Welcome to The Protocol, CoinDesk’s weekly wrap-up of crucial tales in cryptocurrency tech improvement. I am Ben Schiller, CoinDesk’s Options and Opinion Editor.
On this concern:
- HyperLiquid responds to criticism over decentralization
- StarkWare launches appchains on Starknet
- Arbitrum deepens ties to South Korea’s Lotte Group
- Do Kwon felony trial set for 2026
- Pyth Community companions with Revolut in DeFi knowledge deal
- Ripple goals to spice up stablecoin’s utility in Chainlink deal
- AI cash fail to match 2024 efficiency, regardless of bullish outlook
This text is featured within the newest concern of The Protocol, our weekly publication exploring the tech behind crypto, one block at a time. Join right here to get it in your inbox each Wednesday.
Community information
HYPERLIQUID CRITICISM: HyperLiquid, a serious up-and-comer on the earth of decentralized finance, got here beneath fireplace this week over claims that the community is overly centralized and troublesome to work with. HyperLiquid is finest recognized for its flagship decentralized trade and it just lately launched a layer-1 blockchain — all bids by the startup to, in accordance with its flashy net copy, finally “home all finance.” Regardless of incomes plaudits for its quick and easy-to-use trade interface, HyperLiquid has been criticized for, amongst different issues, working a closed-source codebase. In response to a widely-shared X thread from Kam Benbrik, an worker on the validator agency Refrain One, the validators powering HyperLiquid are largely blind to how the chain works beneath the hood, making it troublesome for them to function the {hardware} that is imagined to run the chain. Benbrik additionally raised considerations that HyperLiquid’s extremely concentrated token provide — and its course of for admitting validators to its L1 chain — make the chain centralized and susceptible to failures. “Hyperliquid should enhance transparency, decentralize staking, implement a good validator choice course of, and interact extra with exterior validators,” Benbrik wrote. The complaints come on the heels of a flurry of constructive media consideration for HyperLiquid following November’s massively profitable HYPE airdrop. It hasn’t all been clean crusing for the startup, nevertheless, with scrutiny arising in December following studies of potential North Korean exercise on the community — interpreted by some as an indication that the regime well-known for its crypto-hacking efforts may need HyperLiquid in its crosshairs. HyperLiquid has batted away the North Korean safety considerations, and it just lately addressed the centralization and closed-source critiques in an X thread, stating that the criticisms largely stemmed from “misconceptions” about its tech. Learn extra. –Sam Kessler
SOLANA’S FIREDANCER FORGES AHEAD: Solana is charging forward with its next-gen blockchain consumer “Firedancer,” pushing validators operating the chain to undertake a stripped-down model of the improve forward of a wider, yet-to-be-scheduled official launch. “Firedancer’s proponents consider the software program – developed by the crypto arm of buying and selling big Bounce – will give Solana an unbeatable edge in crypto’s race to woo international monetary markets onto blockchains,” writes CoinDesk’s Danny Nelson. “They level to its theoretical pace: a million transactions per second, orders of magnitude quicker than any blockchain-based system in the present day.” –Sam Kessler
STARKWARE APPCHAINS: Starknet, the layer-2 blockchain on Ethereum recognized for its embrace of zero-knowledge (ZK) cryptography, is including appchains. StarkWare, the first developer of Starknet, advised CoinDesk that its “SN Stack” will let builders simply construct blockchains tailor-made to particular crypto use instances. Learn extra
ARBITRUM-a-LOTTE: Arbitrum, the most important layer-2 community on Ethereum, plans to deepen ties with Lotte Group, the multibillion-dollar South Korean conglomerate recognized for its huge portfolio of purchasing malls, media corporations and leisure properties. Offchain Labs, the developer behind Arbitrum, and the Arbitrum Basis, the non-profit that stewards the challenge’s improvement, stated a monetary deal is within the works that may cement Arbitrum as the principle blockchain infrastructure supplier for “Caliverse,” Lotte’s metaverse gaming platform. Learn extra
AVALANCHE UPGRADE: Avalanche, now the tenth-largest L1 by complete worth locked (TVL), activated its extremely anticipated Avalanche9000 improve, marking its greatest technical modifications since launch in 2020. The community has been prepping these modifications for months, with new options that can lower the prices for sending transactions, working validators and constructing functions on the community. Leaders at Avalanche stated the improve is supposed to draw builders, encouraging them to create custom-made blockchains utilizing its expertise, often known as subnets, or “L1s.” Learn extra.
DO KWON TRIAL: Terraform Labs co-founder and former CEO Do Kwon’s felony fraud trial within the U.S. has been tentatively scheduled for January 2026, permitting prosecutors and Kwon’s protection attorneys time to overview the “huge” six-terabyte trove of information anticipated to be produced throughout the discovery course of. Throughout an preliminary listening to in Manhattan this week, lead prosecutor Jared Lenow advised the court docket that the federal government anticipated to face further delays on account of challenges accessing encrypted data and unlocking 4 cell telephones supplied by Montenegrin authorities after they extradited Kwon to the U.S. on Dec. thirty first. Lenow added that the federal government should additionally translate extracted materials from Kwon’s native Korean. Learn extra.
PYTH PARTNERS: Blockchain oracle agency Pyth Community has partnered with neobank Revolut to port digital banking knowledge into decentralized finance. Revolut will present knowledge for greater than 500 markets together with international trade, equities and commodities. Revolut additionally runs a crypto trade though quantity knowledge is just not printed. Pyth competes with ChainLink and goals to supply correct worth feeds for DeFi protocols. It airdropped its native token (PYTH) in 2023 and has $7.5 billion in worth secured on its oracle, in accordance with DefiLlama. Pyth additionally receives knowledge from crypto exchanges Bitstamp, Bybit and Binance in addition to a number of buying and selling companies akin to Jane Avenue and Cumberland DRW. Learn extra.
AI COINS: AI-crypto tokens are failing to reside as much as their lofty 2024 targets regardless of Nvidia’s (NVDA) current convention sparking bullish sentiment amongst AI shares within the conventional markets. Final March, the NEAR token doubled within the lead-up to Nvidia’s annual convention, beneficial properties that had been mirrored throughout the broader crypto AI market. Fetch.AI (FET), the graph (GRT) and singularityNET (AGIX) all posted important rallies to the upside in unison with the convention. Why are AI tokens shedding momentum? One cause: the emergence of AI agent tokens. Learn extra.
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Calendar
- Jan 7-10, 2025: CES, Las Vegas
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