You know how it goes — you get to the end of the week and want to just phone it in. It’s like that for Ethereum, too. The world’s biggest proof-of-stake network had some trouble finalizing blocks last Thursday and Friday. Maybe it was too excited for Season 3 of Yap Cast?
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
[tl;dr]
Ethereum takes a quick break ⏯️
Worldcoin reportedly raises $120 million 📈
MiCA gets the thumbs-up from finance ministers 👍
[Ethereum Fina— ⏲️]
The Ethereum network temporarily stopped finalizing blocks last Thursday. The issue popped up again on Friday. (For more on finality, see our DeFi Definition at the bottom.)
What Reporters Said 🔎: Even though transactions continued as normal, the issue is theoretically a problem, wrote CoinDesk’s Sage D. Young and Sam Kessler: “According to the Ethereum Foundation, when blocks are not being finalized, it is possible that pending transactions might be re-ordered or dropped from the network.”
What Ethereum Devs Said 🧑💻: Regarding the cause, Ethereum Foundation’s Ben Edgington said on Saturday, “I'm not sure that any of us fully understand why.” But he thinks the issue will pop up again, noted Samuel Haig for The Defiant, because “the speed of the network’s growth may be driving up the computational resources needed to validate Ethereum.”
What Columnists Said: This issue is somewhat specific to Ethereum, tweeted Blockworks senior editor Macauley Peterson: “Other proof-of-stake chains like Solana and Cosmos are designed to halt in such cases until their validators can sort out what's wrong. But Ethereum was designed to just... keep... going... forever... as long as the Internet exists.”
Why It Matters: There are lots of choices for blockchains these days. While Ethereum devs have prioritized security and liveness, some other networks opt for safety. Web3 users get to decide the properties that are most important to them.
[Worldcoin Raises Coin 💸]
Worldcoin, 🌎 a global cryptocurrency project helmed by OpenAI CEO Sam Altman, is reportedly on the cusp of raising $100 million in a bear market. 💯 It already raised more than $100 million in a token sale last year.
What Reporters Said 💬: Ivan Levingston and George Hammon of the Financial Times had the scoop on the startup. 🍨 It cited three anonymous sources who say “Worldcoin is in advanced talks to raise fresh cash as it prepares to launch in the next few weeks.” 🕵️
What Columnists Said: Worldcoin uses eyeball-scanning technology to identify people, 👁️ who can then qualify for a universal basic income paid out in its own cryptocurrency. But as Fortune’s Ben Weiss explained, “At its core, the project is a solution to the robot dystopia that Altman’s OpenAI has made seem tangible: In a world increasingly populated by A.I., how do we know what is and isn’t human?” 🤖
What Worldcoin Said 🔎: The company hasn’t commented on the news, but it did recently release a crypto wallet that holds Bitcoin, Ethereum, and…Worldcoin.
Why It Matters: Sam Altman reshaped the Silicon Valley startup scene as the president of Y Combinator. He’s helped shake up the future of work as CEO of OpenAI. 🧂 Can he leave his mark on crypto and digital identity?
[MiCA: Check ✅]
Finance ministers from the European Union’s 27 member states gave final approval to the Markets in Crypto Assets (MiCA) regulation passed by the European Parliament last month. 🇪🇺
What Reporters Said 🔎: Parts of the law will start being enforced next year, reported Reuters’ Huw Jones. The new rules, which the industry has broadly supported, “require firms that want to issue, trade and safeguard crypto assets, tokenised assets and stablecoins in the 27 country bloc to obtain a licence.” They also regulate stablecoins and crack down on tax evasion. MiCA is already having an effect, noted Decrypt editor Stacy Elliott, citing industry executives who say “an influx of VC funding has flowed into the European crypto market over the past couple months.” 🤑
What Columnists Said: This is certainly “landmark” legislation, said Inbar Preiss of DLNews. But let’s not forget the other big laws either already in place or on the horizon. The EU has a digital ID proposal and a data-sharing bill on the docket that are getting industry pushback. The latter features a provision for “the inclusion of a kill switch in smart contracts.”
Why It Matters: The US and the UK, traditionally leaders in the global financial economy, do not have comprehensive crypto regulations in place. The clear rules in Europe may attract crypto firms looking for a safe base of operations.
[Tidbits]
The return of permissioned blockchains? “Financial firms like Deloitte, S&P Global, and Moody’s have come together to support the launch of the Canton Network, a blockchain designed to streamline financial markets with Web3 tech.” Story by André Beganski (Decrypt)
Is that payable in LUNA? 🌙 “Terraform Labs founder Do Kwon is set to be released from Montenegro jail on supervised bail as his trial on document forgery charges continues.” Story by Sandali Handagama (CoinDesk)
Breaking open the piggy bank? 🐷🏦 “Bankrupt lending platform Celsius moved over 428,000 staked ether (stETH) — a liquid staking derivative token — with a value exceeding $780 million on Monday.” Story by Vishal Chawla (The Block)
[Tweet of the week]
[Events]
VeeCon 2023 | 18th May 2023 | Indianapolis, Indiana, USA
Bitcoin 2023 | 18th - 20th May 2023 | Miami, Florida, USA
The Web3.Conference | 19th May 2023 | Amsterdam, Netherlands
Teamz Web3 Summit | 19th - 23rd May 2023 | Tokyo, Japan
EDCON 2023 | 19th - 23rd May 2023 | Montenegro
Pizza Day Prague | 20th - 21st May 2023 | Prague, Czech Republic
ETHDam | 20th - 21st May 2023 | Amsterdam, Netherlands
BlockSplit | 22nd - 25th May 2023 | Split, Croatia
European Web3 Summit | 23rd - 24th May 2023 | Brussels, Belgium
Saudi Meta Show | 24th - 25th May 2023 | Riyadh, Saudi Arabia
Netx Block Expo Warsaw Summit | 24th - 25th May 2023 | Warsaw, Poland
SpaghettETH | 24th - 26th May 2023 | Naples, Italy
CriptoMexico | 24th - 27th May 2023 | Monterrey, Mexico
ETHDublin | 26th - 28th May 2023 | Dublin, Ireland
Isreal Crypto Conference | 29th - 30th May 2023 | Tel Aviv, Isreal
London Blockchain Conference | 31st May - 2nd June 2023 | London, England
Money Tel Aviv Conference | 31st May 2023 | Tel Aviv, Isreal
Render ATL | 31st May - 2nd June 2023 | Atlanta, Georgia, USA
Crypto Currency World Expo | 1st - 2nd June 2023 | Istanbul, Turkey
Israel’s Web3, CBDC & Crypto Regulation | 1st - 2nd June 2023 | Tel Aviv, Isreal
Crypto Valley Conference | 1st - 2nd June 2023 | Switzerland
Web3 Tales | 1st - 2nd June 2023 | Croatia
Prague Blockchain Week | 2nd - 11th June | Prague, Czech Republic
ETH Belgrade | 2nd - 6th June 2023 | Belgrade, Serbia
ETH Seoul | 2nd - 4th June 2023 | Seoul, South Korea
Belgrade Blockchain Week | 2nd - 9th June 2023 | Belgrade, Serbia
[DeFi Definitions]
A new occasional segment exploring one particular aspect of DeFi.
This week: “Proof of stake (PoS)” by Celina Chu.
Proof of stake (PoS) is a consensus algorithm used to validate transactions and create new blocks on the blockchain. In PoS, validators are randomly chosen to validate transactions and create new blocks based on the amount of cryptocurrency they have staked.
Validators are incentivized to act honestly, as they risk losing their staked cryptocurrency if they act maliciously or fail to validate transactions correctly. This mechanism is designed to encourage validators to act in the best interest of the network.
To further ensure the security of the network, PoS introduces a mechanism known as finality. Finality refers to the point in time when a block on the chain becomes immutable and cannot be altered or reversed. In PoS, finality is achieved by requiring validators to stake their cryptocurrency as collateral and imposing penalties if they attempt to validate conflicting transactions or create multiple blocks at the same height.
A key benefit of PoS is that it is more energy-efficient than PoW, as it does not require as much computing power to validate transactions and create new blocks. This makes it a more sustainable alternative to PoW, which has been criticized for its high energy consumption and environmental impact.
The team: founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Ewan Brewster, Tiffany Mac Sherry, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.