Ethereum

Why the Ethereum Layer-2 Taiko network is spending $100,000 a day on blobs

Published

6 months ago

8 June, 2024

Why the Ethereum Layer-2 Taiko network is spending $100,000 a day on blobs

A Ethereum layer-2 The network called Taiko dominates the market for what we call blobsor dedicated data storage for Ethereum scalers, but these efforts result in costs of tens of thousands of dollars every day for the little-known scaling solution, even surpassing the $100,000 mark several times this week.

The Taiko protocol, which went live in late May, aims to offer users cheaper and faster transactions than on Ethereum’s mainnet, while borrowing security elements from the network. Since going online, Taiko has spent a whopping $900,000 in blobs in less than two weeks to funnel user transactions into the Ethereum network.

Meanwhile, Taiko’s competitors, like Optimism network, rarely spend more than $1,000 per day on Blob-related fees. Introduced in March under the name part of an Ethereum upgradeblobs were introduced as a new resource for layer 2 scaling networks to publish Ethereum transactions at a lower cost.

Taiko Labs, creator of the protocol announcement in March, it had raised $15 million in a Series A funding round. By leveraging “zero-knowledge” cryptography in its design, Taiko is working to differentiate its scalable design in a growing field. more competitive that includes dozens of different scalable networks.

“Taiko just launched its mainnet, and there is a lot to discover before it becomes stable,” said Daniel Wang, CEO of Taiko Labs. Decrypt in a written statement. “We knew we would use more blobs than other Layer 2s. This is a design decision, not a bug.

Layer 2 networks often work by aggregating batches of transactions and processing them on a separate chain before sending the receipts back to Ethereum. However, Taiko’s design differs from this formula, in which many transactions are grouped into batches elsewhere.

Instead, the process of ordering transactions, called sequencing, takes place on Ethereum itself. In a blog postTaiko Labs said this process, called “core sequencing,” is more decentralized than other Layer 2s that rely on centralized sequencers, which are controlled by a network’s development team and collect a small part of user fees.

“It seems expensive,” Alexei Zamyatin, co-founder of Bitcoin BOB layer 2 network, known as Decrypt in an interview. “This makes it more secure, but not as secure as [Ethereum]and you are also much more expensive than most layer 2s.”

A game of compromises

Still, Wang said the costs associated with Taiko’s features could easily break even if “Taiko is fully utilized by users,” providing a sustainable amount of gas fees.

Wang added that Taiko is fully aware of the pros and cons associated with its sequencing method, and he hopes that Ethereum researchers will study Taiko’s on-chain data to explore improvements that could allow Ethereum to better support similar scaling networks.

Some Ethereum researchers, including Justin Drake, believe that Taiko’s team is at the forefront of a new form of decentralized sequencing that could solve major obstacles in the Ethereum ecosystem.

“This takes a step forward in decentralization, credible neutrality and composability of rollups,” he said. Decrypt in a written statement.

If more Layer 2 networks moved the sequencing of their transactions to Ethereum itself, then the fragmentation issues holding up all the space could be resolved, he said. Currently, liquidity and assets are widely distributed across different Layer 2s, effectively siloing users and applications within a given scaling solution while all being tied to Ethereum.

When it comes to Layer 2 networks on Ethereum, the introduction of blobs represented a significant change in how these protocols interact with the underlying blockchain. Before blobs were available as a separate paid marketplace, Layer 2s could only publish bulk transactions as Ethereum “call data,” a space for data to be contained within transactions.

Instead of mass-processing user transactions alongside regular Ethereum activity, blobs almost serve as a dedicated lane on a highway, where less congestion can reduce costs. However, the best way to package these transactions before shipping is still up for debate.

Blobs blobs blobs

In some cases, centralized sequencers can be used to paralyze a network, piercing the veil of permissionless activity that is synonymous with crypto. Sometimes centralized sequencers can be abused to delay transactions Also. However, Taiko’s commitment to decentralization may not be the most effective, according to one of its community advocates.

“Unfortunately, it’s a bit expensive,” pseudonymous cryptography researcher arixon.eth. said on Twitter (aka X). “Due to sequencing, we need to release a blob every 12 days. [seconds]and if there isn’t enough [transactions]then we just won’t fill the blobs.

Taiko Labs’ Wang said changing this pace could be a potential solution adopted soon, stating that the Taiko community is “considering reducing the block proposal frequency a bit.”

The constant flow of blobs, no matter how full they are, has made Taiko one of the top users. On Sunday, for example, Taiko released 25% of all blobs on Ethereum, according to a popular poll. Dune Dashboard. That day, Taiko spent nearly $63,000 in blob-related fees.

On Thursday, Taiko paid $123,000 in fees for blobs, representing 73% of all costs paid for Layer 2s, which was its second day in a row with a six-figure fee total. And while most Layer 2s pass on the cost savings to their users through lower fees, the premium Taiko pays for decentralization, for now, is not a bill users must foot.

“For the moment, it is partially subsidized by the team”, arixon.eth saidadding that the process could be changed in the future so that “blocks are missed until there are enough blocks.” [transactions] in the mempool for a proposer to push a block to [Ethereum] profitably.”

On Wednesday, during the first airdrop of TAIKO tokens, the network’s native cryptocurrency, Layer 2 averaged about 6.42 transactions per second, according to L2BEAT. Meanwhile, Ethereum recorded around 13.6 transactions per second itself.

The performance of Taiko’s token has been rocky so far. After crashing 40% an hour after its launch, from $3.80 to $2.27, the token’s price recovered to $2.45, at the time of writing, showing a drop of almost 3% over the last day, according to CoinGecko.

Edited by Andrew Hayward

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Ethereum

QCP sees Ethereum as a safe bet amid Bitcoin stagnation

Published

4 months ago

31 July, 2024

Chain Feed Staff

QCP, a leading trading firm, has shared key observations on the cryptocurrency market. Bitcoin’s struggle to surpass the $70,000 mark has led QCP to predict Selling pressure is still strong, with BTC likely to remain in a tight trading range. In the meantime, Ethereum (ETH) is seen as a more promising investment, with potential gains as ETH could catch up to BTC, thanks to decreasing ETHE outflows.

Read on to find out how you can benefit from it.

Bitcoin’s Struggle: The $70,000 Barrier

For the sixth time in a row, BTC has failed to break above the $70,000 mark. Bitcoin is at $66,048 after a sharp decline. Many investors sold Bitcoin to capitalize on the rising values, which caused a dramatic drop. The market is becoming increasingly skeptical about Bitcoin’s rise, with some investors lowering their expectations.

Despite the continued sell-off from Mt. Gox and the US government, the ETF market remains bullish. There is a notable trend in favor of Ethereum (ETH) ETFs as major bulls have started investing in ETFs, indicating a bullish sentiment for ETH.

QCP Telegram Update UnderlinesIncreased market volatility. The NASDAQ has fallen 10% from its peak, led by a pullback in major technology stocks. Currency carry trades are being unwound and the VIX, a measure of market volatility, has jumped to 19.50.

The main factors driving this uncertainty are Value at Risk (VaR) shocks, high stock market valuations and global risk aversion sentiment. Commodities such as oil and copper have also declined on fears of an economic slowdown.

Additionally, QCP anticipates increased market volatility ahead of the upcoming FOMC meeting, highlighting the importance of the Federal Reserve’s statement and Jerome Powell’s subsequent press conference.

A glimmer of hope

QCP notes a positive development in the crypto space with an inflow of $33.7 million into ETH spot ETFs, which is giving a much-needed boost to ETH prices. However, they anticipate continued outflows of ETHE in the coming weeks. The recent Silk Road BTC moves by the US government have added to the market uncertainty.

QCP suggests a strategic trade involving BTC, which will likely remain in its current range, while ETH offers a more promising opportunity. They propose a trade targeting a $4,000-$4,500 range for ETH, which could generate a 5.5x return by August 30, 2024.

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Ethereum

Ethereum Whale Resurfaces After 9 Years, Moves 1,111 ETH Worth $3.7 Million

Published

4 months ago

31 July, 2024

Chain Feed Staff

Ethereum records $17.9 billion in spot volume despite 3% drop

An Ethereum ICO participant has emerged from nearly a decade of inactivity.

Lookonchain, a smart on-chain money tracking tool, revealed On X, this long-inactive participant recently transferred 1,111 ETH, worth approximately $3.7 million, to a new wallet. This significant move marks a notable on-chain movement, given the participant’s prolonged dormancy.

The Ethereum account in question, identified as 0xE727E67E…B02B5bFC6, received 2,000 ETH on the Genesis block over 9 years ago.

Screenshot 2024 07 30 at 171307

This initial allocation took place during the Ethereum ICOwhere the participant invested in ETH at around $0.31 per coin. The initial investment, worth around $620 at the time, has now grown to millions of dollars.

Recent Transactions and Movements

The inactive account became active again with several notable output transactions. Specifically, the account transferred 1,000 ETH, 100 ETH, 10 ETH, 1 ETH, and 1 more ETH to address 0x7C21775C…2E9dCaE28 within a few minutes. Additionally, it moved 1 ETH to 0x2aa31476…f5aaCE9B.

Additionally, in the latest round of transactions, the address transferred 737,995 ETH, 50 ETH, and 100 ETH, for a total of 887,995 ETH. These recent activities highlight a significant movement of funds, sparking interest and speculation in the crypto community.

Why are whales reactivating?

It is also evident that apart from 0xE727E67E…B02B5bFC6, other previously dormant Ethereum whales are waking up with significant transfers.

In May, another dormant Ethereum whale made headlines when it staked 4,032 ETHvalued at $7.4 million, after more than two years of inactivity. This whale initially acquired 60,000 ETH during the Genesis block of Ethereum’s mainnet in 2015.

At the time, this activity could have been related to Ethereum’s upgrade known as “Shanghai,” which improved the network’s scalability and performance. This whale likely intended to capitalize on the price surge that occurred after the upgrade.

Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.

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Ethereum

Only Bitcoin and Ethereum are viable for ETFs in the near future

Published

4 months ago

31 July, 2024

Chain Feed Staff

BlackRock: Only Bitcoin and Ethereum Are Viable for ETFs in the Near Future

Bitcoin and Ethereum will be the only cryptocurrencies traded via ETFs in the near future, according to Samara Cohen, chief investment officer of ETFs and indices at BlackRock, the world’s largest asset manager.

In an interview with Bloomberg TV, Cohen explained that while Bitcoin and Ethereum have met BlackRock’s rigorous criteria for exchange-traded funds (ETFs), no other digital asset currently comes close. “We’re really looking at the investability to see what meets the criteria, what meets the criteria that we want to achieve in an ETF,” Cohen said. “Both in terms of the investability and from what we’re hearing from our clients, Bitcoin and Ethereum definitely meet those criteria, but it’s going to be a while before we see anything else.”

Cohen noted that beyond the technical challenges of launching new ETFs, the demand for other crypto ETFs, particularly Solana, is not there yet. While Solana is being touted as the next potential ETF candidate, Cohen noted that the market appetite remains lacking.

BlackRock’s interest in Bitcoin and Ethereum ETFs comes after the successful launch of Ethereum ETFs last week, which saw weekly trading volume for the crypto fund soar to $14.8 billion, the highest level since May. The success has fueled speculation about the next possible ETF, with Solana frequently mentioned as a contender.

Solana, known as a faster and cheaper alternative to Ethereum, has been the subject of two separate ETF filings in the US by VanEck and 21Shares. However, the lack of CME Solana futures, unlike Bitcoin and Ethereum, is a significant hurdle for SEC approval of a Solana ETF.

Despite these challenges, some fund managers remain optimistic about Solana’s potential. Franklin Templeton recently described Solana as an “exciting and major development that we believe will drive the crypto space forward.” Solana currently accounts for about 3% of the overall cryptocurrency market value, with a market cap of $82 billion, according to data from CoinGecko.

Meanwhile, Bitcoin investors continue to show strong support, as evidenced by substantial inflows into BlackRock’s iShares Bitcoin Trust (NASDAQ: IBIT). On July 22, IBIT reported inflows of $526.7 million, the highest single-day total since March. This impressive haul stands in stark contrast to the collective inflow of just $6.9 million seen across the remaining 10 Bitcoin ETFs, according to data from Farside Investors. The surge in IBIT inflows coincides with Bitcoin’s significant $68,000 level, just 8% off its all-time high of $73,000.

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Ethereum

Ethereum Posts First Consecutive Monthly Losses Since August 2023 on New ETFs

Published

4 months ago

31 July, 2024

Chain Feed Staff

Ethereum sees first monthly consecutive losses since August 2023 amid new ETFs

Available exclusively via

Bitcoin ETF vs Ethereum: A Detailed Comparison of IBIT and ETHA

Andjela Radmilac · 3 days ago

CryptoSlate’s latest market report takes an in-depth look at the technical and practical differences between IBIT and BlackRock’s ETHA to explain how these products work.

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