Welcome to Protocol, where Coindesk is a weekly summary of the most important stories in cryptocurrency technology development. I’m Margaux Nijkerk from Tech & Protocols Reporter at Coindesk.

In this issue:

• Eclipse launches $es Airdrop and distributes 15% of the token supply
• Risc Zero’s “Infinite” Incentive Testnet is now available
• Bitcoin development proposal to freeze addresses with quantum disorders – even Nakamoto Atoshi
• aethir and credicible introduces the first depin driven credit card

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Network News

Eclipse token generation event: Layer-2, which combines Eclipse, Ethereum and Solana blockchain technology, shared that it was published in the $es token Airdorp. The team behind the network shares that the initial distribution will occur over the next 30 days, with a total of $1 billion tokens being minted, configured to be distributed to community incentives and long-term protocol sustainability. Of the supply, 15% is assigned to airdrop and liquidity regulations for core community members and developers who have supported the network from the start. 35% will support ecosystem growth and research and development aimed at supporting network expansion. Contributors receive 19% of the supply, including team members, on a four-year vesting period and a three-year lockup schedule. The remaining 31% is for early supporters and investors who are eligible for a three-year lockup schedule to commit long-term to Eclipse’s roadmap. – Margaux nijkerk read more.

Risc-zero’s “infinite” incentive test will be live: Infinite, decentralized zero knowledge (ZK) Computing Marketplace with Risc Zero has launched an incentive testnet (We call it “mainnet beta”) Base is Coinbase’s Ethereum Layer-2 network. With an endless “incentivized testnet, developers can build and test applications in their environments as if the protocol was in full live format. This network has already gained early support from industry heavyweights such as Ethereum Foundation, Wormhole, and Eigenlayer. The distributed market for zero-knowledge computing connects people who need zero-knowledge proofs, such as building applications that developers provide rollups, bridges, or privacy, with independent “ZK Prover or Miner” distributed networks that generate and verify those proofs. Instead of relying on centralized stakeholders, this model can be rewarded by donating computing power and doing the encryption work for anyone with the right hardware. – Margaux nijkerk read more.

New Bitcoin proposals to freeze Quantam-vulnerable addresses: A new Bitcoin draft proposal wants to do something that is unthinkable for a long time. A frozen coin protected by a legacy cryptography, including Nakamoto’s wallet wallet before Quantum Computers cracks. It introduces a step-by-step soft fork that turns quantum transition into a clock, according to a new draft proposal co-authored by Jameson Lopp and other Crypto Security Researchers. If the upgrade fails, the coin cannot be transferred. This includes around 1.1 million BTC, like Satoshi and other early miners, tied to early payee addresses. “This proposal differs fundamentally in Bitcoin history, just as the threat posed by quantum computing is fundamentally different from other threats in Bitcoin history,” the author explained as the motivation for the proposal. “Bitcoin never faced an existential threat to cryptographic primitives.” – Shaurya Malwa read more.

First Depin Driven Credit Card: Aethir, a decentralized GPU cloud network, has partnered with trusted finance, a lending protocol, to introduce its first credit card and loan products with a decentralized physical infrastructure network. (depin)). The move is designed to allow Aethir’s native astoken holders and node operators to access Stablecoin credits without having to settle the token. The product, which debuted on Wednesday, allows eligible users to take care of ATH tokens to access the revolving credit line or preload unpublished cards using Solana’s ATH or Stablecoins. Loan approvals and restrictions are determined by a trusted, AI-driven credit engine that evaluates users’ on-chain activity, asset holdings, and transaction history. – Margaux nijkerk read more.

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In other news

• Ripple has expanded its institutional custody services to the Middle East and partners with UAE-based tokenization platform Ctrl Alt to support Dubai-led real estate digitization initiative. By contract, Ctrl Alt uses Ripple’s custody infrastructure to store tokenized property title certificates issued by the Dubai Land Division (DLD) With the XRP ledger (XRPL). – Shaurya Malwa read more.
• Sharplink Games (sbet)a company registered with NASDAQ with an ether-centric cryptocurrency strategy {{eth}}said Tuesday that it has become the largest corporate holder of assets at 280,706 ETH, worth around $840 million at its current price. The company raised $413 million through issuances of more than 24 million shares between July 7th and July 11th, according to a press release. In the past week, I purchased a total of 74,656 ETHs at an average price each. The company said about $257 million of its funding remained for future ETH acquisitions. – Kim Jiang Sandor read more.

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Regulation and policy

• The House on Tuesday did not vote on a procedural allegation to advance the trio of crypto bills, but may vote Wednesday to advance the law. When it won the crypto-focused week on Tuesday, the U.S. House of Representatives’ process for suddenly suspending digital assets bills on procedurally as members of the U.S. House of Representatives opposed the way it developed under Senate control. The legislation still has strong bipartisan support, with more votes scheduled for late Tuesday afternoon, suggesting that the procedural accident could be overcome. The vote was cancelled within 15 minutes of scheduled start, so the issue may not be raised again until early Wednesday. – Jesse Hamilton, Stephen Alpha, Nikhiresh De read more.
• There are 12 ju umpires seated for the criminal trial of tornado cash developer Roman Storm and are scheduled to begin late this afternoon at Thurgood Marshall Courthouse in Manhattan. Seven women and five men from diverse backgrounds and age ranges will decide whether the U.S. Department of Justice can prove beyond reasonable doubt that Storm was involved in a conspiracy to commit money laundering and infringe US sanctions, as well as a conspiracy to run an unlicensed transmission business. – Cheyenne Ligon & Nikireshde read more.

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Base, the layer-2 network of the largest American crypto exchange, Coinbase, is facing tough times following the chain’s strong entrance into the market over a year ago.

Data from the market analytics platform IntoTheBlock shows that the Base ecosystem is under pressure, a challenge driven by the market’s recent dip.

Base Ecosystem Under Pressure

After reaching a peak of $4 billion in total value locked (TVL) in mid-December 2024, Base is now struggling with a TVL of $3.2 billion, according to data from decentralized TVL aggregator DeFiLlama.

Base’s transaction volume has also fallen from $2.2 billion in mid-December to $852 million currently. The network’s revenue has plummeted from $629,000 to less than $192,000 at the time of writing. Additionally, the chain’s active addresses and transactions have tumbled significantly.

Amid the plunge in active addresses and transaction count, IntoTheBlock mentioned that only a handful of tokens now have the majority of their holders in profit, weakening retail interest.

The network shift can also be seen in transaction volumes – IntoTheBlock’s basket of eight Base assets, including Aerodome Finance (AERO), Morpho (MORPHO), and Brett (BRETT), have recorded a 78% decline in on-chain volume since December.

Base’s Past Performance

Before the negative market dynamics, Base was the go-to network for new retail traders. Its daily transactions surged 1,600% in 2024, growing from 372,000 in January to 6.63 million in October. Its TVL also rose by 470% over the same timeframe, with the chain’s share of the global on-chain TVL expanding from 1.07% to 3.59%.

In addition, Base’s daily transactions skyrocketed by 1,900% from 2.1 million to 42.34 million, earning the network a 9% market share in the global daily transaction volume. At some point in November, the chain’s TVL rallied above $10 billion for the first time, making Base the second Ethereum layer-2 network with more than $10 billion TVL, following Arbitrum.

Having recorded such significant growth last year, Base’s current condition raises the question of the network being at a crossroads – if this is a temporary setback or a turning point for the leading layer-2 chain.

However, the year is just starting, and analysts expect an altseason in the coming months. This, plus Base’s ambitious roadmap for 2025, brings hope about the chain’s mid-term trajectory.

Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Ben Schiller, CoinDesk’s Opinion and Features editor.

In this issue:

• Can Based Rollups solve Ethereum’s problem?
• Lido goes modular
• Uniswap finally unveils Unichain
• Ethereum’s Pectra upgrade is coming

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Network news

BASED ROLLUPS TO THE RESCUE: In recent years, Ethereum has embraced a layer-2 scaling roadmap—a plan that encouraged the development of third-party auxiliary networks called “layer-2 rollups”—to help scale the base Ethereum ecosystem. Offloading activity to these upstart networks has helped bring down fees and improve speeds for end-users, but it has led to a massive, deeply fragmented ecosystem of layer 2s. But while layer-2 networks all post data back down to Ethereum, they often struggle to communicate directly with one another, meaning passing assets and data between them can become expensive and cumbersome. There’s also the risk of centralized sequencers: reliance on company-controlled black boxes to pass transaction data between blockchain layers. As a result, some Ethereum developers are pushing rollup tech that takes a new approach to security and interoperability: “based rollups.” Based rollups differ from most existing rollups because they shift execution duties—such as processing transactions—back to Ethereum’s layer-1 rather than handling them on a separate layer-2 network. When someone transacts on a layer-2 rollup, their transaction is processed through a component called a “sequencer.” The sequencer batches multiple transactions and submits them to Ethereum for settlement. While sequencers provide efficiency and generate revenue for rollup operators by strategically ordering transactions, they also introduce a single point of failure. Based rollups avoid this vulnerability by using Ethereum’s built-in sequencing—its massive community of validators—rather than a single centralized sequencer. Rollups like Optimism, Arbitrum, Base, zkSync, and Blast have quickly grown to support larger transaction volumes than Ethereum itself. According to L2Beat, there are currently 140 live layer-2 networks, but the experience of operating between them—passing assets and other data between networks—has become clunky. As Ethereum becomes bigger and layer-2 networks become more integral to its functioning, improving communication between layer-2s—in other words, improving “composability”—has become more important than ever. — Margaux Nijkerk Read more.

LIDO GOES MODULAR: The developers behind Lido, the largest staking service on Ethereum, have proposed revamping the staking platform with modular “vaults.” The new framework would introduce stVaults, a customizable component designed to help Lido accommodate institutions and more complex staking strategies. Lido currently allows investors to pool their ether (ETH) together and “stake” their crypto — locking up their tokens with the network, helping to secure it in exchange for interest. Lido pioneered liquid staking: users get a receipt on their deposits called Lido staked ETH (stETH) that they can trade at any time. With liquid staking on Lido, entering and exiting staking positions became as simple as buying and selling stETH tokens. Lido V3’s stVaults are “modular smart contracts designed to meet the diverse and evolving needs of Ethereum participants,” according to a press release shared with CoinDesk. The upgrade would enable staking setups beyond cut-and-dry liquid staking. Specifically, stVaults will be able to help institutional stakers who want to personalize their staking setups, node operators who want to attract high-volume stakers, and asset managers who want to create new staking use cases. “What is important to understand with customizable infrastructure, is that you can in general build even more complex products,” said Konstantin Lomashuk, the founder of the Lido staking protocol. — Margaux Nijkerk Read more.

UNICHAIN FINALLY: Uniswap Labs, the primary developer behind one of the largest decentralized exchanges (DEX), Uniswap, shared Feb 13 that its long-awaited layer-2 network, Unichain, is now live. Powered by Optimism’s OP stack, Unichain—like other layer-2s on Ethereum—offers faster and cheaper transactions compared to Ethereum’s mainnet. Developers can deploy apps onto the network, which has been optimized specifically for decentralized finance (DeFi) and aims to serve as “the home for liquidity across chains,” according to Uniswap Labs. For Uniswap Labs, the benefit of launching a layer-2 is twofold: it will provide a better experience for users of Uniswap and similar platforms, and it will create a new revenue opportunity in the form of network fees. A representative for Uniswap Labs told CoinDesk that “around 20%” of the chain’s revenue will go directly to the company. Unichain has been in testing since October 2024 and is classified by Uniswap Labs as a “stage-1” rollup, meaning it has elements of decentralization but retains some centrally-controlled safeguards at this early phase. The network is built on the OP Stack, a modular framework that lets developers build interoperable layer-2 chains based on Optimism’s optimistic rollup technology. Several well-known teams have come out with their own OP Stack-based layer-2’s, including Coinbase’s ‘Base’, Kraken’s ‘Ink,’ World’s ‘World chain,’ and Sony’s ‘Soneium.’ “We are anticipating a world of many, many different use cases, of which trading is a small subset,” Adams told CoinDesk in an interview. In collaboration with Ethereum research and development firm Flashbots, the Uniswap team said it has created a Trusted Execution Environment (TEE) on Unichain, a secure area for more sensitive transactions and is meant to optimize the chain for DeFi by allowing for more advanced trades and faster transaction finality. — Margaux Nijkerk Read more.

PECTRA IN APRIL: Ethereum developers have officially set test dates for Pectra, the network’s first upgrade in 11 months, putting it on track for a potential April release date. Pectra will contain an array of improvements — with a special focus on wallets and validators — but it comes at a period of heightened scrutiny for Ethereum, which has recently faced pressure from its community to refocus and catch up with competitors. Ethereum’s core builders decided on Thursday during their bi-weekly “All Core Developers” call to begin testing Pectra on Feb. 26 on the Holesky testnet, with a follow-up test on the network’s Sepolia testnet slated for Mar. 5. Should those tests succeed, the developers will reconvene on Mar. 6 to determine when to launch the upgrade officially. According to Tim Beiko, the protocol support lead at the Ethereum Foundation, developers expect the upgrade to hit mainnet in early April. Pectra — a portmanteau representing two separate upgrades, Prague and Electra — includes eight major improvements to the second-largest blockchain. Among the most-anticipated is EIP-7702, which is supposed to improve the user experience of crypto wallets. The Ethereum community has been facing an identity crisis over the last few weeks. Its native token, ether (ETH), is underperforming against other cryptocurrencies, and competitor networks like Solana have drawn attention and talent from the Ethereum ecosystem — the first-ever programmable blockchain and still the most trafficked. Amid the controversy — much of it directed at the Etheruem Foundation, which coordinates chain upgrades and is currently undergoing a major leadership shuffle — developers are hoping that Pectra will help put the network on steadier footing. — Margaux Nijkerk Read more.

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Money Center

El Salvador Dispatch

Berlín, a city of 20,000 people, is home to El Salvador’s second Bitcoin circular economy. “Bitcoin City already exists. It’s called Berlín,” said one resident. Tom Carreras reports.

LinksDAO Launches on Base

LinksDAO began by selling NFTs, but the market has moved on in the time since.

Regulatory and policy

Hester Peirce, head of the SEC’s new crypto taskforce, says that memecoins likely to fall outside the regulator’s jurisdiction.

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Calendar