The Disrupt Weekend

Zero-knowledge cryptography is the cutting edge of the cutting edge. And general purpose zkRollups are the holy grail for Ethereum scalability. zkRollups work off economies of scale, where more users transacting makes the network cheaper to use. Two of the leading teams competing in the zkRollup space are Matter Labs and Starkware. Matter labs with zkSync 1 and 2, and StarkWare with StarkEx and StarkNet.

StarkEx is a zkRollup by StarkWare that launched in June 2020 with support for general smart contracts (general here refers to the ability for smart contracts to have the functionality to run any arbitrary logic.) Applications can deploy on StarkEx and harness the scalability of a zkRollup.

To date, StarkEx has processed 42M transactions and a cumulative trading volume of $185B across the four protocols it hosts—those being dYdX, ImmutableX, DeversiFi, and Sorare. The network has demonstrated a rate of over 9,000 TPS for trades and 18,000 TPS for transfers. With Ethereum’s ~15 TPS for trades, it is a ~600x increase in scalability.

Transaction fees are inexpensive to the point where, in practice, they have been abstracted away by protocols on StarkEx. ImmutableX is one such example, with $0 gas fees for both minting and trading NFTs. DiversiFi also features $0 gas fees.

zkSync is a zkRollup by Matter Labs that is built for scalable payments, where users can deposit onto the network and transfer between other zkSync accounts at a fraction of the costs on Ethereum. Since mainnet launch in June 2020, it has processed 4M transactions with transfers fees as low as $0.20. Transactions can be paid for with any supported token (e.g. ETH, DAI, RAI) as well as the token that is being transferred—removing the need to hold a token specifically for paying transaction fees.

In July, zkSync also added functionality for NFTs. All NFTs are pinned to IPFS with minting/trading costs of approximately $0.25.

StarkNet is StarkWare’s next iteration of a zkRollup, with a planned alpha mainnet launch this month. Doing so will make it the first zkRollup to feature general smart contracts on a fully composable network—a feat thought to be years away. Composability refers to the ability for applications to coordinate, build on top of one another, and interconnect.

zkSync2 is the next version of the initial zkSync network, aiming to also feature fully composable smart contracts on a zkRollup. The testnet for zkSync2 launched in October with Curve Finance as the initial testnet application. ZkSync2 has also introduced a zkEVM testnet—the first of its kind. A zkEVM is a virtual machine that simulates an environment like Ethereum, allowing Ethereum smart contracts to be deployed on a zkRollup. The zkEVM testnet was first introduced with UniSync, a fork of Uniswap V2, to demonstrate its functionality.

Phase 2 plans for composable smart contracts, which is expected to release on mainnet sometime in the next few months. Alongside it, a new programming language, Zinc, will be natively supported, as will Solidity. Phase 3 introduces privacy, unlocking the other notable feature of zkRollups. This will be done at a time when zk proofs won’t add significant overhead to the system.

Ultimately, be on the lookout for the mainnet releases of both StarkNet and zkSync 2 as this is the future of blockchain scaling as we know it.”

See Also: StarkNet Alpha 4 Release

“As the Layer 2 ecosystem evolves and DAI liquidity grows within these domains, it will become important for users to be able to move DAI between them in a trustless manner. This initiative to Wormhole DAI across Layer 2 ecosystems, starting with Optimism and Arbitrum, will become an integral feature of the fungibility of Layer 2 DAI.

Our proposed design is fully trustless and allows system participants to bridge virtually unlimited liquidity via the instantaneous minting of DAI on the destination domain. This means no longer being at the mercy of a counterparty having available liquidity.

Maker Wormhole is a generalized version of Fast Withdrawals and that it allows DAI transfers across Layer 2 domains. By taking this approach we will be able to seamlessly deploy Maker Wormhole to any L2 after MCD becomes available on that chain.”

See Also: Introducing Aave Arc

“El Salvador, the only country in which bitcoin is a legal tender, is going to build an entire city based on the largest cryptocurrency, President Nayib Bukele told a raucous crowd in a Saturday night presentation at Bitcoin Week in El Salvador.

According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and commercial areas, restaurants, an airport as well as a port and rail service. The city will be laid out in a circle (like a coin) and in the city center will be a plaza that will be host to a huge bitcoin symbol. The city will have no income, property, capital gains or payroll taxes. The government plans on locating a power plant by the volcano to provide energy for both the city and bitcoin mining.

Bukele also said El Salvador plans on issuing $1 billion US “bitcoin bond,” a tokenized financial instrument developed by Blockstream, on the Liquid Network. Of that amount, $500 million will be used to help construct needed energy and bitcoin mining infrastructure and $500 million to buy even more bitcoin.”

SIGHASH_ANYPREVOUT allows a new type of signing option when signing a transaction, allowing a user to sign a transaction without adding a specific output. This code change helps with a variety of technical problems, including one facing the Lightning Network.

Covenants are a proposed change to Bitcoin’s code that would restrict where a user can send their funds. For example, a covenant could restrict where the bitcoin can be sent, so that it can only go to a few whitelisted addresses.

CISA proposes allowing signatures in a single transaction to be aggregated. One of the exciting consequences of CISA is that it can make CoinJoins cheaper. Only time will tell if any of these proposals will make it into Bitcoin.

“Placing bets on which candidate for Federal Reserve chair would be best for cryptocurrencies? The answer might disappoint: Both incumbent Jerome Powell and leading alternate Fed Governor Lael Brainard are seen as having roughly the same impact. Both candidates are seen as taking a tough stance on crypto regulation, but they’re also both seen as dovish – possibly beneficial for bitcoin’s inflation narrative.

Both Powell and Brainard are seen as monetary-policy doves – meaning they would likely be more tolerant of inflation, if given a choice – and that might be a positive for bitcoin given the cryptocurrency’s use by many investors as a hedge against rising prices. They also, generally speaking, share a conviction that cryptocurrencies should not be allowed to grow unfettered to the point where they might threaten the existing financial system.

I think certainly the people who want to see a more active Fed and a more hands-on Fed with regards to any rollout of a central bank digital currency would be backing Brainard.”

See Also: Public Banking vs. Open-Source Money: What Omarova for OCC Means

The South Korean people and an increasing number of major companies in the country have begun to embrace and integrate the metaverse into their everyday lives in new and unexpected ways. Metaverse and AI avatars are popping up in several industries including retail shopping, finance and even public services.

GS Shop introduced home shopping via the metaverse on Tuesday by showing the inner workings of a food production facility. It aimed to reassure customers of the quality of the facility and the food that was for sale.

The deployment of virtual reality has also extended to the public sector. The Seoul City government announced on Nov. 6 that it planned to have built its metaverse platform by 2023, where residents can file civil petitions.”

See Also: Boson Protocol seeks to blend physical and digital marketplaces in the Metaverse

While stablecoins backed by non-cash assets might be more prone to losses, that’s not the same as broader financial instability.

Consider the dot-com bust at the beginning of the century, which wiped out $8 trillion in U.S. stock market wealth—an amount more than 50 times bigger than the stablecoin market—but that did not trigger systemic financial uncertainty.

Conversely, a weakening housing market in 2007 turned into a full-blown financial crisis when a $2.2 billion French fund no one had ever heard of, with a third of its assets in highly rated subprime bonds, suspended redemptions and touched off a run on all financial institutions and the highly rated assets they were using as collateral.

This is not to say that Tether or other stablecoins won’t implode one day, especially given their connection to the volatile crypto markets. Indeed, it’s not hard to imagine situations that could leave stablecoins in a bad feedback loop: large crypto price declines, margin calls, hacks or operational failures, and so on.

But if such a situation comes to pass, and a run begins, the last thing we want is stablecoin issuers to be holding large cash deposits, fast-maturing repos, or ties to borrowers who are at the core of the banking system. It’s better for now to leave stablecoins where they are in the crypto realm, rather than to chain these risky assets to the center of financial markets.”

See Also: Tether’s Troubles Could Soon Include Antitrust Law