The Protocol: MetaMask’s Secret Weapon and Ethereum’s Dencun Debacle

Last month, our feature in The Protocol highlighted how the blockchain design principle of “intents” was gaining ascendancy among developers on the industry’s cutting edge. This week our Sam Kessler is back with a scoop on how the popular crypto wallet MetaMask, from the Ethereum developer Consensys, has quietly deployed a version of an intents-based routing mechanism that could revolutionize how users interact with blockchains.

We’ve also got:

MOORE IS MORE. Ethereum co-founder Vitalik Buterin, the de facto high priest of the world’s largest smart-contracts blockchain, tossed out last week on a Reddit “Ask Me Anything” that it would be “reasonable” to raise the network’s “gas limit” – a very technical way of referring to the amount of transactions that can get jammed into each new block. He suggested an increase to “40M or so,” implying a 33% increase over the current limit of 30 million gas. (Yes, for the underinitiated, a unit of gas, in this context, is just… a gas.) The main reason this is now possible, according to Buterin, is Moore’s law – the observation that computing power seems to double every year. That’s relevant because of the amount of data that it takes to store Ethereum’s “state” – the complete record of the blockchain’s history; as computers become more powerful, they should theoretically be able to handle the higher transaction capacity – potentially helping to reduce fees for end-users. “There appears to be a constructive willingness to explore this topic further,” analysts at Coinbase Institutional wrote. But some members of the Ethereum community have raised yellow flags. Péter Szilágyi, an Ethereum developer, tweeted that such an increase could slow the network’s “sync time.” Galaxy Research’s Christine Kim wrote in a weekly newsletter that “larger blocks would certainly increase block propagation latency and potentially result in a higher number of missed blocks.” Marius van der Wijden, an Ethereum software developer, estimated that the network’s state is currently around 87 gigabytes (GB), and growing at 2 GB per month. That would put it at 111 GB in a year and 207 GB in five years. In an era where a 1 terabyte thumb drive can be bought on Amazon.com for $19.99, it doesn’t sound too terribly daunting. “The problem here is not the size itself,” van der Wijden wrote. “Everyone will be able to store that amount of data. However, accessing and modifying it will become slower and slower.” One thing there seems to be some agreement on: It’s worth waiting a bit to observe the impact of the upcoming “Dencun” upgrade on the network, which will introduce a new way of storing data as “blobs,” effectively providing a capacity increase.

BLACK DRAGON BREATHES FIRE: Just two months after NEAR Protocol co-founder Illia Polosukhin took over as CEO of the supporting NEAR Foundation, he announced drastic cuts last week in the organization’s workforce – impacting 35 colleagues, or a 40% reduction. According to Polosukhin, the decision came after a “thorough review of the foundation’s activities,” resulting in feedback that “the foundation has not always been as effective as it could be.” Polosukhin noted that the financial picture remains sound, with over $285 million in “fiat” or government-issued currencies and 305 million NEAR tokens “worth over $1B,” along with $70 million of investments and loans. Referred to in the foundation’s communications as the “Black Dragon,” Polosukhin may be under pressure to breathe new life into the alternative layer-1 blockchain, which ranks 32nd among networks based on the much-watched metric of total value locked, or TVL, according to DeFi Llama. Notably NEAR is trying some fresh strategies, pivoting last year to serve as a “data availability” network and cutting a deal with restaking pioneer EigenLabs to create a “fast finality layer” for Ethereum layer-2 networks.

ONE BETTER THAN TWO: The Binance-incubated BNB Chain ecosystem has announced a plan called “Fusion” that will see the original BNB Beacon Chain decommissioned while reinforcing the primacy of the sister BNB Smart Chain. According to a statement on the open-source software platform GitHub, the proposal will help to “overcome legacy services and technical debt, enabling faster iteration and development.” According to the newsletter Wu Blockchain, “BNB Beacon Chain is set to exit the stage within the next six months.”

Highlighting blockchain tech upgrades and developments.

1. Taiko, developing a so-called type-1 zkEVM to help scale the Ethereum blockchain, announced the launch of “Katla,” its alpha-6 testnet, according to a message from the team: “Katla is laying the foundation for Taiko’s mainnet launch in 2024.”2. Parallel Network has officially launched on mainnet and is open to developers, according to the team, claiming to be the first layer-2 network on Arbitrum Orbit to go live. “It is also the first non-custodial omni-chain margin protocol, which allows liquidity to be pooled across multiple chains and makes it immediately available on the Parallel Network.”

3. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) has integrated Circle’s Cross-Chain Transfer Protocol (CCTP) to make it easy for users to transfer USDC across chains, according to a press release. Developers can now build cross-chain use cases via CCIP that involve cross-chain transfers of USDC, including payments and other DeFi interactions, the statement said.

4. The Hedera Council announced its newest member, the electronics maker Hitachi America, Ltd. (Hitachi). According to the team: “Hitachi aims to begin creating proof-of-concepts for end-to-end supply chain and sustainability solutions on Hedera in the next year.”

5. Lagrange Labs, developer of a blockchain proving system based on zero-knowledge cryptography, has integrated its light client protocol, Lagrange State Committees (LSC), for the Ethereum layer-2 network Mantle, according to the team. LSCs “are a ZK light client protocol for optimistic rollups (ORUs), designed through combining Lagrange’s ZK MapReduce Coprocessor and EigenLayer restaking. Each state committee borrows security from Ethereum by dual staking, both through EigenLayer restaking and with the rollup’s native token.”

6. Hacken, a blockchain security auditor, has introduced an open-source Rust library for code coverage generation for WASM-based protocols, according to the team: “Code Coverage utilities are crucial for automation testing to ascertain the thoroughness of code examination. Without it, some critical components can remain untested. While it is available for Ethereum-based projects, WASM-based protocols don’t have it. Wasmcov by Hacken is already integrated into the Radix ecosystem, which enables all Radix-built projects to utilize code coverage measurement. The next protocol to get it will be NEAR. The rest can set it up manually.”

See the entire Protocol Village list from this past week here.

MetaMask has quietly rolled out a limited version of its new routing tech into the new Smart Swaps feature. (MetaMask, modified by CoinDesk)

MetaMask, the most popular crypto wallet on Ethereum, is testing a new “transaction routing” technology that’s likely to have major ramifications for how value flows through the second-biggest blockchain network.

CoinDesk learned of the new technology from developers briefed on the plan, and key details were subsequently confirmed by officials with MetaMask’s parent company, Consensys.

The effort capitalizes on a concept known in blockchain circles as “intents” that is rapidly gaining momentum, potentially leading to a radical shift in how people interact with blockchains: Rather than specifying how they want to get something done (e.g. “sell X tokens on Y exchange for Z price”), blockchain users may only need to specify what they want the outcome to be (e.g. “I want the best price for my tokens”).

The “what” versus “how” distinction might seem subtle, but it’s a big departure from how MetaMask and other crypto wallets worked originally – as neutral, relatively simple pieces of software for connecting users to blockchains. The goal with the new tech is for users to get better execution on their transactions and improved ease of use, but intent-based programs ultimately represent a big shift to where – and to whom – value flows on blockchains.

The new technology is being built by Special Mechanisms Group (SMG), a blockchain infrastructure firm that MetaMask owner Consensys purchased last year.

Read the full story by Sam Kessler here

Fundraisings

Deals and Grants

Data and Tokens

We finally got around to reading Messari analyst Seth Bloomberg’s excellent report out a few weeks ago titled, “The Onchain Economics of ZK Rollups.” It provides a good snapshot of the competition between major Ethereum layer-2 networks as 2023 closed out. The report reinforced the oft-repeated observation that “Data publishing (or data availability) generally remains the highest on-chain cost for rollups” – thus underscoring the significance of Ethereum’s upcoming “Dencun” upgrade, which is supposed to lead to drastic reductions in those expenses. But there are different ways to handle the data, of course, and the zkSync Era project stands out in that it “only posts state diffs to Ethereum,” while most rollup networks “publish the full rollup transaction data.” Per the report: “In simple terms, publishing state diffs means that if two users send ETH and other tokens to each other multiple times, only the net differences in their account balances need to be published to Ethereum instead of the full transaction history between the two users.” The upshot? ZkSync Era has the lowest average transaction costs, at 18 cents, seen as a nice bargain compared with Polygon zkEVM’s 45 cents.