In August, Ethereum revealed the integration of EIP-4844 (proto-danksharding) in its upcoming upgrade, aiming to enhance transaction costs and throughput, while Celo transitioned from an L1 to Ethereum L2 and Coinbase launched their Base Ethereum L2. Market sentiment soared with the potential approval of a spot Bitcoin ETF after a US court ruled against the SEC’s rejection of Grayscale’s application, and PayPal introduced its stablecoin PYUSD to revolutionize Web3 payments.
It was informally announced that Ethereum’s EIP-4844, also known as proto-danksharding, will be a core part of the next network upgrade that is expected to go live in Q4 of this year. This upgrade introduces a new type of transaction called blob-carrying transactions, aimed at reducing transaction costs as well as increasing transaction throughput on Ethereum, in particular by improving cost-efficiency for rollups that post data to Ethereum. While the actual throughput increase will likely not be sufficient immediately to facilitate all blockspace demand for the existing and future rollups, this EIP should serve as a platform for further throughput increases down the line.
One of the new Ethereum L2’s will be Celo, which previously used to be an EVM-compatible L1. This month a governance proposal passed to finalize their transition from L1 to Ethereum L2, with architectural changes including an off-chain data availability layer and the use of a decentralized sequencer. The main benefits they highlight are increased cross-community collaboration, enhanced compatibility, increased security and maintaining low gas fees. We expect more alternative L1’s to follow this trend as Ethereum continues the growth of its dominance.
Coinbase officially launched their Base Ethereum L2, making Coinbase the first publicly traded company to launch their own L2. Coinbase is hoping that Base will help broaden their product offering from mostly centralized to now also facilitating more decentralized applications. Since the launch, Base has already established itself as an L2 that has the ability to generate significant traction, with its TVL currently sitting north of 300M USD. We look forward to seeing how these types of solutions can bridge the gap between centralized and decentralized venues for new crypto users to further adoption. One of the new dApps that launched on Base was Friend.tech, a decentralized social network which allows users to monetize their network; the platform quickly amassed a large and fanatical user base that performed over a million trades in just a week.
Markets showed increasingly positive sentiment on the recent news of a possible spot Bitcoin ETF application approval. Applications from Blackrock, Greyscale, Valkyrie, Fidelity and WisdomTree are currently awaiting approval from the SEC. Chances of approval have risen considerably after a US court ruled this month that the SEC had wrongfully denied Grayscale’s ETF application. The SEC initially denied their application based on the claim that the ETF lacks the ability to perform consistent price-tracking, but the court rejected these arguments. While Greyscale’s victory does not result in the immediate approval of a spot Bitcoin ETF, the court’s overturn of the SEC’s rejection strongly increases the potential approval of any of the currently pending applications.
Fintech giant PayPal announced the launch of its dollar-denominated stablecoin Paypal USD (PYUSD). PYUSD is a fully-backed, fully regulated stablecoin with which PayPal is hoping to transform Web3 payments. The stablecoin is backed by US dollar deposits, US treasuries, and other cash equivalents. The stablecoin is issued by Paxos Trust Company who will transparently publish a monthly report of the reserves.
Gitcoin, a public-goods funding platform, has recently partnered with Shell for a year-long collaboration that aims to support open-source climate solutions. The collaboration will also see Shell making a 500K USD donation through the platform to support these solutions. While the engagement does underline Shell's willingness to engage with blockchain-based solutions, some condemned the collaboration as a form of greenwashing.
Multiple portfolio companies announced interesting developments this month. Astria announced their development cluster which contains the components needed for developers to launch rollups on their shared sequencer network. Through Astria’s permissionless design, using it to deploy a rollup makes it as easy as deploying a smart contract. RISC Zero announced the launch of Zeth, their zkEVM that allows proving of Ethereum block validity, and which aims to make it easier for developers to create zk-powered infrastructure. Celestia concluded their incentivized testnet, with over 1000 participating developers. During this test phase, over 800 rollups were deployed using Rollkit, their rollup SDK. After these successful testnet results & developments, Celestia’s mainnet is expected to launch later this year. Finally, our participation in Maple Finance’s latest fundraising round was announced, in which the company raised an additional 5M USD. The raise is aimed to fuel their expansion into the APAC region.