It is expected to become the new era creator of digital identity and currency, making important contributions to the development of the global economy and society.

The emergence of ChatGPT has shown people the infinite possibilities of AGI (Artificial General Intelligence). With the help of ChatGPT's AI technology, it be more human-like than humans themselves. Traditional Turing or language tests are no longer sufficient to identify real human identities online. However, human verification will be a crucial and inevitable link in the digital realm, especially in the current era of AI popularity. The challenge now is how to conduct human verification while ensuring user privacy and security, which is a problem that urgently needs to be solved for AI development. To address this issue, Sam Altman, the founder of OpenAI, has launched another world-class project, Worldcoin, which has once again entered the public eye. Worldcoin's goal is to use blockchain technology and decentralized identity verification systems to solve critical issues in digital identity verification and digital currency fields, and promote the development of the digital economy. Currently, Worldcoin is in the testing phase, and it is expected to launch on the main network in the first half of 2023. <h1 class="PlaygroundEditorTheme__h1">AI Development Dilemma: Human Proof, Virtual Information Overload, and Disrupting Job Market</h1>With the emergence of ChatGPT, the field of artificial intelligence has entered a new stage. The rise of large language models (LLMs) has enabled AI to mimic human expression in remarkable ways, but it has also raised a series of issues, including human proof, virtual information overload, and disrupting the job market.Human proof problemThe human proof problem refers to the challenge of determining whether a user is a human or a computer program or robot in the field of computer science and AI. With the continued improvement of deep learning models, the performance of LLMs has reached the top 20% of human ability, making it increasingly difficult to distinguish whether a text or conversation is generated by a human or a machine. Traditional human proof methods, such as language recognition or Turing tests, may not be effective for AGI that has mastered human language and logical thinking. Therefore, we need to find a new way to prove that we are human rather than robots to ensure fair distribution of the benefits generated by future systems.Virtual information overload problemAs AI technology develops, the problem of virtual information overload caused by AI is becoming increasingly prominent, such as false advertising and fake news. These pieces of information may have negative effects on people's lives and society. For example, some false advertisements may mislead consumers into buying low-quality products or defrauding them through fraudulent means. In addition, false information may also be used for malicious activities such as cyberattacks and online scams. Earlier, Facebook announced the removal of a group of AI accounts that maliciously fabricated false information and induced users to vote during the US midterm elections, indicating that the problem of virtual information overload caused by AI is becoming more and more serious.Disrupting job market problemThe impact of AI technology on the labor market has attracted the attention of governments around the world. Recently, the US held its first major hearing on AI, and Sam Altman, CEO of OpenAI, called for regulation of AI, welcomed legislation in this field, and expressed concerns about the disruption caused by AI to the labor market. With the continuous development of AI technology, the trend of automation and robotization replacing traditional jobs may accelerate, leading to a large number of unemployment and social instability. Although AI technology may also create new job opportunities, these opportunities often require practitioners to have new skills and knowledge, which may result in some people losing job opportunities.As the founder of ChatGPT, Sam Altman actively responds to the call to solve the increasingly serious AI issues. He supports regulation of the AI field and believes that blockchain technology has characteristics such as decentralization, privacy protection, and security, which can play an important role in solving AI problems. Recently, Sam Altman has frequently tweeted about Worldcoin, showing his confidence in solving AI problems through Worldcoin. In addition, according to reports, Worldcoin is negotiating a funding of $120 million at a valuation of $3 billion and plans to launch its mainnet in the coming weeks. Such a scale of financing is very rare in the current cryptocurrency market conditions, showing that the investment community is very optimistic about the prospects of Worldcoin. The successful funding of Worldcoin also demonstrates the enormous potential of blockchain technology in the field of digital identity authentication. <h1 class="PlaygroundEditorTheme__h1">Worldcoin's Three Major Applications: Global Identity ID, Global Currency, and Wallet System</h1>According to a report by the McKinsey Global Institute, over 4.4 billion people currently lack a legal identity or cannot verify their identity digitally. Therefore, Worldcoin's vision is to establish the world's largest and fairest digital identity and digital currency entity system to help everyone enter the global financial system. The system mainly involves three aspects: global identity (WorldID), global currency (WLD), and wallet system (World App).Global Identity (WorldID)WorldID is Worldcoin's vision to establish a global digital identity authentication system. Users will be provided with a unique and verifiable digital identity by scanning the iris with a biometric device called Orb. In addition, the World ID protocol uses the "Proof of Personhood (PoP)" mechanism, which allows everyone to prove their humanity online without relying on a third-party institution. This innovative identity verification method utilizes zero-knowledge proof to maximize privacy and achieves identity security through the user-managed World ID. Additionally, World ID can play a vital role in addressing the Sybil attack issue prevalent in Web3. The key to solving the Sybil problem is distinguishing between virtual and real accounts, and the wallet address established by World ID can only belong to a real human being since virtual accounts cannot pass the PoP mechanism. In the digital economy era, the importance of identity verification is self-evident, and the establishment of World ID is expected to provide a more efficient, convenient, and secure identity verification method for the global digital economy.Global Currency (WLD)Worldcoin plans to issue a global currency called WLD token. WLD is based on blockchain technology and has faster transaction speeds and lower transaction fees, making global transactions more convenient and secure. Unlike traditional currencies, WLD aims to become a global currency that is not restricted by borders and can be used worldwide. The total supply of WLD is 10 billion, with over 80% of token supply distributed to the community and contributors. Worldcoin uses a deflationary reward model in its token mechanism and incentivizes activity by doing tasks, which can motivate early participation and accelerate user growth. Also, the distribution of WLD tokens is not a one-time grant but obtained by doing tasks. At the early stage, users can receive one token per week, and the time interval for token distribution might increase over time, such as one token per month. This is beneficial for maintaining user activity. According to data, World App has already gained a considerable effect, with over 1.7 million registered users and a daily transaction volume of 60,000.Wallet System (World App)As the most important part of the Worldcoin ecosystem, World App is a native wallet developed specifically for Worldcoin. It not only supports payments, purchases, and transfers with Beta WLD but also supports various other tokens such as WETH, WBTC, DAI, and USDC (more tokens will be supported in the future). Additionally, World App supports both CEX and DEX applications, including Uniswap, ENS, Circle, Safe, Moonpay, and RampNetwork. Therefore, Worldcoin is not only a wallet entry but also a gateway from the real world to the crypto industry. Joining the Worldcoin world is like entering the Ethereum, Bitcoin, and other crypto ecosystems.In terms of functionality, World App focuses on privacy and inclusivity, providing users with a simple and user-friendly application. In addition to the digital identity verification function, World App also has the function to store and send digital currencies. Users can choose to use a bank account or local payment method for deposits and withdrawals and can send instant remittances to friends or family worldwide via telephone contact or crypto address without paying any fees. In terms of service, World App also provides 24/7 online multilingual support to ensure that users can get help anytime and anywhere. In the digital economy era, a feature-rich, easy-to-use wallet system is essential, and World App meets this need.Worldcoin's vision is highly forward-thinking and ambitious. The global identity ID system, global currency, and wallet system it plans to establish all have extensive practical applications and provide support and infrastructure for the digital economy. It also provides new directions and momentum for the development of the digital economy. <h1 class="PlaygroundEditorTheme__h1">Challenges Facing Worldcoin: Technology, Legal Compliance, Competition, and Social Acceptance</h1>Worldcoin is an innovative blockchain project led by renowned founder Sam Altman. Despite the influential founder, the project still faces many questions and challenges related to its advanced concepts and unique innovations. Specifically, the main challenges facingcoin include:1. Technological feasibility: Worldcoin's technology solution has yet to be widely validated and applied, thus its technological feasibility still has some uncertainty. Some people have raised questions about the reliability and stability of its biometric technology, particularly in terms of privacy protection. Although the Worldcoin team claims not to associate user biometric data with Orb and only generates local irreversible one-way IrisHash values, this does not completely eliminate concerns about privacy. Moreover, even if the PoP mechanism can confirm that the account is behind a real person, there will still be cases where the registered account and the actual user are not the same person. The existence of businesses that replace others in completing iris verification on the current market just shows that such loopholes do exist.2. Legal compliance: Digital currencies and identity authentication systems have not yet gained widespread legal recognition, so their compliance also faces some difficulties and challenges. For example, some countries and regions restrict and regulate digital currencies and identity authentication systems, which prevents Worldcoin from entering these countries. Currently, Worldcoin is licensed in 24 countries, 14 of which are developing countries and 8 are in Africa. Poor regions generally lack legal protection, and data collection costs are the lowest. Collecting user data in such places is also a disguised form of crypto-colonialism. In addition, users in these regions generally have little knowledge of the cryptocurrency industry and Worldcoin, making it not a good thing for them to join the cryptocurrency world.3. Competitors: The market for digital currencies and identity authentication systems is highly competitive, and Worldcoin needs to face challenges from other competitors. For example, mature digital currency and identity authentication systems, as well as emerging competitors, are constantly launching more attractive and advantageous products and services, which may affect Worldcoin's market share and user base.4. Social acceptance: Worldcoin needs to gain widespread social recognition and acceptance in order to succeed in the market. According to the official website, as of now, the World APP has only 1.7 million registered users, although its rapid growth rate of acquiring a new user every 14 seconds makes it one of the fastest-growing wallets in the world. However, this growth rate is still far from the target of reaching 1 billion users set by Sam Altman at the beginning of this year. Therefore, Worldcoin needs to take measures to increase its social acceptance, such as increasing transparency, releasing real-time updates, and maintaining communication with the community. These measures will help increase user trust and social acceptance of Worldcoin.<h1 class="PlaygroundEditorTheme__h1">Summary</h1>After two years of silence, the cryptocurrency project Worldcoin led by Sam Altman is finally making substantial progress. In addition to early biometric information collection work, the recently opened registration for the World APP and the announcement that the mainnet will go live in the first half of 2023 indicate that Worldcoin is about to enter an explosive period. As an innovative cryptocurrency project, although Worldcoin will still face many questions and challenges in the short term, it is undoubtedly one of the most promising cryptocurrency applications so far. Worldcoin combines blockchain technology, artificial basic income ideas to provide sustainable and fair income solutions for everyone in the world. It is expected to become the new era creator of digital identity and currency, making important contributions to the development of the global economy and society.

Worldcoin

Chatgpt

Worldcoin: Pioneering a new era of digital identity and global currency

The multi-chain collaborative development has become an inevitable trend in the future of blockchain technology

LayerZero is becoming the foundational network infrastructure for the future whole-chain ecosystem

With the upcoming release of Sui's mainnet, it is believed that Sui will soon experience a wave of development climax

Layer1 blockchain project Sui announced that its mainnet will be launched in the second quarter of this year, along with a series of educational activities and content called "Wave to Mainnet", to help the community understand the potential of the Sui protocol before the mainnet launch. Sui and Aptos are both part of the Meta-series blockchain, established almost simultaneously. Compared to Aptos, Sui focuses more on innovative underlying technology and aims to become the first internet-scale programmable blockchain platform. Although Sui has not developed as quickly as Aptos, projects driven by technological innovation often have the potential for explosive growth. With the imminent release of the Sui mainnet, it is believed that Sui will soon experience a period of rapid development.<h1 class="PlaygroundEditorTheme__h1">Sui quietly tills the soil while Aptos stands in the spotlight</h1>Aptos inherits the open source technology and development experience of the Die project over the past three years, which enables it to quickly build the underlying infrastructure and layout ecological projects. In contrast, Sui chose to build the Layer1 network from scratch, leading to a much slower development process. Therefore, Aptos was more attractive to investors in terms of attracting capital and attention in the early stages. Additionally, both as Layer1 public chains aimed at improving the security and scalability of the blockchain, and creating a high-performance blockchain infrastructure network for billions of people, there are differences in strategy and focus between the two.Aptos places more emphasis on marketin, being marketed as a unique product created by the best developers from the IT industry, which has been effective in attracting a large number of investors. Last year, it launched its mainnet and went live, although its price has fallen over 76%, it has shown strong performance since the beginning of the year, and its total market capitalisation is still USD 2.08 billion. In terms of ecological project cooperation, Aptos focuses on cooperation with well-known companies, such as Google Cloud for infrastructure acceleration programs, NPIXEL for game cooperation, and MoonPay for payment integration in ecological system projects such as Petra, which have brought huge traffic and attention to Aptos and promoted the rapid development of its ecological projects.Unlike Aptos, Sui places greater emphasis on innovative applications of underlying technology. For example, the improved Move language of Sui can more clearly indicate object ownership, mutability, and composability, making it naturally suitable for building metaverse infrastructure. In terms of ecological projects, since the Sui mainnet has not yet been launched, most of its projects are still in the testing stage, so Sui is far less well-known than Aptos in terms of attention. Therefore, in many cases, Aptos is like a superstar standing in the limelight, while Sui is more like a cultivator quietly paying in the background.Sui and Aptos are both Layer1 public chains, and their founding teams both come from Diem and belong to the same Move track, so they have a competitive relationship from the beginning. However, since Sui built the Layer1 network from scratch, the development process was relatively stagnant, and most of the market's attention was focused on Aptos in the early stages, so the competition between the two was not obvious at the beginning. Until recently, Sui's successful completion of the Wave 2 test and announcement of the imminent launch of the mainnet has caught the attention and vigilance of Aptos. Last month, Sui's CTO accused Aptos of pressuring the Pontem team, the organizers of MOVECON (the first large-scale forum in the Move ecosystem), to cancel the Sui team's speech and even remove the Sui Foundation from the list of event organizers. This indicates that Aptos has begun to view the emerging Sui as a competitor and has indirectly confirmed Sui's market position and potential.<h1 class="PlaygroundEditorTheme__h1">Compared to Aptos, Sui has clear advantages in underlying technology</h1>Although Sui still has many shortcomings compared to Aptos, such as in terms of ecosystem projects and community size, Sui has been committed to innovation and application in underlying technology and has accumulated rich technological advantages in the past year. From Sui-Move language to Narwhal-Tusk consensus mechanism to storage fund token economics, Sui has made significant innovations in every aspect of blockchain projects. In this respect, even compared to other new Layer1 public chains such as Aptos, Sui is unique.Sui-MoveAptos and Sui both use Move language, but they differ in some aspects. Aptos followed the classic design of the Diem white paper, while Sui upgraded and adjusted it to form the unique Sui-Move language. The biggest difference with Move is that Sui adopts an object-centric model instead of an address-centric model. Therefore, almost everything on Sui, such as tokens, smart contracts, NFTs, etc., can be represented as "objects." Each object has a series of attributes, including owner address, read/write properties, transferable properties, functional properties, etc. Sui-Move clearly states the ownership, sharing, mutable or immutable characteristics of objects, while Aptos does not. In addition, Sui's ownership API is more concise than Aptos' API because it more clearly displays the blockchain design. In terms of functionality, Sui-Move has certain advantages in security, smart contract support, programming mode flexibility, and compatibility over Move language.Narwhal &amp; TuskThe consensus mechanism of Sui minimizes communication between validators in order to achieve lower latency in processing transactions. Sui's consensus mechanism is divided into two parts: Narwhal and Tusk. Narwhal is a memory pool protocol for storing unconfirmed blockchain transactions and broadcasting them before the consensus protocol validates them. Its task is to achieve consensus while maintaining data availability, and it is independent of the consensus protocol, allowing it to tolerate asynchronous or intermittent faults. Tusk is an asynchronous consensus protocol responsible for transaction ordering. The protocol uses shared randomness to eliminate additional communication between nodes and allows each node to determine the total order of transactions. When used in conjunction with the Narwhal protocol, it ensures high performance even in the event of failures.In theory, the scalability of Sui's design has no known upper limit. In terms of security, compared to synchronous blockchains (i.e. most proof-of-work blockchains), Sui's security attributes can withstand adverse network conditions, network partitions, or DoS attacks on validators because it does not impose any synchronization assumptions on the network.Developer ExperienceAptos' core feature is seamless upgrade, which allows developers to focus on building without disturbing users. In comparison, the Sui Software Development Kit (SDK) provides more convenience for developers. The SDK offers open-source, universal, and user-friendly tools, and allows developers to save a lot of time debugging smart contracts, waiting for audits, and building basic tech stack elements. Furthermore, the SDK also attempts to connect other ecosystems and non-crypto use cases, such as gaming APIs directly connecting to a universal Layer1 instead of a sidechain or gaming-focused L2; "SuiEcho" guides the community by promoting the portability of digital assets from other ecosystems to Sui; and "Handshake" is a frontend tool that serves as a channel for distributing, redeeming, and collecting Sui digital assets (such as payments and merchant coupons) to both crypto and non-crypto users.Sui Token EconomyIn addition to a series of technical innovations aimed at optimizing the system's composability and scalability, Sui also implements a unique token economics model. Unlike the token economics model of traditional proof-of-stake chains, Sui's token economics model adds a "storage fund" function. As blockchain is a data structure that only grows and never shrinks, the amount of data that needs to be maintained on the chain will increase over time, and costs will accordingly rise. This leads to later users of Sui having to pay higher fees than early users. The "storage fund" is designed to solve this problem by allowing early users to pay more fees, enabling all users to use the network based on similar fee levels.<img class="PlaygroundEditorTheme__image editor-image" src="https://coinvoice-international.oss-cn-hongkong.aliyuncs.com/profital-prod/article/20230405/2023040523060958365474.png" alt="" width="inherit" height="inherit">Furthermore, Sui's storage fund also pays validators in the system, or people who actually store the blockchain data and complete data maintenance work. As maintenance work increases, payouts to validators also increase. This will incentivize more people to become validators in the system, and as more people become validators, the total available storage space will also increase, further reducing the gas fees for writing to the blockchain. Sui's token economics model is a typical representative of a highly scalable chain economics model, using game theory to ensure that gas fees remain relatively constant throughout the entire lifecycle of the blockchain.<h1 class="PlaygroundEditorTheme__h1">Inventory of Sui Ecological Projects</h1>MovEXMovEX is the first AMM+ order book mixed liquidity DEX on Sui, which combines the advantages of AMM and order book to provide liquidity trading experience for everyone by creating mixed liquidity pools. Internally, MovEX has a settlement engine that allocates orders between AMM and order book, which ensures that the slippage of traders is minimized and the fairness of liquidity providers is guaranteed. Liquidity providers can also provide one-sided liquidity by customizing price ranges, effectively managing impermanent loss.MovEX supports market trading and limit order trading, two features commonly found in centralized trading platforms. Ordinary users can provide liquidity to the liquidity pool with a customized price range, while professional traders and liquidity providers can become liquidity providers through the order book, similar to market makers in centralized exchanges. Currently, the MovEX product is still in the testing phase, and users can experience the product by linking to the application through the Sui Wallet.Sui WalletSui Wallet is a browser extension that serves as a portal to the Web3 world, allowing users to connect to DApps and sign human-readable transactions from trusted DApps. It is the official wallet of the Sui blockchain, allowing users to create, import, and persistently store mnemonic and derived private keys, transfer coins and NFTs, and view owned fungible tokens and NFTs. Sui wallet was initially developed for Sui developer testing and is currently the most widely recognized wallet on the testnet.SuiswapSuiswap is a DEX of the automatic market maker mechanism (AMM) on Sui chain, supporting the exchange and trading of native assets within the Sui ecosystem. Currently, Suiswap supports users to claim test tokens, trade or build LPs to provide liquidity to the liquidity pool, and the final form of the product will be seen after Sui mainnet goes live.Leizd ProtocolLeizd Protocol is a decentralized lending application within the Sui ecosystem that operates lending function in over-collateralized form. The application uses decentralized dollar stablecoin USDZ as an intermediate asset and, like MakerDAO on the Ethereum chain, realizes risk control of lending products by minting stablecoins. In Leizd Protocol, the borrower can deposit crypto assets as collateral to mint USDZ, then borrow the required USDZ, and exchange it for stablecoins such as USDT or USDC to use. At maturity, the borrower only needs to return the borrowed USDZ and interest to withdraw collateral assets. Depositors can also collateralize crypto assets to mint USDZ for earning interest, or exchange USDZ for other crypto assets and deposit them into the deposit pool to earn interest.It is reported that Leizd Protocol plans to deploy on multiple chains on Sui and Aptos networks, allowing users to realize lending and borrowing with assets on both chains. However, the test product of Leizd Protocol has not yet been launched and the product is still in the concept introduction stage.BlueMoveBlueMove is a platform that supports the creation and trading of NFTs and has been successfully deployed on the Sui and Aptos networks. The platform's smart contracts use a modular system and clearly define the execution scope through standardized signatures, which allows for the introduction of new features over time without compromising security, such as collection offers, feature offers, and multiple cancellations.In addition, BlueMove has issued a total of 300 million MOVE tokens, of which 5% is used for airdrops, 40% for rewarding active traders and collectors on the platform, 15% for rewarding users who stake MOVE tokens, and the remaining for financing and team development. The main utility of MOVE tokens is on-chain governance and membership benefits.Currently, users can buy or sell NFTs on BlueMove and receive MOVE rewards. Moreover, users can also get a share of the platform's transaction fees and additional MOVE rewards by staking MOVE tokens.Abyss WorldsAbyss World is an action role-playing game developed by Metagame Industries based on the Sui Layer 1 blockchain, with a strong Web3 technology and gaming experience. It aggregates Web2 and Web3 game players, allowing players to experience immerse gameplay in a virtual world. The various characters, maps, and storylines within the game will be supported by Sui blockchain technology, enabling players to create a realistic gaming world. According to the roadmap, Abyss World will officially start public testing in the third quarter of this year.In Web3 gameplay, NFTs are a key option to attract users to participate in projects early. Abyss World began the sale of its first batch of Genesis NFT Gazer series on March 23. These NFTs are not just small images, but are tied to in-game rights and features: players who own NFTs can share potential revenues within the game, gain more rare items and skins, and get early access to the game's internal testing. In addition, due to the deep collaboration with Mysten Labs, NFTs not only bind Abyss World's native game token AWT but also have the rights to Sui token airdrops, making it one of the top projects in the Sui ecosystem.<h1 class="PlaygroundEditorTheme__h1">Summary</h1>Sui is the first permissionless Layer1 blockchain designed from scratch and dedicated to providing a more user-friendly experience for Web3 users. However, technology only offers value when it solves actual problems and when people are willing to pay for it. Sui has been focused on innovating and applying underlying technology, which has brought it rich technical advantages. With the launch of Sui's mainnet approaching, it is now time to translate these technical advantages into market competitiveness. Through the "Wave to Mainnet" series of activities, Sui is moving from behind the scenes to the forefront, demonstrating the accumulated technical strength over the years. In the future, how underlying technology promotes overall DX/UX and who can attract more users and liquidity will be gradually answered over time.

Can the rapidly developing Sui become the next disruptor of Layer1?

The Bitcoin NFT market has opened up a new round of competition.

With the explosive popularity of the Bitcoin NFT protocol Ordinals, the entire Bitcoin NFT market has entered a new round of competition. As one of the first blockchains capable of producing Bitcoin ordinals, Stacks has benefited greatly from this. In the past ten days, its token STX has doubled in price. Although the recent market has started a downward trend and the STX price has fallen to $0.69, it is still a popular currency and favored by many investors. However, the popularity of Ordinals has also raised a question. As more and more Bitcoin NFT projects emerge, the Bitcoin network may become congested, which will test Bitcoin's minimalist ideology. For Stacks, as a Bitcoin L2 public chain, this is both a challenge and a rare opportunity.
Bitcoin Star Public Chain Stacks is Born to Breakthrough
There has always been a technical problem in blockchain called the "impossible triangle", which means that only two out of three aspects, decentralization, security, and scalability, can be satisfied. As one of the earliest public chains, Bitcoin also follows this principle. Bitcoin performs the best in decentralization and security, but has made significant compromises in scalability, resulting in poor scalability. It takes 10 minutes to write a new block, and transaction confirmation time can be as high as several tens of minutes. Because of these limitations, although Bitcoin has developed for more than a decade, it still exists as a pure value public chain.
In addition to technical aspects, social divisions are also one of the reasons affecting Bitcoin's expansion. Bitcoin purists believe that Bitcoin, as a value public chain, is already good enough and does not need to be expanded to improve transaction speed. They believe that expanding may change Bitcoin's consensus mechanism, leading to a hard fork and affecting Bitcoin's security and decentralization properties. In addition, deploying various complex smart contracts and applications on the Bitcoin network will also cause congestion and increase gas fees, which deviates from Satoshi Nakamoto's vision of Bitcoin as a peer-to-peer (P2P) cash system. Therefore, they oppose Bitcoin expansion and advocate maintaining the simplicity and stability of the Bitcoin network.
Technical challenges and community divisions have made the process of Bitcoin expansion slow and tortuous. Before the emergence of Stacks, many projects tried to improve Bitcoin's scalability, but most of them disappeared, and only a few forked projects briefly became popular due to hype. In comparison, Stacks is undoubtedly the most successful.
The success of Stacks is mainly due to finding a balance between Bitcoin purists and expansionists.
The native Bitcoin network itself does not support smart contracts and decentralized applications, so a second-layer protocol is needed to achieve these functions. Stacks is such a protocol that deploys smart contracts and decentralized applications on the Bitcoin network by building a new blockchain. The Stacks blockchain interacts with the Bitcoin network, using Bitcoin's security and network effects to ensure its security and decentralization, while not making any modifications to the Bitcoin network, maintaining the simplicity and stability of the Bitcoin network.
Innovation and Advantages of Stacks Technology
Recently, due to the popularity of Ordinals, the public has focused on the issue of Bitcoin's scalability that was previously overlooked, and they were surprised to discover the existence of Stacks. While people tend to think of Stacks as a short-term trend, they do not realize that Stacks has been quietly working on building the Bitcoin Layer 2 network for nearly 10 years.
Stacks is an independent blockchain based on the Bitcoin blockchain, created by Muneeb Ali and Ryan Shea in 2013. It adopts the "Proof of Transfer" (PoX) protocol and utilizes the security of Bitcoin and Stacks token (STX) to implement smart contracts. Early on, Stacks focused on DApps development and providing decentralized experiences with the security of Bitcoin. As congestion and high fees plagued Bitcoin, Stacks began researching and deploying second-layer technologies like Lightning Network to process high throughput, low cost, and instant settlement transactions under Stacks 2.0.
Stacks has many technological advantages, which are reflected in the following aspects:
(1) PoX Mining Mechanism: Stacks uses the PoX mining mechanism instead of the traditional PoW or PoS mining mechanism, which solves many problems in traditional mining mechanisms such as energy consumption and computing power competition.
(2) Clarity Smart Contract Language: Stacks has developed a smart contract language called Clarity, which has a strong type system and clear execution logic. It can execute secure smart contracts without intermediaries, thereby improving the reliability and operability of smart contracts.
(3) Decentralized Identity Verification: Stacks provides a decentralized identity verification system called Blockstack, which uses blockchain technology and public key infrastructure to verify and manage user identities, improving user privacy and security.
(4) Integration with Bitcoin: Stacks is integrated with Bitcoin, and can extend Bitcoin's security, reliability, and market participation to the Stacks ecosystem, achieving higher decentralization and security.
(5) Compatibility with Existing Web Technologies: Stacks can be compatible with existing web technologies, such as developing decentralized applications using JavaScript, making it easier for developers to build decentralized applications. In general, the technological innovation and advantages of Stacks allow it to achieve higher decentralization, security, and reliability with better scalability and sustainability, providing strong support for the growth of its ecosystem.
Bitcoin NFT Rise: Stacks' Opportunities and Challenges
The emergence of Ordinals has sparked another round of hype in the Bitcoin application field. As a representative L2 project of Bitcoin, Stacks is in an excellent position to benefit from market speculation. According to Defi Llama's data, the funds on Stacks increased by 254% in the last 30 days (February 1 to March 2) and TVL increased from $7.56 million to $26.8 million. Stacks' native token STX has doubled in the past two weeks. Although STX's price has experienced a correction in the last few days due to a market downturn, investors generally remain optimistic about the future of STX.
Investors' optimism about STX is mainly based on the expected 2024 Bitcoin halving market. As the token of the Bitcoin second-layer scaling protocol, the value of STX is closely related to Bitcoin. Therefore, although STX seems to have exhausted the growth trend based on the Ordinals news, it is still considered a cryptocurrency worth long-term investment due to Bitcoin's future half-life market and Stacks' good development trend.
The Ordinals-driven Bitcoin NFT craze is getting bigger and it may become the summer of Bitcoin NFT this year. This is an excellent development opportunity for Bitcoin scaling protocols such as Stacks. Especially Stacks, it is not only highly integrated with the Bitcoin ecosystem technically, but its economic model is also more sustainable and decentralized, making it more development space than other public chains.
In addition to the positive side, the explosion of Ordinals also raises a previous issue: if NFT causes network congestion, Bitcoin's minimalist ideological doctrine will face a test. Will the Bitcoin community allow this speculative activity or block the long-term development of the network?
Currently, the opposition's view is centered on the damage NFT has caused to Bitcoin's original use case. Some community members stated, "Allowing Bitcoin to be used for NFTs is a bit like allowing hospitals to host rave parties." Supporters believe that the rise of Bitcoin NFTs has found new application scenarios beyond traditional value storage, providing Bitcoin with more gameplay and financial use cases. From a data perspective, both perspectives can be verified. According to OKLink's data, Ordinals' "inscription" is consuming 50% of Bitcoin block space, and block space utilization has reached 100%. On the other hand, from the perspective of the mining community, the emergence of Bitcoin NFTs has also brought them new revenue growth paths. In the past week, the fees accumulated by writing "inscriptions" using the Ordinals protocol have reached $880,000. Currently, neither party can convince each other. This seems to have returned to the debate between Bitcoin purists and expansionists that Stacks initially faced. Last time, Stacks found a balance point between the two parties. This time, can a balance point acceptable to both parties be found for the debate sparked by Bitcoin NFTs? This is a severe challenge for Stacks and other Bitcoin's L2 networks.
Stacks Popular Ecosystem Projects Review
With the rise of the Bitcoin NFT craze, more and more investors are bullish on Stacks. As an important part of the Bitcoin ecosystem, Stacks provides users with more secure, efficient, and sustainable smart contract services and has the potential for collaborative innovation with other cryptocurrency projects and traditional financial markets. Given Bitcoin's large user base, Stacks' close integration with the Bitcoin ecosystem, more sustainable and decentralized economic model, better privacy protection, and higher performance make it have greater development space than other public chains. Projects worth paying attention to in the current Stacks ecosystem include:
Alex
Recently, Bitcoin has undergone cultural and technological transformation through Ordinals and Stacks. On Stacks, a project that is expected to emerge in the future is ALEX. ALEX is a DEX designed for Bitcoin and the first platform to provide one-stop DeFi services on Bitcoin through Stacks.
The core functions of the ALEX protocol include decentralized trading and decentralized lending. Users can trade on a decentralized exchange and obtain liquidity from liquidity providers. With collateral-based lending, users can collateralize digital assets to obtain stablecoins for fund management without the need to sell assets. ALEX also issues governance tokens ALEX, and users holding ALEX tokens can participate in the protocol's governance process, including proposal submission, voting, and decision-making. Through liquidity mining mechanism, ALEX Labs incentivizes users to provide liquidity and participate in the protocol's ecosystem, earning ALEX tokens as rewards.
Gamma
Gamma is an NFT marketplace in the Stacks ecosystem, formerly known as STXNFT. The market aims to be the center of Web3, attracting collectors, creators, and investors to explore, trade, and showcase NFTs through the Bitcoin ecosystem.
Recently, with the rise of BTC NFT (Ordinals technology), NFT activities on Stacks are also gradually increasing. According to DappRadar data, Gamma's trading volume has grown by more than 300% in the past 30 days, thanks to low-cost and fast NFT minting speed provided by the Stacks ecosystem.Gamma is a premier NFT marketplace where users can explore dozens of different collections that are becoming increasingly popular. In addition, the Gamma platform provides a professional, creator-first NFT Launchpad for digital artists to find an easy way to deploy low-code smart contract functionality. Using Gamma, even inexperienced artists can create smart contract functionality for their NFTs in minutes, ensuring ownership of their NFTs and protecting their work, like copyright. In addition, Gamma also serves as a social platform for creators to gather, collaborate and share ideas. Gamma already has many popular NFT collections, which have built up a fanatical following in the Web3 world. In fact, many collections are already in high demand, and some projects even offer secondary collections to lower the barrier to entry to their community.
Arkadiko
Arkadiko is a DeFi platform built on the Stacks ecosystem, aimed at providing users with various financial products and services, including borrowing, trading, collateralizing, earning rewards, and more. Unlike other DeFi platforms, Arkadiko is built on the Stacks ecosystem and uses Stacks' unique technology architecture, which means it can provide decentralized financial services on the Bitcoin blockchain.
The primary application of the Arkadiko platform is a collateralized asset minting platform for the USDA stablecoin, similar to the MakerDAO model. Users deposit STX into Arkadiko's Vault and mint the soft-pegged USD stablecoin, USDA, through over-collateralization. The deposited STX can also earn rewards through the Stacks PoX mechanism. In addition, users can also use STX tokens as tools for trading and paying fees, and obtain loans by collateralizing STX tokens. Arkadiko's lending rates are low and very attractive to users. Furthermore, Arkadiko also offers liquidity pools, stablecoin trading, and yield farming functions, allowing users to participate in more DeFi products and services. The Arkadiko development team is committed to providing more innovative DeFi products and services to provide a better financial experience for users.
CityCoins
CityCoins is a cryptocurrency designed to provide financial support to cities, promoting the development of urban economies. The project was co-founded by Muneeb Ali and Ryan Shea in 2021 and is supported by the Stacks ecosystem.
The main function of CityCoins is to provide financing for cities and help them achieve sustainable development. Holders of CityCoins can choose to invest them in a specific city's fund, providing financial support to that city. These funds can be used for various projects in the city, such as infrastructure construction, public services, and community development. Holders of CityCoins can earn returns from the fund and receive discounts on CityCoins. In addition, CityCoins can also be used to purchase goods and services specific to a particular city. For example, tourists can use CityCoins to purchase restaurant, hotel, and tourist attraction tickets, as well as other city goods and services. Overall, CityCoins aims to provide more economic support to cities while also providing economic returns to holders. This innovative cryptocurrency model provides a new financing mechanism for sustainable urban development and an interesting investment option for holders. Summary&nbsp;
With the rise of Ordinals, the Bitcoin NFT market is rapidly developing. This is both an important opportunity and a daunting challenge for Stacks. In order to meet the high throughput demands of Bitcoin NFT projects, Stacks needs to further leverage its technical advantages in Bitcoin Layer 2 scaling solutions and launch more scalable network solutions. At the same time, Stacks also needs to strengthen its integration with the Bitcoin network to ensure its security while not affecting the stability of the Bitcoin network. If Stacks can successfully overcome these challenges, it will become one of the most successful scaling solutions in the Bitcoin field, laying the foundation for the future development of the Bitcoin network.

BITCOIN

How far can the Bitcoin-powered public chain Stacks go in the future?

The opacity and complexity of cryptocurrency market making can be daunting. Despite this, ensuring liquidity is critical for the growth and stability of token economies.

Web3.0

Founder’s Field Guide to Token Market Making

The Sui mainnet has been up and running for nearly a month, and let me tell you, it’s been quite a rollercoaster ride.

1 Month In Sui — What Is Happening Now?

What has the market learned one year after the UST fiasco?

Bankless Writer:&nbsp;<a href="https://twitter.com/563defi?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">563</a>The death spiral of Terra USD (UST) and the corresponding collapse of LUNA squashed hopes of 2022 all-time highs in the crypto markets, toppling the first (of many) leverage dominos scaffolded by cheap money, hype, and outright fraud. Billions of dollars and countless fortunes were wiped out in a matter of days from users that placed their hopes in UST’s idealistic algorithmic design.Many early supporters of the Terra ecosystem were enthralled with the notion of a completely decentralized stablecoin. And while UST’s architecture was ultimately shown to be unsustainable, some would argue that the idea that DeFi users should completely segregate themselves from traditional systems is a very worthwhile goal.So as we reflect, one year later, we ask ourselves, “What have we learned?” and “Where are we now?”<hr>While algorithmic ("algo”) stables have lost favor (though USTC, at one-and-a-half cents, still commands a $150M market cap), the broader stablecoin sector has gone on to cement its product-market fit. Whether that is to represent a medium of exchange or just a store of value during bearish periods, today’s DeFi market is awash with stables.The only problem?&nbsp;We’re trending in the wrong direction.Though many felt comfortable relishing in their USDC and laughing at the Terra bagholders, all of DeFi got a reality check in March when<a href="https://decrypt.co/123211/usdc-stablecoin-depegs-90-cents-circle-exposure-silicon-valley-bank?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">&nbsp;USDC de-pegged below 90 cents</a>&nbsp;after it was discovered Circle had funds tied up in the now-defunct Silicon Valley Bank. Users flocked to the relative “safety” of USDT (and just saying this feels wrong).<img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/news/2023/06/01/1685584563911024.png" alt="USTC" width="inherit" height="inherit">via&nbsp;<a href="https://twitter.com/dgntec/status/1634621865485271041?s=20&amp;ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Twitter</a>For a point of comparison, in April of 2022, the market cap of stables was roughly 82% centralized (major culprits being USDT, USDC, BUSD, and TUSD). Today - we’re at about 95% centralization. Tether (USDT) alone has ballooned from making up 44% of total stablecoins to over 63% today, following the USDC de-peg. Not a great look.So, on one side of the spectrum, we have algo stables, which (while decentralized) are vulnerable to death spirals. And on the other, we have centralized fiat-backed stables, which are open to both bank failures and censorship. How do we reconcile this?Lucky for us, these bearish times have been the ideal environment for buildoors to hunker down and do what they do best – innovate.In today’s article, we’re going to walk through a few of the new decentralized stablecoin projects that excite us. And these new projects aren’t just improving the anti-fragility of token designs – novel mechanisms and truly innovative use cases for stablecoins are around the corner as well, threatening to chip away at Tether’s dominance and provide some much-needed decentralization to the market.<h3 class="PlaygroundEditorTheme__h3">1. Curve’s crvUSD</h3>Curve Finance is DeFi's go-to platform for stablecoin trading.It’s difficult to overstate the market impact that Curve has imposed since entering the space. Whether it is innovating on the AMM model with their stable pools or reinventing tokenomic design with their vote-escrow architecture and subsequent gauge mechanics, there is a good reason why entire ecosystems are built on top of this mainstay.<img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/news/2023/06/01/1685584592500572.png" alt="USTC" width="inherit" height="inherit">Via&nbsp;<a href="https://twitter.com/0x_koro/status/1654423692783529984?s=20&amp;ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Twitter</a>In the same way that users can mint DAI against their ETH using Maker, Curve users will soon be able to mint crvUSD against assets on Curve (such as ETH and its derivatives). With their new<a href="https://mirror.xyz/albertlin.eth/H0m3nyq65anotTWhTdWDIWEfMPOofNPy-0qyARYXNF4?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">&nbsp;Lending-Liquidating AMM Algorithm, or LLAMMA</a>, Curve intends to improve upon DAI’s tried-and-true Collateralized Debt Position (CDP = “a loan”) stablecoin design.Here is the ELI5 version on why crvUSD liquidations could be a big improvement over legacy designs:<ul class="PlaygroundEditorTheme__ul"><li value="1" class="PlaygroundEditorTheme__listItem">Collateral is liquidated gradually over a range of prices, instead of instantaneously when the liquidation price is reached. This reduces the chance of market volatility from large-scale liquidation.</li><li value="2" class="PlaygroundEditorTheme__listItem">The design of crvUSD aims to offer lower prices on Curve's AMM, which incentivizes liquidators to arbitrage the difference on external DEXs. Additionally, the strategy of gradual liquidations reduces the need for external DEX liquidity and, consequently, the likelihood of bad debt accumulation.</li><li value="3" class="PlaygroundEditorTheme__listItem">Liquidations can be reversed if prices rebound back above the liquidation price. This means that “scam wicks” won’t be a major worry for borrowers.</li></ul><h3 class="PlaygroundEditorTheme__h3">2. TapiocaDAO’s USDO</h3>Liquidity is the lifeblood of financial markets — without it, incentives dry up and economic activity limps.Today, stablecoin liquidity resides in its own little bubbles scattered around DeFi. While we can say that $130B of stablecoins exist, not all ecosystems are created equally. And if your protocol exists in a market with a low allocation of capital, you’re fighting against gravity.<img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/news/2023/06/01/1685584599694116.png" alt="USTC" width="inherit" height="inherit">Source:&nbsp;<a href="https://defillama.com/stablecoins/chains?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">DeFi Llama</a>TapiocaDAO is building an omnichain decentralized bank — where users can borrow, lend, and mint their stablecoin (USDO) seamlessly across ~17 EVM and non-EVM chains (and counting) — all with no bridges involved. Tapioca does this by utilizing LayerZero’s generalized messaging network as its omnichain infrastructure, with the goal being to build a robust stablecoin for our multi-chain future.USDO is another CDP design that uses network gas tokens (like ETH, MATIC, etc.) and their LSDs as collateral. Beyond simple transfers of funds, omnichain lending, borrowing, and leveraging is possible. For example, you could:<ul class="PlaygroundEditorTheme__ul"><li value="1" class="PlaygroundEditorTheme__listItem">Mint USDO on Berachain by opening up a Collateralized Debt Position (CDP = “a loan”) against your stMATIC on Polygon, which can be leveraged up to 5x with a single click</li><li value="2" class="PlaygroundEditorTheme__listItem">Borrow USDO on Starknet by using your yield-bearing jGLP on Arbitrum as collateral, where your yield will help pay off your loan</li><li value="3" class="PlaygroundEditorTheme__listItem">Lend out your USDO from zkSync to users on any of the ~<a href="https://docs.tapioca.xyz/tapioca/information/supported-chains?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">17 chains</a>&nbsp;supported by LayerZero — a massive improvement in capital efficiency over legacy lending platforms</li></ul><img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/news/2023/06/01/1685584604003424.png" alt="USTC" width="inherit" height="inherit">DeFi’s liquidity fragmentation problem has been the bane of established and budding protocols alike. With Tapioca’s use of LayerZero, we might soon see the day where new projects are not forced to default to the liquidity market leader.<h3 class="PlaygroundEditorTheme__h3">3. Redacted Cartel’s DINERO</h3>Redacted Cartel, famous for their establishment of meta-governance and their unrivaled bribe marketplace, Hidden Hand, is now peering into the world of stablecoins and LSDs with their much-anticipated announcement of the Dinero project.<img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/news/2023/06/01/1685584612121772.png" alt="USTC" width="inherit" height="inherit">via&nbsp;<a href="https://twitter.com/0xMughal/status/1644032602356215808?s=20&amp;ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Twitter</a>The<a href="https://github.com/redacted-cartel/dinero-litepaper/blob/master/Dinero%20Protocol%20litepaper%20-%2020230406%20-%20v1.0.pdf?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">&nbsp;initial litepaper</a>&nbsp;released in April revealed the basic design and motivation behind Dinero. In essence, Dinero aims to provide users with premium Ethereum blockspace via a private RPC (remote procedure call), called the Redacted Relayer. RPCs are what send transaction data from dApps/wallets to a blockchain.Instead of using a default RPC for transactions, using the Redacted Relayer offers up some advantages:<ul class="PlaygroundEditorTheme__ul"><li value="1" class="PlaygroundEditorTheme__listItem">Protection against malicious actors looking to exploit MEV opportunities (<a href="https://www.bankless.com/eths-top-5-gas-guzzlers?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">hi Jared!</a>)</li><li value="2" class="PlaygroundEditorTheme__listItem">Meta transactions – the ability to use the DINERO stablecoin for gas payments instead of ETH</li><li value="3" class="PlaygroundEditorTheme__listItem">Once a certain scale is reached, private transactions and additional use cases such as<a href="https://www.youtube.com/watch?v=4t7qbv4Wzn4&amp;ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">&nbsp;payment for order flow</a>&nbsp;become a possibility</li></ul>The DINERO stablecoin itself is a CDP that is overcollateralized by a combination of USDC and Redacted’s own LSD, pxETH; where the ETH that is used to mint pxETH is used to run Redacted’s validators. This closed-loop system allows Redacted to carve out a cozy ecosystem of blockspace in which to operate. By marketing DINERO as the medium of exchange and gas token on their blockspace island, Redacted is flipping the script – offering up a novel use case that is unique to their stablecoin.<h3 class="PlaygroundEditorTheme__h3">The trend going forward - on-chain and overcollateralized</h3>For the decentralization-maxis among us (myself included), 2023 is shaping up to be an exciting year for stablecoin innovation.With most projects shying away from algorithmic designs and veering towards overcollateralization, the likelihood of a UST-esque death spiral is diminishing with every subsequent code commit.Even Frax, who’s own moniker refers to its fractionalized architecture, has<a href="https://snapshot.org/?ref=bankless.ghost.io#/frax.eth/proposal/0x6d43531f54de3d52ad439dcb6c56e3eae1b833fceb4d484dcb3b20be070ca25d" class="PlaygroundEditorTheme__link">&nbsp;decided to become fully collateralized</a>&nbsp;– showing that the market’s appetite for “unstable stables” is at a new all-time low. We’re also observing experiments with non-pegged DeFi-native assets such as&nbsp;<a href="https://medium.com/reflexer-labs/stability-without-pegs-8c6a1cbc7fbd?ref=bankless.ghost.io" class="PlaygroundEditorTheme__link">Reflexer’s RAI</a>&nbsp;in the works, pushing the boundaries of the centralization/decentralization dichotomy.In total, we see that DeFi users are excited about having decentralized stablecoins that are fully-backed by on-chain assets. And whether the future is dominated by crvUSD, USDO, DINERO, FRAX, RAI, or something new, at least we can all agree, it’d be better than Tether dominance.

Terra

Stablecoins

Stablecoins: 1 Year After Terra

On June 1, the new regulatory framework for virtual assets in Hong Kong, "Guidelines for Virtual Asset Trading Platform Operators" , came into effect.

On June 1, the new regulatory framework for virtual assets in <a href="https://tokeninsight.com/en/news?title=hong%20kong" target="_blank" class="PlaygroundEditorTheme__link">Hong Kong</a>, "Guidelines for Virtual Asset Trading Platform Operators" , came into effect. The transition period lasts until June 1, 2024; if current operators apply to the Securities and Futures Commission within nine months after June 1, 2023, and confirm that they will comply with the regulatory provisions formulated by the Securities and Futures Commission, they can be considered to have obtained a license until the Securities and Futures Commission makes a decision on their license application.It is important to note that the registration of exchanges is open today, and exchanges such as OKX and Gate have stated that they will apply for registration, but the regulatory body will still need some time to process applications for the transition period.Which products can be traded?Firstly, regulatory requirements emphasise that tradable tokens are only non-securities tokens with a minimum 12 month track record and that the token is already included in two cryptocurrency indices. According to market analysis, BTC, ETH, LTC, BCH, DOT, SOL, ADA, AVAX, MATIC, LINK is the most likely token to be included for retail trading. Secondly, the regulation prohibits exchanges from offering Earn products, lending and saving services. These types of services are very common in top exchanges. In addition, exchanges are prohibited from offering derivatives trading, such as perpetual contracts. However, the regulation acknowledges the importance of derivatives trading in the crypto market and says it will be further studied and considered.Stablecoins are still bannedThe Hong Kong Monetary Authority has issued a summary of the stablecoin discussion document in January 2023, and the regulatory arrangements for stablecoins are expected to be implemented in 2023/2024. Therefore, the Securities and Futures Commission stated that stablecoin and cryptocurrencies linked to other asset values should not be allowed to be traded for retail until the planned regulation of stablecoins is implemented.Can people from other jurisdictions trade through Hong Kong platforms?According to the provisions of the regulatory guidelines, platform operators must implement various measures (such as checking IP addresses and blocking access) to prevent people from jurisdictions that prohibit virtual asset trading from using their services.<img class="PlaygroundEditorTheme__image editor-image" src="https://tokeninsight.com/cdn-cgi/image/width=950,fit=cover,quality=80/https://s2.tokeninsight.com/static/calendar/img20230601020514b8614b87-cacd-436d-ad2c-5bb2010f1569.jpg" alt="" width="inherit" height="inherit">&nbsp;

Hong Kong

Hong Kong New Crypto Regulations come into effect June 1, Key Points You need to Know

"The Beacon Chain has life." On May 11th and 12th, 2023, Ethereum faced two temporary loss of finality events that tested its resilience.

<h2 class="PlaygroundEditorTheme__h2">Introduction</h2>"The Beacon Chain has life." On May 11th and 12th, 2023, Ethereum faced two temporary loss of finality events that tested its resilience. Despite these challenges, the network maintained its vitality, autonomously recovering from both incidents. We're about to delve into these noteworthy events, scrutinizing their impact and the subsequent enhancements implemented to prevent similar incidents in the future.<img class="PlaygroundEditorTheme__image editor-image" src="https://mirror.xyz/_next/image?url=https%3A%2F%2Fimages.mirror-media.xyz%2Fpublication-images%2F2q_wYQe3fPkXlQZcS-MFQ.png&amp;w=3840&amp;q=75" alt="" width="2000" height="949"><h2 class="PlaygroundEditorTheme__h2">The Incidents</h2>May 11 and 12, 2023, will be marked as significant dates in Ethereum's history, where its resilience was put to the test. On May 11, around 20:19 UTC, Ethereum's Mainnet network witnessed a significant drop in block production, causing a four-epoch delay in finalization - a first for Ethereum. The following day, a similar incident occurred, this time stretching the delay to nine epochs and leading to an inactivity penalty.During these incidents, a substantial dip in network participation was observed. The first drop occurred in epoch 200,551, resulting in a temporary halt in finalization until epoch 200,555. The second participation drop was seen in epoch 200,750, causing another pause in finalization until epoch 200,759.Despite the initial concerns, Ethereum's network showcased its inherent robustness by autonomously recovering from both incidents. These events not only affirmed the resilience of Ethereum's Beacon Chain but also highlighted areas for potential enhancements. As we progress through this article, we'll explore these areas in greater detail.<img class="PlaygroundEditorTheme__image editor-image" src="https://hx24-prod.mars-block.com/image/crawler/2023/05/30/1685412988475185.jpg" alt="以太坊" width="inherit" height="inherit"><h3 class="PlaygroundEditorTheme__h3">Inactivity Leak</h3>During periods of non-finality, the Ethereum network deploys a crucial mechanism called the "inactivity leak.” This feature is ingrained in Ethereum 2.0's proof-of-stake protocol, engineered to sustain network functionality amidst significant disturbances - from events like World War III to large-scale natural disasters - that could result in a sizable number of validators going offline, thereby obstructing block finalization.In the event that the network fails to finalize blocks for four consecutive epochs (~16 minutes), it triggers the inactivity leak mode. Under this regime, validators failing to attest to blocks start to lose a part of their staked Ether (ETH). This penalty intensifies quadratically over time until block finalization resumes.This mode wields a dual deterrent. Firstly, it negates rewards for validators' attestations. Secondly, it imposes escalating penalties on non-participating validators proportionate to the duration of their inactivity. This mechanism incentivizes validators to stay actively involved, accelerating network recovery. It is a cornerstone feature that safeguards network integrity during major disruptions.You can read more about this in the comprehensive guide on Ethereum 2.0 incentives and mechanisms at Eth2Book&nbsp;<a href="https://eth2book.info/capella/part2/incentives/inactivity/" target="_blank" rel="noreferrer" class="PlaygroundEditorTheme__link">here</a>.<h2 class="PlaygroundEditorTheme__h2">The Impact</h2>For Network Participants (Validators):As per the estimates provided by&nbsp;<a href="https://twitter.com/benjaminion_xyz" target="_blank" rel="noreferrer" class="PlaygroundEditorTheme__link">Ben Edgington</a>, assuming an 8 epoch leak with 65% of validators offline, the inactivity leak led to approximately 28 ETH being burned. This equates to about 0.0006 ETH per offline validator.Furthermore, during the duration of the outages, attestation rewards were reduced to zero, resulting in an additional loss of around 50 ETH that could have been otherwise issued. Taken together, the estimated total loss for the validators, in terms of both inactivity penalties and lost attestation rewards, is around 78 ETH.For Users:Contrarily, end users experienced minimal impact. Despite the decline in available block space leading to reduced transaction processing capacity, there was no dramatic surge in gas prices, which stayed below the daily peak. More significantly, the network maintained liveness throughout these incidents.This meant that Ethereum continued to process transactions without any major disruptions, demonstrating its resilience. Consequently, users could maintain their operations on the Ethereum network largely uninterrupted, underscoring the robustness of the system even in the face of challenges.<h2 class="PlaygroundEditorTheme__h2">The Causes</h2>At the heart of the issue with Prysm was an absent caching mechanism for block replays. This absence escalated the system load, generated excessive go routines, and heightened CPU stress. In some instances, new replays commenced even before the previous ones concluded, further straining the system.Another compounding factor was Prysm's improper processing of attestations from previous epochs - data that should have been disregarded, but wasn't. This inefficiency, coupled with the suboptimal use of the head state, stressed the system particularly in the face of a deposit surge and a growing validator registry.The incidents also unveiled key differences in the strategies adopted by different Ethereum clients. While Lighthouse chose to drop attestations to maintain network liveness, Prysm and Teku, among others, defaulted to generating blocks using old attestations when faced with execution client issues.Despite the challenges, these incidents were critical in providing insights into software inefficiencies, design choices, and network conditions, making the Ethereum network more robust. This series of events has not led to any permanent damage, but rather has reinforced the resilience and versatility of Ethereum's network design.<h2 class="PlaygroundEditorTheme__h2">The Recovery</h2>The resilience of Ethereum's Beacon Chain was truly tested during these incidents, and it passed with flying colors. The Ethereum Beacon Chain seems to be alive, healing itself.A key factor in the successful recovery was the diversity of clients on the Ethereum network. The existence of multiple clients, each with their unique ways of handling the network, proved to be a boon. For instance, while Prysm and Teku clients struggled under the load of old attestations, Lighthouse's strategy of dropping attestations ensured that part of the network stayed live and functional.In essence, Ethereum's resilience comes from its client diversity, a factor that played a crucial role in helping the network recover on its own, thereby negating the need for any manual intervention.<h2 class="PlaygroundEditorTheme__h2">Lessons Learned</h2><ul class="PlaygroundEditorTheme__ul"><li value="1" class="PlaygroundEditorTheme__listItem">Testnet vs Mainnet:&nbsp;The incidents underscored the discrepancies between testnet environments and the Mainnet. With over 600,000 validators and a significant volume of withdrawal operations on the Mainnet, it's clear that the complexities and unpredictability of a live network often exceed those of test environments. This signals the need for more rigorous stress testing to better prepare for real-world network conditions.</li><li value="2" class="PlaygroundEditorTheme__listItem">Inactivity Leak Penalties:&nbsp;The effectiveness of inactivity leak penalties on the Mainnet was reinforced during the incidents. These penalties play an essential role in promoting active validator participation, maintaining network liveness, and enabling network recovery.</li><li value="3" class="PlaygroundEditorTheme__listItem">The Importance of Liveness:&nbsp;The incidents underscored the vital role of liveness in a blockchain network. Under the design of the LMD Ghost protocol, Ethereum maintained its liveness throughout the process, ensuring users experienced minimal impact. Unlike certain blockchains that may face downtime during network issues, Ethereum prioritizes liveness over throughput. This approach safeguards users and the proper functioning of the network, emphasizing that without liveness, network functionality and user security are compromised, regardless of throughput.</li><li value="4" class="PlaygroundEditorTheme__listItem">Importance of Client Diversity:&nbsp;The recovery process emphasized the value of having a diverse client base. Different Ethereum clients have unique responses to network incidents, contributing to the overall resilience and robustness of the network.</li><li value="5" class="PlaygroundEditorTheme__listItem">Network Resilience:&nbsp;The incidents served as a powerful testament to the Ethereum network's resilience. Despite significant challenges, the network self-recovered and bounced back stronger, embodying the concept of antifragility in complex systems. This resilience sets a strong precedent for the broader crypto ecosystem and signifies the robustness of Ethereum's underlying architecture and design principles.</li></ul>The incidents on May 11 and 12, 2023, served as pivotal moments in Ethereum's journey. They provided tangible proof of the Beacon chain's vitality, even amidst challenging circumstances. As Ethereum continues to evolve, it builds upon these experiences, growing not only more robust but also more antifragile - ready to forge ahead in its journey of decentralization and beyond.

Ethereum

Ethereum's Finality Challenge: A Retrospective on the Beacon Chain's Vitality

Bringing Client (i.e., Dependency) Diversity to DeFi

DeFi

Oracle-Free Protocols

Why DeFi is Broken and How to Fix It ？ Pt 1: Oracle-Free Protocols

NFT marketplace&nbsp;Blur&nbsp;has announced a new feature on Twitter that allows users to borrow $ETH and repay the loan in small increments over a period of time, rather than all at once.This applies to both NFTs purchased using "buy now, pay later" (BNPL) and NFTs borrowed directly. If the loan gets recalled, users can extend the loan term by paying down as low as 0.1 $ETH, instead of immediately repaying the full amount. This can also be used to refinance the loan for better interest rates.

Blur Launches Incremental Repayments for $ETH Loans

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Hong Kong New Crypto Regulations come into effect June 1, Key Points You need to Know

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