While wrapped digital assets have enabled the bridging of assets and expanded their utility, their perceived need for custodianship reintroduces centralization risks and trust dependencies. This contradicts the decentralized ethos of blockchain technology, according to Chris Li, founder and CTO of Ava Protocol. Attaining Utility While Preserving the Core Principles of Decentralization Li told Bitcoin.com […]
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Bitcoin’s Scaling Dilemma: Binance Report Sheds Light on BTC’s Enhancement Hurdles
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Bitcoin Cash Prepares Adaptive Blocksize Limit Upgrade, Commits to Network Scaling
Bitcoin Cash, the usability-focused Bitcoin hard fork, is preparing to perform a blockchain-wide upgrade slated to happen on May 15th. The upgrade implements the adaptive blocksize limit algorithm, allowing the network to adapt to future increases in demand without having direct input from actors, avoiding the opportunity for social attacks. Bitcoin Cash to Include Adaptative […]
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“Scaling Bitcoin Together” Event Set to Unite Bitcoin Leaders in Hong Kong
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Ethereum to Launch Dencun Upgrade March 13, Introducing ‘Blobs’ for Layer Two Scaling
The Ethereum network is set to roll out the Dencun upgrade, aiming to significantly enhance data storage and transaction efficiency through the implementation of EIP-4844, known as “Proto-Danksharding.” Ethereum Set to Undergo Major Upgrade With Dencun Rollout on March 13 The Ethereum mainnet is gearing up for a significant upgrade as the long-anticipated Dencun update […]
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Vitalik Buterin Debates Over Blockchain Scaling Terminology
Amid the rapidly evolving Ethereum ecosystem, Vitalik Buterin has rejoined the debate on the classification of layer-two scaling solutions, putting the spotlight on the security and scalability trade-offs between rollups and validiums.
Vitalik Buterin Weighs in on Ethereum Layer-Two Inclusion
Ethereum co-founder Vitalik Buterin has once again returned to a discussion within the blockchain community over the classification of layer-two scaling solutions. Much of the debate has centered around the distinction between various layer-two approaches, particularly focusing on the security aspects and architectural differences of various systems.
While the discussion has been ongoing for some time, see Buterin’s Oct. 2023 blogpost title “Different types of layer 2s,” Buterin’s recent involvement began when he responded to Daniel Wang, the founder of the Ethereum rollup solution Taiko, about how the source of data availability (DA) separates rollups from validiums.
This is correct.
The core of being a rollup is the unconditional security guarantee: you can get your assets out even if everyone else colludes against you. Can’t get that if DA is dependent on an external system.
But being a validium is a correct choice for many apps, and…
— vitalik.eth (@VitalikButerin) January 16, 2024
Validiums are a type of Ethereum layer-two scaling solution, which use zero-knowledge proofs for computational verification but differ crucially from rollups in data storage. Unlike rollups, where data is stored on the Ethereum main chain (layer-one), validiums store data on a separate server or system. This approach increases scalability but introduces potential risks with data availability, as any failure in the external system can render assets within the validium inaccessible. This makes validiums suitable for high-throughput applications but with added trust assumptions due to their reliance on external data storage systems.
Buterin pointed out that systems like validiums, which use separate data chains such as Celestia for data availability, do not offer the same level of security as traditional rollups. According to Buterin, the absence of a withdrawal guarantee in systems reliant on external solutions disqualifies them from being classified as genuine rollups.
The Ethereum co-founder referred to his previous attempts to categorize different layer solutions, noting the difficulty in neatly defining the terms due to the blurred lines between architecture and security. He observed that the distinction between layer-two and layer-three is more about architecture than security, complicating the categorization process.
Buterin’s remarks have sparked a discussion in the community, with differing opinions on what constitutes a layer-two network. While some argue that the reliance on external systems for data availability disqualifies validiums as true rollups, others maintain a broader definition. Ethereum community member Ryan Berckmans, for example, contends that any network settling on Ethereum should be considered layer-two, irrespective of the data availability approach.
This is a new industry, we can define “L2” to mean whatever we want. The maximally useful definition of L2 includes both rollups and validiums.
Later in the discussion, Buterin posted on Warpcast where he proposed new terminology to help encapsulate the differences between “strong L2” and “light L2” solutions. Examples of strong L2s were rollups, plasma, and channels; whereas validiums and pre-confirmations were light L2s. This new terminology was met with tepid responses.
The discussion is not just about semantics but also about understanding the trade-offs and security features of different blockchain scaling technologies. The way these technologies are categorized and understood affects how they are developed, used, and trusted.
Do you think rollups and validiums are layer-twos? Share your thoughts and opinions about this subject in the comments section below.
STX20 Protocol Demonstrates Potential for Scaling Bitcoin Ordinals on an L2 Network
According to developers behind the project, the debut of the STX20 protocol on Stacks’ Bitcoin layer two (L2) has marked a pivotal moment for Ordinals-style assets. Amid growing demand for innovative use cases in the Bitcoin ecosystem, the Stacks team believes the STX20 test has shown significant potential for scaling and efficiency.
Stacks Seeks to Transform Bitcoin Ecosystem With STX20 L2 Solutions
On Dec. 17, the STX20 protocol was launched on Stacks’ Bitcoin layer two, aiming to test the practicality and impact of Ordinals-style assets on layer two platforms. The surge in popularity of Ordinals and BRC20 tokens has catalyzed a burst of creativity and user engagement within the Bitcoin ecosystem, albeit at the cost of increased network fees and congestion.
Just as Ethereum’s economic activity has gravitated toward layer twos for better efficiency and lower fees, Bitcoin’s Ordinals and multi-token assets can also leverage layer two solutions. Stacks developers believe the STX20 protocol represents a significant step in this direction, with a stress test conducted to evaluate its performance under the intense activity of mass minting and trading STX20 assets.
According to the team, the STX20 debut recorded several benchmarks, including a ninefold increase in normal transaction count on Stacks and the ability to process high volumes efficiently. Notably, Stacks processed transactions 30 times faster while handling 40 times the block size and provided much cheaper transaction costs compared to Bitcoin’s layer one.
One of the standout statistics from the STX20 test was the significantly lower cost of transactions on an L2 compared to Bitcoin’s main chain. The Stacks team emphasized the potential for layer two solutions like STX20 to make participating in Bitcoin’s various activities more accessible and affordable for a broader user base.
Stacks developers think that STX20 test demonstrated that Bitcoin’s L1 activity could transition to an L2 without sacrificing community engagement or compromising on the core value of security. This transition, the team highlighted, is supported by Stacks’ Nakamoto upgrade, which is set to further enhance the speed and security of its chain.
In addition to the Nakamoto upgrade, the Stacks team details that there are other developments bolstering Bitcoin’s layer two ecosystem. The bitcoin decentralized finance (defi) protocol ALEX has announced off-chain support for STX20 trading. The devs also noted that the Fastmint technology promises faster and more responsive minting of NFTs on the Stacks layer, further supporting the STX20 framework.
While Ethereum has seen a great influx of layer twos working alongside the network, Bitcoin L2s like the Lightning Network and Liquid have seen lackluster adoption. Layer twos on Bitcoin have not materialized to anything of substance at least to date, but the network has been clearly grappling with onchain fees rising and a growing backlog of unconfirmed transactions. Stacks proponents hope to turn this trend around and re-invigorate the Bitcoin L2 ecosystem.
What do you think about the Stacks’ STX20 protocol? Share your thoughts and opinions about this subject in the comments section below.
Ethereum: Balancing Act At $2,300 – Scaling The Heights Or Facing A Looming Drop?
The past few weeks have been a rollercoaster ride for Ethereum. Buoyed by a waning Bitcoin dominance and an influx of traders seeking greener pastures, Ethereum’s price surged towards critical resistance levels near ,500.
Yet, a palpable anxiety lingers in the air, fueled by questions about Ethereum’s long-term scalability and the increasing chorus of bearish whispers. Can the second-largest crypto navigate this tightrope walk and reclaim its DeFi crown, or will it take a tumble from grace?
Ethereum Rises: Growth, Innovations, And Challenges
Beneath the surface of rising price charts lies a complex story of intertwined strengths and weaknesses. Ethereum’s impressive 87% year-on-year market cap surge, catapulting it from 0 billion to a hefty 7 billion, paints a picture of robust growth.
The Merge upgrade, a landmark event streamlining Ethereum’s blockchain, and the burgeoning DeFi ecosystem pulsating with innovative applications are key contributors to this ascent.
However, lurking beneath this facade is a critical bottleneck: Ethereum’s Layer 1 scalability limitations. The network’s notorious high transaction fees and sluggish throughput have become thorns in the side of DeFi expansion, frustrating both users and developers yearning for a smoother experience.
As of writing, on this 26th of December, Ethereum’s price hovers around ,233, painting the daily and weekly charts red with a dip of roughly 1.5%, data from Coingecko shows. This recent descent adds further intrigue to the complex dance Ethereum is performing near the critical ,500 resistance level.
This delicate dance between bullish aspiration and bearish pressure underscores the fragile equilibrium in the market. On one hand, the optimism surrounding Ethereum’s future potential continues to draw in traders.
On the other hand, the specter of high transaction fees and scalability woes, alongside whispers of a potential bear market, keeps selling pressure simmering just below the surface.
Ethereum At ,300: Bulls’ Battle, Bears’ Threats
For Ethereum bulls, the ,300 level is a crucial battleground. If they can muster enough buy-side force to sustain a climb above this mark, it could pave the way for a surge towards the coveted ,500 resistance level. This breakthrough would be a significant psychological victory, injecting fresh confidence into the market and potentially triggering a new upward trend phase.
However, the bears are not out for the count. Their sights are set on breaching the ,200 support level, which would solidify their grip and potentially trigger a more substantial decline. Should this scenario unfold, the ,000 mark could come into play, with further losses possible if selling pressure remains unchecked.
Adding to the intrigue is the factor of exchange supply. A recent increase in Ethereum tokens on exchanges indicates more readily available ETH for sellers, potentially amplifying downward pressure. This highlights the delicate balance between market sentiment and technical factors in determining Ethereum’s future trajectory.
Meanwhile, the ETH traders’ profit-taking is evident in the Network Realized Profit/Loss between October 31 and December 23. A significant amount of profit-taking may cause the price of ETH to decline.
Ethereum’s Critical Crossroads Ahead
Looking ahead, Ethereum’s path hinges on its ability to navigate this complex landscape. Addressing its scalability issues through Layer 2 solutions and potential future upgrades will be crucial for maintaining and expanding its DeFi dominance.
Rekindling developer and user confidence by reducing transaction fees and improving network throughput is also paramount. Only by tackling these internal challenges and adapting to the ever-evolving crypto sphere can Ethereum truly reclaim its throne as the king of DeFi.
The next few weeks are likely to be pivotal for Ethereum. Will it scale the ,500 height and cement its position as a leader in the crypto revolution? Or will internal limitations and external pressures force it to face a precipitous drop?
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Immutable Momentum: IMX Rockets To $2.21, Scaling Heights Unseen Since 2022
Immutable and its native IMX token deviate from the current cryptocurrency market downturn triggered by declines in Bitcoin and Ethereum. While most prominent gaming tokens have followed suit, experiencing a decrease in value since late Sunday, this pattern highlights the interconnected nature of digital assets.
Despite market volatility, the IMX token fights the downward pressure and continues its previous upward trajectory, demonstrating a unique resilience and potential decoupling from cryptocurrency correlation.
Immutable’s IMX Hits Milestone
The trajectory of Immutable’s IMX token has been characterized by a rapid and substantial increase in value since October. This upward movement reached its zenith today, as the IMX token breached past the key level.
At the time of writing, IMX was trading at .01, up 42% in the last seven days, data from CoinMarketCap shows.
Such a peak represents a significant milestone for the token, as it marks a level that had not been reached since April 2022. This extended duration underscores the significance of the current price surge, suggesting a notable departure from the historical price trends of the IMX token.
With a market valuation of more than .8 billion, Immutable X is one of the largest layer-2 networks globally. It is a network that is essential to the non-fungible token (NFT) and gaming industries.
The organization has collaborated with some of the major names in the gaming sector in the last few years. Companies like Merit Circle, Illuvium, Unity, Ubisoft, and StarkWare are a few of the most renowned partners.
In an effort to transform gaming on Beam in the future, the network has partnered with Merit Circle DAO and GameStop, two of the biggest American retailers.
In order to establish Transak as the “principal payments partner” for Immutable Checkout on the zkEVM network, Immutable established a new partnership with the payments processor on Monday.
Because of Immutable X’s low transaction costs, Ethereum-grade security, speedy transaction rates, and user-friendliness, developers adore it. Additionally, it contains all the tools required by developers to create scalable games, including Orderbook, Marketplace, Checkout, and Passport.
IMX Price Prediction
With 18 of the 30 (or 60%) green days and 11.72% price volatility over the past 30 days, Immutable X is still attracting the interest of investors. Likewise, Immutable’s future appears bright as 27 technical indicators are glowing green.
The CoinMarketCap ranking of the IMX token has increased to 29th. The spike is in reaction to VanEck’s claim that the introduction of new blockchain-based video games, such Illuvium, which is due out next year, may raise the value of the IMX token.
Immutable has also been trying to fix many of the technological pain points that have hampered the success of Web3 gaming thus far, according to VanEck.
Meanwhile, Coincodex’s current Immutable price prediction indicates that this week’s price of Immutable will fall by -7.18% to $ 0.003929.
The coin’s technical indicators show a bearish attitude at the moment, despite the Fear & Greed Index hitting 65 (Greed).
Featured image from Shutterstock
What Are Rollups? Ethereum’s Main Scaling Solution Examined
Rollups are structures that have been designed as a way of scaling Ethereum’s capacity to process transactions and data. They group a bunch of tasks and compute them offchain, only posting the result of these transactions to Ethereum, allowing more data to be piled up on L1 (layer one). Ethereum co-founder Vitalik Buterin has been pushing rollups as part of the future of Ethereum scaling since 2020, and with the proposal of Danksharding, its scaling roadmap has become rollup-centric.
Rollups and the Scalability Problem
Ethereum, one of the first-generation smart contracts-enabled blockchains, has been facing a scalability problem due to its limited capabilities for processing transactions and data. In its base layer, Ethereum can process approximately 15 transactions per second (TPS), which was enough in its first stages but is now insufficient given the popularity of the blockchain.
Rollups attack this problem by taking part of the blockchain burden offchain, while maintaining a connection with the parent chain (in this case, Ethereum). Rollups allow processing to be run offchain, only returning a simple result to the parent chain. This achieves two objectives: it lets more data be posted in the chain by other rollups and allows more transactions to be processed quickly at a lesser cost, albeit with a security and decentralization tradeoff.
They are called rollups because most use compression techniques to “roll up” a group of transactions and only output the necessary data to the main chain. While this means that the parent chain will still be constrained if the data output is large, it still helps due to the mentioned compression.
According to Ethereum co-founder Vitalik Buterin, an Ethereum base-layer ERC20 token transfer costs ~45,000 gas, while an ERC20 token transfer in a rollup takes up 16 bytes of on-chain space and costs under 300 gas. Also, migrating a mainnet smart contract to a rollup is possible without too many changes.
Different Kinds of Rollups
Depending on the approach each one takes to validate its data, rollups can be classified into two main groups: Optimistic and ZK-rollups.
Optimistic rollups always assume that transactions realized and proposed are valid and invite users to provide proof of fraud to demonstrate the opposite. If there is a dispute, a fraud-proof is weighted against the party that submitted the data to the Ethereum chain, and the loser gets penalized, seeing their funds slashed. Optimism, Arbitrum, and Base are optimistic rollups.
ZK-rollups rely on cryptography proofs verified by a smart contract on top of the Ethereum network. These validity proofs are updated in each batch of transactions and can be easily verified compared to their optimistic siblings. This makes Zk-rollups cheaper than optimistic rollups. Loopring and Zksync are part of this group.
A Rollup-Centric Roadmap
Ethereum scalability plans included an L1 solution based on sharding, meaning that data would be divided and processed in parallel to allow more transactions with lower transaction fees. However, this design has been substituted for a rollup-centric sharding approach called danksharding, in which the main chain expands to allow more data to be included, allowing rollups to take advantage of this space.
This is the consequence of Vitalik’s Buterin’s rollup-centric scaling proposal, which seeks to turn Ethereum into “a single high-security execution shard that everyone processes, plus a scalable data availability layer.” Buterin estimates that if all protocols and transactions migrate to rollups, Ethereum could hit ~3,000 TPS.
However, with the upcoming improvements derived from the implementation of EIP-4844 (proto-danksharding), which allows rollups to post more data to the parent chain and establishes a separate fee market, the capacity of Ethereum could peak at a theoretical max of ~100,000 TPS.
What do you think about rollups and their importance for Ethereum scaling? Tell us in the comments section below.