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THE PROTOCOL: SOLANA'S ALLURE FOR DEVS; AVALANCHE'S BIG UPGRADE


ALSO: ENS PICKS TECH FOR ITS L2; BITCOIN'S RUNES GET AN AMM

By Marc Hochstein
Dec 18, 2024, 7:20 p.m. UTC
(Pixabay, modified by CoinDesk)


Welcome to The Protocol, CoinDesk's weekly wrap-up of the most important stories
in cryptocurrency tech development. I'm Marc Hochstein, CoinDesk's deputy
editor-in-chief for features, opinion and standards.

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In this issue:

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 * Solana was the biggest draw for new crypto developers in 2024
 * No wonder: Solana's transaction volume is off the charts
 * Coinbase alums take next step toward no-code blockchain development
 * Kraken’s 'Ink' layer-2 goes live
 * Avalanche activates biggest-ever upgrade
 * Ethereum's ENS picks Consensys' tech for its L2
 * Bitcoin's Stacks L2 gets an automated market maker for Runes
 * Most Influential 2024: EigenLayer's Sreeram Kannan

--------------------------------------------------------------------------------

This article is featured in the latest issue of The Protocol, our weekly
newsletter exploring the tech behind crypto, one block at a time. Sign up here
to get it in your inbox every Wednesday.

--------------------------------------------------------------------------------


NETWORK NEWS

NEW DEVS ❤️SOLANA: The Solana ecosystem, ground zero for the memecoin craze, was
the most popular blockchain among new developers this year, according to a
report released last week by Electric Capital. In July, this community became
the first since 2016 to bring on board more devs than Ethereum. Solana attracted
7,625 new developers in 2024, the most of any chain and a little over 1,000 more
than Ethereum. The results underscore the challenge Ethereum faces as rival
smart contract platform Solana's low fees and fast transactions attract
investment and talent. Read more.



SPEAKING OF SOLANA: Solana's network activity has lit up as the Pudgy Penguins
NFT project debuted its native token, PENGU, on the programmable blockchain.
Solana registered a total transaction tally of 66.9 million 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 top of the Ethereum blockchain, has gone live. The
network, called Ink, is Kraken's answer to Base, the highly successful
blockchain launched by rival exchange Coinbase. Like Base, Ink is based on the
OP Stack, a customizable framework that lets developers build their own rollups
using Optimism’s technology. The team had originally planned for Ink to go live
in early 2025, so the launch of its main network is ahead of schedule. Read more

AVALANCHE UPGRADE: Avalanche, a layer-1 blockchain launched in 2020 that's now
the tenth-largest by total value locked (TVL), activated its highly anticipated
Avalanche9000 upgrade Monday, marking the ecosystem's biggest technical changes
to date. The network has been prepping for these changes for months, with new
features that will cut the costs for sending transactions, operating validators
and building applications on the network. Leaders at Avalanche previously said
that part of the goal with the upgrade is to attract developers to Avalanche and
encourage them to create customized blockchains using its technology, known as
subnets, or “L1s." Read more.



A BOON FOR RUNES: Crypto degens have a new – and, if all goes according to plan,
faster, cheaper and safer – way to trade Runes, the Bitcoin ecosystem's answer
to memecoins. An automated-market maker (AMM) for the Runes protocol went live
on Wednesday on Stacks, following the unveiling of the layer-2 network's native
BTC-backed asset sBTC on Tuesday. It's the first AMM for such tokens on Stacks.
The teams behind decentralized exchange (DEX) Bitflow Finance and Bitcoin bridge
Pontis developed the AMM. Runes launched in April and spurred a flurry of
activity, paying 78.6 BTC ($8.18 million) in fees in the first 90 minutes.
However, less than a month later, this excitement waned considerably, with fees
dropping more than 50%. Bitflow's aim is for its AMM to help Runes scale and
address some of the shortcomings holding it back. Read more.

ENS PICKS L2 TECH: ENS Labs, the company behind the Ethereum Name Service, has
picked 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 rollup
network, according to L2Beat, with $1 billion locked in its ecosystem. Rollups
are a special type of blockchain where one can transact faster and at a lower
cost. There are two kinds of rollups: optimistic and zero-knowledge. Optimistic
rollups use optimistic proofs, which have a seven-day window to dispute
transactions before they are finalized. Zero-knowledge rollups, by contrast,
finalize proofs within minutes. ENS has been described as "the phone book for
Web3," but a more precise analogy is the web's domain name service (DNS). The
domain name "CoinDesk.com" is easier to remember and type than a numerical IP
address. Similarly, ENS handles like parishilton.eth, which the namesake heiress
acquired in 2021, are more relatable than the strings of letters and numbers
that make up Ethereum wallet addresses. For this service, "we need fast
finality,” said Nick Johnson, the founder and lead developer of ENS. That's
because “you want to be able to update your ENS name and have the chain reflect
it in the smallest interval possible. And to do that and have it remain
decentralized and secure, we need fast finality, and optimistic roll-ups can't
deliver that." Read more.



NO 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 low-to-no-code tools for building decentralized
applications (dapps). Currently linked to Coinbase’s Base and backed by Coinbase
Ventures, the “Create-Patchwork” picks-and-shovels approach lowers the barriers
to building blockchain applications and attaching data to them. Following the
trend toward easily generated content, the complex world of blockchains and
smart-contract design is on a path to 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 foundational step to enable creators to generate
contracts and applications in seconds using natural language inputs. “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 lets on-chain
things own other on-chain things, and it allows anyone to attach programmable
data to on-chain things.” Read more

--------------------------------------------------------------------------------


EIGENLAYER'S SREERAM KANNAN: KING OF THE PROFESSOR COINS

EigenLayer founder Sreeram Kannan at ETH Denver 2024 (Danny Nelson/CoinDesk)

For a crypto founder who's attracted so much controversy, Sreeram Kannan is
surprisingly sanguine.



In a wide-ranging interview after his selection as one of CoinDesk’s “Most
Influential” figures in crypto for 2024, the EigenLayer founder was generous
with his time, chatting more than an hour beyond our scheduled slot. I was
surprised at his openness because the last time we spoke, a colleague and I had
just published an investigation into potential conflicts of interest at his
company, Eigen Labs, and in the interim Kannan had disavowed our reporting
point-by-point on a Blockworks podcast.

This time, Kannan emerged in a different light. Whatever his misgivings about
CoinDesk’s past coverage, they didn’t seem top-of-mind.

What emerged wasn’t the portrait of a defensive tech founder, but rather that of
a driven, thoughtful academic-turned-entrepreneur still adjusting to a spotlight
few in this industry ever enjoy. Instead of bitterness or evasion, I found
ambition, reflection and a quiet kind of excitement.

Kannan seemed as astonished as anyone by how swiftly EigenLayer had transformed
from a concept into one of crypto’s most talked-about experiments, telling
CoinDesk that he continued to view EigenLayer as a “scrappy startup.”

Over the past 12 months, EigenLayer — which allows emerging blockchain
applications to borrow Ethereum’s robust security — went from a relative unknown
to an industry heavyweight. The platform raised more than $100 million from
venture firms including Andreessen Horowitz and, before even fully launching,
drew hundreds of millions of dollars in deposits from crypto users seeking extra
yield. Many were incentivized by a viral points program that investors hoped
would translate into a lucrative future token airdrop.



EigenLayer’s success during the bear market was striking, and Kannan may have
played a larger role than any other entrepreneur in revitalizing decentralized
finance on Ethereum. But not everything went according to plan. Industry critics
took issue with the EIGEN token distribution plan — which locked up tokens for
months and barred claimants from certain geographies — as well as the platform’s
slower-than-expected feature rollout and concerns about “rehypothecation,” or
the reuse of collateral for multiple purposes. In August, the CoinDesk
investigation (that Kannan disputed in 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 ascent. 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
“restaking” — letting people reuse staked Ethereum assets to secure other
networks — has sparked a wave of innovation and copycats. He’s become a familiar
face on the conference circuit, where he unpacks his vision of blockchains as
tools for solving humanity’s endless “coordination problems.”

Blockchains, Kannan says, “are the biggest upgrade to human civilization since
the U.S. Constitution.”

CLICK HERE FOR THE FULL PROFILE BY COINDESK'S SAM KESSLER:

--------------------------------------------------------------------------------


MONEY CENTER

'Wrapped' in intrigue


 * Coinbase Says It Nixed wBTC Because Justin Sun Posed 'Unacceptable Risk'
 * WBTC Episode 'Reopened Old Wounds' of Centralized Failures: Bitcoin Builders
   Association

Deals and grants

 * Stablecoin Payments Platform BVNK Raises $50M to Fuel U.S. Expansion
 * RWA-Focused Plume Raises $20M from Brevan Howard, Others Ahead of Mainnet
   Launch
 * Custody Firm Taurus Partners With Temenos Bringing Crypto Wallets to
   Thousands of Banks

Regulatory and policy

 * Next U.S. Senate Banking Chair Calls Crypto 'Next Wonder' of World

--------------------------------------------------------------------------------

Calendar

 * Jan 9-12, 2025: CES, Las Vegas
 * Jan. 15-19: World Economic Forum, Davos, Switzerland
 * January 21-25: WAGMI conference, Miami.
 * Jan. 24-25: Adopting Bitcoin, Cape Town, South Africa.
 * Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
 * Feb. 1-6: Satoshi Roundtable, Dubai
 * Feb. 19-20, 2025: ConsensusHK, Hong Kong.
 * Feb. 23-24: NFT Paris
 * Feb 23-March 2: ETHDenver
 * March 18-19: Digital Asset Summit, London
 * May 14-16: Consensus, Toronto.
 * May 27-29: Bitcoin 2025, Las Vegas.

MARC HOCHSTEIN

As Deputy Editor-in-Chief for Features, Opinion, Ethics and Standards, Marc
oversees CoinDesk's long-form content, sets editorial policies and acts as the
ombudsman for our industry-leading newsroom. He is also spearheading our nascent
coverage of prediction markets and helps compile The Node, our daily email
newsletter rounding up the biggest stories in crypto. From November 2022 to June
2024 Marc was the Executive Editor of Consensus, CoinDesk's flagship annual
event. He joined CoinDesk in 2017 as a managing editor and has steadily added
responsibilities over the years. Marc is a veteran journalist with more than 25
years' experience, including 17 years at the trade publication American Banker,
the last three as editor-in-chief, where he was responsible for some of the
earliest mainstream news coverage of cryptocurrency and blockchain technology.
DISCLOSURE: Marc holds BTC above CoinDesk's disclosure threshold of $1,000;
marginal amounts of ETH, SOL, XMR, ZEC, MATIC and EGIRL; an Urbit planet
(~fodrex-malmev); two ENS domain names (MarcHochstein.eth and MarcusHNYC.eth);
and NFTs from the Oekaki (pictured), Lil Skribblers, SSRWives, and Gwar
collections.

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