The Protocol: Bitcoin's Call for Volunteers, Ethena's USDe, Blast's Blast-Off

In this week's issue of CoinDesk's newsletter on blockchain technology, we've got an exclusive interview with Stacks co-creator Muneeb Ali. PLUS: More than $200 million of blockchain project fundraisings.

AccessTimeIconFeb 28, 2024 at 8:35 p.m. UTC
Updated Mar 9, 2024 at 5:53 a.m. UTC

As the bitcoin (BTC) price pushes past $60,000 for the first time since November 2021, The Protocol is covering what's happening on the technology side of Bitcoin, the world's oldest and largest blockchain. Apparently, help is needed with the volunteer job of helping to manage proposals for Bitcoin software upgrades. We've also got an exclusive interview with Trust Machines CEO Muneeb Ali, co-creator of Stacks, one of the top Bitcoin layer-2 networks – at a time when many new Bitcoin layer-2s are under development.


  • Blast's blast-off, Gauntlet's move to Morpho, Dan Held's new gig, Peter Brandt's $200M bitcoin price target.
  • Ethena's USDe: Deconstructing the financial engineering.
  • Top picks from the past week's Protocol Village column: Dune, Arbitrum Foundation, OpenZeppelin, Lens, Ripple, Axelar, Telos, Input Output.
  • Nearly $240 million of blockchain project fundraisings.

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

Network news

TERRA-FI-ING? If it seems too good to be true, it sometimes is. But hope springs eternal that the crypto project Ethena's new USDe token might prove sustainable despite yields that typically might signify high risk. Described as a "synthetic dollar" rather than a stablecoin, USDe is backed by Ethereum liquid staking tokens such as Lido's stETH, but paired with short ETH perpetual futures positions on derivatives exchanges. As of Monday, the annualized yield was calculated at 24%, and according to DeFiLlama, the project has already pulled in nearly $500 million of deposits. There's an "active discourse among the crypto community as critics fear another Terra-like collapse with an algorithmic stablecoin," analysts at Galaxy Digital wrote last week. Terra, of course, was the project behind the UST stablecoin, which offered 19% returns before its collapse in 2022 touched off a domino-like wave of defaults, bankruptcies, lawsuits and regulatory crackdowns across the crypto industry. Coinbase Institutional researchers noted that the project has a $10 million insurance fund to guard against risks, such as yields flipping negative, but they also worried about its potential to distort market signals: "Should this protocol grow substantially, it could cause a possible imbalance in favor of shorts in the perps market, thus having a disproportionate effect on funding rates." Ethena recently announced a $14 million fundraise, but it got messy after a draft press release went around to media listing investors who hadn't yet committed. To the project's credit, Ethena has gone out of its way to disclose what might go wrong, including funding risk, liquidation risk, custodial risk, exchange failure risk and collateral risk. "We believe it is crucial to highlight the risks associated with USDe, the actions we have taken to mitigate these risks, as well as the future plans to further manage and ameliorate these risks," according to Ethena.


  • Luke Dashjr, the pseudonymous and outspoken Bitcoin developer, tweeted out a call for volunteers to help out with the "thankless and boring job" of serving as a Bitcoin Improvement Proposal editor, noting that there is a backlog of 133 pull requests in the BIP repository. According to Dashjr, the other BIP editor resigned a month ago.
  • Ethereum co-founder Vitalik Buterin tweeted that “one application of AI that I am excited about is AI-assisted formal verification of code and bug finding. Right now Ethereum’s biggest technical risk probably is bugs in code, and anything that could significantly change the game on that would be amazing.”
  • Bitcoin creator Satoshi Nakamoto, in a recently released batch of emails posted by early collaborator Martii "Sirius" Malmi, warned that the original blockchain could one day become an energy guzzler. But he quickly pivoted to what he saw as a reasonable defense: "If it did grow to consume significant energy, I think it would still be less wasteful than the labour and resource-intensive conventional banking activity it would replace," Nakamoto wrote. "The cost would be an order of magnitude less than the billions in banking fees that pay for all those brick-and-mortar buildings, skyscrapers and junk mail credit card offers."
  • User deposits on token mixer Tornado Cash are reportedly at risk following the insertion of malicious code in the protocol's back end, according to a Medium post by community member Gas404. The post explains that a malicious javascript code was hidden from a two-month-old governance proposal submitted by an alleged Tornado Cash developer on Jan. 1. The code redirects deposit data to a public server hosted by the alleged developer.
  • Reddit, in filing to go public on the New York Stock Exchange, disclosed that it has invested part of its excess cash in bitcoin (BTC) and ether (ETH), joining Michael Saylor's MicroStrategy and Elon Musk's Tesla among corporations that have purchased cryptocurrencies.
  • Avalanche, a layer-1 blockchain, suffered its first downtime in at least three years on Friday, officially resolved after six hours. In an incident report, project engineers attributed the outage to "buggy logic" that "led to each node saturating their allocation with useless transaction gossip. This dynamic prevented pull queries issued by the validator from being processed in a timely manner and led to consensus stalling (as no polls were being handled)."

Screenshot from Avalanche's network status website shows last week's outage. (Avalanche)

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

  1. For the past six years, Dune has led the charge in democratizing access to crypto data, establishing itself as the foremost authority in the blockchain sector with an extensive repository of 1.5 million datasets, according to the team. Now, there's "a significant step forward as Dune unveils Dune Datashare, streamlining access to its meticulously curated crypto data through the Snowflake Marketplace."
  2. Arbitrum Foundation, supporting the top-ranked Ethereum layer-2 network, Arbitrum, announced a partnership with OpenZeppelin, a smart-contracts code auditor, "to enable next-generation development on Arbitrum Stylus," according to the team. Currently tagged as an alpha release, Stylus is an upgrade to Arbitrum Nitro, the tech stack powering Arbitrum One, Arbitrum Nova and Arbitrum Orbit chains. It opens the door for developers to write smart contracts in various languages, such as Rust, C, and C++, that compile to WebAssembly (WASM).
  3. Lens Protocol, a decentralized social media platform that's a sister project to the lending protocol Aave and led by Stani Kulechov, is launching out of beta and going permissionless, according to the team: "While in beta, users could join through invites, but there was a waitlist to mint a user profile. Before today, any builder could contact Lens or join a Lens hackathon to build on Lens. Now permissionless, anyone can mint a profile by going to, and any builder can get started by accessing Lens documentation"
  4. Ripple and Axelar Foundation are partnering to integrate the Axelar network with XRP Ledger, according to the teams: "Axelar network's integration with the XRPL aims to help bolster the XRPL DeFi ecosystem by providing essential liquidity for stablecoins and large-cap assets."
  5. Researchers at Telos Foundation, supporting the Telos blockchain, and Input Output Global, known for its work on the Cardano blockchain, have teamed up to publish a white paper revealing a new protocol, "Snarktor," that developers can leverage to scale blockchains more efficiently and securely across millions of use cases via the integration of zk-SNARK technology.

Schematic from the paper illustrating the basic flow of the "Snarktor" aggregation service. (Alberto Garoffolo, Dmytro Kaidalov and Roman Oliynykov/Cryptology ePrint Archive)

Stacks Creator Ali Calls Bitcoin 'Apex Predator' as Development Flourishes on OG Blockchain

Muneeb Ali, co-creator of Stacks and CEO of Trust Machines (CoinDesk TV)
Muneeb Ali, co-creator of Stacks and CEO of Trust Machines (CoinDesk TV)

There's a buzz around Bitcoin these days, and it's got as much to do with the development taking place on the original blockchain – once seen as a sleepy and ultra-conservative ecosystem compared with Ethereum, and its higher frequency of upgrades and greater programmability – as with the newly approved spot bitcoin ETFs that have pulled in billions of dollars from investors.

Bitcoin the cryptocurrency is in the midst of a powerful rally, headed for a sixth straight monthly gain, its longest such streak in three years. With a market capitalization of $1.12 trillion, bitcoin (BTC) accounts for roughly half the value of all cryptocurrencies; put another way, it's worth as much as all other digital assets combined.

But it's the newfound spirit of development that's got engineers and programmers including Muneeb Ali, CEO of Trust Machines and co-creator of the Stacks project, suddenly hitting the talking circuit. Top blockchain tech podcasts are airing episodes about the prospects for Bitcoin layer-2 networks, analysts are scurrying to assess the potential, NFT-like digital art on Bitcoin are fetching tens to hundreds of thousands of dollars, and there's even a new venture-capital fund to plunk down money into Bitcoin DeFi projects.

CoinDesk's Jenn Sanasie interviewed Ali, who has a Ph.D. in computer science from Princeton University, about the flurry of activity, and what he sees as the real breakthroughs that are making it all possible, and what he expects to come of it all. He also spoke about the Stacks project's much-anticipated Nakamoto upgrade, tipped to drastically improve the speed.

Money Center


  •, the biggest liquid restaking protocol, has raised $23 million in a Series A round led by Bullish Capital and CoinFund. The round also included investment from OKX Ventures, Foresight Ventures, Consensys and Amber, among others. CoinDesk is owned by the Bullish Group.
  • Avail, among a handful of new "data availability" blockchain projects designed to handle transaction data produced by the increasingly sprawling networks, announced on Monday a $27 million fundraising led by the venture capital firms Founders Fund and Dragonfly.
  • Longtime Solana contributor Armani Ferrante’s crypto wallet and exchange company Backpack has raised $17 million in a funding round led by Placeholder VC, according to a press release.
  • Flare, describing itself as a layer-1 network for data, has raised $35 million in a private round that included investment from Kenetic, Aves Lair and others, according to a press release.
  • Eigen Labs, the developer behind EigenLayer, the crypto restaking project atop Ethereum that is shaking up the decentralized finance landscape before it's even gone live, raised $100 million from venture capital investor a16z crypto. Eigen Labs confirmed the investment in a thread on the social media platform X.
  • Helius announced the successful closing of a $9.5 million Series A round, according to the team: "Helius, founded by former Coinbase and Amazon Web Services software engineers, has built a suite of tools designed to enhance the developer experience on Solana. The round was led by Foundation Capital, with participation from Reciprocal Ventures, 6th Man Ventures and Solana ecosystem founders, among other funds and investors."
  • Meso, a payment platform connecting banks and blockchains, announced it has raised $9.5 million in a seed round, co-led by Solana Ventures and Ribbit Capital, with participation from 6th Man Ventures, Canonical Crypto, Phantom Co-Founder Chris Kalani, Pinterest CEO Bill Ready and Archie Puri of Bodhi Labs.
  • Validation Cloud, a global node infrastructure provider, raised $5.8 million, led by San Francisco-based Cadenze ventures, and included VCs such as Bloccelerate, Blockchain Founders, Side Door, to provide the necessary foundations for enterprise adoption in Web3, according to the team.
  • Inco, leading developer of a universal confidentiality layer for Ethereum and other networks, has secured $4.5 million in a seed round led by 1kx, and launched its testnet Gentry, according to the team.
  • Astar Network developer Startale Labs, a developer of Japanese Web3 products, Aiming to accelerate the mass adoption of Web3, has raised an additional $3.5 million from UOB Venture Management and Samsung Next, according to the team.
  • Geodnet has raised $3.5 million to build "the world’s largest real-time kinematics network," according to the team.
  • Binance Labs, the venture capital and incubation arm of Binance, has invested an undisclosed sum in Babylon, a Bitcoin staking protocol, according to a blog post.

Deals and Grants

Regulatory, Policy and Legal

Uniswap's UNI Led CoinDesk 20 in February as Bitcoin Boomed

Every member of the benchmark CoinDesk 20 Index of large digital assets was in the green during February. Bitcoin (BTC), the largest and oldest cryptocurrency, gained for a sixth straight month, rising 45% and pushing past $60,000 for the first time since 2021 – as enthusiasm rose along with billions of dollars of inflows into new bitcoin spot ETFs. Bitcoin's all-time-high price around $69,000 is now very much in sight, though obviously anything goes in notoriously volatile crypto markets. The CoinDesk 20 Index was up 37% during the period, vastly outperforming the S&P 500's 2.6% month-to-date increase.

CoinDesk 20 Index (yellow line) charted versus S&P 500 (white) and gold (red), through Feb. 26. (Tracy Stephens/CoinDesk Indices)
CoinDesk 20 Index (yellow line) charted versus S&P 500 (white) and gold (red), through Feb. 26. (Tracy Stephens/CoinDesk Indices)

The big leader in the CoinDesk 20 during February was the decentralized exchange Uniswap's UNI token, soaring 79% as the project's governance lead, Erin Koen, proposed a new mechanism that would reward token holders who stake and delegate tokens. (According to the author "defioasis," writing in the Wu Blockchain newsletter: "Assuming the proposal is passed and 1/10 to 1/4 of the LP fees are distributed as protocol fees to UNI holders, then UNI holders could receive approximately $62.62 million to $156.5 million in annual dividends.")

Polygon's MATIC token, one of the biggest losers in digital-asset markets over the past year, staged a bit of a recovery, rising 36%. Even so, it trailed the 49% gain for Ethereum's native cryptocurrency, ETH, which was lifted by speculation that the token might win approval for its own spot ETF. Stellar's XLM token trailed with a 13% rise, even as the decade-old network underwent a major upgrade to increase its programmability via the "Soroban" smart-contracts project.

Select members of the CoinDesk 20 Index, with their month-to-date returns through Feb. 28. (Tracy Stephens/CoinDesk Indices)
Select members of the CoinDesk 20 Index, with their month-to-date returns through Feb. 28. (Tracy Stephens/CoinDesk Indices)


Edited by Bradley Keoun.


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.