Author: Michelle Lazo

Starknet, a Layer-2 network on Ethereum, is poised to open staking on its ecosystem by the end of 2024. The announcement, made by StarkWare’s CEO Eli Ben-Sasson at the Ethereum Community Conference in Brussels, marks a significant milestone in Starknet’s decentralized journey. This article explores the details of the Starknet staking launch, its phased rollout, and the potential opportunities for users and developers.

Starknet Improvement Proposal: Eli Ben-Sasson introduced a Starknet Improvement Proposal that outlines the staking process for the Starknet ecosystem. According to the proposal, users will have the option to become stakers, with rewards proportional to the amount of STRK tokens staked. Stakers will be required to lock their tokens for a 21-day period before being able to withdraw their funds, ensuring a commitment to network security and stability.

Phased Rollout of Staking: The staking rollout will occur in several stages. Initially, stakers will need to connect to Starknet, interact with the staking contracts, and adhere to the proposed protocol rules. This first main stage is crucial for setting up the foundational aspects of staking on Starknet. StarkWare and the Starknet Foundation will closely monitor users’ staking habits to inform future updates and enhancements to the staking mechanism.

Real-Time Attestations and Sequencing: In subsequent stages, stakers will provide real-time attestations to the content of blocks, further securing the network. The final stage will see stakers performing sequencing and proving activities, fully securing the Starknet network. This phased approach ensures a thorough and secure implementation of staking, gradually increasing the responsibilities and rewards for stakers.

Building the Staking Community: Ben-Sasson emphasized the importance of this staking initiative in building a robust staking community and technology. “As Starknet continues its decentralized journey, StarkWare is excited to propose the first stage of staking,” he said. “This is an important step in building the staking community and technology, offering new opportunities for users and developers.”

Impact on the Ethereum Ecosystem: The introduction of staking on Starknet is expected to have a significant impact on the broader Ethereum ecosystem. As a Layer-2 solution, Starknet aims to enhance Ethereum’s scalability and reduce transaction costs. By enabling staking, Starknet can attract more participants, thereby increasing network security and fostering a more decentralized and resilient ecosystem.

Opportunities for Users and Developers: The Starknet staking launch presents numerous opportunities for both users and developers. Users can earn rewards by staking their STRK tokens and actively participating in network security. Developers, on the other hand, can leverage the enhanced security and scalability of Starknet to build more efficient and innovative decentralized applications.

Community Involvement and Governance: The success of the Starknet staking initiative will largely depend on community involvement and governance. The Starknet community will play a pivotal role in approving the SIP and shaping the future of staking on the network. By engaging with the community, StarkWare aims to ensure that the staking mechanism aligns with the needs and expectations of its users.

Conclusion: The Starknet staking launch set for the end of 2024 marks a crucial step in the network’s evolution. With a well-structured phased rollout, Starknet aims to build a robust staking community and enhance its security and decentralization. As the Ethereum ecosystem continues to grow, the introduction of staking on Starknet will provide valuable opportunities for users and developers, contributing to a more scalable and efficient blockchain environment.

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Vitalik Buterin, co-founder of Ethereum, recently delivered a keynote at the Ethereum Community Conference in Brussels. His talk focused on “hardening” the Ethereum blockchain, addressing both its strengths and weaknesses. The discussion provided insights into the current state and future direction of the Ethereum ecosystem, a topic of great importance to the estimated 1,100 attendees.

Strengths of the Ethereum Blockchain: Buterin highlighted several strengths of the Ethereum blockchain. One of the primary advantages is its large and reasonably decentralized staking ecosystem. This decentralization is crucial for maintaining the integrity and security of the blockchain. Furthermore, Ethereum boasts a highly international and intellectual community, which contributes to its innovative and dynamic nature.

Weaknesses and Addressable Issues: Despite its strengths, Buterin acknowledged that Ethereum has its weaknesses. One significant issue is the difficulty of solo staking, which requires 32 ETH to become a validator. This high entry barrier limits participation and centralizes validation power. Additionally, running a node is technically complicated, posing another barrier to broader participation. However, Buterin emphasized that both of these issues are addressable through technical improvements and community efforts.

Proposals for Improvement: Buterin discussed various technical improvements aimed at addressing Ethereum’s weaknesses. These improvements focus on simplifying the protocol to make it more robust and easier to use. He argued that a simplified ecosystem is essential for its long-term success, stating, “If you want a robust ecosystem, it needs to be simple.” This simplification would eliminate unnecessary complexities and enhance the overall functionality of the blockchain.

Addressing Transaction Censorship: Transaction censorship is another concern for Buterin. He proposed increasing the quorum threshold from 75% to 80% as a potential solution. This increase would make it harder for malicious actors to execute attacks and help maintain the blockchain’s integrity. The proposal aims to ensure that recovering from chain attacks, particularly after finalization, becomes more manageable.

Concerns About 51% Attacks: Buterin expressed concerns about the possibility of a 51% attack on the Ethereum blockchain. He suggested that in such an event, the Ethereum community should rally together, force a minority soft fork, and slash the attacker. However, he acknowledged that this approach relies on several assumptions about coordination and ideology, making it challenging to implement effectively in the long term.

Historical Context and Future Directions: Buterin has been a frequent speaker at EthCC, addressing various challenges and milestones in Ethereum’s development. In 2023, he discussed issues surrounding abstraction, and in previous years, he provided insights into Ethereum’s evolution ahead of significant updates like the Merge. His ongoing engagement with the community underscores his commitment to Ethereum’s continuous improvement.

Conclusion: Vitalik Buterin’s keynote at EthCC highlighted both the strengths and weaknesses of the Ethereum blockchain. By focusing on decentralization, community engagement, and protocol simplification, Ethereum can address its current challenges and pave the way for a more robust future. The proposed technical improvements and increased quorum threshold aim to enhance the blockchain’s security and functionality. As Ethereum continues to evolve, the insights and strategies shared by Buterin will play a crucial role in shaping its trajectory.

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Multicoin Capital, a leading U.S. investment firm focused on cryptocurrency, has announced a pledge of up to $1 million to support Senate candidates with favorable views on the crypto industry. The firm plans to back four Republican candidates—Sam Brown in Nevada, David McCormick in Pennsylvania, Bernie Moreno in Ohio, and Tim Sheehy in Montana—through donations to the conservative super political action committee  Sentinel Action Fund.

Matching Crypto Donations

Multicoin’s support will depend on the outcome of Sentinel’s crypto donation drive. According to Sentinel’s website, Multicoin will match 100% of Solana (SOL) token donations sent to the PAC by July 14. Gemini is hosting the group’s crypto donations portal, accepting a variety of tokens, including SOL.

“We’re doing this because we realize that political engagement matters, and it starts with supporting the candidates who believe America needs to remain free for innovation,” said Multicoin Managing Partner Kyle Samani.

Bipartisan Support for Crypto-Friendly Candidates

Multicoin Capital, along with its leaders Kyle Samani and Tushar Jain, has previously supported pro-crypto candidates across party lines. Despite donating to Sentinel, a conservative group, Multicoin identified Sentinel as aligned with its crypto interests due to the specific candidates it is backing this cycle. All four Republican candidates supported by Sentinel have received “A” ratings from the Coinbase-led crypto advocacy group Stand With Crypto.

Candidate Ratings

While the opponents of these candidates are not uniformly critical of cryptocurrency, three out of four are rated as “neutral” or better by Stand With Crypto. However, Ohio Senator Sherrod Brown has received an “F” rating, partly due to his strong opposition to the crypto industry.

Strategic Political Investment in Crypto

Multicoin’s decision to support these races is driven by a desire to flip the Senate to Republican control. This shift could alter the balance of power in agency appointments and other key areas where crypto companies intersect with the federal government, such as the courts.

Tech Rollout: Dialect’s “Blink” Technology

The matching pledge also serves as a high-profile test of Dialect’s newly debuted “Blink” technology. This technology allows users of X  to execute on-chain Solana transactions through their social media posts. Blink will enable Solana users to donate to Sentinel via X and prompt donors to fill out required Federal Election Commission documentation.

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The value of cryptocurrency stolen in hacks worldwide more than doubled in the first six months of 2024 compared to the same period last year, driven by a few large-scale attacks and increasing crypto prices, according to blockchain researchers at TRM Labs.

Surge in Crypto Theft

Hackers stole over $1.38 billion worth of cryptocurrency by June 24, 2024, compared to $657 million in the first half of 2023, TRM Labs reported. The median theft size was one-and-a-half times larger than the previous year.

Ari Redbord, global head of policy at TRM Labs, noted, “While we have not seen any fundamental changes in the security of the cryptocurrency ecosystem, we have seen a significant increase in the value of various tokens—from Bitcoin to ETH (Ether) and Solana—compared to the same time last year.”

Increased Motivation for Cybercriminals

Rising cryptocurrency prices have motivated cybercriminals to target crypto services more aggressively. The increased value of tokens means that successful hacks result in larger hauls for attackers.

Crypto prices have rebounded from their late 2022 lows following the collapse of Sam Bankman-Fried’s crypto exchange, FTX. Bitcoin hit an all-time high of $73,803.25 in March 2024.

Major Thefts

One of the largest crypto thefts this year was the $308 million worth of Bitcoin stolen from Japanese crypto exchange DMM Bitcoin. The company described the incident as an “unauthorized leak.”

Cryptocurrency companies are frequent targets for cyberattacks, but thefts of this scale remain relatively rare. In 2022, stolen cryptocurrency volumes were around $900 million, with a significant portion attributed to the over $600 million stolen from a blockchain network linked to the online game Axie Infinity. U.S. authorities have connected North Korean hackers to that theft.

North Korean Cyber Activities

The United Nations has accused North Korea of using cyberattacks to fund its nuclear and missile programs. North Korea has denied these allegations of hacking and cyberattacks.

Implications for the Crypto Industry

The significant increase in cryptocurrency thefts highlights the ongoing challenges the industry faces in securing digital assets. As the value of cryptocurrencies continues to rise, so does the incentive for cybercriminals to exploit vulnerabilities.

Conclusion

The first half of 2024 has seen a dramatic rise in cryptocurrency thefts, with hackers stealing more than double the amount taken in the same period last year. As the crypto market continues to evolve, the industry must remain vigilant and invest in robust security measures to protect against increasingly sophisticated cyber threats.

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Prices for major cryptocurrencies, as well as shares of Coinbase Global (NASDAQ:COIN) and MicroStrategy (NASDAQ:MSTR), slumped on Friday as the collapsed crypto exchange Mt. Gox began paying back creditors.

Nobuaki Kobayashi, the trustee for the Mt. Gox bankruptcy estate, announced that the estate has “made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors through a part of the Designated Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan.” He noted that other creditors would be “promptly” repaid once certain conditions were met, ensuring that payments could be made “safely and securely.”

Bitcoin and Ether Prices Drop

As of 10:45 a.m. ET Friday, Bitcoin (BTC) was trading around $55,700, down roughly 2.4%. Ether (ETH) was also down about 3.4%. The anticipation of the Mt. Gox news, which Kobayashi indicated last month would occur in July, had already begun to impact the crypto market. The latest announcement sent Bitcoin to its lowest level in five months.

Mt. Gox Hack and Its Aftermath

Mt. Gox was once the world’s largest crypto exchange, handling 70% of Bitcoin transactions at its peak. A hack in 2014, which resulted in the loss of an estimated 740,000 Bitcoin, led to the exchange’s collapse. The ongoing repayments to creditors have continued to create uncertainty in the market.

Impact on Coinbase and MicroStrategy

The repercussions of the Mt. Gox repayments have also been felt by Coinbase and MicroStrategy. Coinbase reported $935 million in revenue from customer crypto trading in the first quarter, double what it was in the fourth quarter. MicroStrategy disclosed in its first-quarter financial report that it owns 214,400 Bitcoin.

As of 10:45 a.m. ET Friday, Coinbase shares were down about 5% to $213.87, while MicroStrategy shares fell more than 6% to $1,220.11. Despite these declines, shares of Coinbase and MicroStrategy have surged about 23% and 93% year-to-date, respectively.

Market Reactions and Future Outlook

The anticipation and realization of the Mt. Gox repayments have created significant volatility in the crypto market. Investors are closely watching how the repayment process will unfold and its potential impact on Bitcoin and other cryptocurrencies. The continued distribution of the Mt. Gox estate could lead to further fluctuations in the market.

Conclusion

The Mt. Gox repayment process has significantly impacted the crypto market, causing a notable drop in Bitcoin and Ether prices. Shares of Coinbase and MicroStrategy also experienced declines amid the news. As the repayment process continues, market participants will be keenly observing the developments and their implications for the broader cryptocurrency landscape.

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