Luna collapse. — Tom Carreras Read more
Regulatory and Policy Updates
- China and Europe have both sanctioned retaliatory tariffs against the U.S.—a recent escalation in a trade dispute that has impacted global markets, including digital asset markets. — Source
- Bitcoin’s price fell below $77K on Wednesday, reflecting a modest 8% drop since the announcement of Donald Trump’s ‘Liberation Day’ tariffs. Economic recession concerns present a significant test for crypto markets, which have emerged following the 2008 financial crisis and have yet to experience a major U.S. recession. Currently, signs of resilience are visible within the decentralized finance (DeFi) sector. — Oliver Knight Read more
- Argentina’s congress has initiated a probe into LIBRA, the purported pump-and-dump memecoin project endorsed by President Javier Milei, which resulted in a 90% loss for investors and led to calls for Milei’s impeachment. —Francisco Rodrigues Read more