The Protocol: Google Pushes Deeper into Blockchain

Alert readers of The Protocol will remember our smart feature last month on the concept of “restaking” on Ethereum – essentially a way of sharing the blockchain’s security among other protocols and networks. For today’s issue, our Margaux Nijkerk sat down for an interview with Sreeram Kannan, the University of Washington computing professor who now serves as founder of EigenLayer, the most well-known among restaking pioneers. (Spoiler alert: He acknowledges the systemic risks flagged by Ethereum co-founder Vitalik Buterin.)

Also in this week’s issue:

You're reading The Protocol, CoinDesk’s weekly newsletter that explores the tech behind crypto, one block at a time. Subscribe here to get it every week.

James Tromans, Google Cloud’s head of Web3. (CoinDesk TV)

GOOGLE BLOCKCHAIN: In a sign that big tech companies are nosing into blockchain, Google’s cloud-computing division is increasingly popping up in crypto news headlines, and top executives focused on Web3 are making the rounds with media. Last week, Google Cloud announced it would add 11 networks including Polygon, Optimism and Polkadot to its ‘BigQuery’ program for public datasets, originally set up for Bitcoin in 2018 and later expanded to additional chains including Ethereum, Litecoin and Dogecoin. “Over the past 18 months we’ve been investing in this space, we’ve continued to hire, we’ve continued to grow not only our business development and our go-to-market teams but also our product and engineering capabilities,” James Tromans, Google Cloud’s global head of Web3, told CoinDesk TV in an interview last week. “We’re not just fly-by-night.” On Sept. 14, Orderly Network, a decentralized exchange designed for white-labeling, posted on X that it would “exclusively develop off-chain components of DeFi infrastructure” on Google Cloud, and that it would be “actively involved in alpha testing Google’s Web3 innovations.” Over the past couple years, Google has announced business initiatives with BNB Chain, Celo, Polygon, Celo, Axie Infinity, LayerZero Labs, Solana and Tezos. It bears reminding readers that Google’s push to develop quantum computing has been posited as an existential threat to the blockchain industry, since theoretically such ultra-fast machines might be able to crack the cryptography underpinning digital-asset networks.

ETHEREUM’S BAD RAP: How has the Ethereum blockchain performed since April’s Shapella upgrade, which allowed staking withdrawals for the first time? It might depend on whom you ask, and how you ask the question. In a widely-circulated report, JPMorgan analysts noted that “the increase in network activity has been rather disappointing.” According to the bank’s calculations, the daily transaction count over the network has fallen by 12%, and daily active addresses are down 20%. The analysts acknowledged the steep drop in Ethereum’s energy consumption as a result of the “Merge” shift to a proof-of-stake network a year ago, as well as the overall reduction in issuance of new ETH – a bullish factor. But Akash Mahendra, director of Haven1 Foundation, which supports the Haven1 network, notes that the acute focus on Ethereum alone might take too myopic a view – since it might ignore the rapid growth of layer-2 networks that work atop Ethereum and have absorbed many of the transactions that might otherwise take place on the layer-1 blockchain. The build-out “yielded substantial improvements in scalability and alleviated congestion on the mainnet,” Mahendra said in emailed comments. Even so, transaction activity on Ethereum has been so anemic lately that the supply curve has recently reverted to being inflationary. A fresh source of criticism is that Ethereum developers appear to have fallen behind in their push toward the next big upgrade, known as Dencun. Galaxy’s Christine Kim wrote last week that the developers are now cautioning that they are unlikely to activate Dencun this year if they can’t get the upgrade launched on a test network before Devconnect, an Ethereum-focused conference set for mid-November in Istanbul.

YOU SNOOZE, YOU LOSE: Arbitrum Foundation, which maintains the development of the Arbitrum blockchain, said Sunday it had transferred 69 million (worth $59 million) in unclaimed ARB tokens to the network’s treasury, after the claim period ended.

BUT ARE YOU WINNING? The median pay globally among 570 blockchain engineers surveyed was $120,000, with those in North America getting $193,000, up 1.5% versus the prior year, according to a new Pantera study. (The study also found that 97% of crypto-industry employees take their salaries in fiat currencies, and that 88% of roles are remote.)

ALSO:

Mixin Network has confirmed a report from SlowMist, a blockchain security consultancy, that it was hacked for nearly $200 million on Sept. 23. Mixin said there was an attack on the database of its cloud service provider; snarky posters on X (Twitter) noted that the database was under centralized control, creating a single point of failure.

Curve founder Michael Egorov deposits $35M in CRV tokens to settle debt on Aave.

The Bitcoin blockchain is going through another round of congestion due to Ordinals inscriptions.

Pudgy Penguins NFTs have inspired a toy collection at Walmart.

Crypto influencer Ben Armstrong, founder of Bitboy crypto channel, was arrested while live-streaming on X; the BEN token price plunged.

Bitcoin miner Marathon reportedly mined an invalid block due to a “transaction ordering issue:”

Schematic of the invalid block on the main Bitcoin network. (OxB10C/X)

Highlighting blockchain tech upgrades and developments.

1. Blocknative to suspend MEV-Boost Relay as CEO Matt Cutler says the economics failed to "materialize."

2. Push Protocol, the Web3 communication network formerly known as EPNS, which includes a dedicated channel for distributing CoinDesk news directly to users who opt in through their wallet addresses, has launched its own “Push Snap” on MetaMask. “You can now seamlessly receive notifications powered by Push Protocol directly in your wallet, ensuring you never miss out on important updates from the channels that you subscribe to,” according to the description on the MetaMask Snaps website.

3. Circle and Stellar announced that the euro-linked stablecoin EURC, available on the Ethereum and Avalanche blockchains, will be going live on the Stellar Network.

4. Immunefi, a bug bounty and security services platform for Web3, announced the launch of its on-chain Vaults System, designed to increase transparency and trust between projects and security researchers by enabling projects to deposit assets into their own sovereign vault to pay out bug bounty rewards.

5. Arbitrum users can now trade Bitcoin mining power with each other, using the hashpower marketplace Lumerin.

Fundraisings

Deals and grants

Data and tokens

Blockchain projects and startups have netted more than $100 million of funding in each of the past three weeks, according to FundStrat. “A trend has developed of projects beginning to emerge from stealth development and announcing their product updates or new fundraises,” according to the analysis firm. “Projects may be seeing light at the end of the tunnel of this bear market and think it is the right time to emerge.”