CoinDesk Reports

With all the multiple, differing blockchain and tokens now live on the crypto universe, it’s hard not to worry the industry is recreating the same problems of the original internet. 

This episode is sponsored by PumaPay.io.

This week, co-hosts Michael Casey and Sheila Warren are joined by Denelle Dixon, CEO of Stellar Development Foundation, and Peng Zhong, CEO of Tendermint.

Developers will emphasize that their particular blockchain protocol is decentralized and devoid of gatekeeping intermediaries. But how do users move assets across those chains and how can one chain validate the transactions in another? More precisely, how do you do that without once again having to rely on a trusted intermediary to act as a conduit of information or custodian of value? This is eerily reminiscent of the Web 2.0 internet structure that arose at the turn of the century, an economic model that now dominates our lives and falls far short of the early internet founders’ dreams of an open, decentralized system. As Web 2.0 consolidated around large “walled garden” platforms whose corporate owners were the sole gatekeepers to those platforms’ data, we handed immense power to a few key internet companies. 

How do we avoid making the same mistake again? The answer seems to lie in interoperability protocols and cryptographic tools that essentially stitch blockchains together in a way that users of each can trust information and asset management systems managed by the others, all without a need for trusted custodians. 

Much is happening in this field. Protocols such as Polkadot, founded by the Berlin-based Parity Labs outfit of early Ethereum developers Gavin Wood and Jutta Steiner, is setting itself the lofty goal of creating the next internet via the aptly named Web3 Foundation. There are blockchains focused on financial interoperability such as Ripple’s Interledger and Stellar. And there’s Cosmos, the blockchain of blockchains developed by Tendermint, which provides a suite of tools for blockchain developers to build cross-chain applications. 

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington chat with the CEO and founder of Allnodes, Konstantin Boyko-Romanovsky. Allnodes is a blockchain node hosting, monitoring and staking service supporting over 25 cryptocurrency networks.  

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Among the networks for which Allnodes provides hosting services, Boyko-Romanovsky said, the set up for validator nodes on Ethereum 2.0 was by far “the most stressful.” 

“Ethereum 2.0 is like playing Diablo in nightmare mode. I didn’t sleep well for two months when Ethereum [2.0] was launched because there is a risk of slashing,” said Boyko-Romanovsky.

The risk of slashing, or getting penalized, on Eth 2.0 is greater for staking-as-a-service platforms like Allnodes than for individual users. According to Edgington, this is by design in order to encourage network decentralization.  

“The Ethereum [2.0] protocol was not designed with staking services in mind. It was very much designed for individual stakers,” he said. “It is deliberately not supposed to be easy for [staking] services.” 

Even so, Edgington noted that among staking services Allnodes consistently operates the best-performing Eth 2.0 validator nodes in terms of rewards earned. 

While Boyko-Romanovsky attributed most of that success to “luck,” he also noted that using a single Eth 2.0 software client, Teku, and investing time into understanding Teku enabled him and his team to make “improvements” to their validator set-up based on their knowledge.

The trio also discussed the downfall of decentralized finance (DeFi) protocol Iron Finance and Mark Cuban’s call for action from U.S regulators in light of the fiasco. To listen to the full discussion, check out this week’s episode of “Mapping Out Eth 2.0.” 

Links mentioned in this podcast:

• CoinDesk article about Iron Finance token price crash (https://www.coindesk.com/iron-finance-says-it-suffered-cryptos-first-large-scale-bank-run-in-token-crash-postmortem)
• Iron Finance blog post (https://ironfinance.medium.com/iron-finance-post-mortem-17-june-2021-6a4e9ccf23f5)
• Mark Cuban’s statement in Bloomberg (https://twitter.com/TheStalwart/status/1405536487630798859/photo/1) 

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This week, “Opinionated” co-hosts Ben Schiller, Anna Baydakova and Danny Nelson are talking to Jonathan Koomey, researcher and book author.

This episode is sponsored by PumaPay.io.

Koomey, the author of “Turning Numbers into Knowledge: Mastering the Art of Problem Solving” and “Cold Cash, Cool Climate: Science-Based Advice for Ecological Entrepreneurs,” spent a lot of time studying and debunking the current narrative around bitcoin’s impact on the environment. 

In 2019, he conducted a study for CoinCenter, titled “Estimating Bitcoin Electricity Use: A Beginner’s Guide,” where he separates real numbers from baseless assumptions. Koomey likes to run numbers and he’s indifferent to bitcoin, so he stays cool above the raging fire of the bitcoin climate debates. 

How much electricity does bitcoin actually consume? Is it a lot, and compared to what? What are the most reliable sources of actual numbers? Is buying carbon offsets a good way to make your bitcoin “green”? 

Listen as Anna, Ben and Danny discuss these complicated topics with Jonathan.  

Jonathan Koomey’s Twitter handle is: @jgkoomey.

Materials mentioned in this episodes:

• Jonathan Koomey’s research for CoinCenter: “Estimating Bitcoin Electricity Use: A Beginner’s Guide”
• Jonathan Koomey’s books: “Turning Numbers into Knowledge: Mastering the Art of Problem Solving” and “Cold Cash, Cool Climate: Science-Based Advice for Ecological Entrepreneurs”
• Cambridge Centre for Alternative Finance: Cambridge Bitcoin Electricity Consumption Index (CBECI) 
• Danny Cullenward and David G. Victor, Making Climate Policy Work

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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As society moves increasingly online, so do the kinds of risks that businesses face. With cybercrime growing exponentially and businesses liabilities expanding as they accumulate giant honeypots of sensitive user data, this week’s Money Reimagined explores a new approach toward risk, one fueled by a blockchain mindset.

• An analysis of the state of cybercrime with the explosion in ransomware attacks
• The new mindset based on principles of openness and decentralization
• The case for resiliency and cost-based risk tolerance over efficiency and total protection

This episode is sponsored by PumaPay.io.

Hosts Michael Casey and Sheila Warren are joined by Dante Disparte, chief strategy officer and head of global policy at Circle whose career was previously centered on radical insurance innovation, and digital pioneer Pindar Wong, chairman of VeriFi, an internet infrastructure consulting firm.

A recent report from Cybersecurity Ventures predicted cybercrime costs are on track to total $6 trillion this year. If cybercrime were a country, it would be the third latest economy in the world.

How can a blockchain mindset reduce those costs? The Colonial Pipeline attack was a case study in the danger of centralization. The wider distribution of value, data and attack points that’s inherent to decentralized blockchain technology, as well as its collective witness feature and the power of collective, iterative improvement in open-source development hints at more effective strategies for managing such risks. 

It comes down to a different framing for how to strengthen security. The classical notion of “secured versus not secured” is a prohibitive way of thinking that ignores the grey areas of “at-risk.” Is a healthcare model, with different levels and types of sickness, a more constructive mindset?

With governments poised to introduce CBDCs around the world – tempting cybercriminals with the biggest honeypots of them all - a new antifragile risk-management framework is crucial for society as these changes shape the digital future. 

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss why the term “validator” is a misnomer on Ethereum 2.0 and the different ways decentralization can be measured on a proof-of-stake (PoS) blockchain. 

This episode is sponsored by PumaPay.io.

The community behind the PoS network, Avalanche, attacked Kim on Twitter for her use of the term “validator” when describing the growth of the Eth 2.0 network. 

“The kind of comments I was getting was, Christine, you’re misleading and intentionally misrepresenting the growth of the Ethereum network. You don’t know what you’re doing,” said Kim. “And to that, I obviously got very riled and said, ‘No, I’m not using this term wrong.’”

In the context of Ethereum 2.0, validators affirm the validity of blocks and transaction data on the network in exchange for earning rewards in the form of interest on a minimum locked deposit of 32 ether. Their growth is directly correlated to the amount of total stake on Eth 2.0 but not with the number of machines or computers, also called “nodes,” running Eth 2.0 client software. This is because a single node can run multiple Eth 2.0 validators concurrently. 

In comparison, a validator on other PoS blockchains such as Avalanche is equivalent to a single node. On these blockchains, having more validators indicates increasing levels of network decentralization and resiliency against single points of failure. 

“Having 10 beacon nodes with one validator each is 10 times more resilient than having one beacon node with 10 validators. So from that point of view, it’s better to have one [validator] per node,” Edgington said. “But what if your 10 nodes are all hosted on [Amazon Web Services] and AWS goes down? It’s the same, right? So, in a sense, you don't really learn much by that comparison.”

In Edington’s view, nodes like Eth 2.0 validators can still be “politically centralized” and controlled by a single user or entity, which is why a blockchain that is architecturally decentralized by the number of nodes may not be politically or logically decentralized. 

The term “validator” on Eth 2.0 can still be misleading for other reasons, the primary of which is that Eth 2.0 validators don’t really validate anything. Beacon chain nodes ensure block validity while the role of validators is to attest and affirm the finality of these blocks. 

Listen to the full conversation between Kim and Edgington on this week’s Mapping Out Eth 2.0 episode where they discuss the role and function of validators on Eth 2.0, as well as the impact of El Salvador’s announcement about bitcoin as legal tender in the country.

Links mentioned in this podcast: 

• The Meaning of Decentralization by Vitalik Buterin (https://medium.com/@VitalikButerin/the-meaning-of-decentralization-a0c92b76a274)   
• El Salvador’s Legislature Votes to Adopt Bitcoin as Legal Tender (https://www.coindesk.com/its-official-el-salvadors-legislature-votes-to-adopt-bitcoin-as-legal-tender) 

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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This week, “Opinionated” co-hosts  Ben Schiller, Anna Baydakova and Danny Nelson dig deep into two of the biggest storylines in crypto: the proliferation of ransomware (and what crypto’s got to do with it) and El Salvador’s upstart bid to become a global bitcoin capital.

This episode is sponsored by PumaPay.io.

Just over a month after ransomware group DarkSide held gas company Colonial Pipeline hostage for $4.4 million in bitcoin, there’s been a major development. The feds say they’ve gotten most of the payment back – an almost unheard of feat, and one shrouded in mystery.

How did they pull it off? The gang runs through some of the most popular theories, from FBI honeypot mixing services to good old police work. Then, they hash out what it might take to pull off the perfect crypto crime.

Even as the U.S. is moving to (possibly) crack down on bitcoin, another nation, El Salvador, is racing to embrace it. President Nayib Bukele closed out Miami’s crazed bitcoin conference with the blockbuster news that he’d make bitcoin legal tender. It's being framed as a means to give El Salvador’s majority unbanked population access to financial services – but is that really the case?

Ben, Anna and Danny discuss these and other topics, plus an update on where the ESG movement stands. 

Ben Schiller’s Twitter handle is: @btschiller

Anna: @baidakova

Danny: @realDannyNelson

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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In the early days of blockchain technology, decentralized autonomous organizations (DAOs) seemed like a far-out, unattainable idea. How could an organization, a company or a collective, ever manage itself without anyone in charge? 

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Then came the launch of The DAO, an Ethereum-based investment vehicle that subsequently collapsed due to a devastating hack, which in appropriating the acronym gave it a dirty name. It seemed real, functioning DAOs would forever be a pipe dream.

Yet, thanks largely to the success of decentralized finance (DeFi), DAOs are now here. They’re real. 

In this week’s episode, we explore how developers and investors are working through the complex process of bridging the human and legal needs of the outside world with these complex, decentralized systems run by blockchains, automated smart contracts, “multisig” tokenized collateral agreements. 

We were joined by two great guests, who helped us turn what might be otherwise seen as a nerdy topic into one of huge significance for the future of investing, innovation and economic development: 

Rune Christensen, chief executive officer of the Maker Foundation, which founded MakerDAO, the first truly successful DeFi DAO on the Ethereum blockchain, which generates the algorithmic stablecoin, dai. 

Ian Lee, managing director of IDEO Co-Lab Ventures and a co-founder of Syndicate, which enables groups of investors to fund DeFi projects and other ventures using DAOs and DAO-like structures. 

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington interview Kosala Hemachandra, the co-founder and CEO of My Ether Wallet (MEW), about MEW’s two-step solution to staking on Ethereum 2.0.

This episode is sponsored by PumaPay.io.

“Whenever we see a bottleneck, whenever we see a problem, like an accessibility problem for us … that’s where we jump in,” said Hemachandra. “We’re like, okay, let’s reduce it down to three steps maximum and then let’s take [users] through these steps and then it'll make it easy for them to get into Ethereum and use Ethereum. Therefore, Ethereum will grow.” 

Hemachandra has watched Ethereum grow from as early as 2014 when the network was merely a technical concept defined by a yellow paper. When the network officially launched in July 2015, Hemachandra noticed a major pain point for users trying to access the network. 

There was no user-friendly interface to send and receive on-chain transactions. 

As a back-end developer and web programmer by trade, Hemachandra along with his co-founder Taylor Monahan created MEW as a wallet service that could offer users an alternative for interacting with the Ethereum blockchain, which at the time could only be done through a command line interface. 

Fast forward to 2021 and a lot has changed about Ethereum, as well as MEW. 

MEW is one of several crypto wallet services actively helping onboard new users to the Ethereum blockchain, which has now amassed a market capitalization of over $272 billion. Ethereum has also spawned a second, parallel blockchain network known as the Ethereum 2.0 Beacon Chain on which ETH holders can stake their coins and earn rewards. 

Eth 2.0 is envisioned to one day replace Ethereum’s existing consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS) and thereby significantly reduce the overall energy costs of the network. 

Similar to 2015, Hemachandra noticed another pain point at the creation of Eth 2.0. 

“[To stake,] you have to be knowledgeable in running nodes, running validators, having them on 24/7, and like a lot of backend stuff,” said Hemachandra. “That’s when we jumped in. We’re like, okay, a regular user will not be able to accomplish these things so we have to make it easy for them.”

This was how the idea to introduce staking services on MEW was born. Since launching their staking services in December 2019, close to $200 million worth of ether has locked into Eth 2.0 using MEW’s 2-step solution. 

To learn more about the MEW’s Eth 2.0 staking services and what Hemachandra sees as the next major pain point on Ethereum to solve, listen to this week’s episode of Mapping Out Eth 2. 

Links mentioned in this podcast: 

• MEV estimations by Ryan Berckmans (https://twitter.com/RyanBerckmans/status/1401586370678829069) 
• Overview of MEV concerns on Ethereum 2.0 (https://hackmd.io/@Izzy-/Eth2VevStaking) 
• Vitalik Buterin’s ideas around MEV (https://ethresear.ch/t/proposer-block-builder-separation-friendly-fee-market-designs/9725) 
• What is Flashbots? (https://github.com/flashbots/pm) 
• Quarterly review of the staking industry by Staked (https://staking.staked.us/state-of-staking) 

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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DeFi, as the world of decentralized finance is known, is growing up. 

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Venture money is being dedicated to the space, decentralized finance (DeFi) liquidity protocols are being upgraded to add flexibility, and so-called layer 2 solutions are being deployed to help scale this vibrant new, ever-evolving decentralized financial system while preserving decentralization. The community has also just successfully gone through a stress test in the form of a sharp decline in crypto prices, which produced none of the systemic risk fallout that some people had hypothesized would arise at such times for DiFi collateral contracts. 

So, where does this strange new world of finance go from here? In part, that question is about governance and regulation. How will the decentralized autonomous organizations (DAOs) that run the DeFi ecosystem’s various interoperable protocols connect the choices of its human investors with the decentralized, pseudonymity-dependent, on-chain consensus mechanisms on which these smart contracts depend? And what, if anything, should or could external government regulators and internal self-regulators do to protect people if the machines that run it all go bad?

For insights into how this fascinating new environment is shaping up, listen in while we chat to Rebecca Rettig, general counsel of Aave, and Marc Boiron, general counsel at decentralized exchange dYdX, about all of the above. 

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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In this week’s episode, CoinDesk’s Christine Kim and Consensys’ Ben Edgington discuss major investments in layer 2 Ethereum scaling solutions and debate whether Elon Musk’s attempts to “greenwash” the Bitcoin network are working. 

This episode is sponsored by PumaPay.io.

Over the last few months, investments in Ethereum startups focusing on layer 2 technologies have been on the rise. 

In late March, billionaire investor Mark Cuban made an investment in Polygon, previously known as the Matic Network. Polygon enables users to send transactions on Ethereum with greater speed and lower cost by moving computations to a separate side blockchain or “sidechain.” 

On March 1, venture capital firm Union Square Ventures led a Series A funding round for Matter Labs, another Ethereum layer 2 scaling solution. In February, Silicon Valley VC Andreessen Horowitz led a $25 million investment for the team behind the Optimistic Ethereum Network, another still yet different layer 2 Ethereum-scaling service. 

“It seems like capital galore going into layer 2s and if any of our listeners we’re around for Consensus [last] week, we also heard a lot of [decentralized finance] developers … talking about how layer 2 scaling is going to be the solution to one of their biggest challenges, which is high fees and limited transaction throughput on Ethereum,” Kim said. 

Along with greater investment in various layer 2 scaling solutions, there is heightened competition among these startups. As end users have started to compare and contrast the merits of one layer 2 solution over another, controversy has been brewing on social media according to Edgington.  

“There are trade-offs all over the space and it’s hard to see how this is going to fall out,” he said. “With Polygon, it’s certainly gaining a lot of traction and [its future] will depend on how people feel in the long term about the security trade-offs in the security model.”

Speaking of controversies, Edgington and Kim also discussed Elon Musk’s latest attempts to improve the environmental footprint of the Bitcoin blockchain by creating a new “green” initiative within the North American Bitcoin mining community. 

While Edgington viewed these efforts as nothing more than a “PR effort to greenwash Bitcoin,” Kim pushed back on whether these efforts could make a significant impact in making bitcoin mining more energy sustainable in the long run. 

Even if bitcoin mining were to become more sustainable, Edgington noted bitcoin would still consume magnitudes more energy than Ethereum’s proof-of-stake (PoS) blockchain because PoS doesn’t rely on intensive computer computations for network security but instead relies on the collective stake, or wealth, of users. 

To listen to the full debate between Edgington and Kim on bitcoin’s energy consumption, listen to this week’s episode of Mapping Out Eth 2.0. 

Links mentioned in this podcast: 

• What’s New In Eth2 (www.eth2.news)   
• Valid Points (https://www.coindesk.com/newsletter/valid-points)   

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750,000,000 PMA tokens are now up for grabs. By depositing today, you will become part of the next evolution of DeFi payments. Go to PumaPay.io.

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