Decentralized finance (DeFi) continues to push the boundaries of crypto trading, with platforms emerging to offer new levels of efficiency, accessibility, and transparency. One such platform is Hyperliquid, a decentralized exchange (DEX) built on its own Layer-1 blockchain. Designed to combine the speed and usability of centralized exchanges with the benefits of decentralization, Hyperliquid has attracted a growing user base and significant trading activity.

With over 400,000 users and a daily trading volume exceeding $6 billion, the platform is gaining attention in the crypto space. But what makes it stand out, and how does it compare to other trading platforms?

### **What is Hyperliquid?**

[Hyperliquid](https://hyperfoundation.org/) is a DEX that aims to provide low fees, high-speed transactions, and advanced trading tools while maintaining the security and transparency of blockchain technology. Unlike traditional DEXs, which often struggle with liquidity and user experience, Hyperliquid aims to combine the best of both centralized and decentralized exchanges.

The platform offers perpetual trading, margin trading, and spot trading, catering to both retail and institutional traders. It operates without traditional gas fees, aiming to streamline transactions and improve cost efficiency.

Let’s explore some of the core features that define Hyperliquid’s approach to decentralized trading.

### **Key Features of Hyperliquid**

Hyperliquid was designed to address the pain points commonly faced by crypto traders: low liquidity, slow order execution, complex interfaces, and lack of transparency. By leveraging its proprietary Layer-1 blockchain, Hyperliquid combines the speed and efficiency of centralized exchanges with the trustless nature of decentralized platforms.

- **Low Fees and 1-Click Trading**: The platform provides a cost-effective fee structure, and its 1-click trading feature makes order execution seamless.
- **Diverse Trading Options**: Hyperliquid supports spot, margin, and perpetual contracts, allowing traders to apply different strategies.
- **Optimized Liquidity & Speed:** With improved liquidity mechanisms and rapid order matching, trades are executed with minimal slippage.
- **Developer Integration**: The platform provides tools for third-party developers to build on its ecosystem, encouraging innovation.

### **What Traders Can Do on Hyperliquid**

- **Trade a Variety of Assets**: Users can trade a broad selection of cryptocurrencies, including options for spot markets and perpetual contracts.
- **Use Advanced Order Types**: Hyperliquid supports advanced trading strategies, including customizable order types that cater to both novice and experienced traders.
- **Provide Liquidity**: Traders can contribute to liquidity pools and earn rewards while helping enhance the platform’s ecosystem.

### **How Hyperliquid Compares to Uniswap: A Simple, Widely Used DEX**

Uniswap is one of the most popular decentralized exchanges, known for its user-friendly design and focus on spot trading. Its automatic market maker (AMM) system allows users to swap a wide variety of tokens, making it accessible for casual traders. However, Uniswap lacks advanced trading features like margin or perpetual contracts, limiting its appeal to more experienced traders. Transactions on Uniswap can involve multiple steps, such as confirming the transaction and approving tokens for swapping, which may slow down execution, especially for users who prefer faster trades.

In comparison, Hyperliquid offers advanced features like margin and perpetual contracts, catering to traders looking for more than just basic spot trading. The platform operates on a Layer-1 blockchain optimized for speed and efficiency, potentially reducing the number of steps required for a trade. This focus on low-latency execution and streamlined processes may be particularly appealing to users who require faster trades and more complex trading tools, such as leverage and advanced contracts.

### **How Hyperliquid Compares to dYdX: A DEX for Advanced Traders**

dYdX is built for advanced traders, offering features like margin trading, perpetual contracts, and lending. The platform transitioned to a Cosmos-based blockchain in 2023 to improve scalability and performance. While these features provide deeper functionality for professional traders, the platform's complex interface and learning curve may be challenging for beginners.

Hyperliquid, like dYdX, also provides advanced trading options, but with a focus on high-frequency trading and seamless user experience. While both platforms cater to advanced traders, dYdX provides a broader suite of trading features, and Hyperliquid emphasizes ease of use for users looking for a seamless trading experience.

### **HYPE Token: A Community-Centric Launch**

In 2024, Hyperliquid introduced its native token, HYPE, through an airdrop to nearly 100,000 users. Touted as one of the most valuable airdrops ever, 12% of recipients received between 5,000-10,000 tokens, with some seeing the value of their tokens soar to over $140,000 within weeks of distribution.

Hyperliquid did not rely on venture capital funding. Instead, the majority of the token supply—more than 75%—was allocated to the community. This approach reflects Hyperliquid's commitment to its users, with significant portions set aside for both current and future participants.

Here's the breakdown of the token distribution:

- **38.88%** for future emissions
- **31%** for the genesis airdrop
- **23.8%** to core contributors, including Hyperliquid Labs developers (with a vesting period until 2027-2028)
- **6%** to the Hyper Foundation
- **0.3%** for community grants
- **0.012%** for HIP-2

This model ensures that the majority of HYPE tokens remain in the hands of the community. Notably, unlike many other airdrops, Hyperliquid did not allocate any tokens to private investors, allowing more tokens to go directly to users.

HYPE serves several key functions within the Hyperliquid ecosystem:

- **Governance**: Token holders have a say in platform decisions, allowing for decentralized decision-making.
- **Gas Fees**: HYPE can be used to pay for transaction fees within the Hyperliquid ecosystem.
- **Limited Supply**: The total supply of HYPE is capped at 1 billion tokens, enhancing its scarcity and potential value over time.

### **Challenges and Future Prospects**

While Hyperliquid has achieved remarkable success, it is not without its challenges. The platform’s trading pair selection remains somewhat limited, and its interface, while user-friendly, could benefit from further refinement. Additionally, as a relatively new Layer-1 blockchain, Hyperliquid’s long-term security and reliability are yet to be fully tested.

However, the future looks promising. Hyperliquid is continuously expanding its offerings, adding new assets and introducing advanced trading tools like AI-powered analytics and customizable dashboards. These innovations, coupled with its robust infrastructure, are attracting institutional investors and reinforcing its role in the evolving DeFi landscape.

Hyperliquid represents a shift in decentralized crypto trading. By addressing the limitations of traditional DEXs and providing a CeFi-like experience, it has introduced new standards for speed, simplicity, and innovation. With a focus on community engagement, competitive fees, and cutting-edge features, Hyperliquid is positioning itself to play a significant role in the future of DeFi. However, its continued success will depend on its ability to adapt and meet the changing demands of the market.

*Disclaimer: The content provided in this article is for informational purposes only and should not be construed as financial, investment, or trading advice. Always consult with a qualified financial advisor before making investment decisions.*

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Hyperliquid

TON (The Open Network) and Pyth Network have recently announced a partnership. This collaboration aims to enhance the development of decentralized applications (dApps) on the TON blockchain by integrating Pyth’s advanced data streams. As a result, developers on the TON network will have access to high-quality, real-time pricing information, which is crucial for building innovative dApps.

### **TON and Pyth**

Now, let’s take a closer look at the projects involved. 

**TON (The Open Network)** is a decentralized blockchain platform developed by Telegram to offer high-speed, low-cost transactions and robust scalability. Designed to integrate seamlessly with Telegram’s ecosystem, TON supports a wide range of applications, including decentralized finance (DeFi), gaming, and more, making it a versatile foundation for blockchain development. Throughout the year of 2024, TON has seen a significant increase in users and higher adoption rates. This growth is in large part attributed to the popularity of casual games on the Telegram messaging app. Currently, TON has locked in a total value exceeding $500 million.

**Pyth Network** is a decentralized oracle network that specializes in delivering high-frequency, real-time data feeds to blockchain applications. By aggregating data from multiple sources, Pyth provides accurate and reliable pricing information crucial for various decentralized finance (DeFi) and other blockchain-based applications. While originally designed for the Solana blockchain, now it functions on more than 70 blockchains, including Solana, Ethereum, Optimism, Arbitrum, and Base. It offers market data for various assets such as cryptocurrencies, equities, FX, and commodities.

### **The Partnership and Its Implications**

The partnership is expected to improve various aspects of the TON ecosystem, particularly in decentralized finance (DeFi). The integration of Pyth’s pull oracle data feeds will equip TON developers with essential real-time, institutional-quality price data needed to build innovative decentralized applications (dApps). This collaboration will enable projects within the TON network to offer improved financial services and facilitate lightning-fast transactions, crucial for serving a wide global audience.

Beyond DeFi and gaming, Pyth's data capabilities are expected to attract new Web3 users who demand the same responsiveness they are accustomed to from Web2 services. 

Michael Cahill, CEO of Douro Labs and a core contributor to Pyth, emphasized that TON builders can trust Pyth to support their projects, including those already operational on other chains. This collaboration will bolster TON’s efforts to onboard users into the on-chain space, reinforcing the network's commitment to delivering top-tier services and functionality.

### **TON Ecosystem and New Developments**

This marks a significant step forward in the development of decentralized applications (dApps), promising to deliver enhanced data integration and improved financial services for the TON ecosystem. The changes will help make dApps more effective and the network more dynamic. Improved data integration means that applications will run more smoothly, with access to better information and more reliable financial tools. As a result, developers can create more innovative and efficient solutions, while users benefit from a more robust and responsive network.

On August 9, IntoTheBlock (ITB) added TON to its analytics platform. This provides the TON community with free access to advanced analytical tools. These tools will help users better understand trends and on-chain information. The integration aims to boost user engagement and improve network transparency, offering valuable insights into the TON ecosystem and supporting its overall growth.

### **Conclusion**

The collaboration between TON and Pyth, coupled with the integration of IntoTheBlock's analytics tools, represents a major advancement for the TON ecosystem. By leveraging Pyth’s real-time data feeds and ITB’s analytical capabilities, TON is set to enhance its offerings, drive user engagement, and foster a more transparent and dynamic network. These developments highlight TON's commitment to providing cutting-edge solutions and maintaining its position as a leading platform in the blockchain space.

On-chain  intelligence.png

TON Teams Up with Pyth

Arbitrum DAO, which governs the Arbitrum ecosystem, recently conducted a vote to decide whether to expand its Orbit chains to networks other than Ethereum. The proposal was approved with 84.5% in favor and only 0.01% choosing to abstain. 

You can find the full proposal [here](https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xd6138aaca39742a1a56f3219a74a4258e0786aa5494cdfbe752f23277c1b947f).

### **Arbitrum Orbit**

The Arbitrum Orbit framework enables developers to design custom Layer 2 and Layer 3 rollup chains. These chains offer significant customization options, allowing developers to modify key elements such as the supported gas token, governance mechanism, data availability layer, and privacy features. Arbitrum Orbit is a framework allowing developers to create bespoke Layer 2 and Layer 3 rollup chains. Orbit chains can be customized, allowing developers to change core features including the network’s supported gas token, governance mechanism, data availability layer, and privacy features.

Currently, Arbitrum has 50+ orbit chains in development and is diversified into:

- 22 Defi Chains
- 17 Gaming Chains
- 5 NFT Chains
- 12 Infra and Tooling Chains

### **The Proposal**

In January, the Arbitrum Foundation rolled out the Arbitrum Expansion Program, which allows third-party projects to fork and adapt Arbitrum's codebase for deployment on any blockchain that employs Ethereum’s security model. In exchange, these projects participate in a revenue-sharing arrangement.

The latest proposal makes it possible for new Orbit chains to be launched on additional blockchain networks, including Bitcoin, Binance Smart Chain, and Cosmos. This adjustment responds to interest from projects wishing to create Orbit chains on blockchains beyond Ethereum, prompting the foundation to reassess the program’s current limitations. These changes could lead to more Orbit deployments and increased revenue for the Arbitrum DAO.

### **What’s Next?**

Keep in mind that the Arbitrum Expansion Program is only 8 months old, and this new authorization is set to accelerate its growth by enabling the launch of Orbit chains on multiple blockchain networks beyond Ethereum. 

Arbitrum is well-positioned to maintain its leadership in the Layer 2 ecosystem and possibly expand further. However, the Layer 2 market is becoming increasingly saturated, with many competing solutions striving for prominence. This heightened competition is compounded by the fact that many leading projects are shifting their focus towards launching their own Layer 1 solutions instead of supporting additional Layer 2 platforms. As the market evolves, Arbitrum will need to strategically navigate these challenges and capitalize on new opportunities to sustain and enhance its market position.

### **Summary**

The approval to expand Arbitrum Orbit chains to networks beyond Ethereum marks a significant milestone for the Arbitrum ecosystem. This decision opens new opportunities for developers and projects interested in leveraging the capabilities of Arbitrum across various blockchain networks.

This move also hints at potential revenue growth and expansion opportunities for Arbitrum DAO, marking it as a notable player in the evolving Web3 space. As the ecosystem continues to grow and adapt, it will be interesting to see how this decision influences the future of decentralized finance and blockchain technology.

rwa_cover-1.png

Orbit Chains to be Deployed Beyond Ethereum

Arbitrum Goes Chain-Agnostic

### **Scaling Bitcoin: StarkWare’s Breakthrough with Zero-Knowledge Proofs**

StarkWare, a blockchain developer known for StarkEx and StarkNet, claims to have verified the first zero-knowledge proof using its new STARK verifier on Bitcoin’s Signet test network. StarkWare’s goals are to enhance the scalability and security of blockchains, and this is a major step forward.

### **STARK Verifier**

StarkWare believes that zero-knowledge (ZK) proofs are crucial for unlocking Bitcoin's programmability and expanding its use worldwide. In simple terms, ZK proofs are a cryptographic method that enables one party to prove to another that they possess specific information without actually revealing it. For instance, in a layer 2 network, a user can prove ownership of a transaction to a smart contract or network node without disclosing sensitive data. This helps reduce congestion on blockchains, speeds up transactions, and maintains security. 

CEO Eli Ben-Sasson stated, “We said we wanted to scale Bitcoin and unleash the blockchain’s power to transform the world. This is us doing that. It’s our very first step in showing what Bitcoin can do with zero-knowledge technology.”

The concept was established by verifying the 32nd number in the Fibonacci squared sequence. This achievement paves the way for generalizing the design and enabling it to perform a wider range of general-purpose computations.

### **Scaling Bitcoin Without Forks**

No additional blockchain is being created, as StarkWare utilizes the existing Starknet network with its current governance and tokenomics. Bitcoin scaling doesn't necessitate a fork, and each decentralized application (dapp) has the flexibility to select its preferred settlement option. This is made possible in part by the utilization of OP_CAT.

### **OP_CAT**

The proposed Bitcoin update known as OP_CAT aims to restore some of the functionality that was originally available but was turned off by Satoshi Nakamoto in 2010 due to security concerns.

However, supporters of OP_CAT argue that advancements in technology and changes to the Bitcoin code have already addressed these issues.

StarkWare's breakthrough highlights the clear advantages of integrating OP_CAT and enabling Ethereum-like smart contract capability on the blockchain network. However, there are still critics, and consensus has not yet been reached in the community.

### **The Signet Test Network**

The test was conducted on The Signet test network. Bitcoin's Signet network, similar to other Bitcoin testnets, provides a controlled environment for developers to test new features, applications, and tools before deploying them on the Bitcoin mainnet.

However, Signet differs from traditional Bitcoin testnets due to its centrally coordinated nature and added stability and protection against spam or malicious activities.

### **A New Era of Bitcoin Development**

The achievements of StarkWare represent a significant advancement in Bitcoin scaling solutions by utilizing their ZK rollup technology. This project not only reinforced the case for OP_CAT but also demonstrated that there are still boundaries to be broken in the development of Bitcoin, creating opportunities for new developers to enter the ecosystem.

Blockchain.jpg

Starkware's Breakthrough with ZK Proofs

### **Introducing GOAT Network: The Future of Bitcoin Layer 2 Solutions**

ZKM is set to launch a groundbreaking Bitcoin Layer 2 solution called GOAT Network later this quarter. This innovative network aims to be the first decentralized Bitcoin Layer 2 that shares network ownership, marking a significant step forward in the crypto world.


### **Decentralized Ownership and Participation**

GOAT Network uses a decentralized sequencer model, where operators secure the network and earn yields on their Bitcoin. This model fosters a more community-driven approach, allowing even small BTC holders to stake their Bitcoin and earn yields. Such inclusivity opens up opportunities for everyone to participate and benefit, not just large investors.


### **EVM Compatibility for Enhanced Functionality**

One of the standout features of GOAT Network is its EVM compatibility, which allows for smart contract functionality. Unlike Bitcoin's Lightning Network, this compatibility enables more complex and versatile applications, significantly expanding what users can do on the network.


### **Multiple Yield Sources**

Participants on GOAT Network can earn yields from several sources:

- Gas fees in BTC
- Mining rewards in GOAT tokens
- Returns from staked BTC (stBTC)

As the team stated, "stBTC is a receipt token that users will receive after staking their BTC on GOAT Network. That stBTC receipt token can then be used to unlock more yield opportunities within the GOAT Network ecosystem."


### **Initial Dapps for Maximum Utility**

At launch, GOAT Network plans to offer several decentralized applications, including:

- Decentralized Exchange (DEX)
- Borrowing and Lending Platforms
- Perpetual Swap Platforms

These dapps will provide a comprehensive suite of financial services for Bitcoin-native assets, further expanding the Web3 ecosystem.


### **A Vision for a Universal Layer 2**

GOAT Network aims to be a "Universal Layer 2," starting with Bitcoin and later integrating other blockchains. This vision seeks to unify fragmented liquidity and enhance interoperability across the blockchain landscape.


### **Seamless Interoperability with Entangled Rollup Technology**

To achieve seamless interoperability across different blockchains, GOAT Network uses ZKM's Entangled Rollup technology. This ensures secure and efficient interactions between networks, eliminating the need for vulnerable third-party bridges.


### **Conclusion**

GOAT Network is poised to revolutionize the Bitcoin ecosystem by introducing a decentralized, inclusive, and feature-rich Layer 2 solution. With the ability to stake BTC, earn yields, and use smart contracts, GOAT Network offers new ways to maximize the potential of Bitcoin and beyond. Stay tuned for its launch later this quarter and get ready to witness this exciting new chapter in the world of cryptocurrency!


**Please be aware that the information provided is for informational purposes only and should not be construed as financial advice. Always conduct your own research and consult with a professional financial advisor before making any investment decisions.*

Introducing GOAT Network

Tech News

Mass Adoption

Deep Dive

Cryptocurrency network fees, also known as transaction fees, are small payments made to those responsible for processing and securing transactions on the blockchain, such as miners or validators. These fees fluctuate depending on factors like network congestion, transaction size, and type. For anyone engaging with blockchain technology, understanding these fees is essential for managing the process of sending and receiving cryptocurrencies effectively.

In essence, blockchain fees are what users pay to have their transactions confirmed and added to the blockchain ledger. Far from being just an expense, these fees play a crucial role in ensuring transactions are processed efficiently and securely, maintaining the stability and reliability of the entire network.

### **Why Are Network Fees Important?**

Network fees are vital in maintaining the functionality of decentralized blockchain networks like Bitcoin and Ethereum. Acting as incentives, they encourage miners or validators to devote their resources to verifying and processing transactions.

Miners, typically found in Proof-of-Work (PoW) networks like Bitcoin, use computational power to solve complex puzzles, securing the network and confirming transactions. Validators, on the other hand, operate in Proof-of-Stake (PoS) networks like Ethereum (post-merge), where they stake their cryptocurrency holdings to validate and add transactions to the blockchain.

This fee system also helps maintain the integrity of the network by deterring spam and malicious activities. Moreover, transaction fees create a dynamic environment where users can influence the speed of their transactions. By adjusting the fees they’re willing to pay, users can prioritize their transactions, ensuring faster processing during times of high network demand.

### **How Are Network Fees Calculated?**

Network fees are not fixed; they are determined by several key factors that can change based on current conditions:

- **Network Demand:** As more users send transactions, the demand for block space increases, driving up the fees.
- **Transaction Size:** Larger transactions take up more space in a block, which translates to higher fees.
- **Transaction Priority:** Users who are willing to pay higher fees can ensure their transactions are processed faster, as miners or validators tend to prioritize them.

For example, on a network like Binance Smart Chain, fees are influenced by various factors, such as transaction details and network conditions. Smaller transactions are cheaper, while those involving decentralized applications or multi-step processes may result in higher fees.

### **Why Do Blockchain Transaction Fees Vary?**

The cost of a blockchain transaction can vary widely, depending on factors like the data involved and the computational resources required to process it. On smart contract-enabled blockchains like Ethereum, the complexity of the transaction often plays a key role in determining the cost. Below are examples of common transactions and how they impact fees:

1. **Simple Cryptocurrency Transfers**:
    
Transferring cryptocurrency, such as sending Ether (ETH) from one address to another, is a straightforward process. These transactions are typically low-cost because they require minimal computational resources and don't involve any complex operations or smart contract execution.
    
2. **Token Swaps on Decentralized Exchanges (DEXs)**:
    
When interacting with decentralized exchanges like Uniswap or SushiSwap, the transaction fees tend to be higher. This is because these transactions involve smart contracts that need to calculate exchange rates, update liquidity pool balances, and distribute rewards to liquidity providers, all of which require additional computational work.
    
3. **Minting Non-Fungible Tokens (NFTs)**:
    
Minting NFTs often comes with the highest fees. Creating a unique, one-of-a-kind token demands significant computational resources and data storage. This makes NFT minting more costly than simpler transactions like transfers or token swaps.
    

Now, let’s take a closer look at the actual numbers.

### **Research Findings on Blockchain Fee Earnings**

A [recent study](https://www.coingecko.com/research/publications/blockchain-fee-earnings) by CoinGecko analyzed gas fees earned by Layer 1 (L1) and Layer 2 (L2) blockchains from January 1, 2023, to December 31, 2024, using data from TokenTerminal and Artemis. Blockchains with insufficient publicly available fee data were excluded. Here are the key findings.

![Untitled.png](/uploads/Untitled_95833f46f7.png)

1. **Top Fee-Earning Blockchains in 2024**:
- Ethereum led with $2.48 billion in annual gas fees, a 3.0% increase from 2023, despite the Dencun upgrade reducing Layer 2 (L2) transaction costs.
- Tron followed with $2.15 billion, a 116.7% increase, driven by stablecoin usage.
- Bitcoin ($922.89 million) and Solana ($750.65 million, a 2838% surge) also saw significant fee earnings.
- BNB Chain earned $194.78 million, while TON ranked 10th with $35.28 million.
2. **Layer 1 (L1) and Layer 2 (L2) Earnings**:
- L1 blockchains earned $6.60 billion across 21chains, while L2s earned $294.92 million across 12 chains.
- Four L2s (Base, Arbitrum, Linea, Optimism) ranked among the top 10 fee-earning blockchains.
3. **Ethereum’s Fee Trends**:
- Ethereum’s monthly fees fluctuated between $62.82 million and $606.77 million in 2024, with Q1 2024 being its highest-earning quarter in two years ($1.17 billion).
4. **Tron and Solana Growth**:
- Tron outpaced Ethereum in fee earnings for six consecutive months, fueled by stablecoin activity.
- Solana’s fee earnings surged due to high transaction volumes, despite network congestion.
5. **Layer 2 Performance**:
- Base led L2s with $84.78 million in fees, a 548.2% increase, driven by retail adoption and Coinbase integration.
- Arbitrum and zkSync saw declines of 30.1% and 59.6%, respectively, due to increased market saturation and reduced airdrop-driven activity.
6. **Key Drivers**:
- Fee earnings for L2s were heavily influenced by airdrop campaigns and incentive programs, leading to discussions around long-term sustainability.

### **Looking Ahead: The Future of Transaction Fees in Blockchain**

As blockchain technology continues to evolve, transaction fees will remain a critical component of the ecosystem. The ongoing development of Layer 2 solutions, improvements in scalability, and new consensus mechanisms have the potential to reshape how fees are calculated and managed.

In the coming years, we may see greater efforts to reduce fees and make blockchain networks more accessible and cost-efficient. Whether through innovations like rollups, zero-knowledge proofs, or other emerging technologies, the landscape of blockchain fees will likely continue to evolve to meet the demands of both users and developers.

Staying informed about these changes will be crucial for anyone engaged with blockchain technology, ensuring that users can make informed decisions about transaction costs, prioritize their activities effectively, and contribute to the broader adoption of decentralized technologies.

Their Purpose and Earnings Across Blockchains

Network Fees

Blockchain’s evolution has introduced multiple layers—Layer 0, Layer 1, Layer 2, and Layer 3—each designed to address key challenges like scalability, functionality, and interoperability. But what exactly do these layers mean?

A blockchain layer refers to a distinct level within the technology stack, with each playing a specific role. Layer 0 establishes the foundational infrastructure, enabling networks to communicate and share resources. Layer 1 manages on-chain transactions and security. Layer 2 enhances scalability by processing transactions off-chain, while Layer 3 powers user-facing applications.

This layered structure emerged as a response to blockchain’s early limitations, providing solutions that enhance performance, security, and usability. In this article, we’ll explore these layers in detail, examining how they work together to create a more scalable and interconnected blockchain ecosystem.

### **The Evolution of Blockchain Complexity**

Bitcoin, the first blockchain, introduced a single-layer model focused solely on peer-to-peer transactions. While revolutionary, its design had limitations, including scalability (only ~7 transactions per second) and a lack of support for smart contracts or complex applications.

As adoption grew, these constraints became apparent, driving innovation toward multi-layered architectures. Early challenges—slow speeds, high fees, and energy inefficiency—highlighted the trade-offs between decentralization, security, and scalability. 

At the heart of blockchain's design challenges lies the Blockchain Trilemma, a fundamental concept articulated by Ethereum's Vitalik Buterin. This trilemma posits that any blockchain network can only optimally achieve two out of three critical properties: decentralization, security, and scalability. Decentralization refers to the distribution of control across network participants, security involves protection against attacks and data integrity, while scalability concerns transaction throughput and efficiency. 

Bitcoin's choice to prioritize decentralization and security resulted in limited scalability. Ethereum's introduction of smart contracts expanded functionality but inherited similar scaling challenges. This trilemma has driven continuous innovation across blockchain layers, with each subsequent layer attempting to better balance these competing priorities.

Solutions emerged in phases. Ethereum’s introduction of smart contracts enabled decentralized applications (dApps), though scalability challenges remained. To alleviate this, Layer 2 solutions like rollups helped offload transactions from Layer 1, enhancing throughput while maintaining security and decentralization. Meanwhile, Layer 0 protocols enabled inter-chain communication, connecting different blockchains for cross-chain interoperability and resource sharing. Building on this, Layer 3 focuses on user-facing applications, abstracting the complexity of blockchain to deliver seamless experiences in areas like decentralized finance (DeFi), NFTs, and blockchain-based gaming.

This progression reflects blockchain’s shift from a niche technology to a multi-layered framework capable of supporting global adoption. The combination of different layers addresses fundamental scalability challenges while maintaining security and decentralization, setting the stage for blockchain’s growth across multiple industries.

### **Layer 0: The Foundation (Network Layer)**

Layer 0 is the base infrastructure enabling blockchains to communicate and share resources. Without it, networks like Bitcoin and Ethereum would operate in isolation.

Polkadot and Cosmos are prime examples of Layer 0 solutions. Polkadot uses a relay chain to connect independent blockchains, while Cosmos leverages its Tendermint protocol for cross-chain interoperability. The key role of Layer 0 is ensuring seamless data and asset transfers across ecosystems.

### **Layer 1: Core Blockchain (Protocol Layer)**

Layer 1 is the foundation where transactions are finalized, focusing on security and decentralization but facing scalability trade-offs.

Bitcoin and Ethereum are the most well-known Layer 1 blockchains. Bitcoin’s transaction speed is limited, processing only around 7 transactions per second (TPS), while Ethereum handles 15–30 TPS on average. This slower throughput leads to high fees during network congestion, such as during Ethereum’s NFT boom, highlighting scalability challenges.

Over time, alternative Layer 1 blockchains, such as Solana, have emerged to address these scalability issues by offering faster transaction speeds and lower fees. While these networks can process thousands of TPS, they come with their own challenges—often sacrificing decentralization and facing potential congestion during periods of high demand.

These constraints on Layer 1 emphasize the need for Layer 2 solutions to enhance scalability, reduce costs, and maintain security and decentralization.

### **Layer 2: Scaling Solutions**

Layer 2 enhances Layer 1 by processing transactions off-chain, reducing costs and congestion.

Layer 2 solutions come in several forms:

- Rollups (e.g., ZK and Optimistic Rollups) batch transactions to reduce costs and improve settlement efficiency.
- Plasma chains offload transactions to separate chains to ease congestion on the main network.
- Validiums improve scalability by storing data off-chain while maintaining security.
- State channels enable instant, low-cost microtransactions by processing them off-chain.
- Sidechains (like Polygon) operate as independent chains that connect back to Layer 1 networks for final settlement.

Rollups are one of the most prominent Layer 2 solutions, and there are two main types: ZK-Rollups and Optimistic Rollups. ZK-Rollups, like zkSync and StarkWare, use zero-knowledge proofs to validate transactions before they are committed to Layer 1, providing high security alongside scalability. On the other hand, Optimistic Rollups, such as Arbitrum and Optimism, assume transactions are valid by default, offering efficiency and cost savings for dApps with a challenge period to ensure correctness.

The impact of Layer 2 is undeniable—Ethereum’s Layer 2 networks now handle over $40 billion in assets, proving that scalability is achievable without sacrificing security.

### **Layer 3: Application Layer**

Layer 3 is where user-facing applications reside, bridging the gap between blockchain technology and end-users. This layer abstracts the complexity of blockchain, providing interfaces and experiences that are easy for users to interact with. It hosts decentralized applications (dApps) across various domains, including decentralized finance (DeFi), NFTs, and gaming.

Prominent examples include DeFi platforms like Uniswap and Aave, which enable financial services without intermediaries, NFT marketplaces like OpenSea and Blur for digital ownership, and blockchain-based games like Axie Infinity, which introduce novel economic models.

Layer 3 applications not only offer decentralized alternatives to traditional services but are also helping drive broader blockchain adoption. By providing seamless, user-friendly experiences, they attract users beyond the crypto-native audience and expand blockchain’s reach into industries like finance, entertainment, and even social media.

### **Key Takeaways**

The layered blockchain architecture represents an increasingly sophisticated approach to solving the fundamental trilemma of decentralization, security, and scalability. 

- Layer 0 connects ecosystems.
- Layer 1 ensures security.
- Layer 2 scales efficiently.
- Layer 3 drives adoption.

This multi-layered framework has transformed blockchain from Bitcoin’s single-layer origins into a dynamic, interconnected ecosystem supporting billions in assets and millions of users. As of today, its impact is clear—cross-chain bridges powered by modular architectures, like those in Polkadot and Cosmos, enhance scalability and link disparate blockchains, while Layer 2 solutions bolster Ethereum’s growth and dApps redefine industries from finance to gaming. Emerging innovations, such as account abstraction, further simplify interactions by allowing users to manage multiple assets and protocols seamlessly, improving both security and user experience.

Looking ahead, these advancements continue to shape blockchain’s evolution, addressing challenges of scalability, interoperability, and usability. From enabling financial inclusion to powering decentralized entertainment, this layered foundation keeps blockchain a transformative force for a more connected and accessible world.

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Layer 0 to Layer 3

2024 has been a standout year for the cryptocurrency market. Bitcoin (BTC) reached an unprecedented $100k, while Ethereum (ETH) climbed past $4k, setting new benchmarks for the industry.

In parallel, a series of compelling narratives have unfolded. The rapid rise of memecoins, advancements in AI, the tokenization of real-world assets (RWA), the ongoing expansion of GameFi, and innovations in decentralized physical infrastructure (dePIN) have energized the market and opened new possibilities.

Looking forward, VanEck—a globally recognized investment management firm—[shared its predictions for 2025](https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-vanecks-10-crypto-predictions-for-2025), providing insights into how these trends may evolve in the years ahead. Let’s take a closer look at some of them.

### **Market Momentum**

VanEck predicts that this bull market will continue in 2025, with the first peak occurring in Q1. At the height of this cycle, according to the estimation, Bitcoin (BTC) will be priced at around $180,000, while Ethereum (ETH) could exceed $6,000. Notable projects like Solana (SOL) and Sui (SUI) might surpass $500 and $10, respectively.

After this initial peak, Bitcoin might experience a 30% drop, with altcoins potentially facing steeper declines of up to 60% as the market undergoes a summer consolidation. However, VanEck anticipates a rebound in the fall, with major cryptocurrencies regaining their momentum and reaching previous all-time highs by year-end.

### **AI Agents**

VanEck also foresees a significant rise in the on-chain activity of AI agents, predicting that their numbers will exceed 1 million by 2025. These specialized bots are designed to optimize outcomes such as "maximizing yield" in DeFi or "enhancing engagement" on platforms like X/Twitter by autonomously refining their strategies.

Currently, platforms like Virtuals empower users—even those without technical expertise—to create AI agents for on-chain tasks. By tapping into decentralized contributors, including fine-tuners, dataset providers, and model developers, creators can build and lease AI agents to generate income. This accessibility will fuel a rapid increase in agent deployment.

While DeFi remains a central focus for AI agents, their utility is expanding into areas such as social media, gaming, and consumer applications. These agents can serve as influencers, interactive gaming characters, or digital companions. Some, like Bixby and Terminal of Truths, have already gained significant traction, amassing 92k and 197k followers on X/Twitter, respectively.

### **Bitcoin L2s**

Another crucial development that could reshape the crypto ecosystem is the rise of Bitcoin layer-2 (L2) blockchains. These solutions are designed to scale Bitcoin more efficiently and open up new opportunities for its use cases. By enhancing Bitcoin’s transaction throughput and reducing latency, Bitcoin L2s are addressing the network’s existing limitations while adding new capabilities, such as smart contract functionality, which can drive a dynamic DeFi ecosystem centered around Bitcoin.

At present, Bitcoin can be transferred from the Bitcoin blockchain to smart contract platforms via bridged or wrapped BTC, which depend on third-party systems that are susceptible to hacks and security issues. Bitcoin L2 solutions aim to mitigate these risks by providing frameworks that connect directly with Bitcoin's base layer, reducing the need for centralized intermediaries. While challenges related to liquidity and user adoption persist, Bitcoin L2s offer the promise of enhanced security and decentralization, instilling greater confidence in BTC holders to engage actively with their Bitcoin in decentralized ecosystems.

The growth of Bitcoin L2s reflects increasing demand from BTC holders seeking to generate yield and expand the utility of their assets. As Bitcoin L2s and chain abstraction technology evolve into accessible tools, they will significantly strengthen Bitcoin’s position in the broader DeFi space. Platforms like Ika on Sui and Infinex on Near demonstrate how multi-chain solutions can enhance Bitcoin's interoperability with other ecosystems.

By facilitating secure and efficient on-chain borrowing, lending, and other permissionless DeFi solutions, Bitcoin L2s and abstraction technology will convert Bitcoin from a mere passive store of value to an active player in decentralized ecosystems. As adoption increases, these technologies will unlock significant opportunities for on-chain liquidity, cross-chain innovation, and a more interconnected financial future.

### **DeFi and NFTs**

Despite significant trading activity on decentralized exchanges (DEXs)—with volumes surpassing centralized exchanges (CEXs) in some cases—the total value locked (TVL) in decentralized finance (DeFi) remains 24% below its peak. VanEck predicts that DEX trading volumes will exceed $4 trillion by 2025, capturing 20% of CEX's spot trading volumes. This growth will be driven by the rise of AI-related tokens and consumer-facing decentralized applications (dApps).

The introduction of tokenized securities and high-value assets will further propel DeFi’s expansion, adding new liquidity and enhancing its utility. As a result, the DeFi TVL is expected to recover to over $200 billion by year-end, reflecting growing demand for decentralized financial infrastructure in an evolving digital economy.

The NFT market, heavily impacted by the 2022–2023 bear market, has seen trading volumes decline by 39% since 2023 and an even steeper 84% drop since 2022. While fungible token prices have rebounded in 2024, NFTs have lagged in price and activity until a notable turnaround in November. However, certain projects have demonstrated resilience by building strong community connections and creating lasting value.

For instance, Pudgy Penguins have transformed into a consumer brand with collectible toys, while Miladys have gained cultural relevance in internet subcultures. The Bored Ape Yacht Club (BAYC) continues to grow as a prominent cultural entity, attracting attention from brands, celebrities, and mainstream media.

As crypto wealth recovers, VanEck expects affluent users to diversify into NFTs, viewing them not just as speculative assets but as investments with lasting cultural and historical importance. According to VanEck, established collections like CryptoPunks and BAYC could see benefits from this shift, despite significant drops from their all-time highs—down around 90% and 66%, respectively. Other projects, such as Pudgy Penguins and Miladys, have already surpassed their previous price records.

Ethereum remains the dominant blockchain for NFTs, hosting the majority of leading collections. In 2024, Ethereum accounts for 71% of NFT trading, a share that is projected to grow to 85% by 2025. This dominance is further reflected in market capitalization rankings, where Ethereum-based NFTs hold the top positions, underscoring its central role in the NFT ecosystem.

Although NFT trading volumes may not reach the euphoric heights of previous cycles, VanEck believes a sustainable market with annual turnover of $30 billion—roughly 55% of the 2021 peak—is within reach. This shift toward sustainability and cultural significance, rather than speculative frenzy, will shape the future of the NFT space.

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Crypto in 2025

In the world of cryptocurrencies, staking has emerged as a popular way to earn passive income. Originally created as an alternative to traditional mining, staking allows users to lock up their digital assets to help secure a blockchain and earn rewards in return. Unlike mining, staking requires far less energy, making it a more sustainable option for supporting blockchain networks. This approach has become a go-to option for those interested in passive income through crypto.

### **What Is Staking?**

In essence, staking is the process of locking up cryptocurrency to support the operations and security of a blockchain network. It is mainly associated with networks that use the Proof of Stake (PoS) model. By committing your assets, you help validate transactions and maintain the integrity of the network. In return for your contribution, you earn rewards, typically paid out in the same cryptocurrency you’ve staked. This creates a win-win situation where you can earn passive income while actively supporting the growth and stability of the blockchain ecosystem.

If you’re interested in staking, the first step is to choose a cryptocurrency that supports this mechanism, such as Ethereum, Avalanche, or Solana. Next, you’ll need to set up a compatible wallet to securely store your assets. Once your wallet is ready, you can purchase the cryptocurrency you wish to stake and transfer it to your wallet. Afterward, you’ll select a staking platform or a validator—an entity that manages the staking process for you. By delegating your assets to a validator, you can start earning rewards effortlessly. The process is typically straightforward, allowing you to watch your rewards grow as you contribute to the network’s health.

### **Recent Examples of Staking Returns**

A [recent CoinGecko report](https://www.coingecko.com/research/publications/staking-yields-across-blockchains) looks at staking yields and participation rates in leading PoS blockchains among the top 50 cryptocurrencies. The study used data from [Staking Rewards](https://www.stakingrewards.com/) to analyze staking yields and the percentage of each token’s supply that is staked. This information highlights the participation levels and returns of various networks, showcasing staking as an appealing way for crypto holders to earn income.

Here are some key findings on staking yields and participation rates:

- **Cosmos (ATOM)**: Offers a yield of up to **18.5%** with a staking ratio of **59%**, equivalent to about 248.8 million ATOM valued at $1.2 billion, making it a top choice for high returns.
- **Polkadot (DOT)**: Provides yields of **up to 11.5%** and has a staking ratio of **56%**, with a total staked volume of 853.2 million DOT worth $3.7 billion, appealing for those seeking significant rewards.
- **Avalanche (AVAX)**: Delivers yields of **7-8%** with a staking ratio of **58%**, involving 234.1 million AVAX valued at $7.2 billion, attracting a robust staking community.
- **Aptos (APT)**: A newer Layer-1 blockchain offering a yield of **7.0%** and a staking ratio of **78%**, showcasing its growing appeal among stakers.
- **Solana (SOL)**: Offers yields of **6-7%** with a staking ratio of **67%**, translating to about 393.6 million SOL worth $65.2 billion, though network reliability concerns persist.
- **Ethereum (ETH)**: The largest PoS blockchain, with a yield of **around 3.0%** and a staking ratio of **28%**, reflecting a stable choice valued at approximately $89.4 billion.

![image_2024-11-04_12-42-52.png](/uploads/image_2024_11_04_12_42_52_8d9de1151d.png)

These examples highlight the diverse options within the staking landscape, each offering unique rewards and opportunities. The report emphasizes that staking yields can be shaped by network design, token supply dynamics, and security priorities, contributing to variations in staking returns across different chains.

### **Pros and Cons of Staking**

Staking offers several key benefits, alongside certain risks that participants should be aware of:

**Pros:**

- **Passive Income:** Staking provides an avenue to earn returns without needing to trade or actively manage investments.
- **Network Support:** Stakers contribute to the security and stability of PoS networks, helping to validate transactions and prevent malicious activities.

**Cons:**

- **Lock-up Periods:** Many staking networks require assets to be locked up for a set period, during which they cannot be withdrawn or traded. This can be a drawback if users need liquidity.
- **Market Volatility:** As with any cryptocurrency investment, staking is subject to the market's volatility. The value of staked assets can fluctuate, impacting the overall returns.

With this in mind, it’s important to consider both the benefits and drawbacks before diving into staking. While it can be a solid way to earn passive income, being aware of the associated risks is essential.

### **Final Thoughts**

Summing up, staking presents a compelling opportunity for crypto holders to earn passive income while contributing to the stability and security of blockchain networks. While we've highlighted a selection of cryptocurrencies with notable yields, it's important to remember that there are many more options available, some of which can offer outstanding returns. However, in this dynamic landscape, it's crucial to be aware of potential pitfalls, including unfair players and misleading information. Doing your own research and understanding the risks involved will empower you to make informed decisions that enhance your crypto journey and potentially maximize your returns.

Exploring Crypto Staking

Currently, professionals from both the cryptocurrency and traditional finance sectors are working together to extend the advantages of digital assets to conventional assets through the emerging field of asset tokenization. Fundamentally, asset tokenization involves recording ownership of traditional assets on blockchains. Asset tokenization has the potential to not only streamline transactions but also to provide broader access to certain types of investment opportunities and introduce increased liquidity to traditionally illiquid asset categories such as real estate and art. In this article, we will provide a comprehensive overview of the present status of asset tokenization and its operational mechanisms.

The digitization of real-world assets (RWAs) is one of the most captivating uses of blockchain technology, transforming our perception and interaction with various forms of value. A diverse range of tangible and intangible assets, including art, collectibles, real estate, stocks, commodities, and even personal data, can now be digitally represented on-chain through token issuance.

This groundbreaking process unlocks innovative approaches for transferring ownership, sharing revenue streams, and enhancing liquidity for assets that were previously illiquid or non-marketable. The potential for tokenization to revolutionize traditional asset classes and financial markets is substantial, bridging the divide between the physical and digital realms.

### **What are Real-World Assets in Crypto**

The term "Real-World Assets" (RWAs) refers to a diverse category of assets — whether physical, digital, or data-driven — that derive their value from existing outside the blockchain. Through tokenization, these assets can be transformed into digital representations on the blockchain, unlocking new possibilities for ownership, trading, and investment.

Stablecoins represent the earliest example of real-world assets in the crypto space, backed by fiat currencies like the US dollar or euro to provide a stable, liquid alternative to traditional currency. However, tokenization’s potential extends far beyond just currency, covering a wide range of assets, such as:

- **Financial assets**: Stocks, securities, insurance, treasuries, equities, and indices.
- **Physical assets**: Real estate, precious metals, raw materials, agricultural products, and intellectual property like artwork and music licensing.
- **Digital assets**: Data sets, intellectual property, and digital content rights.

### **Tokenization of RWAs**

Tokenizing assets involves converting rights to a physical or digital asset into a digital token on a blockchain. The tokenization process can yield either fungible tokens for easy exchange or non-fungible tokens (NFTs) that each represent unique assets. The type of token minted is typically determined by the nature of the asset and the intended use case. Asset tokenization is the process of recording the rights to a given asset into a digital token that can be held, sold, and traded on a blockchain.

The resulting tokens represent a stake of ownership in the underlying asset. Virtually any asset, whether physical like real estate or intangible like stock in a corporation, can theoretically be tokenized. Converting these assets into digital tokens makes them more easily divisible, allowing for fractional ownership, which enables more people to invest and can make the markets for those assets more liquid. Asset tokenization can also facilitate direct, peer-to-peer trading of traditional assets that currently require intermediaries and can bring greater security and transparency to the marketplace.

### **Pros of RWA Tokenization**

Tokenized real-world assets offer numerous benefits, including:

- **Liquidity.** Tokenized RWAs facilitate increased market liquidity for traditionally illiquid assets by establishing globally accessible liquidity conditions.
- **Transparency.** The representation of tokenized assets on-chain ensures transparency and auditable asset management, thereby reducing overall systemic risks and providing a more accurate determination of leverage and risk in the entire system.
- **Accessibility.** Through blockchain-based applications, tokenized RWAs can expand the potential user base of certain asset types and allow a broader set of users to access assets that would otherwise be unavailable to them through fractional ownership.

### **Challenges**

However, the tokenization comes with a number of challenges. Some of them include:

- **Legal recognition**. Tokenized asset ownership and digital ownership rights may not be acknowledged by existing legal systems, potentially causing issues with enforcing ownership or transferring rights. The laws and regulations governing tokenized assets are uncertain and evolving rapidly. It can be difficult to understand and comply with applicable laws. For instance, tokenized assets may not qualify for the same protections typically associated with traditional financial securities investment.
- **Incompatibility with traditional systems**. The integration of tokenized assets with current financial and legal systems can be difficult or even impossible.
- **Complexity**. Asset tokenization is intricate, which could result in steep learning curves or barriers to entry for many market participants. Robust storage solutions are required for securely holding and managing tokenized assets. Tokens may be lost, stolen, or mismanaged.

### **Summary**
The tokenization of real-world assets presents a significant opportunity to reshape finance into a more secure, transparent, and efficient backend infrastructure. This transformation can address conflicts of interest and risk management challenges prevalent in traditional financial systems.

While obstacles to RWA tokenization exist, the potential for widespread adoption remains promising. Achieving broad acceptance will require a delicate balance, but the opportunity for success is clear. By carefully planning RWA infrastructure, maintaining a focused vision, and making determined efforts to overcome past challenges, the journey ahead holds immense promise.

Unlocking New Opportunities Through Blockchain Technology

Tokenization of Real-World Assets

The cryptocurrency market is notorious for its extreme price fluctuations. Bitcoin and Ethereum, while revolutionary, can swing 10% or more in a single day—making them impractical for daily transactions, savings, or remittances. This volatility has long been a roadblock to mainstream adoption, as businesses and individuals hesitate to rely on assets that could lose significant value overnight.

Enter stablecoins: digital currencies that combine blockchain's efficiency with the stability of traditional assets. By pegging their value to fiat currencies like the US dollar or commodities such as gold, stablecoins provide the best of both worlds—fast, borderless transactions without the wild price swings. They serve as a crucial on-ramp for real-world crypto adoption, enabling practical use cases in payments, trading, decentralized finance (DeFi), and wealth preservation.

### **What Are Stablecoins?**

Stablecoins are a specialized class of cryptocurrencies designed to maintain a fixed value, typically mirroring a 1:1 ratio with an underlying asset. This stability makes them ideal for everyday financial activities while retaining the transparency and speed of blockchain technology.

- Total Market Cap: $239+ billion (as of the time of writing, according to CoinGecko)
- Market Share: ~8% of the entire cryptocurrency market
- Leading Players:
    - Tether (USDT): The dominant stablecoin with over $100 billion in circulation
    - USD Coin (USDC): A fully audited alternative backed by cash and US Treasuries
    - DAI: Decentralized stablecoin secured by crypto collateral

These digital assets function as a vital bridge between traditional finance and the crypto economy, allowing users to transact seamlessly without exposure to volatility.

### **Types of Stablecoins**

Stablecoins achieve price stability through different mechanisms, each with distinct advantages and trade-offs.

**Fiat-Backed (Centralized)** — the most common type, these are directly backed by reserves of fiat currency or cash equivalents. Examples like USDT and USDC offer high liquidity and widespread acceptance but require trust in the issuer’s reserve management.

**Crypto-Backed (Decentralized)** — projects like DAI and GHO use overcollateralization—locking up more crypto than the stablecoins issued—to maintain their peg. While transparent and trustless, they remain vulnerable to sudden crypto market crashes.

**Commodity-Backed —** assets like PAX Gold (PAXG) and Tether Gold (XAUT) are pegged to physical commodities, providing an inflation hedge. However, they tend to be less liquid than their fiat-backed counterparts.

**Algorithmic (Non-Collateralized)** — these rely on smart contracts to dynamically adjust supply and demand, as seen with USDD, which uses algorithms and some crypto reserves, and Frax (FRAX). While capital-efficient, they carry higher risks, as demonstrated by Terra’s UST collapse in 2022.

Fiat-backed stablecoins currently lead the market in adoption and liquidity, largely due to their perceived reliability and integration with existing financial systems. Meanwhile, decentralized and algorithmic models continue to push the boundaries of innovation, offering alternative approaches that prioritize transparency, capital efficiency, or decentralization—each with its own set of trade-offs and risks.

### **How Stablecoins Drive Adoption**

Stablecoins are transforming cryptocurrency adoption by addressing key limitations in both traditional finance and volatile crypto markets. By offering price stability paired with the efficiency of blockchain, stablecoins enable practical applications that are reshaping how people engage with money worldwide.

In economies facing hyperinflation or capital controls, stablecoins like dollar-pegged USDT and USDC have become vital tools for financial preservation. Countries such as Argentina, Nigeria, and Venezuela have seen widespread adoption as citizens seek refuge from local currency depreciation, often at a premium, when traditional banking systems fail.

Beyond wealth preservation, stablecoins are revolutionizing everyday transactions. They offer near-instant settlements with minimal costs compared to traditional banking. Financial giants such as PayPal and Visa have started integrating stablecoins for payment processing, reflecting their growing mainstream acceptance. In cross-border remittances, stablecoins can reduce fees by more than 50%, significantly benefiting migrant workers who rely on overseas income.

Stablecoins also serve as a critical gateway for new investors entering the crypto ecosystem. Their price stability makes them an attractive low-risk entry point for users looking to move funds into crypto without the volatility of Bitcoin or Ethereum. On both centralized (CEX) and decentralized (DEX) exchanges, stablecoins are often the first step for users transitioning from fiat to crypto, making them essential for onboarding new participants into the broader ecosystem.

In decentralized finance (DeFi), stablecoins have become indispensable. Their stability makes them ideal for lending protocols, liquidity pools, and yield farming, with platforms like Aave and MakerDAO offering attractive yields. This integration has created a thriving DeFi ecosystem where stablecoins serve as both a medium of exchange and a store of value.

### **Stablecoins and the Future**

The explosive growth of stablecoins underscores their rising importance in the digital finance landscape. From a market cap of just $1.5 million in 2016, the sector has ballooned to over $239 billion by 2025. At times, Tether (USDT) even surpasses Bitcoin in daily trading volume—a testament to its deep liquidity and central role in crypto market activity. This momentum highlights how stablecoins have evolved from a niche innovation into a core component of the global financial system.

Regulatory frameworks like the EU’s MiCA and Singapore’s stablecoin legislation are helping to legitimize the sector, while innovations such as yield-bearing stablecoins (e.g., USDY) continue to broaden their utility and deepen user engagement across a range of financial use cases.

Yet for all their promise, stablecoins still face meaningful challenges. Regulatory scrutiny, reserve transparency, centralization risks, and operational dependencies on issuers or custodians remain critical concerns. Addressing these issues—through stronger oversight, verifiable reserves, and more resilient issuance models—will be essential for sustaining trust and ensuring long-term viability.

As adoption accelerates, stablecoins are proving that blockchain innovation and financial stability can coexist, marking them as a foundational pillar in the future of money.

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Shaping the Future of Financial Transactions

Stablecoins

By 2140, all 21 million bitcoins will have been fully mined. After that point, no new bitcoins will be created, and miners will no longer receive rewards from newly mined coins. 

Currently, miners are crucial to maintaining the Bitcoin network, and a large share of their incentive comes from these block rewards. However, once the supply cap is reached, a critical question arises: What will happen to the Bitcoin network when all bitcoins are mined? Without the creation of new coins, what will drive miners to continue supporting and securing the network?

In today’s article, we’ll explore what the Bitcoin network might look like once all bitcoins have been mined and how miners could continue to be incentivized to maintain the system.

### **Bitcoin Scarcity**

Bitcoin is unique because it has absolute mathematical scarcity, meaning there will only ever be 21 million bitcoins in existence, a limit that can be verified by anyone in the network. This scarcity is governed by Bitcoin's source code, known as Bitcoin Core, which rewards miners with new bitcoins when they successfully create a block.

The reward miners receive for adding a block is halved approximately every four years in an event known as the "halving." The reward started at 50 bitcoins per block, dropped to 25 bitcoins in late 2012, and further reduced to 6.25 bitcoins in 2020. The most recent halving, which occurred on 20 April 2024 at 12:09 AM UTC (with block number 840,000), reduced the block reward to 3.125 bitcoins. This will continue until around the year 2140, at which point no new bitcoins will be generated, as the issuance will decrease from one satoshi per block to none.

Although the total supply of Bitcoin is capped at 21 million, the actual number of bitcoins in circulation is likely to be significantly lower. This is because many bitcoins may become inaccessible over time due to reasons such as users losing their private keys or passing away without sharing their wallet details. In fact, a 2020 study by crypto forensics firm Chainalysis estimated that up to 20% of the bitcoins that have been issued may be permanently lost, further reducing the available supply.

### **Bitcoin Deflationary Concerns and Economic Impact**

While the halving strengthens Bitcoin’s scarcity, it also brings challenges for miners, whose earnings are reduced by half during each event. This decline in profitability may force some miners to exit the market, potentially impacting Bitcoin’s security. Critics worry that a reduced number of miners could weaken the network's resilience and negatively affect the value of Bitcoin, particularly as the system becomes increasingly reliant on transaction fees.

Bitcoin's deflationary nature also raises questions about its ability to function as a global currency. With its inflation rate halving every four years, Bitcoin becomes progressively scarcer. Economists argue that this deflationary trend might limit its use in retail transactions due to high prices and potential hoarding behaviors. However, Bitcoin’s divisibility into 100 million smaller units, known as satoshis, ensures that even small fractions can retain purchasing power, providing a buffer against concerns of scarcity.

This deflationary characteristic becomes even more pronounced as Bitcoin's price rises, influencing user behavior and shifting priorities from immediate spending to long-term holding for value appreciation. Critics often argue that such a shift could stifle economic activity, as individuals may delay purchases in anticipation of further price increases. However, this perspective overlooks the adaptability of markets and the diverse ways people use money. While Bitcoin might encourage saving over instant consumption, it doesn’t eliminate spending altogether. Instead, it encourages individuals to prioritize meaningful and well-considered purchases. Proponents of Bitcoin believe this approach aligns with its role as a store of value, fostering a culture of financial discipline and long-term planning that benefits both individuals and the broader economy.

### **Miners’ Motivation**

As Bitcoin moves toward its supply cap over the coming century, miners are expected to adapt by shifting from block rewards to transaction fees as their primary revenue source. Already, transaction fees have shown significant potential, as demonstrated on April 20, 2024, when they surpassed block rewards, accounting for over 75% of miner earnings during a surge in network activity. With continued adoption and increasing transaction volumes, these fees are likely to provide a sustainable income stream for miners, ensuring the ongoing security and stability of the network beyond the year 2140.

Bitcoin’s finite supply could further solidify its role as a store of value, driving demand and leading to higher transaction fees as users compete for processing priority. This economic shift is expected to support mining profitability, even without new coin issuance, as higher fees compensate for the eventual disappearance of block rewards.

Additionally, ongoing integration of advanced technologies, such as renewable energy and artificial intelligence, could help reduce operational costs and improve mining efficiency. Innovations like repurposing excess mining heat for industrial or residential use could create secondary revenue streams, further reinforcing the economic viability of Bitcoin mining.

Ultimately, Bitcoin’s adaptability, along with the ingenuity of its mining community, suggests that the network will remain secure and sustainable as it transitions to a transaction fee-based model after 2140. This shift demonstrates the resilience of the Bitcoin ecosystem, ensuring its long-term success even after the final coin is mined.

### **Conclusion**

Once Bitcoin reaches its supply cap and the final coin is mined, the network will undergo a major transformation. While the end of block rewards might seem like a challenge for miners, transaction fees are poised to become the primary source of revenue, providing a sustainable model for network security. With growing adoption, increasing transaction volumes, and Bitcoin's finite supply driving demand, the economics of Bitcoin mining are likely to remain strong even after 2140.

Technological innovations and efficiency improvements, such as the use of renewable energy and AI, could further support miners, ensuring their continued participation in securing the network. As Bitcoin solidifies its role as a store of value, it may become less reliant on inflationary mechanisms, fostering a more resilient and secure network. Ultimately, the combination of Bitcoin's adaptability and the ingenuity of its mining community will ensure its sustainability for generations to come.

What Happens When the Last Coin Is Mined?

Bitcoin’s Big Question

Google Cloud has introduced a Blockchain Remote Procedure Call (RPC) service to simplify the interaction of crypto developers with blockchain data and enhance the stability of decentralized applications (dApps).

The initial compatibility of the new service will be with the Ethereum mainnet and testnet, and there are plans to expand to additional blockchains next year.

The Google Cloud’s Blockchain RPC service is launching with an initial free tier that provides up to 100 call requests per second and one million requests per day, supporting a defined set of RPC methods for Ethereum nodes.

### **What is RPC**

RPC, which stands for Remote Procedure Call, is a software communication protocol used to request a service from another program located on a different computer and network.

The Blockchain RPC service is designed to meet the needs of developers at various organizations, from startups looking for an easy entry point to blockchain to large enterprises requiring the reliability, security, and performance offered by Google Cloud’s infrastructure.

During unusually high network activity or transaction volumes, blockchain networks often encounter RPC issues.

### **Challenges with Current Blockchain RPC Providers**

Google Cloud highlighted the ongoing challenge of RPC reliability for many crypto developers, as even slight delays or errors can impact the performance of decentralized applications that require the capability to clear and settle transactions instantly.

Google Cloud's connective RPC service addresses the key issue of RPC reliability for developers, simplifying the process by offering a scalable solution for interacting with blockchain data.

The free tier of the service makes it accessible to startups and larger companies and supports ETH's standard JSON-RPC, facilitating easy integration with developers' applications. The service's straightforward setup reduces the complexities of working with blockchain data.

As Google Cloud plans to add support for more smart contracts, the service will become even more appealing to developers.

### **Key Features of Google Cloud's Blockchain RPC**

- **Enterprise-grade reliability:** The service leverages Google Cloud infrastructure to provide security and reliability, helping to ensure a dependable foundation for developers' applications.
- **Cost-effectiveness:** Blockchain RPC offers an economical alternative to dedicated nodes, providing up to 100 requests per second and 1 million requests per day in the free tier.
- **Compatibility:** Developers can easily transition from existing RPC providers by simply changing their RPC endpoints.
- **Scalability:** The service scales to handle growing request volumes, eliminating the need for manual scaling.

### **Google’s Future Plans**

In addition to Ethereum, Google Cloud intends to expand the Blockchain RPC service to more chains next year, enabling creators to use the service across different platforms. The service is currently available globally, allowing individuals to explore its features through the free tier.

This launch demonstrates Google Cloud's increasing interest in blockchain advancement and its commitment to helping developers build better dApps. Earlier this year, the company introduced a Web3 portal with resources to support blockchain. By expanding its blockchain tools, Google Cloud continues to support developers in the growing Web3 space, making dApp development easier by offering reliable infrastructure and reducing the need to manage node structures.

### **The Role of Big Tech in Blockchain Growth**

As we see more large tech corporations like Google, Microsoft, and Sony getting involved and expanding their activity in the blockchain space, their presence is undeniably strengthening the industry overall and laying the groundwork for further waves of mass adoption. 

However, this growing influence also brings concerns about centralization and a potential shift towards a cloud-based economy, as these companies could dominate infrastructure and services, moving away from blockchain's decentralized roots. The increased reliance on cloud-based solutions may alter the dynamics of blockchain development, with more developers turning to centralized infrastructure rather than self-hosted or decentralized options.

The ideal scenario for the industry might involve a balance of enterprise-grade reliability, affordability, and scalability, while preserving decentralization. Such an approach could help ensure that blockchain technology remains accessible and secure, supporting innovation without compromising its foundational principles.

We'll continue to explore this evolving landscape — stay tuned for more insights!

Google Cloud Expands Web3 Services

Blockchain’s evolution has introduced multiple layers—Layer 0, Layer 1, Layer 2, and Layer 3—each designed to address key challenges like scalability, functionality, and interoperability. But what exactly do these layers mean?

A blockchain layer refers to a distinct level within the technology stack, with each playing a specific role. Layer 0 establishes the foundational infrastructure, enabling networks to communicate and share resources. Layer 1 manages on-chain transactions and security. Layer 2 enhances scalability by processing transactions off-chain, while Layer 3 powers user-facing applications.

This layered structure emerged as a response to blockchain’s early limitations, providing solutions that enhance performance, security, and usability. In this article, we’ll explore these layers in detail, examining how they work together to create a more scalable and interconnected blockchain ecosystem.

### The Evolution of Blockchain Complexity

Bitcoin, the first blockchain, introduced a single-layer model focused solely on peer-to-peer transactions. While revolutionary, its design had limitations, including scalability (only ~7 transactions per second) and a lack of support for smart contracts or complex applications.

As adoption grew, these constraints became apparent, driving innovation toward multi-layered architectures. Early challenges—slow speeds, high fees, and energy inefficiency—highlighted the trade-offs between decentralization, security, and scalability. 

At the heart of blockchain's design challenges lies the Blockchain Trilemma, a fundamental concept articulated by Ethereum's Vitalik Buterin. This trilemma posits that any blockchain network can only optimally achieve two out of three critical properties: decentralization, security, and scalability. Decentralization refers to the distribution of control across network participants, security involves protection against attacks and data integrity, while scalability concerns transaction throughput and efficiency. 

Bitcoin's choice to prioritize decentralization and security resulted in limited scalability. Ethereum's introduction of smart contracts expanded functionality but inherited similar scaling challenges. This trilemma has driven continuous innovation across blockchain layers, with each subsequent layer attempting to better balance these competing priorities.

Solutions emerged in phases. Ethereum’s introduction of smart contracts enabled decentralized applications (dApps), though scalability challenges remained. To alleviate this, Layer 2 solutions like rollups helped offload transactions from Layer 1, enhancing throughput while maintaining security and decentralization. Meanwhile, Layer 0 protocols enabled inter-chain communication, connecting different blockchains for cross-chain interoperability and resource sharing. Building on this, Layer 3 focuses on user-facing applications, abstracting the complexity of blockchain to deliver seamless experiences in areas like decentralized finance (DeFi), NFTs, and blockchain-based gaming.

This progression reflects blockchain’s shift from a niche technology to a multi-layered framework capable of supporting global adoption. The combination of different layers addresses fundamental scalability challenges while maintaining security and decentralization, setting the stage for blockchain’s growth across multiple industries.

### Layer 0: The Foundation (Network Layer)

Layer 0 is the base infrastructure enabling blockchains to communicate and share resources. Without it, networks like Bitcoin and Ethereum would operate in isolation.

Polkadot and Cosmos are prime examples of Layer 0 solutions. Polkadot uses a relay chain to connect independent blockchains, while Cosmos leverages its Tendermint protocol for cross-chain interoperability. The key role of Layer 0 is ensuring seamless data and asset transfers across ecosystems.

### Layer 1: Core Blockchain (Protocol Layer)

Layer 1 is the foundation where transactions are finalized, focusing on security and decentralization but facing scalability trade-offs.

Bitcoin and Ethereum are the most well-known Layer 1 blockchains. Bitcoin’s transaction speed is limited, processing only around 7 transactions per second (TPS), while Ethereum handles 15–30 TPS on average. This slower throughput leads to high fees during network congestion, such as during Ethereum’s NFT boom, highlighting scalability challenges.

Over time, alternative Layer 1 blockchains, such as Solana, have emerged to address these scalability issues by offering faster transaction speeds and lower fees. While these networks can process thousands of TPS, they come with their own challenges—often sacrificing decentralization and facing potential congestion during periods of high demand.

These constraints on Layer 1 emphasize the need for Layer 2 solutions to enhance scalability, reduce costs, and maintain security and decentralization.

### Layer 2: Scaling Solutions

Layer 2 enhances Layer 1 by processing transactions off-chain, reducing costs and congestion.

Layer 2 solutions come in several forms:

- Rollups (e.g., ZK and Optimistic Rollups) batch transactions to reduce costs and improve settlement efficiency.
- Plasma chains offload transactions to separate chains to ease congestion on the main network.
- Validiums improve scalability by storing data off-chain while maintaining security.
- State channels enable instant, low-cost microtransactions by processing them off-chain.
- Sidechains (like Polygon) operate as independent chains that connect back to Layer 1 networks for final settlement.

Rollups are one of the most prominent Layer 2 solutions, and there are two main types: ZK-Rollups and Optimistic Rollups. ZK-Rollups, like zkSync and StarkWare, use zero-knowledge proofs to validate transactions before they are committed to Layer 1, providing high security alongside scalability. On the other hand, Optimistic Rollups, such as Arbitrum and Optimism, assume transactions are valid by default, offering efficiency and cost savings for dApps with a challenge period to ensure correctness.

The impact of Layer 2 is undeniable—Ethereum’s Layer 2 networks now handle over $40 billion in assets, proving that scalability is achievable without sacrificing security.

### Layer 3: Application Layer

Layer 3 is where user-facing applications reside, bridging the gap between blockchain technology and end-users. This layer abstracts the complexity of blockchain, providing interfaces and experiences that are easy for users to interact with. It hosts decentralized applications (dApps) across various domains, including decentralized finance (DeFi), NFTs, and gaming.

Prominent examples include DeFi platforms like Uniswap and Aave, which enable financial services without intermediaries, NFT marketplaces like OpenSea and Blur for digital ownership, and blockchain-based games like Axie Infinity, which introduce novel economic models.

Layer 3 applications not only offer decentralized alternatives to traditional services but are also helping drive broader blockchain adoption. By providing seamless, user-friendly experiences, they attract users beyond the crypto-native audience and expand blockchain’s reach into industries like finance, entertainment, and even social media.

### Key Takeaways

The layered blockchain architecture represents an increasingly sophisticated approach to solving the fundamental trilemma of decentralization, security, and scalability. 

- Layer 0 connects ecosystems.
- Layer 1 ensures security.
- Layer 2 scales efficiently.
- Layer 3 drives adoption.

This multi-layered framework has transformed blockchain from Bitcoin’s single-layer origins into a dynamic, interconnected ecosystem supporting billions in assets and millions of users. As of today, its impact is clear—cross-chain bridges powered by modular architectures, like those in Polkadot and Cosmos, enhance scalability and link disparate blockchains, while Layer 2 solutions bolster Ethereum’s growth and dApps redefine industries from finance to gaming. Emerging innovations, such as account abstraction, further simplify interactions by allowing users to manage multiple assets and protocols seamlessly, improving both security and user experience.

Looking ahead, these advancements continue to shape blockchain’s evolution, addressing challenges of scalability, interoperability, and usability. From enabling financial inclusion to powering decentralized entertainment, this layered foundation keeps blockchain a transformative force for a more connected and accessible world.