This week marks the completion of our fourth hard fork, Spurious Dragon, and the subsequent state clearing process, the final steps in the two-hard-fork solution to the recent Ethereum denial of service attacks that slowed down the network in September and October. Gas limits are in the process of being increased to 4 million as the network returns to normal, and will be increased further as additional optimizations to clients are finished to allow quicker reading of state data.

In the midst of these events, we have seen great progress from the C++ and Go development teams, including improvements to Solidity tools and the release of the Geth light client, and the Parity, EthereumJ and other external development teams have continued pushing forward on their own with technologies such as Parity’s warp sync; many of these innovations have already made their way into the hands of the average user, and still others are soon to come. At the same time, however, a large amount of quiet progress has been taking place on the research side, and while that progress has in many cases been rather blue-sky in nature and low-level protocol improvements necessarily take a while to make it into the main Ethereum network, we expect that the results of the work will start to bear fruit very soon.

Metropolis

Metropolis is the next major planned hardfork for Ethereum. While Metropolis is not quite as ambitious as Serenity and will not include proof of stake, sharding or any other similarly large sweeping changes to how Ethereum works, it is expected to include a series of small improvements to the protocol, which are altogether much more substantial than Homestead. Major improvements include:

• EIP 86 (account security abstraction) – move the logic for verifying signatures and nonces into contracts, allowing developers to experiment with new signature schemes, privacy-preserving technologies and modifications to parts of the protocol without requiring further hard forks or support at the protocol level. Also allows contracts to pay for gas.
• EIP 96 (blockhash and state root changes) – simplifies the protocol and client implementations, and allows for upgrades to light client and fast-syncing protocols that make them much more secure.
• Precompiled/native contracts for elliptic curve operations and big integer arithmetic, allowing for applications based on ring signatures or RSA cryptography to be implemented efficiently
• Various improvements to efficiency that allow faster transaction processing

Much of this work is part of a long-term plan to move the protocol toward what we call abstraction. Essentially, instead of having complex protocol rules governing contract creation, transaction validation, mining and various other aspects of the system’s behavior, we try to put as much of the Ethereum protocol’s logic as possible into the EVM itself, and have protocol logic simply be a set of contracts. This reduces client complexity, reduces the long-run risk of consensus failures, and makes hard forks easier and safer – potentially, a hard fork could be specified simply as a config file that changes the code of a few contracts. By reducing the number of “moving parts” at the bottom level of the protocol in this way, we can greatly reduce Ethereum’s attack surface, and open up more parts of the protocol to user experimentation: for example, instead of the protocol upgrading to a new signature scheme all at the same time, users are free to experiment and implement their own.

Proof of Stake, Sharding and Cryptoeconomics

Over the past year, research on proof of stake and sharding has been quietly moving forward. The consensus algorithm that we have been working on, Casper, has gone through several iterations and proof-of-concept releases, each of which taught us important things about the combination of economics and decentralized consensus. PoC release 2 came at the start of this year, although that approach has now been abandoned as it has become obvious that requiring every validator to send a message every block, or even every ten blocks, requires far too much overhead to be sustainable. The more traditional chain-based PoC3, as described in the Mauve Paper, has been more successful; although there are imperfections in how the incentives are structured, the flaws are much less serious in nature.

Myself, Vlad and many volunteers from Ethereum research team came together at the bootcamp at IC3 in July with university academics, Zcash developers and others to discuss proof of stake, sharding, privacy and other challenges, and substantial progress was made in bridging the gap between our approach to proof of stake and that of others who have been working on similar problems. A newer and simpler version of Casper began to solidify, and myself and Vlad continued on two separate paths: myself aiming to create a simple proof of stake protocol that would provide desirable properties with as few changes from proof of work as possible, and Vlad taking a “correct-by-construction” approach to rebuild consensus from the ground up. Both were presented at Devcon2 in Shanghai in September, and that’s where we were at two weeks ago.

At the end of November, the research team (temporarily joined by Loi Luu, of validator’s dilemma fame), along with some of our long-time volunteers and friends, came together for two weeks for a research workshop in Singapore, aiming to bring our thoughts together on various issues to do with Casper, scalability, consensus incentives and state size control.

A major topic of discussion was coming up with a rigorous and generalizable strategy for determining optimal incentives in consensus protocols – whether you’re creating a chain-based protocol, a scalable sharding protocol, or even an incentivized version of PBFT, can we come up with a generalized way to correctly assign the right rewards and penalties to all participants, using only verifiable evidence that could be put into a blockchain as input, and in a way that would have optimal game-theoretic properties? We had some ideas; one of them, when applied to proof of work as an experiment, immediately led to a new path toward solving selfish mining attacks, and has also proven extremely promising in addressing long-standing issues in proof of stake.

A key goal of our approach to cryptoeconomics is ensuring as much incentive-compatibility as possible even under a model with majority collusions: even if an attacker controls 90% of the network, is there a way to make sure that, if the attacker deviates from the protocol in any harmful way, the attacker loses money? At least in some cases, such as short-range forks, the answer seems to be yes. In other cases, such as censorship, achieving this goal is much harder.

A second goal is bounding “griefing factors” – that is, ensuring that there is no way for an attacker to cause other players to lose money without losing close to the same amount of money themselves. A third goal is ensuring that the protocol continues to work as well as possible under other kinds of extreme conditions: for example, what if 60% of the validator nodes drop offline simultaneously? Traditional consensus protocols such as PBFT, and proof of stake protocols inspired by such approaches, simply halt in this case; our goal with Casper is for the chain to continue, and even if the chain can’t provide all of the guarantees that it normally does under such conditions the protocol should still try to do as much as it can.

One of the main beneficial results of the workshop was bridging the gap between my current “exponential ramp-up” approach to transaction/block finality in Casper, which rewards validators for making bets with increasing confidence and penalizes them if their bets are wrong, and Vlad’s “correct-by-construction” approach, which emphasizes penalizing validators only if they equivocate (ie. sign two incompatible messages). At the end of the workshop, we began to work together on strategies to combine the best of both approaches, and we have already started to use these insights to improve the Casper protocol.

In the meantime, I have written some documents and FAQs that detail the current state of thinking regarding proof of stake, sharding and Casper to help bring anyone interested up to speed:

https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ

https://github.com/ethereum/wiki/wiki/Sharding-FAQ

https://docs.google.com/document/d/1maFT3cpHvwn29gLvtY4WcQiI6kRbN_nbCf3JlgR3m_8 (Mauve Paper; now slightly out of date but will be updated soon)

State size control

Another important area of protocol design is state size control – that is, how to we reduce the amount of state information that full nodes need to keep track of? Right now, the state is about a gigabyte in size (the rest of the data that a geth or parity node currently stores is the transaction history; this data can theoretically be pruned once there is a robust light-client protocol for fetching it), and we saw already how protocol usability degrades in several ways if it grows much larger; additionally, sharding becomes much more difficult as sharded blockchains require nodes to be able to quickly download parts of the state as part of the process of serving as validators.

Some proposals that have been raised have to do with deleting old non-contract accounts with not enough ether to send a transaction, and doing so safely so as to prevent replay attacks. Other proposals involve simply making it much more expensive to create new accounts or store data, and doing so in a way that is more decoupled from the way that we pay for other kinds of costs inside the EVM. Still other proposals include putting time limits on how long contracts can last, and charging more to create accounts or contracts with longer time limits (the time limits here would be generous; it would still be affordable to create a contract that lasts several years). There is currently an ongoing debate in the developer community about the best way to achieve the goal of keeping state size small, while at the same time keeping the core protocol maximally user and developer-friendly.

Miscellanea

Other areas of low-level-protocol improvement on the horizon include:

• Several “EVM 1.5” proposals that make the EVM more friendly to static analysis, facilitating compatibility with WASM
• Integration of zero knowledge proofs, likely through either (i) an explicit ZKP opcode/native contract, or (ii) an opcode or native contract for the key computationally intensive ingredients in ZKPs, particularly elliptic curve pairing computations
• Further degrees of abstraction and protocol simplification

Expect more detailed documents and conversations on all of these topics in the months to come, especially as work on turning the Casper specification into a viable proof of concept release that could run a testnet continues to move forward. ]]> https://earlybirdsinvest.com/ethereum-research-update/feed/ 0 57648 https://earlybirdsinvest.com/businesses-are-absorbing-bitcoin-at-4x-the-rate-it-is-mined-according-to-rivers-research/ https://earlybirdsinvest.com/businesses-are-absorbing-bitcoin-at-4x-the-rate-it-is-mined-according-to-rivers-research/#respond Sat, 30 Aug 2025 17:07:56 +0000 https://earlybirdsinvest.com/businesses-are-absorbing-bitcoin-at-4x-the-rate-it-is-mined-according-to-rivers-research/

River says companies are taking in far more bitcoin each day than miners create.

The U.S.-based bitcoin financial services firm, which runs brokerage and mining operations and publishes research, released a Sankey-style flow infographic dated Aug. 25 in a post on X. In this layout, outflows are shown on the left, inflows on the right, and the thickness of each line represents the size of the net daily movement.

River defines “businesses” broadly. The category combines bitcoin treasury companies — firms such as Strategy that publicly hold BTC — with conventional companies that keep bitcoin on their balance sheets. Based on public filings, custodial address tagging and its own heuristics, River estimates that about 1,755 BTC per day flow into business-controlled wallets.

By comparison, River calculates new miner supply at about 450 BTC per day in 2025. That figure reflects the April 2024 halving, which cut the block subsidy to 3.125 BTC per block.

With bitcoin blocks averaging one every 10 minutes — about 144 per day — the result is roughly 450 BTC in new issuance daily, though the exact number fluctuates slightly as block times vary.

That math is the basis for River’s claim that companies are absorbing bitcoin at nearly four times the rate it is mined.

The infographic shows other large institutional inflows as well.

Funds and ETFs account for about 1,430 BTC/day in net inflows, which further boosts total absorption compared with new issuance. Smaller streams go to “other” entities (about 411 BTC/day) and governments (about 39 BTC/day).

River also records a small but steady flow into “lost bitcoin” (about 14 BTC/day), representing coins that the firm judges to be permanently inaccessible, such as through key loss.

On the other side of the ledger, individuals appear as the largest net outflow at about –3,196 BTC/day. River stresses that this does not necessarily mean retail investors are dumping coins. Rather, it reflects bitcoin moving from addresses the firm classifies as individual-held into those it tags as institutional.

River says the takeaway is simple: when inflows to businesses and funds exceed new issuance from miners, available supply tightens. Still, the firm cautions that the infographic should be read carefully.

First, the figures are estimates, not an exact census of the blockchain.

River relies on a mix of wallet tagging, public disclosures and external databases, which may miss some holdings or misclassify certain addresses. Second, net inflows do not always equal direct spot buying. A business wallet showing +1,755 BTC per day could reflect OTC transactions, custodial transfers or treasury reshuffling, not just exchange purchases.

For readers unfamiliar with flow diagrams, the point is this: the lines show where coins are ending up on balance, not every trade or transfer in the system. If more coins consistently end up in business, fund and government wallets than miners are producing, River argues that institutions are tightening supply at the margin.

River’s snapshot is not a price forecast, but it illustrates how ownership patterns may be shifting. If businesses and funds continue to absorb more than miners produce, the firm argues, institutions could play a larger role in shaping bitcoin’s supply dynamics.

Google’s Gemini is now testing a new feature called “Projects.” This will be similar to OpenAI’s Project Feature for ChatGPT.

With Projects, you can add files, documents or your code. Then, you can ask Gemini to reference those files in project conversations.

Google describes this as a feature where you “start by adding files to the project. Gemini can reference these files in project conversations and use them to generate new documents and code.”

With Projects, you can group similar tasks together and create your own workplace within Gemini.

It’s unclear when the feature will begin rolling out, but it could be limited to enterprise customers initially.

In addition to Projects, Google is working on Gemini 3, which would be the company’s most powerful model to date, and it could deliver a big blow to OpenAI.

Google rolls out Genie 3

Google recently announced Genie 3, which is developed by Google DeepMind, the same team behind Gemini.

With Genie 3, you can simulate the real world and turn a text prompt into a new, playable, interactive world you can move through in real time.

As one user on Reddit found, you can even look down and see how you’re walking in a world simulation created using Genie 3.

Google says Genie 3 renders the world at 720p and 24 fps, and keeps the scene physically consistent for several minutes.

According to market analytics firm SwissBlock, Bitcoin’s latest push to $120,000 has now fallen into a stall-out similar to a “failed breakout zone.” In a thread on July 31, the company said “the momentum didn’t ignite,” claiming that the overwhelming share of the coin sitting in the commercial flow that was realized and profits has been transformed into an opportunity to meet prices.

Earn profits and the Bitcoin Rally will be cooled

SwissBlock assembled the set fold as a pause rather than a breakdown. “Profit acquisitions are on the rise, but not as intense as the second half of 2024,” the company wrote, adding that the effect through July is “sufficient to cause rise and consolidation.” The tone is cooled and not yielding. “We see sales pressure, but not extreme. Think cooling, not yield.” That diagnosis rests on on-chain measurements of realized profits. This is an input that tends to expand into rallies as years of coins are spent powerfully, and a market structure in which bids absorb supply rather than overwhelmed.

Related readings

The most impressive data point in a thread is its breadth of profitability. “96% of the supply is profit,” SwissBlock points out, and GlassNode says. The ratio historically coincides with the happiness of the later cycle, but is mechanically self-limiting. With almost all holders on the green, potential sales pressure rises as “unrealized profits are captivating sellers.” As SwissBlock said, “The strong holders remain. But unrealized profits will attract sellers. Each bounce will bring about supply until demand returns.” The company claims the broader trend is “until it is, but the momentum needs to be reset.”

Beyond the realised flows on-chain, the company’s composite foundation reads neutrality with improved liquidity. “The BTC foundations are strong and stable,” writes SwissBlock, pointing out that a 60 (neutral) Bitcoin Basic Index reads, “network growth is cooled,” and “liquidity is recovering.” That mix usually supports a range of behavior, as the Post said, “environment that supports integration” (Bitcoin can be “long-splitting to the side”) over a surge in directionality. The meaning is that the market’s “breakout failure” risk reflects timing rather than trend reversal. For a continuous continuity, positioning and liquidity are still not aligned.

Related readings

The cross-asset context is equally subtle. “Altsesason is active, but under stress,” writes Swissblock, saying, “$ETH continues to structurally outperform BTC and holds this pullback better.” Its thin spinning highlights the selectivity of risk appetite and the vulnerability of momentum other than the biggest name. Historically, that pattern often precedes the decisive movement of Bitcoin that recharges or destroys spins.

The assessment of SwissBlock’s conclusions is carefully and constructively leaning. “Between profits is declining and sales pressure is being absorbed. BTC is preparing for a breakout, but we need to match momentum.” The company is hoping for a grind until that consistency arrives. Bidding continues to meet supply from profitable owners, easing profits and increasing liquidity in the background. If Bitcoin returns momentum to positive, the Swiss block claims that spillover could be powerful.

In short, today’s $115,000 drop appears to be a more utter rejection than a test of the market’s ability to consume profits and reset momentum without damaging the underlying uptrend. With 96% of supply being compressed in profits and widths, the next impulse may depend on whether liquidity and demand can be re-registered before making profits. For now, the SwissBlock message is clear. You need to get a breakout, but it’s not expected.

At the time of pressing, BTC traded for $115,452.

Featured images created with dall.e, charts on tradingview.com

San Francisco-based lender Divine Research has issued around 30,000 unbacked short-term crypto loans since December, using OpenAI CEO Sam Altman’s iris-scanning platform World ID to verify borrowers.

Divine offers loans under $1,000 in the USDC (USDC) stablecoin, mainly to overseas borrowers underserved by traditional finance. It uses World ID to ensure users cannot open multiple accounts after defaulting.

“We’re loaning to average folks like high-school teachers, fruit vendors . . . basically anyone with access to the internet can get access to our funds,” Divine founder Diego Estevez told the Financial Times. “This is microfinance on steroids.”

Interest rates range from 20% to 30%, with a reported first-loan default rate of around 40%. “High interest rates compensate for these losses,” Estevez said, adding that free World tokens issued to borrowers can be “partially” reclaimed.

Related: Fees, collateral give DeFi edge as TradFi eyes crypto loans

Everyday investors can earn by funding high-risk crypto loans

Estevez said Divine’s lenders are everyday individuals seeking solid returns. “Anyone can provide liquidity. We’ve engineered the system such that after accounting for default rates and the [interest] rates on offer, providers will always make a profit.”

Divine is part of a growing group of high-risk crypto lenders capitalizing on renewed market momentum and political tailwinds, including support from former US President Donald Trump.

Another startup, 3Jane, recently raised $5.2 million from Paradigm and offers uncollateralized credit lines on Ethereum. Unlike Divine, 3Jane requires “verifiable proofs” of assets or income, but still no collateral.

3Jane plans to introduce AI agents that follow lending rules automatically, aiming to lower rates while enforcing repayment. Defaulted loans on its platform are sold to US debt collectors.

Other players like Wildcat cater to market makers and trading firms, offering undercollateralized loans with customizable terms. According to Wildcat adviser Evgeny Gaevoy, “In the event of a default, lenders co-ordinate directly among themselves to seek recourse.”

Related: Fintech firms will move to DeFi lending within 3 years

Crypto lending gains traction

Lending remains a small slice of the crypto market but attracts growing attention as institutional players reenter the space. Last week, reports revealed that JPMorgan Chase is looking into crypto-backed loans, planning to lend directly against crypto assets like Bitcoin (BTC) and Ether (ETH).

However, the shadow of 2022 looms large, when major crypto lenders like Celsius and Genesis collapsed. Celsius’s CEO Alex Mashinsky was sentenced to 12 years for fraud, and Genesis settled a $2 billion lawsuit.

Magazine: Will Robinhood’s tokenized stocks REALLY take over the world? Pros and cons

]]> https://earlybirdsinvest.com/divine-research-issues-unbacked-crypto-loans-using-sam-altmans-world-id/feed/ 0 49942 https://earlybirdsinvest.com/trons-record-breaking-performance-in-h1-2025-highlighted-in-cointelegraph-and-cryptoquant-research-reports/ https://earlybirdsinvest.com/trons-record-breaking-performance-in-h1-2025-highlighted-in-cointelegraph-and-cryptoquant-research-reports/#respond Thu, 24 Jul 2025 05:34:41 +0000 https://earlybirdsinvest.com/trons-record-breaking-performance-in-h1-2025-highlighted-in-cointelegraph-and-cryptoquant-research-reports/

UK’s National Cyber Security Centre (NCSC) has announced a new Vulnerability Research Initiative (VRI) that aims to strengthen relations with external cybersecurity experts.

The agency already conducts internal vulnerability research on a wide range of technologies and will continue to do so. However, the launch of VRI will create a parallel program designed to improve discovery and sharing of critical insights with the community more expeditiously.

The NCSC is the UK’s cybersecurity authority, tasked to protect from cyber threats targeting the country’s critical infrastructure, government, businesses, and citizens.

To fulfill this mission, the agency publishes alerts, cybersecurity guidance, and threat analysis, provides support in incident response, and coordinates related activities with public, private, and international partners.

The VRI is a structured collaboration between the NCSC and external cybersecurity researchers to improve the UK’s capabilities in identifying and understanding software and hardware vulnerabilities.

“The Vulnerability Research Initiative (VRI) is NCSC’s programme of research with external partners on VR,” reads the agency’s announcement.

“The VRI’s mission is to strengthen the UK’s ability to carry out VR. We work with the best external vulnerability researchers to deliver a deep understanding of security on a wide range of technologies we care about.​”

NCSC will partner with skilled external vulnerability researchers who will be given objectives to identify flaws in specific products of interest, assess proposed mitigations, and finally disclose the flaws through the ‘Equities Process’ procedure.

The researchers will also submit to the NCSC details about the tools they used and the methodologies they followed during their VR activities, to help develop a framework of effective practices.

NCSC states that it plans to involve more experts in emerging specialized areas such as AI-powered vulnerability discovery.

Interested security specialists are invited to email at vri@ncsc.gov.uk with their skills and focus areas.

The email address address should not be used for sending full vulnerability reports, the agency notes. NCSC recommends using this portal to report a vulnerability instead.

The Bank of Canada took a significant step in exploring the technical feasibility of a digital Canadian dollar, proposing a specific system designed for a retail central bank digital currency (CBDC) focused on simple, everyday payments, according to a new research paper.

The central bank’s research team examined OpenCBDC 2PC, a model developed in collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative. This design prioritizes privacy, speed and decentralization by allowing users to hold digital funds directly, much like digital cash.

The new research comes after the Bank of Canada said it is shifting its focus away from a retail CBDC last year, saying that it was prepared if the people of the nation decide such a product is needed in the future.

Privacy issues

A major focus of the report is privacy, which isn’t a big surprise because CBDCs have sparked debate around the world, in part on concerns they could enable state surveillance of financial activity. Unlike cash, which is anonymous, a CBDC could theoretically allow a central authority to track every transaction.

The report suggested that the system separates personal identity from transaction data, allowing non-registered users to hold funds in self-custodied wallets. The users could then transact without sharing their identity with a bank or payment processor. Even for registered users, the central bank would not have access to identifying information or transaction histories.

The report goes further, proposing enhanced protection by potentially using cryptographic techniques such as zero-knowledge proofs to obscure transaction amounts from the core infrastructure. These features collectively offer a level of privacy that the authors say could exceed that of current electronic payment systems.

Bitcoin-like structure

In contrast to traditional banking systems, where money is stored in user accounts, the report suggests a design that uses “unspent transaction outputs” (UTXOs) — a structure more commonly associated with Bitcoin.

The system processes transactions in two steps: updating a core ledger and transferring funds from one user’s wallet to another. This approach supports real-time settlement and offers a higher degree of privacy from both banks and government institutions.

Challenges

While the report lays out a detailed technical solution to a potential digital Canadian dollar, it also identifies potential hurdles.

One of the main hurdles is that integrating the proposed architecture with existing retail payment infrastructure could require substantial technical upgrades, including in the way point-of-sale terminals handle digital cash-like transfers.

Additionally, while the system is scalable in theory, performance dips during audits and system recovery operations need further engineering work to meet production-grade standards.

The paper clearly states that this is not a commitment to launch a CBDC. However, the findings lay out a concrete technical foundation for what such a system could look like— one that balances user privacy, institutional control, and operational resilience.

Whether the central bank will implement it remains a question, given the controversy surrounding CBDC. However, the timing of the report could be right as Canada’s new prime minister, Mark Carney, was quoted in his 2021 book as a supporter of CBDCs.

“The most likely future of money is a central bank stablecoin, known as a central bank digital currency or CBDC,” he wrote in his book.