What key feature is EigenLayer introducing, and how does it impact the restaking system? What is RootstockLabs’ plan for building layer-2 networks on Bitcoin, and what tools will they provide developers? How has THORChain been implicated in North Korea’s crypto laundering activities, and what are the implications for blockchain decentralization? What does the proposed Bitcoin Improvement Proposal (BIP) on quantum resistance entail, and why is it significant for Bitcoin’s future security?
Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. We’re Margaux Nijkerk and Sam Kessler, reporters on CoinDesk’s Tech team.
In this issue:
- EigenLayer Finally Ready To Launch Critical Missing Feature
- RootstockLabs Prepares To Release SDKs for Bitcoin Layer 2s Using BitVMX
- Inside North Korea’s Favorite Crypto Laundering Tool: THORChain
- Bitcoin Developer Proposes Hard Fork To Protect BTC From Quantum Computing Threats
This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday.
Network News
EIGENLAYER’S KEY FEATURE IS FINALLY COMING: EigenLayer, the restaking protocol, shared last week that it will finally introduce its long-awaited slashing feature on April 17, marking the protocol’s first "feature-complete" version. Slashing will allow Actively Validated Services (AVSs) — apps built atop EigenLayer’s restaking system — to penalize operators who fail to meet pre-established conditions and reward those who do. EigenLayer originally pioneered the concept of restaking, a way for Ethereum users to secure additional protocols beyond the base layer by recommitting their staked Ether. Slashing was supposed to be a core part of this system, providing apps a way to punish bad actors by seizing a portion of their capital. Since slashing was not part of EigenLayer when it initially launched in 2024, it left room for competitors to gain market share. Symbiotic, which allows for the restaking of any asset, has been used by EigenLayer early adopters including Hyperlane, an interoperability framework, and Ethena, a popular synthetic dollar protocol. — Sam Kessler Read more.
BUILDING LAYER-2S ON BITCOIN COMING SOON: One of the oldest Bitcoin ecosystem projects is moving to the next stage of enabling developers to build layer-2 networks using its computational layer. Rootstock is one of many projects currently advancing the goal of bringing greater utility and interoperability to Bitcoin, which it is doing using "BitVMX", a modified version of the BitVM programming language. RootstockLabs project is weeks away from releasing software development kits (SDKs), allowing developers to start producing their own Bitcoin layer-2s using BitVMX, founder Sergio Lerner told CoinDesk. SDKs are sets of tools enabling third parties to build applications using a particular platform or framework. "We are very close to having all the pieces ready for people to start building their own solutions on top of BitVMX," Lerner said in an interview. — Jamie Crawley Read more.
NORTH KOREA’S PREFERRED CRYPTO LAUNDERING TOOL: In February, North Korea stole $1.4 billion in the biggest-ever crypto heist. THORChain, a network used to swap crypto, has become central to North Korea’s laundering operations — used to bridge 85% of funds from the hack. Unlike some other blockchain services, THORChain’s operators have refused to block transactions linked to the Bybit heist, despite requests from the FBI and other government agencies. THORChain wallets like Asgardex and Vultisig — tools that most people use to transact on the network — haven’t budged, either. According to estimates from blockchain security researchers who spoke to CoinDesk, THORChain’s major wallet developers and validators — many publicly identified and based in jurisdictions with strict anti-money-laundering regulations, including the U.S. — have earned over $12 million in fees connected to the heist. The U.S. Office of Foreign Assets Control (OFAC) has previously sanctioned blockchain services used in connection with money laundering, such as the mixer app Tornado Cash (which has since been delisted after a court ruling) and Bitzlato, an exchange. Prosecutors have also charged operators behind similar platforms. For legal experts and the crypto community, whether THORChain — a layer-1 blockchain — should be treated differently than these other services revives a fundamental debate faced by virtually all crypto platforms: Is the network truly decentralized? — Sam Kessler Read more.
CAN BITCOIN RESIST QUANTUM COMPUTING?: Bitcoin could be headed for its most sweeping cryptographic overhaul yet if a new proposal gains traction. A draft Bitcoin Improvement Proposal (BIP) titled Quantum-Resistant Address Migration Protocol (QRAMP) has been introduced by developer Agustin Cruz. It outlines a plan to enforce a network-wide migration of BTC from legacy wallets to ones secured by post-quantum cryptography. Quantum computing involves moving away from a process reliant on binary code, ones and zeros, and exponentially increasing computing power by employing Quantum bits (qubits) that exist in multiple states simultaneously. Such a jump in power is expected to threaten modern computing encryption built by classic machines. The proposal suggests that after a predetermined block height, nodes running the updated software would reject any transaction trying to spend coins from an address using ECDSA cryptography, which could theoretically make it vulnerable to quantum attacks. — Francisco Rodrigues Read more.
In Other News
- The first Ripple (XRP) ETF went live on Tuesday. Also on Tuesday, Ripple agreed to acquire multi-asset prime brokerage firm Hidden Road for $1.25 billion, marking one of the largest M&A deals in the digital asset industry to date. — Will Canny and Shaurya Malwa
- Galaxy Digital plans to redomicile in Delaware and list shares on Nasdaq after May 9 shareholder vote. The news comes a week after Galaxy, a major crypto venture firm, agreed to pay $200 million in a settlement with the New York attorney general’s office related to the fund’s involvement in the 2022 Terra-Luna collapse. — Tom Carreras Read more
Regulatory and Policy
- China and Europe both approved retaliatory tariffs against the United States — the latest development in a trade war ignited by U.S. President Donald Trump that has ripped through global markets, including digital asset markets. — CoinDesk
- The price of bitcoin dropped below $77K on Wednesday, representing a relatively modest 8% decline since the announcement of Donald Trump’s ‘Liberation Day’ tariffs. Recession fears have teed up a major test for crypto markets, which were born out of the 2008 financial crisis and have not existed through a major U.S. recession. So far, the decentralized finance (DeFi) sector has shown signs of resilience. — Oliver Knight
- Argentina’s congress has launched an investigation into LIBRA, the alleged pump-and-dump memecoin project promoted by president Javier Milei. The token wiped out 90% for investors and led to calls for Mile’s impeachment. — Francisco Rodrigues
Calendar
EigenLayer Finally Ready to Launch Crucial Missing Feature: A Game-Changer for Ethereum Staking
In the rapidly evolving landscape of blockchain technology, the importance of innovation cannot be overstated. For Ethereum enthusiasts and stakeholders, the expectations are particularly high as the network continues to evolve following its transition from proof-of-work to proof-of-stake. A key player in this transformative narrative is EigenLayer, a protocol that has positioned itself at the forefront of Ethereum’s staking ecosystem. The announcement that EigenLayer is finally prepared to launch a crucial missing feature has sent waves of excitement through the community, and for good reason.
The Rise of EigenLayer
EigenLayer emerged as a pioneering solution designed to enhance Ethereum’s staking capabilities. By allowing users to reuse their staked ETH beyond just securing the Ethereum network, EigenLayer has been pivotal in introducing new revenue streams and staking strategies. This innovative approach aims to incentivize users to lock up their assets longer, thus contributing to Ethereum’s security while also allowing them to participate in various decentralized applications (dApps) within the ecosystem.
The lack of a comprehensive solution that enables flexible staking options has long been a pain point for Ethereum users. Staking inherently limits asset liquidity, which can be frustrating for those looking to maximize returns in a thriving DeFi landscape. EigenLayer’s realization of this challenge and its commitment to addressing it has positioned the protocol as a critical piece of the Ethereum puzzle.
The Missing Feature: Liquid Staking
The anticipated launch revolves around EigenLayer’s crucial feature—liquid staking. Liquid staking stands as a revolutionary mechanism that allows stakers to maintain liquidity on their staked assets. In essence, this provides users the opportunity to stake their ETH while simultaneously receiving a tokenized representation of their staked assets. This representation can be utilized within the DeFi ecosystem, allowing for greater flexibility and engagement.
For Ethereum stakers, the implications of liquid staking are profound. Traditionally, staking involves locking up ETH for a set duration, which could flag risks of illiquidity. With EigenLayer’s liquid staking, users can enjoy the benefits of staking—such as earning rewards for securing the network—without sacrificing access to their capital. This newfound flexibility opens up myriad opportunities for users to maximize their returns across multiple protocols and platforms, thus enhancing the overall utility of staked ETH.
The Advantages of Liquid Staking with EigenLayer
The launch of EigenLayer’s liquid staking feature presents deep-seated advantages that cater to both stakers and the broader Ethereum ecosystem:
Enhanced Liquidity: The primary advantage of liquid staking allows users to enjoy liquidity on their staked assets. Instead of being tethered to a non-liquid investment, users can engage in other DeFi opportunities while still holding onto their staking rewards.
Increased Participation: As staking becomes easier and more flexible, it’s expected that more users will engage in Ethereum’s proof-of-stake model. This increase in participation can lead to greater network security and decentralization.
Diversified Revenue Streams: With liquid staking, users can now participate in yield farming, lending, and other DeFi protocols with their tokenized staked assets. This diversification not only mitigates risk but also maximizes potential returns.
- Reduced Risk of Slashing: EigenLayer’s infrastructure adds an additional layer of security. By allowing users to stake while still utilizing their assets, the protocol may help to reduce the chances of slashing—where users risk losing part of their staked ETH due to network misbehavior.
The Road Ahead
As EigenLayer prepares for the official launch of its liquid staking feature, the attention of the cryptocurrency community shifts towards the practicalities of implementation. The team has emphasized rigorous testing and security audits, ensuring that the launch is smooth and reliable. This commitment to due diligence is crucial given the increasing scrutiny from regulators and the overall public concerning blockchain security.
Moreover, the anticipation surrounding the liquid staking feature is amplified by the broader trends within the Ethereum ecosystem. As the network gears up for future upgrades aimed at reducing transaction costs and improving scalability, EigenLayer’s features could serve as a model for other protocols, setting a precedent for how staking and liquidity can coexist symbiotically.
In Conclusion
EigenLayer’s imminent launch of its liquid staking feature signifies more than just an enhancement of its own offerings; it represents a pivotal moment for Ethereum’s staking landscape. By addressing the critical need for liquidity in staking, EigenLayer is helping to reshape how users interact with their digital assets and participate in the blockchain economy.
With increased participation, enhanced security, and diversified revenue streams on the horizon, EigenLayer is not just filling a gap—it’s paving the way for the future of Ethereum staking and decentralized finance as a whole. As the official launch draws near, the excitement is palpable throughout the community, marking a significant evolution in how Ethereum stakeholders can leverage their assets for maximum impact. Ethereum users should keep a close watch on this development, as its implications could reshape not just their strategies, but the entire ecosystem.
EigenLayer is set to launch an essential feature that fills a significant gap in its functionality. This development is anticipated to enhance the platform’s capabilities, providing users with improved options for leveraging their assets. As a core component of the EigenLayer ecosystem, this feature aims to boost the overall efficiency and performance, making it a pivotal addition for developers and users alike.
By implementing this new feature, EigenLayer addresses key needs within the decentralized finance (DeFi) space, potentially attracting more users and applications to its platform. This move is seen as an important step towards broadening the usability and appeal of EigenLayer, positioning it as a competitive player in the evolving landscape of blockchain technology.
With the launch approaching, stakeholders are eager to see how this enhancement will impact the platform’s adoption and integration within various DeFi projects. The community is hopeful that this addition will streamline processes and improve user experiences, driving further innovation and growth in the ecosystem.