Welcome to The ProtocolCoinDesk’s weekly roundup of the biggest stories in the development of cryptocurrency technology. I’m Marc Hochstein, Deputy Editor-in-Chief of Features, Opinions and Standards at CoinDesk.
In this number:
- Solana was the biggest attraction for new cryptocurrency developers in 2024
- No wonder: Solana’s trading volume is off the charts
- Coinbase Students Take Next Step Toward Codeless Blockchain Development
- Kraken’s ‘Ink’ layer 2 activates
- Avalanche activates the largest update ever
- Ethereum’s ENS chooses Consensys technology for its L2
- Bitcoin Stacks L2 Gets Automated Market Maker for Runes
- Most influential in 2024: Sreeram Kannan of EigenLayer
This article appears in the latest issue of The Protocol, our weekly newsletter that explores the technology behind cryptocurrencies, block by block. Sign up here to receive it in your inbox every Wednesday.
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NEW DEVELOPERS ❤️SOLANA: The Solana ecosystem, ground zero of the memecoin craze, was the most popular blockchain among new developers this year, according to a report published last week by Electric Capital. In July, this community became the first since 2016 to add more developers than Ethereum. Solana attracted 7,625 new developers in 2024, the most of any chain and just over 1,000 more than Ethereum. The results underline the challenge facing Ethereum, as rival smart contract platform Solana’s low fees and fast transactions attract investment and talent. Read more.
TALKING ABOUT SOLANA: Solana network activity lit up when NFT project Pudgy Penguins introduced its native token, PENGU, to the programmable blockchain. Solana recorded total transactions of 66.9 million on Tuesday, the highest daily volume since its inception in 2020, according to data source Artemis. To highlight how busy it was, Solana’s transaction count eclipsed the total of all other major chains combined. Read more
THE INK IS DRY: Kraken, the seventh-largest crypto exchange, said its Layer 2 rollup network, built on the Ethereum blockchain, is now operational. The network, called Ink, is Kraken’s answer to Base, the wildly successful blockchain launched by rival exchange Coinbase. Like Base, Ink is based on the OP Stack, a customizable framework that allows developers to create their own rollups using Optimism technology. The team had originally planned for Ink to go live in early 2025, so its mainnet launch is ahead of schedule. Read more
AVALANCHE UPDATE: Avalanche, a layer 1 blockchain launched in 2020 and now the 10th largest by total value locked (TVL), activated its highly anticipated Avalanche9000 upgrade on Monday, marking the ecosystem’s biggest technical changes to date. The network has been preparing for these changes for months, with new features that will reduce the costs of sending transactions, operating validators, and building applications on the network. Avalanche leaders previously said that part of the goal of the update is to attract developers to Avalanche and encourage them to create custom blockchains using its technology, known as subnets or “L1s.” Read more.
A BENEFIT FOR THE RUNES: Cryptodegens have a new (and, if all goes to plan, faster, cheaper, and more secure) way to trade Runes, the Bitcoin ecosystem’s answer to memecoins. An automated market maker (AMM) for the Runes protocol went live on Stacks on Wednesday, following the introduction of the layer 2 network’s native BTC-backed asset, sBTC, on Tuesday. It is the first AMM for this type of tokens on Stacks. The teams behind decentralized exchange (DEX) Bitflow Finance and Bitcoin bridge Pontis developed the AMM. Runes launched in April and sparked a flurry of activity, paying out 78.6 BTC ($8.18 million) in fees in the first 90 minutes. However, less than a month later, this enthusiasm diminished considerably and rates fell by more than 50%. Bitflow’s goal is for its AMM to help Runes scale and address some of the shortcomings that are holding it back. Read more.
ENS CHOOSE L2 TECHNOLOGY: ENS Labs, the company behind Ethereum Name Service, chose Linea’s technology to build its upcoming layer 2 network, Namechain. Linea is a zero-knowledge rollup that came out in July 2023 and was built by Ethereum infrastructure giant Consensys. It is the seventh largest cumulative network, according to L2Beat, with $1 billion locked in its ecosystem. Rollups are a special type of blockchain in which transactions can be made faster and at a lower cost. There are two types of rollups: optimistic and zero-knowledge. Optimistic rollups use optimistic testing, which has a seven-day window to dispute transactions before they are finalized. In contrast, zero-knowledge summaries finish proofs in a matter of minutes. ENS has been described as “the phone book of Web3”, but a more accurate analogy is the domain name service (DNS) of the web. The domain name “CoinDesk.com” is easier to remember and type than a numerical IP address. Similarly, ENS handles like Parisilton.eth, which the eponymous heiress acquired in 2021, are more identifiable than the strings of letters and numbers that make up Ethereum wallet addresses. For this service, “we need fast finality,” said Nick Johnson, founder and lead developer of ENS. This is because you want to be able to update your ENS name and have the chain reflect it in the shortest possible interval. And to do that and keep it decentralized and secure, we need fast finality, and optimistic roll-ups can’t achieve that. “. Read more.
WITHOUT CODE, NO PROBLEM? Patchwork, a startup focused on simplifying blockchain and smart contract development founded by former Coinbase employees, has released the next version of its tools with little to no code for creating decentralized applications (dapps). Currently linked to Coinbase and backed by Coinbase Ventures, the “Create-Patchwork” picks-and-shovels approach reduces the barriers to creating blockchain applications and attaching data to them. Following the trend toward easily generated content, the complex world of blockchain and smart contract design is on the way toward no-code applications or a “text-to-app” experience. Create-Patchwork is the first of several features the team plans to roll out in early 2025 and a critical step in enabling creators to generate contracts and applications in seconds using natural language input. “Patchwork is an Ethereum protocol that makes it really easy to build dynamic on-chain applications,” co-founder Kevin Day said in an interview. “It allows things on the chain to own other things on the chain and allows anyone to attach programmable data to things on the chain.” Read more
SREERAM KANNAN OF EIGENLAYER: THE KING OF PROFESSOR COINS
For a cryptocurrency founder who has generated so much controversy, Sreeram Kannan is surprisingly optimistic.
In a wide-ranging interview following his selection as one of CoinDesk’s “most influential” figures in crypto for 2024, the EigenLayer founder was generous with his time, chatting for more than an hour beyond our scheduled time. I was surprised by his candor because the last time we spoke, a colleague and I had just published research into potential conflicts of interest at his company, Eigen Labs, and in the meantime Kannan had disavowed our point-by-point report on a Block Podcast.
This time, Kannan emerged in a different light. Whatever your doubts about CoinDesk’s past coverage, they didn’t seem to be top of mind.
What emerged was not a portrait of a defensive tech founder, but rather that of an academic turned motivated and thoughtful entrepreneur still fitting into a prominent place few in this industry enjoy. Instead of bitterness or avoidance, I found ambition, reflection, and a kind of quiet excitement.
Kannan seemed as amazed as anyone by how quickly EigenLayer had transformed from a concept to one of the most talked-about experiments in crypto, telling CoinDesk that he continued to see EigenLayer as a “disorganized startup.”
Over the past 12 months, EigenLayer, which allows emerging blockchain applications to borrow the robust security of Ethereum, has gone from a relative unknown to an industry heavyweight. The platform raised more than $100 million from venture firms including Andreessen Horowitz and, even before its full launch, attracted hundreds of millions of dollars in deposits from cryptocurrency users looking for additional yield. Many were incentivized by a viral points program that investors hoped would result in a lucrative token airdrop in the future.
EigenLayer’s success during the bear market was surprising, and Kannan may have played a bigger role than any other entrepreneur in revitalizing decentralized finance on Ethereum. But not everything went as planned. Industry critics took issue with EIGEN’s token distribution plan, which locked up tokens for months and excluded claimants from certain geographies, as well as the platform’s slower-than-expected feature rollout and concerns about “rehypothecating” or reusing collateral for multiple purposes. In August, CoinDesk’s investigation (which Kannan questioned on the podcast) raised questions about EigenLayer’s conflict of interest policies, which may have allowed employees preferential access to tokens powered by its platform.
None of this seemed to derail Kannan’s intellectual rise. Beyond running Eigen Labs, he still holds a position as an affiliate professor of electrical and computer engineering at the University of Washington, and his theory of “staking” (allowing people to repurpose staked Ethereum assets to secure other networks) has sparked a wave of innovation. and imitators. He has become a familiar face on the speaking circuit, expounding his vision of blockchains as tools to solve humanity’s endless “coordination problems.”
Blockchains, Kannan says, “are the greatest improvement to human civilization since the United States Constitution.”
CLICK HERE TO SEE THE FULL PROFILE OF SAM KESSLER FROM COINDESK:
money center
‘Wrapped’ in intrigue
Offers and subsidies
Regulation and policy
Calendar
- January 9-12, 2025: CES, Las Vegas
- January 15-19: World Economic Forum, Davos, Switzerland
- January 21-25: WAGMI conference, Miami.
- January 24-25: Bitcoin Adoption, Cape Town, South Africa.
- January 30-31: PLAN B Forum, San Salvador, El Salvador.
- February 1-6: Satoshi Roundtable, Dubai
- February 19-20, 2025: ConsensusHK, Hong Kong.
- February 23 and 24: NFT Paris
- February 23 to March 2: ETHDenver
- March 18-19: Digital Asset Summit, London
- May 14-16: Consensus, Toronto.
- May 27-29: Bitcoin 2025, Las Vegas.
