Protocol – Earlybirds Invest https://earlybirdsinvest.com Latest Crypto News Sun, 07 Sep 2025 16:08:05 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.7 https://i0.wp.com/earlybirdsinvest.com/wp-content/uploads/2024/12/cropped-New-Project-2024-12-17T235703.455.png?fit=32%2C32&ssl=1 Protocol – Earlybirds Invest https://earlybirdsinvest.com 32 32 240146708 Venus Protocol Halts Activity After User Falls for $13.5 Million Crypto Scam https://earlybirdsinvest.com/venus-protocol-halts-activity-after-user-falls-for-13-5-million-crypto-scam/ https://earlybirdsinvest.com/venus-protocol-halts-activity-after-user-falls-for-13-5-million-crypto-scam/#respond Sun, 07 Sep 2025 16:08:04 +0000 https://earlybirdsinvest.com/venus-protocol-halts-activity-after-user-falls-for-13-5-million-crypto-scam/

A user on the decentralized lending platform Venus Protocol lost $13.5 million after unknowingly approving a malicious transaction.

The attack did not exploit any flaw in Venus Protocol itself but instead took advantage of a phishing scam, where the user was tricked into giving access to their wallet.

Blockchain security firm PeckShield first reported the incident on September 2. Initially, they estimated the loss at around $27 million, but later adjusted this figure to $13.5 million after accounting for the user’s outstanding debt.

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Following community concerns, Venus Protocol addressed the situation on X. The team confirmed that there was no technical issue with the platform and stated that the problem likely came from the user’s end.

When asked directly if this was caused by user error, Venus Protocol replied:

Right now, yes, that appears to be the case. We will keep everyone updated as we investigate.

The platform was temporarily paused while internal security checks were carried out.

Although Venus Protocol’s systems were not breached, the team still decided to suspend operations briefly to make sure nothing else was at risk. They also reassured users that smart contracts remained secure and fully operational.

The scam occurred around the same time as another phishing-related event. Users holding WLFI governance tokens from World Liberty Financial were also targeted in a separate wallet exploit that same day. How? Read the full story.


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Venus Protocol Reclaims $13.5 Million After Zoom-Based Wallet Hack https://earlybirdsinvest.com/venus-protocol-reclaims-13-5-million-after-zoom-based-wallet-hack/ https://earlybirdsinvest.com/venus-protocol-reclaims-13-5-million-after-zoom-based-wallet-hack/#respond Fri, 05 Sep 2025 11:50:40 +0000 https://earlybirdsinvest.com/venus-protocol-reclaims-13-5-million-after-zoom-based-wallet-hack/

On September 4, Venus Protocol successfully returned $13.5 million in cryptocurrency to a user whose wallet had been compromised in a phishing scheme linked to North Korea’s Lazarus Group.

The attack took place on September 2 and involved the use of a tampered Zoom application. After the victim unknowingly installed it, they were tricked into handing over control of their wallet.

After the transactions began, two of Venus Protocol’s security partners, Hypernative and HExagate, flagged the unusual activity. Their early warning allowed the platform to temporarily pause operations.

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Venus Protocol then checked its systems to make sure the issue did not come from within. The investigation confirmed that neither the protocol’s smart contracts nor its user interface had been altered or compromised.

To recover the stolen funds, Venus Protocol held an emergency governance vote. The outcome approved a forced liquidation of the attacker’s wallet. This action allowed the platform to seize the stolen tokens and move them to a secure recovery wallet.

According to Venus, the full recovery, from detecting the suspicious behavior to transferring the funds, was completed in under 12 hours.

Kuan Sun, the victim of the phishing attack, later thanked the teams involved and said the outcome was a win in a situation that could have ended much worse.

On September 3, World Liberty Financial (WLFI) blacklisted compromised wallet addresses before its token launch. How? Read the full story.


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Protocol Update 003 — Improve UX https://earlybirdsinvest.com/protocol-update-003-improve-ux/ https://earlybirdsinvest.com/protocol-update-003-improve-ux/#respond Fri, 29 Aug 2025 10:31:56 +0000 https://earlybirdsinvest.com/protocol-update-003-improve-ux/

A few months ago, we announced a renewed focus of Protocol on three strategic initiatives: Scale L1, Scale blobs, Improve UX. Following previous updates on Scale L1 and Scale blobs, this note relates to our “Improve UX” track, and its mission:

Seamless, secure and permissionless experience across the Ethereum ecosystem, for individuals and institutions.

We see interoperability, and related projects presented in this note, as the highest leverage opportunity within the broader UX domain over the next 6-12 months, in our position as a public, core Ethereum R&D group.

The near-term strategy focuses on areas we believe will continue to be fundamental components of interop: Intent-based architecture and general message-passing. For both, our aim is to focus on clear, measurable protocol metrics to drive down latency and cost, while increasing security and trustlessness. These metrics include: Signatures per operation, time-to-inclusion, time-to-fast-confirmation, time-to-finality, and time-to-L2-settlement.

We divide our work in three streams:

  1. Initialisation: Make intents more modular and lightweight, and strengthen shared standards for seamless and secure movement of assets across all chains.
  2. Acceleration: Drive latency and costs down, accelerate efforts for faster inclusion, confirmation, finality, and settlement.
  3. Finalisation: Integrate frontier consensus (fast finality) and cryptography (SNARKs with real-time proving) to unlock fast, permissionless crosschain messaging.

Why focus on interop?

The Ethereum ecosystem is composed of our L1 mainnet and the many L2s that permissionlessly extend Ethereum beyond the L1’s boundaries. These extensions provide critical entry points and scaling opportunities for Ethereum, yet also bring their own challenges, chief among them the pressures of fragmentation on the Ethereum experience and its economy.

There are many potential definitions of what it means to “solve interop” and the extent to which interop is already solved. While much of the infra and tech is ready (or soon will be), there are several steps remaining to actually get these solutions into the hands of all users and inject it seamlessly into their daily UX.

At its simplified core, the key ingredients to accelerate interop boil down to unlocking fast crosschain message-passing and standardisation. Currently, message-passing is partially bottlenecked by slow settlement times. While work continues to remove these bottlenecks, we have infrastructure we can leverage today to solve the most common user flows and provide a unified experience across the Ethereum ecosystem.

Still, interop is not the only UX issue facing Ethereum users. At the end of this note, we highlight distinct EF initiatives dealing with different aspects of user-centric development, with a stronger accent on security and privacy. Beyond, many more opportunities to improve Ethereum UX will be sought and delivered by projects in our ecosystem. We look forward to celebrating their achievements and continuing to collaborate in order to strengthen the core properties of Ethereum.

Stream 1: Initialisation

Intents are one mechanism to improve UX for crosschain interactions, abstracting away the complexities of crosschain mechanics and distilling the outcome of an action. We define intents as a high-level expression of what a user wants to achieve onchain, without prescribing the exact low-level transactions that should be executed. Intents are declarative (“I want this outcome, I’m flexible about how it’s achieved”), whereas transactions are prescriptive (“call this contract with these parameters”).

The intent layer sits between order-flow interfaces (wallets) and deeper interoperability infrastructure (bridges, either canonical or private). As such, it is a strategic point to support, leveraging both the wallets’ expertise to provide the best UX and the bridges’ ability to settle the many assets deployed across Ethereum.

Yet intent protocols can often introduce trust assumptions on solver intermediaries, which can create censorship vectors and privacy issues. Other approaches, like crosschain messaging bridges or the Ethereum Interoperability Layer (EIL), also advance interop without solver dependencies. Taken together, these efforts broaden the design space for interoperability.

Project #1: Open Intents Framework

Takeaway: Laying down the foundation of neutral infrastructure supporting intents-based crosschain protocols.

The Open Intents Framework (OIF) provides modular infrastructure for each of the intent layers: Origination, fulfillment, settlement and rebalancing. It is an extensible framework laying the groundwork for further refinements, towards more secure, cheaper and faster settlement of user interactions across chains. The Open Intents Framework is a collaborative effort including core contributors from the Ethereum Foundation plus Across, Arbitrum, Hyperlane, LI.FI, OpenZeppelin, Taiko, Wonderland, and many others – a meaningful step forward for a unified yet differentiated approach to interoperability.

The OIF was built from the ground up to be as lightweight and customisable as possible, in order to accommodate different requirements and use cases across Ethereum’s ecosystem of L2s. This modularity and customization allows for easy swapping of each piece of the intents stack, to make it easy to switch out mechanisms which may have weaker trust assumptions or security guarantees. The OIF is committed to improve settlement guarantees including security, censorship resistance and privacy.

Production-ready smart contract implementations of the Open Intents Framework are live today with architecture diagrams and developer documentation. Through Q3 2025, contributing teams are finalising smart contract foundations and standards, completing auditing, and adding a few more validation mechanisms. In Q4 2025, the OIF will have completed the open-source solver and crosschain validation module. Teams will have access to the full reference solver implementation with configurable chain subscriptions, automated rebalancing capabilities, and modular validation supporting major crosschain verification protocols. New chains will be able to deploy production solvers immediately upon launch, eliminating the traditional months-long integration cycles.

Project #2: Ethereum Interoperability Layer

Takeaway: A trustless, censorship-resistant transport layer, making cross-L2 transactions feel like single-chain transactions.

The Ethereum Interoperability Layer (EIL) focuses on making Ethereum feel like one chain again, without compromising on CROPS values (censorship-resistance, open-source, privacy and security).

EIL is led by the Chain and Account Abstraction team, creators of the ERC-4337 protocol. EIL is a trustless cross-L2 interop layer, enabling seamless multichain transactions while keeping the user in control, preserving privacy and Ethereum-level censorship resistance. While intents are a declarative abstraction (“I want this outcome”), the Ethereum Interoperability Layer focuses on prescriptive execution via transactions (“here are the exact calls to make”) without trusting intermediaries.

A public design document will be released in October, with more details provided at Devconnect.

Project #3: Interop standards

Takeaway: Reducing user and developer friction across the stack with common protocols for crosschain operations.

Finally, a large set of standards will support the expansion of OIF and EIL, establishing unified design principles from the user to interop backends. These standards include Interoperable addresses (ERC-7828 and ERC-7930), asset consolidation (ERC-7811) and multi-calls (ERC-5792) for improved wallet and app UX, as well as neutral message-passing infrastructure, such as an intent standard (ERC-7683) and a common messaging interface (ERC-7786).

To date, ERC-7683 has been reviewed and revised by a group of contributors from Across, Uniswap, LI.FI, and OpenZeppelin. The main change is a higher-level interface redesign to support multiple intent origination flow, specifically for new flows such as Resource Locks and direct-to-filler transfers. In the spirit of flexibility and modularity, the revised standard will also include different auction mechanisms (e.g., Dutch, first-come first-serve) and allow for compatibility with other open-source initiatives like multi-chain inputs and interoperable addresses.

Stream 2: Acceleration

While Stream 1 builds basic services required for a neutral, user-centric and secure interoperability stack, Stream 2 aims to raise the speed limits on every node and link of the network. We focus on four key metrics detailed in the sections below: L1 time-to-inclusion, L1 time-to-strong-confirmation, L1 time-to-finality and L2 time-to-settlement.

Project #4: Fast L1 Confirmation Rule

Takeaway: Receive fast and strong L1 confirmations in 15-30 seconds instead of waiting 13-19 minutes for full finality.

Faster confirmation times are consistently cited as one of the biggest requirements for better interop across the Ethereum ecosystem. The structure of Ethereum’s Proof-of-Stake mechanism has attesters voting on the current state of the chain every slot, with full finality trailing by many slots. However, there is already a way to get faster confirmation with provable safety, but this is not well-known and usable at the moment.

Brief overview of the fast confirmation rule: Utilises the accumulated votes of attesters to provide a lower (but still strong) degree of confirmation at a much earlier point in time, while full finality is later obtained (the same exact way it is today). Under well-specified models of an adversary, a faster confirmation rule offers provable safety and represents an attractive option for mechanisms relying otherwise on full finality. We will make this fast confirmation rule usable by implementing it in all consensus clients and work to integrate its endpoint with projects interested in decreasing latency for their users.

Roberto Saltini and Mikhail Kalinin (Consensys) currently lead the specification of the fast confirmation rule and its proof of correctness. The TxRx team (Consensys) is implementing the rule in Teku, while Terence Tsao (Offchain Labs) has provided an early implementation for Prysm and Harsh Pratap Singh (EPF Fellow) is working on a Lighthouse implementation. With further simplifications expected to the specs, and a simpler path to implementation, we target Q1 2026 for availability of the fast confirmation rule in all consensus layer clients, and will work with partner projects for integration.

Project #5: Shorter L1 slots

Takeaway: Performing the research and engineering groundwork for reducing L1 slot times asap.

Significant UX improvements are obtained from shorter L1 slots, and we aim to initially target 2x shorter slots, from 12 seconds to 6 seconds. Halving the slot time not only halves time-to-L1-inclusion for L1 users, but additionally halves the time-to-strong-confirmation and the time-to-finality for consumers of these confirmation rules. This allows faster settlement, less capital in flight, and reduced fees and latency for users of interoperability protocols, as well as a greater incentive to use secure L1 settlement.

The project requires multiple workstreams: Robust data analysis for network performance and centralisation pressures (currently involving Maria Inês Silva, Sam Calder-Masson and Toni Wahrstätter), specifications of consensus and execution layer changes (involving Dankrad Feist, Justin Traglia and Milos Stankovic) and client implementations (early work from Milos Stankovic and Jihoon Song). Much of this work is independent from slot restructuring efforts such as moving to EIP-7732, enshrined Proposer–Builder Separation.

Project #6: Shorter L2 settlement

Takeaway: Reducing latency to move assets out of rollups decreases rebalancing costs and increases service quality of intents.

Optimistic rollups settle in the order of 7 days, once a long enough challenge window has remained open to contest the published state of the rollup. Shorter withdrawal windows allows for faster movement of assets from the rollup, and lowers rebalancing costs for solvers, i.e., lowers cost for users of intent protocols. It is a key lever for intents to settle greater volumes at cheaper fees. Much progress here is already underway thanks to the efforts of many across L2 and ZKEVM teams. We will work to support optimistic rollups interested in implementing ZK-based real-time proving, and/or moving to a secure 2-out-of-3 faster settlement mechanism.

Stream 3: Finalisation

The final frontier of interoperability on Ethereum is attained with two pieces of technology: Real-time proving and fast finality. Our aim will be to accelerate research and prototype initiatives to bring forward the timelines of each. To highlight the open-ended nature of this stream, we call projects here “Explorations”.

Exploration #1: Interoperability snarkification

All Protocol activities must reckon with the acceleration of SNARKs towards broad availability. For instance, the “Scale L1” track plans early work towards the progressive integration of this technology in the core of the Ethereum protocol. Likewise, it is not possible today to ignore the snarkification of everything, in particular as it relates to interoperability solutions.

With a robust intents-based approach to crosschain UX, the objective is to continue accelerating and solidifying the backends of these systems, to the point of lowest friction. Fast settlement allows for fast liquidity rebalancing, cutting costs for intent users. And beyond reduced costs and latency, we believe that snarkification has the potential to redraw the map of asset issuance, bridge primitives and crosschain programmability, enabling among other things synchronous composability with L1. Getting ahead of this revolution puts us in control to steer our network towards the futures that we desire.

With some SNARK-based versions of the faster L2 settlement mechanism described in Project #6, optimistic rollups have the potential to unlock a “fast root” against which their state can be assumed to be settled. Yet it is also possible to permissionlessly obtain this fast root, and “zkSettle” against it. In particular, this form of settlement may be introduced as a mechanism available through the Open Intents Framework (Project #1), ensuring the most robust form of intent settlement and maximal user protection.

Exploration #2: Faster L1 finality

We propose exploring all paths to bring finality forward from today’s 13-19 minutes to the order of seconds. First, shorter slots as described in Project #5 will halve the finality time, bringing us to 7-10 minutes. Second, beacon chain changes could accelerate it further, down to 1-2 minutes. Finally, replacing our current consensus protocol, Gasper, with a leaner and faster protocol, will yield an extra order of magnitude improvement, with target finality obtained in under 10 seconds.

The EF Protocol Consensus team is working on several projects illuminating the decision tree for a robust, performant and decentralised consensus protocol. 3-slot-finality (3SF) is a well-understood protocol obtaining strong safety with dynamic availability, a combination unique to protocols such as Ethereum’s. Explorations in newer classes of protocols such as Kudzu, Hydrangea or Alpenglow reveal opportunities for improvements on 3SF with lower latency and higher throughput, but must be designed for Ethereum’s unique properties.


Improving UX has grown to become a multi-faceted effort, with several distinct streams of work tackling issues from interoperability, security and privacy. With this note, we’re clarifying our own interoperability work, and invite you to find more details on Trillion Dollar Security and the Kohaku privacy wallet below.

Trillion Dollar Security

Led by Fredrik Svantes and Josh Stark, the Trillion Dollar Security (1TS) initiative is an ecosystem-wide effort to upgrade Ethereum’s security to help bring the world onchain. Phase 2 of 1TS tackles UX, including better models of clear signing, key management and wallet security and privacy standards.

Kohaku

Led by Nicolas Consigny and Vitalik Buterin, the Kohaku project develops the necessary technology to power wallets that are private across their entire stack. The project is developed in collaboration between the EF and various external teams. Kohaku’s core goals are (i) an SDK that exposes strong privacy/security primitives and (ii) a power‑user wallet that ships on top of that SDK. In a first phase the project will focus on the browser extension that targets advanced users introducing privacy and security features. The extension is designed to preserve privacy while reducing trust assumptions and eliminating unnecessary external dependencies. The project will ship with Helios lightclient, a privacy‑service abstraction, support for private addresses, native private balances & private sends.

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Protocol Update 002 – Scale Blobs https://earlybirdsinvest.com/protocol-update-002-scale-blobs/ https://earlybirdsinvest.com/protocol-update-002-scale-blobs/#respond Sat, 23 Aug 2025 01:39:29 +0000 https://earlybirdsinvest.com/protocol-update-002-scale-blobs/

Following up from Protocol Update 001, we’d like to introduce our approach to blob scaling. The L1 serves as a robust foundation for L2 systems to scale Ethereum, and a necessary component of secure L2 solutions is data availability provided by the L1. Data availability ensures that updates L2s make back to the L1 can be verified by anyone. Blobs are the unit of data availability in the protocol today, so scaling the blob count per block is a key requirement to usher in a wave of L2 adoption for use cases like real-time payments, DeFi, social media, gaming, and AI/agentic applications.

Our work is structured as a series of incremental changes to Ethereum’s blob architecture. To accelerate our rate of scaling, we are expanding from a “fork-centric” philosophy to also ship incremental optimizations in non-breaking ways as they become ready. Thus, we have the following projects tied to both network upgrades, but also the periods in between (“interfork”).

TL;DR

  • Fusaka introduces PeerDAS, a new data architecture that allows blob scaling beyond today’s throughput levels from 6 blobs/block up to 48 blobs/block
  • Blob Parameter Only (BPO) forks gradually increase mainnet blob count, bolstered by incremental peer-to-peer bandwidth optimizations
  • Advanced networking techniques planned for Glamsterdam iterate on the PeerDAS design to scale even further
  • Mempool sharding preserves Ethereum’s values as data continues to scale
  • Research into the next generation of DAS unlocks an evolution in secure DA scaling

PeerDAS in Fusaka

The first milestone is the delivery of PeerDAS in the upcoming Fusaka network upgrade. PeerDAS introduces data availability sampling (DAS), where an individual node only downloads a subset of the blob data in a given block. Together with randomized sampling per node, computational load is bounded, even as the total blob count increases. As nodes no longer need to download all the blobs in a block, we can raise the blob count without a commensurate increase in node requirements.

Fusaka is expected later this year with implementations in all Ethereum clients. Extensive testing has been performed on development networks (“devnets”) including non-finality scenarios and adversarial “data withholding” conditions. At this point in the R&D process, we continue to harden existing devnets and plan deployment to testnets and mainnet. Barnabas Busa is leading the charge here to ensure smooth progression through the final stages of the upgrade pipeline.

PeerDAS v1.x

We have two prongs of non-consensus changes in our strategy to progressively scale blobs in between the Fusaka and Glamsterdam upgrades: BPOs and bandwidth optimizations. These are additive as better bandwidth utilization lets us leverage resources towards higher throughput.

BPO

PeerDAS introduced in Fusaka sets the stage for a theoretical increase of 8x from the throughput of Ethereum today (i.e. ~64 KB/s to ~512 KB/s). Rather than immediately jump to this theoretical max at the time of Fusaka deployment, core developers have elected for a more gradual increase via “blob parameter only” hard forks. This mechanism lets core developers program automatic increases in blob capacity over time, keeping us on a continuous growth trajectory. Once programmed, BPOs don’t require any manual intervention to activate. In between steps, we’ll monitor the network and react to scaling bottlenecks that may only present themselves on mainnet, paving the way for the next increase. Barnabas Busa along with others on the EF PandaOps team work closely with the client teams to distill the correct schedule to achieve the 8x scaling from today.

Bandwidth optimizations

There’s a lot we can do to more efficiently use bandwidth on the network. Raúl Kripalani along with Marco Munizaga are leading efforts on this network engineering work. A particularly promising optimization is the introduction of “cell-level messaging” which allows nodes to more intelligently query for parts of the samples introduced in PeerDAS. This change reduces redundant communication on the network, and the bandwidth savings can, in turn, be dedicated to the safe provisioning of even more blob capacity. No consensus or execution protocol changes are needed to unlock this milestone, so they can be shipped interfork before Glamsterdam next year.

PeerDAS v2

This project refers to the next generation of the PeerDAS design that affords even more scale while capitalizing on the bandwidth savings realized from pipelining introduced by EIP-7732 (scheduled for inclusion in Glamsterdam). There are further refinements to cell-level messaging and data reconstruction techniques that let nodes more flexibly sample individual parts of blobs so that the core idea of DAS can be expressed in full. These gains, along with the pipelining benefits that allow for more efficient utilization of the time between blocks, set us up to scale beyond the limits of imminent PeerDAS designs. There are many moving pieces, and exact numbers need to be calibrated to both performance of implementations and mainnet analysis as the blob count is actually scaled in a production setting, but this work should give us the final multiples on DA throughput before needing to seek alternative designs.

This batch of updates will go into the Glamsterdam upgrade expected in the middle of 2026. Alex Stokes and Raúl Kripalani are coordinating the R&D here to ensure we can keep scaling blob throughput.

Blobpool scaling

While the benefits of scaling are clear, we must do so while preserving Ethereum’s core values. One of these directly relevant to blob scaling is censorship resistance. The mempool serves as a decentralized network for blob inclusion and directly provides censorship resistance in the face of a centralized builder network producing most blocks on Ethereum. While instances of censorship have improved over time, it is tantamount to the scaling strategy to also ensure the blob mempool scales with it.

Csaba Kiraly is leading work here so we can maintain this critical resource. Current implementations support near-term blob throughput with vigorous research into the best ways to scale the mempool as we get to higher levels unlocked with Fusaka and beyond.

Future of DA

Beyond future iterations of PeerDAS, we have a variety of research directions to keep scaling DA while retaining the security properties of Ethereum that make it unique. Proposals generally fall under the moniker FullDAS with several flavors under active investigation. A key component of these proposals all involve innovations in peer-to-peer networking that allow for a highly diverse set of participants to shard an increasing number of samples while remaining fault tolerant to adversarial actors. Work such as Robust Distributed Arrays formalizes this notion. Other considerations include low-latency inclusion, censorship resistance, and evolutions of the blob fee market to make it easier to get blobs onchain.

Research here is stewarded by Francesco D’Amato and is very active – reach out if you’d like to collaborate!

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Aave reaches multiple all-time highs as protocol hits $3 trillion deposits https://earlybirdsinvest.com/aave-reaches-multiple-all-time-highs-as-protocol-hits-3-trillion-deposits/ https://earlybirdsinvest.com/aave-reaches-multiple-all-time-highs-as-protocol-hits-3-trillion-deposits/#respond Sat, 16 Aug 2025 11:13:58 +0000 https://earlybirdsinvest.com/aave-reaches-multiple-all-time-highs-as-protocol-hits-3-trillion-deposits/

Aave reached multiple all-time highs this week, fueled by the heated crypto market.

The money market protocol reached $3 trillion in cumulative deposits on Aug. 15, while surpassing $29 billion in active loans on August 13, according to Token Terminal data.

Additionally, Aave’s total value locked (TVL) climbed to a record high above $40 billion on Aug. 14, based on DefiLlama data. 

The achievements come amid DeFi lending emerging as the second-largest category with $75.3 billion in combined TVL.

Lending sector shows strong growth

DeFi lending protocols collectively manage $75.3 billion in total value locked across 540 protocols, making it the second-largest DeFi category behind liquid staking’s nearly $81 billion. 

The lending sector has posted a strong recent performance with 18.7% growth over the past month, outpacing most other DeFi categories. Furthermore, active loans reached roughly $43 billion on August 13, a new record for the sector.

Within this landscape, Aave commands a dominant position with approximately 66.7% market share of the DeFi lending market. Aave’s nearest competitor, Morpho, holds just $6.3 billion in deposits. As a result, Aave is nearly six times larger. 

The protocol’s TVL has grown 25.7% over the past 30 days, with active loans increasing by nearly $8 billion (38%) in the same period. This growth trajectory positions Aave among the top 41 US-chartered commercial banks by deposit volume, ahead of established institutions like Barclays.

Token performance and growth outlook

The AAVE token has surged 138% from its 2025 bottom on April 8. Aave founder Stani Kulechov projects the platform could reach $100 billion in net deposits before year-end, which would place it among the world’s 35 largest banks on par with Deutsche Bank.

The protocol’s expansion has been driven by institutional adoption and strategic partnerships. 

Nasdaq-listed BTCS uses Aave to generate yield on Ethereum holdings, while $6.4 billion of Ethena’s USDe stablecoin and related assets are deposited on the platform.

Aave’s multiple records this week demonstrate the protocol’s evolution into a potential institutional-grade financial infrastructure, capturing market share as traditional finance institutions increasingly integrate decentralized lending services.

Mentioned in this article
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S&P Global Assigns First-Ever B- Credit Rating to DeFi Platform Sky Protocol https://earlybirdsinvest.com/sp-global-assigns-first-ever-b-credit-rating-to-defi-platform-sky-protocol/ https://earlybirdsinvest.com/sp-global-assigns-first-ever-b-credit-rating-to-defi-platform-sky-protocol/#respond Mon, 11 Aug 2025 09:50:47 +0000 https://earlybirdsinvest.com/sp-global-assigns-first-ever-b-credit-rating-to-defi-platform-sky-protocol/

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S&P Global Ratings has issued a B- issuer credit rating to Sky Protocol, formerly known as Maker Protocol, in the first-ever rating by a major credit agency for a decentralized finance (DeFi) platform.

Key Takeaways:

  • S&P Global gave Sky Protocol a first-ever B- credit rating for a DeFi platform.
  • The agency flagged risks including high depositor concentration, centralized governance, and weak capitalization.
  • S&P said the protocol can meet obligations but is vulnerable in adverse conditions.

The rating forms part of S&P’s ongoing stablecoin issuer assessments, launched in 2023 to evaluate their ability to maintain a peg to fiat currencies.

The review covered the creditworthiness of Sky’s USDS and DAI stablecoins, along with its sUSDS and sDAI savings tokens.

S&P Rates USDS ‘Constrained’ With Score of 4 in First Evaluation

In its first evaluation, S&P gave USDS a “4” on its stability scale — labeled “constrained” — for maintaining its dollar peg.

Sky Protocol, a decentralized lending platform, facilitates crypto-backed loans and uses USDS to support lending and borrowing activity.

USDS ranks as the fourth-largest stablecoin by market cap, with $5.36 billion in circulation, according to CoinMarketCap.

S&P defines a default in this context as a “haircut imposed on token holders.”

The agency highlighted potential triggers, such as mass withdrawals exceeding available liquidity or credit losses outpacing capital reserves.

Weaknesses flagged include high depositor concentration, centralized governance, reliance on founder Rune Christensen, regulatory uncertainty, and limited capitalization, its risk-adjusted capital ratio was just 0.4% as of July 27.

Andrew O’Neil, S&P’s digital assets analytical lead, told Cointelegraph that a B- rating indicates the protocol “can meet its financial obligations” but remains “vulnerable in adverse business, financial and economic conditions.”

The governance issue was underscored by S&P’s observation that decision-making remains highly centralized, partly due to low voter participation, despite Christensen holding nearly 9% of governance tokens.

Sky’s Asset-Liability Committee said the review allowed it to re-examine traditional counterparty risk models and assess DeFi-specific risks such as smart contract vulnerabilities, oracle dependencies, bridge security, and governance issues.

These were identified as areas requiring ongoing monitoring and mitigation.

The rating also lowered Sky’s anchor score to “bb,” four notches below the U.S. banking anchor of “bbb+,” citing the broader regulatory uncertainty facing DeFi.

S&P Ranks USDC Strong, Puts USDT and USDS in ‘Constrained’ Category

S&P’s stablecoin assessment ranked Circle’s USDC at 2 (strong), Tether’s USDT at 4 (constrained), and USDS also at 4, with O’Neil noting that Tether’s main issue is transparency while USDS faces complexity in its asset base and weaker capital reserves.

S&P launched its stablecoin stability framework in December 2023, and in June, awarded its first blockchain-based mortgage securitization, by Figure Technology Solutions, an AAA rating for a $355 million pool of mortgage assets.

Globally, stablecoin regulation is accelerating. In the US, President Donald Trump signed the first federal stablecoin bill on July 18, calling it a “giant step” toward securing American dominance in global finance and crypto technology.

As reproted, Western Union is positioning itself for a new phase of digital transformation, signaling strong interest in using stablecoins to modernize its global remittance operations.


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Ethereum-Based DeFi Protocol Euler (EUL) on the Rise Following Coinbase Listing https://earlybirdsinvest.com/ethereum-based-defi-protocol-euler-eul-on-the-rise-following-coinbase-listing/ https://earlybirdsinvest.com/ethereum-based-defi-protocol-euler-eul-on-the-rise-following-coinbase-listing/#respond Thu, 07 Aug 2025 23:44:36 +0000 https://earlybirdsinvest.com/ethereum-based-defi-protocol-euler-eul-on-the-rise-following-coinbase-listing/

An Ethereum (ETH)-based decentralized finance (DeFi) altcoin is on the rise after gaining support from the top US-based crypto exchange platform.

In a new thread, Coinbase says it is adding support for Euler (EUL), a lending and borrowing protocol built on top of the second-largest digital asset by market cap.

“Euler (EUL) is now live on http://coinbase.com and in the Coinbase iOS and Android apps. Coinbase customers can log in to buy, sell, convert, send, receive or store these assets.”

Following the announcement, EUL saw a price increase, rising from an August 6th low of $11.02 to a peak of $12.17 just a day later. The asset has since stabilized and is currently trading at $11.77, representing a 5.7% increase over the last 24 hours.

According to its official website, Euler is a modular DeFi platform that features permissionless vault creation, allowing anyone to create a lending vault for a specific asset using the ERC-4626 token protocol, an extension of the popular ERC-20 standard that extends its reach to yield-bearing vault tokens.

“Vaults are the fundamental building blocks of the Euler protocol, serving as the primitive unit for all lending and borrowing activities…

EVK (Euler Vault Kit) vaults are extended ERC-4626 vaults that function as passive lending pools. Unlike standard ERC-4626 vaults that generate yield through active investment strategies, EVK vaults earn yield by lending assets to borrowers. These vaults accept ERC-20 token deposits and enable users to borrow against their collateral.”

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NEAR Protocol Posts 5% Recovery Amid Volatility Surge https://earlybirdsinvest.com/near-protocol-posts-5-recovery-amid-volatility-surge/ https://earlybirdsinvest.com/near-protocol-posts-5-recovery-amid-volatility-surge/#respond Thu, 07 Aug 2025 18:25:46 +0000 https://earlybirdsinvest.com/near-protocol-posts-5-recovery-amid-volatility-surge/

NEAR Protocol climbed 5% from $2.47 to $2.60 in the 24-hour period ending 7 August at 14:00 UTC, exhibiting strong resilience amid broader market turbulence. Institutional accumulation helped fuel a recovery rally after early-session lows, with price action coalescing between $2.48 and $2.52 before a sharp upside break around 10:00 UTC, supported by 3.36 million in trading volume. The asset’s advance, partially influenced by global risk-off sentiment, reflected investors’ pivot to alternative assets during heightened geopolitical and macroeconomic uncertainty.

Late-Session Sell-Off Caps Bullish Momentum

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Despite its earlier strength, NEAR’s final hour of trading—from 13:06 to 14:05 UTC—witnessed a surge in volatility that erased most intraday gains. After briefly testing resistance at $2.61, a spike in volume between 13:39 and 13:42 coincided with profit-taking behavior. Selling pressure shaped a descending channel, with price retreating to close at $2.60, slightly above fresh support near $2.598. The move signals possible short-term exhaustion, as institutional distribution may be limiting further upside despite earlier accumulation.

Macro Conditions Continue to Shape Market Dynamics

The backdrop of NEAR’s performance remains heavily influenced by shifting macroeconomic forces. As major economies recalibrate monetary policy in response to inflationary effects from ongoing trade disputes, institutional flows into digital assets like NEAR have intensified. The cryptocurrency’s intraday pullback mirrors broader market hesitation, as participants digest global policy shifts and their implications for crypto-market structure and risk appetite.

Technical Indicators Analysis

  • NEAR Protocol demonstrated considerable resilience during the preceding 24-hour period from 6 August 15:00 to 7 August 14:00, recovering from early session nadirs of $2.47 to close at $2.60, representing a compelling 5% gain.
  • The cryptocurrency exhibited a classic accumulation pattern throughout the initial 18 hours, consolidating between $2.47-$2.52 before surging dramatically at 10:00 on 7 August with exceptional volume of 3.36 million units—approaching threefold the 24-hour average of 1.20 million.
  • This breakout established robust support at $2.51 and resistance proximate to $2.61, with the pronounced price expansion suggesting institutional accumulation followed by momentum-driven purchasing that could extend towards $2.65-$2.70 based upon measured move projections.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

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Protocol Update 001 – Scale L1 https://earlybirdsinvest.com/protocol-update-001-scale-l1/ https://earlybirdsinvest.com/protocol-update-001-scale-l1/#respond Tue, 05 Aug 2025 19:27:19 +0000 https://earlybirdsinvest.com/protocol-update-001-scale-l1/

In June, we introduced Protocol, reorganizing the Ethereum Foundation’s research & development teams to better align on our current strategic goals, Scale L1, Scale Blobs, and Improve UX without compromising on our commitment to Ethereum’s security and hardness.

Over the coming weeks, we’ll publish updates on each work stream, covering their ongoing progress, new initiatives, open questions and opportunities for collaboration. We start today with Scale L1 — expect follow-ups about Scale Blobs and Improve UX soon!

TL;DR

  • Marius van der Wijden joined Ansgar Dietrichs and Tim Beiko to co-lead Scale L1
  • Mainnet’s gas limit increased to 45M post-Berlinterop, a first step on the road to 100M gas and beyond 
  • All major execution layer clients shipped Pre-Merge History Expiry, significantly reducing node disk usage
  • Block-Level Access Lists (BALs) are being considered as a headliner for Glamsterdam
  • Compute & state benchmarking initiatives are underway to better manage EVM resource pricing and performance bottlenecks
  • The path to zkEVM real-time proving is becoming more concrete, with the prototyping of a ZK-based attester client underway
  • We are still hiring a Performance Engineering Lead: applications close Aug 10

Geth-ing Serious About L1 Scaling

Scaling Ethereum requires reconciling ambitious designs with engineering pragmatism. To help us achieve this, we’ve appointed Marius van der Wijden as co-lead for Scale L1 alongside Ansgar Dietrichs and Tim Beiko.

Marius’s extensive engineering experience on Geth combined with his commitment to protocol security make him a perfect fit to align our scaling strategy with Ethereum’s constraints.

Together, Ansgar, Marius and Tim have defined a set of key initiatives that will enable us to Scale L1 as quickly as possible. 

Towards a 100M Mainnet Gas Limit

Our immediate goal is safely scaling Ethereum’s mainnet gas limit to 100M per block. Parithosh Jayanthi, closely supported by Nethermind’s PerfNet team, is leading our work getting through each incremental increase.

At the recent Berlinterop event, client teams significantly improved their worst-case performance benchmarks, enabling the recent increase to 45M gas — a first step on the path toward 100M gas and beyond!

Additionally, client hardening has become an integral part of the 100M Gas initiative. The Pectra upgrade rollout highlighted several issues caused by network instability. It is paramount to ensure clients remain robust as throughput increases, even if the network temporarily loses finality.

History Expiry

The History Expiry project, led by Matt Garnett, reduces Ethereum nodes’ historical data footprint. The recent deployment of Partial History Expiry removed pre-Merge historical data, saving full nodes approximately 300–500 GB of disk space. This ensures they can run comfortably with a 2TB disk.

Building on this, we’re now developing Rolling History Expiry, which will continuously prune historical data beyond a fixed retention period. This will keep nodes’ storage needs manageable, even as Ethereum scales.

Block-Level Access Lists

Block-Level Access Lists (BALs), championed by Toni Wahrstaetter, are emerging as a leading candidate for inclusion in the Glamsterdam upgrade. BALs provide several critical benefits:

  • Enable parallel transaction execution within blocks.
  • Facilitate parallel computation of state roots, significantly speeding up block processing.
  • Allow preloading of required state at the start of block execution, optimizing disk access patterns.
  • Improve overall node sync efficiency, benefiting new and archival nodes.

These improvements collectively enhance Ethereum’s capacity to reliably handle higher gas limits and faster block processing.

Benchmarking & Pricing

An ongoing challenge in scaling Ethereum is aligning the gas costs of EVM operations with their computational overhead. The performance of worst-case edge cases currently limits network throughput.

By improving benchmarking infrastructure and repricing operations that can’t be optimized by clients, we can make block execution times more consistent. If we close the gap between the worst and average case blocks, we can then raise the gas limit commensurately.

Ansgar Dietrichs leads efforts focused on targeted benchmarking and engineering interventions, informed directly by PerfNet’s comprehensive benchmarking, to identify and resolve compute-heavy bottlenecks. Significant progress has already been made post-Berlinterop, particularly in managing worst-case compute scenarios.

In parallel, Carlos Pérez spearheads Bloatnet: an initiative aimed at benchmarking and optimizing state performance. This involves testing node performance under conditions with state sizes double the current mainnet and gas limits reaching 100–150M, to directly inform both repricings and client optimizations.

Both of these efforts will inform Glamsterdam EIP proposals to homogenize resource costs across operations, enabling further L1 scaling.

zkEVM Attester Client

Today, Ethereum nodes execute all transactions in a block when receiving it. This is computationally expensive. To reduce this computational cost, Ethereum clients could instead verify a zk proof of the block’s execution. To enable this, proofs of the block must be produced in real time, which we are getting closer and closer to.

Kevaundray Wedderburn is leading work on a zkEVM attester client that assumes we have real time proofs and uses them to fulfill its validator duties.

Once the prototype is ready for mainnet, it will roll out as an optional verification mechanism. We expect a small group of nodes to adopt this over the next year, allowing us to build confidence in its robustness and security.

After this, Ethereum nodes can gradually transition to zk-based validation, with it eventually becoming the default. At that point, L1’s gas limit could increase substantially — even go beast mode!

RPC Performance & Hiring

As throughput increases, different node types (execution, consensus, RPC) face distinct challenges. RPC nodes specifically encounter heightened pressure as they serve extensive historical and real-time state requests.

Internally, the EF’s Geth and PandaOps teams are actively researching optimal configurations for different node types. We expect the importance of this to increase in the coming years and want to grow our expertise in this domain.

To that end, we’re actively hiring for a Performance Engineering Lead. Applications close August 10. If you’re as excited as us about scaling the L1, we’d love to hear from you!

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hbar prices are going to beserk: ERC3643, T-rex protocol, new era of Hedera? https://earlybirdsinvest.com/hbar-prices-are-going-to-beserk-erc3643-t-rex-protocol-new-era-of-hedera/ https://earlybirdsinvest.com/hbar-prices-are-going-to-beserk-erc3643-t-rex-protocol-new-era-of-hedera/#respond Tue, 05 Aug 2025 07:15:47 +0000 https://earlybirdsinvest.com/hbar-prices-are-going-to-beserk-erc3643-t-rex-protocol-new-era-of-hedera/

Hedera Hashgraph has taken the critical step that can redefine the market position and performance of HBAR price action. The network has officially joined the ERC3643 standard, a framework designed to integrate on-chain identity, compliance, and tokenized asset issuance.

This surprising move connects Hedera to the T-Rex protocol ecosystem. It supports billions of dollars of compliant security tokens across the Ethereum and EVM compatible chain. This is an important step for sustainable institutional adoption of HBAR.

For contexts, ERC3643 is not just a token standard. Unlike the ERC20 and ERC721, it was explicitly built for regulated securities markets with compliance, KYC/AML controls, and direct restrictions on token smart contracts.

By adopting it, Hedera has effectively opened its infrastructure in the facility-grade tokenization market, a segment that is projected to grow to trillions of dollars by the end of the decade.

How does ERC3642 increase HBAR prices?

(sauce)

The strategic significance is twice as high for HBAR holders. First, it allows Hedera to strengthen institutional legitimacy. Today, Hedera has been sold for a long time as an alternative to enterprise-grade blockchain.

However, by integrating ERC3643, its substance gives its substance, ranging from private equity to real estate and tokenized funds, with the introduction of compliance rails required by institutional investors and asset managers.

But beyond this, it also introduces a new era of interoperability and a depth of liquidity.

As ERC3643 already runs across the Ethereum ecosystem, Hedera can leverage the cross-chain liquidity pool to establish herself as a viable host of security tokens.

This reduces Hedera’s previous quarantine and positions HBAR as a potential settlement asset in the broader financial stack.

As adoption accelerates, the impact on HBAR assessments is clear. Increased demand for Hedera native tokens will drive utilities, which will drive price growth for HBARs.

Simply put, the integration of ERC3643 reduces the barriers traditional financial institutions build on Hedera. This could lead to a sharp rise in HBAR over the coming months.

Discover: 9+ Best High Risk, High Reward Crypto Buy in August 2025

HBAR Price Analysis: Is Hedera primed for the best retest ever?

As Hedera breaks the ground with the integration of the ERC3642, the HBAR price is essentially integrated following a triple test with low support above $0.22.

Currently trading at the current market price of $0.251 (representing a 24-hour change of +0.94%), HBAR prices outweigh both significant psychological recovery ($0.25) and 200-DMA’s immobilized support ($0.20).

(hbarusdt)

The HBAR price has managed to get out of the disastrous “McDonald’s pattern” following these rejections, but caution remains among traders following a tough double rejection with resistance of around $0.30.

A break above this level will almost certainly replace a retest of the ATH around $0.40, but while being strengthened by the integration of ERC3642, such a substantial move should involve a significant move in Bitcoin, followed by a sudden drop-off at BTC.D.

For now, the RSI indicator illuminates a possible pass to a $0.30 retest following a basic boost, suggesting that the current reading at 53 is on the card this week.

Discover: 20+ Next Cryptocurrency to Explode in 2025

Key takeout

  • The Hedera Hashgraph Association surprised the ERC3642 Association.

  • By participating in the token standard Hedera, we are opening the door to true institutional interest in tokenized securities.

  • Experts predict this could drive the rush of Hedera’s utility, which could in turn bolster the price of HBAR.

  • For now, hbar prices remain in bullish form, targeting a third retest of resistance at $0.30

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