Welcome to Protocol, where Coindesk is a weekly summary of the most important stories in cryptocurrency technology development. I am Ben Schiller, the opinion and editor of Coindesk.
In this issue:
Can base rollups solve Ethereum issues? Lido will finally announce the modular mowapp.
Network News
Roll-up to rescue: In recent years, Ethereum has embraced the Layer-2 scaling roadmap. This will help to expand the plan-based Ethereum ecosystem that facilitated the development of third-party auxiliary networks known as “Layer 2 Rollup.” Off-load activities to these emerging networks helped to reduce end-user fees and improve speeds, but led to a large, fragmented ecosystem at Layer 2. However, although all Layer-2 networks return data to Ethereum, they often struggle to communicate directly with each other. There is also the risk of a centralized sequencer. It relies on company-controlled black boxes for passing transactional data between blockchain layers. As a result, some Ethereum developers are pushing roll-up technologies that take a new approach to security and interoperability. “Base Rollup.” Base rollups are different from most existing rollups. When someone trades in Layer-2 rollup, rather than processing them, those transactions are processed through a component called a “sequencer”. Sequencers generate revenue for the rollup operator by batching multiple transactions and strategically ordering sequencers, but introduces a single obstacle. Its large inspection variators – more than sorted sequencers, arbitrum, zksync, and explosions are growing rapidly to support larger transaction volumes than L2beat. , but the experience working between them – Passing other data between networks makes Ethereum bigger, Layer-2 networks become essential for its functionality, improving communication between Layer 2, in other words I will improve and improve. Composability” – It's more important than ever. — Margaux nijkerkRead more.
The Lido will be modular. The developer behind Lido, Ethereum's biggest staking service, suggested revamping the staking platform with modular “Vaults.” The new framework introduces Stvaults, a customizable component designed to help Lido meet institutions and more complex staking strategies. Lido now allows investors to pool ether (ETH) together and “bet” the code. It helps you lock the token on your network and secure it in exchange for interest. Lido has pioneered Liquid Staking. Users will obtain receipts in deposits called Lido Staked Eth (steth) that they can trade at any time. Lido staking and entering and leaving the staking position with Lido is as easy as buying and selling a stest token. According to a press release shared with Coindesk, the Lido V3 STVAULTS is a “modular smart contract designed to meet the diverse and evolving needs of Ethereum participants.” The upgrade allows for staking setups beyond cut and dry liquid staking. Specifically, STVAULTS can assist in institutional stakers who want to personalize their staking setups, node operators who want to attract large numbers of stakers, and asset managers who want to create new stakeholder use cases. “What is important to understand with customizable infrastructure is that you can generally build even more complex products,” says Konstantin Lomashuk, founder of Lido Staking Protocol. – Margaux nijkerkRead more.
Unichain: Uniswap Labs is the largest distributed exchange (DEX), one of the leading developers of Uniswap, shared on February 13th, and its long-standing layer 2 network, Unichain. It's currently live. With its optimistic OP stack, Unicane, like other Layer-2 in Ethereum, expels transactions faster and cheaper than Ethereum's mainnet. According to UNISWAP Labs, developers are optimized specifically for distributed finance (DEFI) and are intended to serve as “a home of liquidity between chains.” With UNISWAP Labs, there are two advantages to launching Layer-2. It offers a great experience for users of UNISWAP and similar platforms, creating new revenue opportunities in the form of network fees. A representative from Uniswap Labs told Coindesk that “about 20%” of the chain's revenue will go directly to the company. Unichain has been tested since October 2024 and is classified as a “Stage 1” rollup by UNISWAP Labs. That is, there is a decentralization element, but it holds centrally controlled protective measures in this early stage. This network is built on an OP stack. It is a modular framework that allows developers to build interoperable layer 2 chains based on optimistic roll-up technology. Several well-known teams have announced their own OP stack-based Layer 2, including Coinbase's “Base”, Kraken's “Ink, “The World's “World Chain”” and Sony's “Sony Um”. “We expect a world of many different use cases where transactions are small subsets,” Adams told Koindsk in an interview. In collaboration with Flashbots, the Ethereum Research developer, the UNISWAP team has created a reliable execution environment (TEE) in Unichain, a safe area for more advanced transactions, providing more advanced transactions and more advanced transactions. He said it was intended to optimize the chain of Defi by making it possible. Faster transaction finality. – Margaux nijkerkRead more.
Pectra in April: Ethereum developers officially set a test date for Pectra, their first network upgrade in 11 months, and are on track to potential dates for the April release date. Pectra includes a variety of improvements that focus specifically on wallets and validators, but during a period of growing scrutiny for Ethereum. Ethereum has recently put pressure on the community to focus and keep up with its competitors. Ethereum's core builders decided on Thursday during biweekly “all core developers” calls to begin testing Pectra on Holesky's testnet on February 26th. If successful, the developer will be reconvened on March 6th to determine when the upgrade will officially launch. According to Tim Beiko, the protocol support lead for the Ethereum Foundation, developers are hoping that the upgrade will hit MainNet in early April. Pectra – Portmanteau, which represents two separate upgrades of Prague and Electra, includes eight major improvements to the second largest blockchain. The most planned is EIP-7702, which is supposed to improve the user experience of crypto wallets. The Ethereum community has been facing an identity crisis over the past few weeks. Its native token, Ether (ETH), has performed poorly against other cryptocurrencies, and networks of competitors like Solana have drawn attention and talent from the Ethereum ecosystem. In the controversy, much of it is directed at the Etherum Foundation, which has coordinated chain upgrades and is currently undergoing a major leadership shuffle. – Margaux nijkerkRead more.
Money Center
El Salvador dispatch
A city of 20,000 people, Berlin is the home of El Salvador's second Bitcoin circular economy. “Bitcoin City already exists. It's called Berlin,” one resident said. Tom Carreras reports.
Linksdao will be released on the base
Linksdao started by selling NFTS, but the market has since moved on.
Regulation and policy
Hester Peirce, head of the SEC's new Crypto Taskforce, said Memecoins are likely outside the jurisdiction of regulators.
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