This past week, the ProgPoW proposal resurfaced as the Ethereum community's top priority after Ethereum developers voted to move forward with changing Ethereum's mining algorithm. For those who aren't up to speed, ProgPoW is a proposal that aims to block dedicated mining chips (ASICs) from mining a specific chain. ProgPoW belongs to a family of mining algorithms that are ASIC-resistant which also includes Monero's RandomX.
The ProgPoW proposal made an appearance in Ethereum governance last August under the name EIP-1057. At the time, the proposal faced opposition from a significant number of Ethereans who deemed it unnecessary to implement since Ethereum 2.0 is expected to use PoS.
The proposal's proponents tried to sell the proposal as a gradual stepping stone towards PoS. Since the proposal hadn't been audited at the time, discussions around ProgPoW subsided until just last week when it came to the forefront of the Ethereum community's attention.
When developers voted to schedule ProgPoW implementation by next July, things escalated quickly. Given the amount of opposition to the proposal, several community members were worried about the potential of a contentious hard-fork similar to the Segwit2x war on Bitcoin in 2017.
Many prominent community members have shown clear intentions to refrain from running modified node software that incorporates the ProgPoW proposal. Others like Cyrus Younessi have demonstrated the dangers of pushing forward a proposal that doesn't share broad consensus across the community, especially for the DeFi ecosystem.
The debate around ProgPoW made Ethereum core devs keenly aware of their initial lack of communication on the topic. From our assessment, it's not likely that the ProgPoW proposal will be executed since there's a glaring lack of rough consensus. However, this debate has served as a strong reminder that community sentiment matters the most in truly decentralized networks.
State of Digital Assets Event
The recordings from The State of Digital Assets seminar we co-hosted with CMT Digital are now live.
Watch ARK Invest CEO Catherine Wood's insightful keynote on assessing Bitcoin's opportunity here. To catch panels with speakers from TD Ameritrade, Fidelity, CFTC, Square Crypto, Bakkt, and MIT, head on over here.
⚡️ Corona Virus Challenges Bitcoin SoV Thesis
Unless you've been living under a rock, you've probably noticed that the Corona virus crisis has affected our global economy. Initially, the US public market didn't react much to the global crisis, but from Feb 24th onwards, things took a tumble.
Many hoped that Bitcoin would deliver on its promise as a hedge against economic panic. However, while gold prices spiked, BTC followed market trends - resembling more of a risk-on investment.
In our last newsletter, we discussed the attack against DeFi protocol bZx which resulted in more than $300k of losses. The bZx team analyzed the attack and disclosed that a smart-contract vulnerability (wrong checking of slippage protection) was exploited to execute the attack.
The team batched the smart contract and restarted operations just to be hit by a larger attack less than 24 hours later. The new attack was an oracle manipulation attack that resulted in more than $600K of losses.
Shortly after, an individual used an unannounced stablecoin trading pool in the DeFi app Curve and lost more than $560K in stablecoin trades. The problem originated from a smart contract that didn't check for trade slippage.
Sore from the recent bZx drama, the community was vocally upset with the Curve Finance protocol developer who created the protocol as a free service. The backlash led to a thoughtful article that is literally titled "Buliding in DeFi Sucks" - it details the challenges of building a free service for the DeFi community.
Libra Wins the Support of Shopify
A new member is joining the Libra association after a wave of departures including Visa, Mastercard, and Paypal. The new member is e-commerce platform Shopify. Shopify explained that joining Libra would enable building a global payment network that would make it easier to access money. It is worth mentioning that the news was announced shortly after a16z's Chris Dixon hinted that Libra may have to change direction to appeal to regulators. The hinted change would simply make Libra coin a USD-backed stablecoin instead of being backed by a basket of global currencies.
Celo & TD Labs
TD labs (our Network Participation entity) actively participated in the Celo network incentivized testnet and competition. Celo is an interesting project that tries to prioritize user participation in the network through light clients. It was fun to participate and do our small part in the testnet launch. TD Labs ended up winning the "Master Validator Badge", a reward for being in the top 20 validators and earned a spot among the mainnet network genesis validator set.
Disclosure: Token Daily Capital and/or its partners may have exposure to some of the cryptocurrencies mentioned in this newsletter.