Unchained - After the Bitcoin Halving, Will the Runes Protocol Live Up to the Hype? - Ep. 634

Episode Date: April 19, 2024

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. Not only will April 20 (or 19, depending on which part of the world you are) mark the fourth Bitcoin halving, but also the launch of a new primitive on Bitcoin called Runes Protocol.  Charlie Spears, co-founder of Blockspace Media, joined Unchained to talk about all things Runes, which is a messaging protocol that allows for the creation of fungible tokens on Bitcoin. It is designed to fix some of the issues with the BRC-20 token standard, such as inefficiency and proliferation of unspent transaction outputs. Charlie believes that the launch of Runes will increase demand for Bitcoin's blockspace and potentially lead to higher transaction fees. He also discusses the potential for Runes to interact with Bitcoin covenants and layer two solutions. Show highlights: What Runes is and why Charlie believes that it is the hottest thing since Ordinals The differences between Runes and BRC-20 fungible tokens  Runes’ unique features, with Charlie pointing out that this is “what the degens really want” Whether the Runes Protocol will create a “burst of demand” and have a positive impact on miners  Whether the launch of Runes will be successful in the long-term and how Bitcoin’s blockspace could become more attractive Whether Bitcoin L2s will help clear Bitcoin’s mempool, and why Charlie believes that they won’t reduce fee pressure on the base layer The coolest things that Runes Protocol will enable, according to Charlie How Taproot Assets and RGB differ from Runes and why they have not taken off Why Casey, the founder of Runes, will claim the first inscription with Uncommon Goods Thank you to our sponsors! iTrustCapital Polkadot Guest Charlie Spears, cofounder of Blockspace Media Links Recent coverage on Unchained of the Bitcoin halving: Arthur Hayes and Will Clemente on How This Bitcoin Halving Is Different Runes Unchained: What Are Runes? A Guide to the New Fungible Token Protocol on Bitcoin Bitcoin Runes Explainer by Charlie Spears BRC-20s and Ordinals: Unchained: What Are BRC-20 Tokens? A Brief Introduction Bitcoin’s BRC-20 Mania: Is It Sustainable? How to Create a Bitcoin Ordinal Bitcoin Ordinal NFTs Are Hot and Getting Hotter. What's the Hype About?  Halving Unchained:  Bitcoin Halving: What Is It & How Is It Determined? Here’s Why No One Agrees Exactly When The Bitcoin Halving Will Happen Bitcoin Miners Diversify Their Revenue Streams as Halving Nears Bitcoin L2s Unchained:  Stacks’ Muneeb Ali On Why Bitcoin Is Exciting Once Again Citrea: An Ethereum-Like Experience Built on Bitcoin? How Botanix Aims to Enable Smart Contracts on Bitcoin Learn more about your ad choices. Visit megaphone.fm/adchoices

The Rooms Protocol is the hottest thing since Ordnals itself. So, you know, if you were under a rock this past year on Bitcoin, Bitcoin kind of sprung to life. All of a sudden, people are putting JPEGs on Bitcoin and now fungible tokens on Bitcoin. And the creator of the Ordinals' Ordinal Theory, Casey Rodomor, throughout last September, this idea for a different token standard called Rooms on Bitcoin, just in a blog post. The DGens, the people loved it. They demanded he built it, so he did.

Hi, everyone. Logging for Unchained. You're a no hype resource for all things Crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor at Forbes, was the first major meter porter to cover cryptocurrency full-time.

This is the April 19th, 2024 episode of Unchained. With I Trust Capital, you can buy and sell crypto in a tax advantage retirement account. Enjoy significant tax advantages, 24-7 access, and the industry's lowest fees.

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Because local news is big news. Choose news, not noise. CBC News. When McDonald's partnered with Frank's Redhot, they said they could put that shit on everything. So that's exactly what they. McDonald's did. They put it on your McChrispy. They put it in your hot honey macnucket's dip. They even put it in the creamy garlic sauce on your McMuffin. The McDonald's Franks Red Hot

menu. They put that shit on everything. Breakfast available until 11 a.m. at participating Canadian restaurants for a limited time. Franks Redhot is a registered trademark of the French's Food Company LLC. Today's guest is Charlie Spears, co-founder of Walkspace Media. Welcome, Charlie. Hey, glad to be here, Laura Shinman. Listening to you for a long time. and it's kind of crazy to be on the show. Excited to have you here. This is the week of the Bitcoin having, which currently looks like it will happen Friday evening,

East Coast time, though it will be past midnight on the 20th, UTC time, meaning 420. And we will use that for the history books. So this event obviously is a major event that happens roughly every four years in Bitcoin. However, this year, there's another event that people are,

are talking about quite a bit, which is the launch of the Roons Protocol, which is on Bitcoin. So what is the Roons Protocol? The Rooms Protocol is the hottest thing since Ordinals itself. So, you know, if you were under a rock this past year on Bitcoin, Bitcoin kind of sprung to life. All of a sudden, people are putting JPEGs on Bitcoin and now fungible tokens on Bitcoin. and the creator of the ordinal's ordinal theory, Casey Rodomor, throughout last September this idea for a different token standard called Roons on Bitcoin

just in a blog post. The DGens, the people loved it, they demanded he build it, so he did. And he implemented Roons as a protocol into the same client that he implemented ordinal theory. And this Roons protocol is hard-coded to begin. Again, lock 840,000, which is the halving, which I believe if this airs today, is very soon. So what are runes? Roons in contrast to the popular BRC20 token standard, BRC20s fit into an inscription that's like the blob of data that might be a JPEG or JSON.

Rooms in contrast to being this fungible token messaging protocol like BRC20 is a similar messaging protocol where you create a transaction on Bitcoin, it says the operations that you want to perform according to the Roon's protocol in that transaction in the operan, and it messages to an off-chain indexer to track token state. That might be a bit of a mouthful, might be jumping in the deep end, but basically it maps really well onto the way Bitcoin already works. Bitcoin has a UTXO model instead of an account model, kind of like Ethereum. Right, which stands for unspent transaction output. Yeah, unspent transaction output. And so these outputs can contain other outputs called op returns, which include the message that says Charlie sends

Laura a ruin. And I'll stop there. And that's just the high level idea of what it is. Yeah. And just to clarify for people, when you talk about how it's a messaging protocol, what that means is it's not, you know, like if you think of something, similar in Ethereum that might be created by a smart contract or in the past, there have been new things added to Bitcoin that maybe require it a hard fork or even a soft fork. But this, as you said, is just a messaging protocol. It's added in, it runs on this, you know, ordinal, ordnals theory, I guess, that was already created last year. Kind of. I'll actually point that it doesn't run an ordinal theory. It's just implemented in the same

client that runs ordinal theory. So, it naturally works with it, but it doesn't use ordinal theory. So that's kind of where the confusion can happen. Yeah. Yeah, sorry. I misspoke there. Because Ordinals uses SATs, which, you know, is like counting the Satoshes in every block. But this doesn't use that.

It's more purely based on the messages. Yeah. And yeah, yeah. Yeah, so you can include this message, this data in a Bitcoin transaction. And Roons very simply just, includes the data in a more like intuitive way for Bitcoin. When these unspent transaction outputs are created and destroyed as Bitcoins are sent back and forth, so are to the Roon's messages.

So a Roon will exist on a UTXO and you'll send that UTXO to someone else. And then the Roon's protocol will see that your run is on that UTXO now. It's pretty simple, and it has some really cool long-term, like, extensibility or implications. Yeah, and let's also differentiate it from BRC-20s. I believe that the intention of the Rooms Protocol was actually to fix some of the issues with BRC-20s in terms of, you know, what was not ideal about that. So can you explain the difference in what problems this standard fixes? Yeah, so it's funny because I was a notable, also the first people to really talk about BRC-20,

and kind of a notable early critic, more as a technical critic, because it is a comically dumb way to do fungible tokens. But that doesn't mean that that's not the way everybody wants to do it. The market clearly found these things attractive. And the market found BRC20 is very attractive because of its like fair mint mechanic. It's intuitive what the BRC20 is doing, how to mint it, and the idea that like the person who created it, the token doesn't also necessarily get all the tokens. So BRC20s, again, a messaging protocol,

but you create an inscription. So you have the ordinal theory which tracks the Satoshes, and the Satoshes are associated with a data blob on Bitcoin that we call an inscription. And Casey, the guy invented an ordinal theory, imagined that people put images in there, but lo and behold, before you knew it, the DGens were putting in text or JSON, which says, this is the message for the fungible token protocol. And the first one that really dominated the narrative was BRC20, where BRC20 says, we're going to create these inscriptions, we're going to say put the protocol message in it.

And that's how we do it. Now, what happens is, you know, after you create this protocol message, a mint or a transfer or deploy inscription, that inscription becomes useless afterwards. And it kind of, it has some very, objectively negative drag on Bitcoin itself, it proliferates what's called the number of unspent transaction outputs. These outputs have to be stored on your Bitcoin node. And the more of them there are, the harder it is to run a Bitcoin node. This has been kind of the conversation

of, you know, data in general on Bitcoin. But this is one where like all these messages get stored and they get stored in like dust amounts, like the smallest unit of a Bitcoin that people really can meaningfully use and transact with. And it just is very inefficient. It causes users to overspend really inefficiently and for node operators on Bitcoin to just start to get a little nervous about the trajectory of how many UTXOs are on Bitcoin.

So Roons solves some of that. It doesn't solve the issue that it's an off-chain indexed protocol. But it does say we're going to reduce like the amount of UTXO proliferation. This is objectively better at a protocol standpoint for Bitcoin as a network and nodes. And then it actually makes it a little bit more efficient because people aren't stuck with little bits of Bitcoin just hanging around, which is hard to like kind of re-merge into a useful chunk of Bitcoin. And that's pretty important. I also think it's not understood well enough that,

how kind of janky BRC20 as a protocol has been this past year. If you've been in our world of like ordinals, like there's been issues with protocol definitions, the indexer wars, the, you know, the public and private interest. And it's been this just chaotic story.

And I'm, I'm happy to see we've emerged out of it. And we're in a pretty good place for BRC 20 right now. But like Casey spent a lot of time, heads down implementing and defining how Rooms works. so that when block 840,000 hits here in maybe a matter of hours by the time you hear this, the protocol is pretty well defined and people can just start using it. That's pretty big from my protocol launch perspective in contrast to BRC20.

And then so in addition to solving some issues with ERC20s, I think that there are additional features to runes that BRC20s don't have. What are those? Yeah. There's a lot of features. One is because Roons are implemented in the same client that Casey and Raff are building, which tracks the Satoshi's with Ordinal Theory, the Ord client it's called. Because they're actually the same people building both things,

they can kind of cross the streams a bit. So one of the fun things is you could theoretically, I don't know if this is going to be implemented early and live, but you can in one of the inscriptions, one of those JPEGs that we use track with Ordinal Theory, you could theoretically reference the balance of runes that are on the output of that inscription or the address of that inscription.

This is really interesting because it basically synergizes the very things the Degians really, really want. They really want to trade all of these different types of assets. and it allows for some fun gamification. Then there's also a lot of interesting things where one of the challenges is Bitcoin's base fees are getting more expensive. This is a good thing.

But at some point, it's just uneconomic to transact fungible tokens on the base layer in the way that they're currently designed. So when we look at Roons and its structure as a UTXO-based fungible token protocol, call, it actually lends itself to extending onto what we call layer twos because it's much more naturally. You don't have to like do the same kind of like weird Rube Goldberg machine of like locking them up in some kind of box, but it rather may function more like the lightning network where you can

do, you know, hash time locks or or other types of like UTXO locking to extend that to layer 2s. So I think that's a really interesting thing and allows for a lot of scaling off-chain. All right. So in a moment, we're going to talk a little bit more about the impacts of Rooms on Bitcoin, but first a quick word for those sponsors who make this show possible. Pocodot is the original and largest layer zero blockchain with over 2000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times, tailored court time for the needs of every protocol, trustless bridges to multiple chains,

and revise tokenomics with a token burn to reduce inflation. Perfect for GameFi and Defy to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger with Pocod. Join the community at Pocodot.network slash ecosystem slash community. Back to my conversation with Charlie. So you kind of alluded to this earlier, but obviously something that we have seen with Ordinals and BRC20s, I think, is that they have greatly affected the amount of data stored in a block, competition to get into a block, fees. So what do you think the impact of Rooms will be in terms of, you know, yeah, the data in blocks?

That is the golden question. That's what everybody wants to know. Certainly it's going to create a burst of demand after the having. There is this looming event where we all know that at Block 840,000, this thing goes live. So everyone's going to be rushing in to try to create their Rooms token and then mint out that token. So the ecosystem is in kind of a frenzy right now with people trying to scramble to build tooling last minute integrate into their marketplaces. And so that means that the rails are being built and probably exist for a lot of people to speculate in kind of a burst event shortly after the having on all

this, on these fungible tokens. And that is transaction demand. That's block space demand. This means that fees are going to go high right after the having. The question then becomes, what happens like long term? Does this mania, down, is it cyclical? I can't imagine that it doesn't have a like a cyclical personality to it of up and down, but this will just mean we have another type of transaction behavior on Bitcoin. Bitcoin's block space gets more dynamic from a fee standpoint. When you no longer have people all making the same type of like daily cost average, you know, transactions on Bitcoin, and you have like different cohorts of actors all wanting some people want to just DCA every day some people want to you know open lightning channels some people want to do fungible tokens some people want to put JPEGs on there this creates a very compelling dynamism to Bickwin's block space which is ultimately good and it it allows you know everybody from developers to miners themselves lean into I think

expanding Bitcoin's block space use. This is great for Bitcoin mining. We're headed into a halving, and having has historically been a time, a culling time for the mining industry, where miners, their margins get compressed or go negative, and it becomes a game of survival. This halving is different. The mining industry is quite profitable right now, and the fees will make it even more profitable. So we could see maybe for the first time in my career as a multi-year-long Bitcoin miner, we could see the mining industry not have the same kind of culling event as it has been,

or maybe not as significant. So this is great from a long-term Bitcoin thesis standpoint that Bitcoin is finally maturing into a dynamic lock space demanded blockchain. Yeah. I find this intersection between these two events, the having and the launch of Rooms, to be super interesting. And you did talk about how it's unclear exactly what will happen long term. Like very obviously that first block, you know,

or the moment of the having the 840,000 block height, that that will be a very competitive block. But if you were to guess, you know, with your experience in the mining space, How would you expect the launch of Roons will interact with the having, kind of like not just on that first block, but longer term? So much of this is dependent upon narrative. We've seen empirically on Bitcoin that the best technical implementation does not mean the most popular implementation.

So much of this is driven by narrative. I think that we are in a new era for fees, whether it's driven by Roons, BRC20, inscriptions, or something else. So I think we're in a new permanent era of block space price discovery. And maybe this will be driven by Roons. I think this year is probably going to have a significant Roons narrative to it. It's hard for me to say, I'm famously bad at predicting which fungible token protocols are going to be popular. I right curve everything way too much.

So I think if the narrative is able to stay strong for the coming months, and maybe even years, Roons finds a nice niche as a fun, fungible token protocol. I think less important than whether it's Rooms or something else. Right now, the attention is on Bitcoin. Everybody in their dog is trying to deploy capital, deploy transactions on Bitcoin, and tokens. And these things, I think this is just Pandora's box that's been opened and many things flew out, some good, some bad. I think it's unclear whether Rooms is either.

I think it's a little bit of both. I think fees are higher for longer. And the big question now is, will the Bitcoin Mempool ever clear? Will we ever clear out all the transactions way to be confirmed? We have not cleared the Mempool in over a year. This should be the biggest story of Bitcoin. So I'm excited to see that continue. Well, what do you think it would take to clear the MMPL?

It would require the market totally nuking and everybody losing interest in Bitcoin. So right now, is it clogged with Ordinals, BRC20, and then soon Rune's transactions? Is that? Yeah. You know, I occasionally I'll tweet something like, here's what's going on in the MMP pool today. Because I get a lot of these questions. It's like, people are like, well, why are fees high today? And it's this weird thing where I have to play this wrong.

role of analyst and degenerate because it's like, well, today there was this, so this past week was like, this week it wasn't ordinals or inscriptions or runes. It was some like fork of the RGB standard on Bitcoin that was primarily driven out of Asia. And that is the kind of thing, that's just the new regime we're in going forward. So it's like some new thing happening on Bitcoin, many people are going to debate the merits of it. I have a more neutral approach of this is just demand for Bitcoin and demand for Bitcoin's block space. So I won't make a prediction of whether the MMPL were clear, but I think that if the MMPL does clear,

it's probably, it coincides with a broader market downturn. Well, what about all these layer twos that are popping up on Bitcoin? Like, obviously we've had Lightning for a while. And as far as I understand, Rooms actually plays pretty well with Lightning. Actually, you mentioned that too in the show.

Yeah. And then, you know, there's like a new Z-K I don't know if you call it a roll-up Satrea. There's a build-on Bitcoin BitV-V-M stuff. There's another one called Botanic. There's a bunch. So,

I don't know if any of those could help clear it. It's a bit of a chicken in the egg. Why would you really expect a layer two to catch on without the base layer Bitcoin itself being in significant demand? So there has to be a reason for users to

move off-chain or or abstract from the Bitcoin base layer. And I think we're there. I think, I believe that generally more use cases, even if they create base layer efficiency, actually result in net new demand for block space. So I actually think if, say, Botanics or, you know, like a state chain or these other multi-sig like layer two schemes,

if they take off, they don't actually reduce fee pressure on the base layer. I think they just create net more fee pressure on the base layer. I think there's this new term of like, there's this new way of looking at layer two's that I've seen proposed, which is you can look at it from a technical sense, but there's also this like economic argument that maybe we consider things which pay fees or generate transaction fees on the base layer to be some kind of Bitcoin layer or layer two. I think that's an interesting way of looking at it from an analyst standpoint of we want more economic actors on Bitcoin, even if they create efficiency in moving off chain. I think long term that only makes Bitcoin more valuable on the base layer.

Okay. Well, let's actually just very briefly round up also because I think there's a lot of really interesting things that people can do with Rooms. You read about some of these in a guest post for Dan Held's site where you talked about potentially someone wanting to buy a ruin and paying the transaction fee for the seller. You talked about ways that ruins could intersect with some covenants. So what are some of the more interesting things that you think we could see in the future? Oh, man, where do I start? There's so many cool things. This is like where the nerdy bitcoins get to have, they have to think like a D-Gen because there's some really cool stuff.

So simply, when you create a runes transaction, it's a normal Bitcoin transaction with one output that says, here's the runes, they go here. You can create a transaction that other people can spend and pay for that transaction and then have themselves receive the run. So this is an interesting proposal thrown out by Rindell, Roth 13 Maxi, of the Tabaret Wizards, where you could basically use a rune as a transaction fee. So you could create a transaction that you want to send, Charlie sends Laura a little bit of Bitcoin. And then also there's a root attached to it. Someone, and I could construct that transaction

that anyone could pay for it if they wanted, and you would still get the Bitcoin, Laura. So someone could come in and they basically take the ruin bounty of that transaction. This is really cool. It adds a lot of weird incentive to Bitcoin. Some of it's scary, but it's very interesting because I've not seen anything like this on Bitcoin before. And then also there is this conversation going on in Bitcoin of soft forks.

A lot of these surround this idea of adding op codes to allow Bitcoin covenants. A covenant is a way to commit to using a UTXO or Bitcoin in a certain way going forward. It's an important way for Bitcoin to scale. Because covenants affect Bitcoin itself, because Roons maps very well on top of Bitcoin, these covenants could be used to add interesting complexities to Roons. So it creates, like, finally an incentive for the non-technical D-Gen to find one of these covenant or software proposals attractive. A lot of what Bitcoin has to do in order to evolve and change is convince the majority

of the economic participants that they want it to happen. And so what is the carrot dangling for the DGen to support something obscure like Opcheck template verify? Well, I'm not sure. You see the Wizards doing it with OpCat. They're

crafting a very compelling narrative of why we need OpCat. But for something like CTV, like what's the purpose? Maybe a DGEN says, oh my gosh, with CTV, I can do this like this new Roons technique, that's attractive.

So it really, I don't want to say aligns all the camps of Bitcoin. It just gives everyone in Bitcoin more things to do and talk about. And that's what's so interesting about Roons in particular. But you see this happening across the whole Bitcoin ecosystem right now. Yeah. There's actually been a couple of other protocols that have been around longer than Roons that are similar. One is Tap Root's assets.

and the other you mentioned RGB. How do they differ from Rooms and why do you think they haven't quite taken off? That's a really good question. They're a little bit similar to Rooms and that they work naturally within Bitcoin's UTXO model. Taproot assets is an additional way of doing fungible tokens within Lightning. I actually am quite optimistic about taproot assets. And RGB is an old, old idea on Bitcoin, which has been in development for forever, which is finally seeing the light of it.

day where it basically says we're going to freeze or lock these UTXOs and do off-chain or like computation on the wallet side. What does that mean? Why have they not taken off? That's a great question. Why do things which are built well or built in a different way? Why do they not take off? I think it's a marketing issue, timing issue, and a narrative issue.

maybe these different protocols didn't lean into the JPEG use case enough. As Udi Werthamer says, there's only been two real use cases for crypto and that's stable coins and NFTs. And so what Ordinals did is it injected NFTs into the Bitcoin

conversation. We'd seen attempts at this. We'd seen counterparty, which is popular, but it didn't really click. I think the NFT ecosystem last cycle was looking for something new. And it's just very path-dependent. When Ornall's launched, it just grabbed its hooks into the NFT enjoyers, and Casey shepherded it very well. I think it brought enough novelty and freshness to the whole NFT story.

I think that's why Ornall is taken off. And then the rest is just kind of growing and sprouting out from around that. Well, speaking of Casey, I heard him saying that. he wanted to control the first ruin that will launch with the first block. So he's creating something called Uncommon Goods. And I don't even know what to call it because obviously there's going to be a series of these. So is it the first run, what is it, the first run series? Yeah, it's the first run etching.

So it's the first token. Oh, right, etching. He just didn't want anybody else to claim it. Like he has the first inscription. He has the first inscription ever. it's his. He came up with the idea. He deserves that.

But I think it's also like he wants the protocol not to be co-opted by or dominated by any single person. So, you know, if you release the protocol, you could have some well-capitalized venture firm come in and get that first one. And they kind of carry the reins from a narrative standpoint of this new young budding fungible token protocol. So the real controversy is he actually. proposed initially doing the first 10 because of like there's some there's a novelty to having a single digit um you know token but he recently as of yesterday uh said it's only going to be one and the reason he couldn't think of any other good names so Casey is uh he's more of a creative than a developer um he's just as much of creative as he has a protocol engineer and i think that's why

he's so lovable and why people just love to do stuff that Casey invents Yeah, yeah, and the name is Uncommon Goods, and I heard him also say that I think to start, the names have to be like 13 characters, and then eventually he'll allow shorter names. Well, this has been super fun. I'm very excited to see how the launch goes. Yeah, thank you so much, Charlie, for explaining it all. Thank you so much, Laura. Thanks so much for coming on Unchained. Don't forget, next up is the weekly news recap.

Today, we're trying something new, since I'm still in my health sabbatical. The recap will be read by Wondercraft AI. Stick around for this week in crypto after this short break. Did you know you can buy and sell crypto with tax benefits in an individual retirement account? I trust capital makes this possible. But what does this mean? When you buy crypto outside an IRA, like on an exchange, you face taxes on gains. But in an IRA, like a Roth IRA, gains can be tax-free.

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crypto roundup. In today's recap, we are diving into some major developments, including the conviction in the Mango Markets Fraud case, the approval of the first Bitcoin and Ethereum ETFs in Hong Kong, legislative efforts in the U.S. aimed at regulating stable coins and rising scrutiny of the CFTC Chair's connections with the founder of FTX. Additionally, we'll explore the advancements in Ethereum Layer 2 solutions, the impact of Uniswop's increased fees, Bitcoin coins assent in daily transaction fees and the significant drop in the board ape yacht club's NFT prices. Let's get into the details. Jury deliberates in Mango Markets, 10 million fraud case. The trial of Avi Eisenberg, accused of a $110 million fraud on the Mango Market's

cryptocurrency trading platform, has been convicted. The guilty verdict could have lasting implications for both defy protocols and defy users, perhaps setting precedent for future cases. Eisenberg, arrested after manipulating the price of MNGO perpetual futures to illegitimately withdraw cryptocurrencies with inflated collateral, was found guilty on Thursday of committing commodities fraud, commodities manipulation, and wire fraud. He faces up to 40 years in prison. During the trial, the prosecution argued Eisenberg's actions were a clear case of theft. They highlighted his price manipulation from trading large sums between his own accounts to artificially inflate the value. But Eisenberg's defense, led by attorney Brian Klein,

claimed that the trades were permissible on the mango markets protocol, suggesting that a lack of explicit terms of use allowed Eisenberg's strategy. In another Defy case, a former security engineer received a three-year prison sentence for the first-ever conviction of hacking a smart contract, involving over $12 million in stolen crypto. Hong Kong approves first Bitcoin and Ethereum spot ETFs. The Hong Kong Securities and Futures Commission granted preliminary approval to four asset managers to launch the city's first spot, Bitcoin, and Ethereum Exchange traded funds. China asset management, Bocera Capital, Hashke Capital, and Harvest Global received approvals.

Estimates on potential inflows vary, with some analysts suggesting the ETFs could attract up to $1 billion, $1, predominantly in Bitcoin. Restrictions on mainland China investors, however, and the scope of Hong Kong's ETF market overall might limit demand, at least compared to the U.S., where Bitcoin ETFs have amassed nearly $60 billion. The Hong Kong launches are expected to positively impact prices by increasing demand and potentially tying up liquidity, mirroring previous U.S. market impacts. Senators introduce latest stablecoin regulation bill.

Senator Cynthia Lummis and Kirsten Gillibrand unveiled a new legislative proposal aimed at regulating stable coins or digital assets pegged to stable currencies like the dollar. The bill specifies permitted stable coin issuers and establishes strict operational standards, including requiring issuers to maintain dollar-backed reserves and operate as either registered non-depository trust companies or depository institutions. It also mandates full reserve backing with public disclosures. Notably, the bill would prohibit algorithmic stablecoins, which rely on algorithmic mechanisms rather than full collateralization. Cryptoskeptic Senator Sherrod Brown expressed willingness to advance U.S. legislation on stable coins, emphasizing the need for thorough regulatory scrutiny prior. Meanwhile, the United Kingdom is set to introduce new legislation by July that would regulate

stable coins, along with crypto staking, exchange, and custody services, aiming to establish the country as a crypto hub. Senators seek clarity on CFTC chairs' ties to FTC's founder. Senators Elizabeth Warren and Chuck Grassley have requested detailed information from Commodity Futures Trading Commission Chair, Rosten Banam, regarding his communications with FTCS founder, Sam Bankman Frid. The inquiry, following Bankman Frid's conviction, aims to scrutinize Bainham's interactions with Bankman Frid during the critical months before the exchange declared bankruptcy. The Lawmaker's letter demands that Bainham submit records of all meetings, phone calls,

and messages exchanged with Bankman Frid by April 29th. This request is part of a broader investigation into how regulatory oversight may have fallen short in allowing fraud at FTX to take place. Rising Tide of Ethereum Layer 2s and Wallets Ethereum Layer 2 solutions and self-custodial wallets are surging. They aim to improve transaction speeds and cut costs. OKX, a major crypto exchange, has launched its X layer,

a Layer 2 solution built using the Polygon Chain Development Kit. This platform allows OKX's 50 million users to interact seamlessly with Ethereum-based decentralized applications, enhancing scalability and privacy through zero knowledge proofs. Simultaneously, WorldCoin, founded by Sam Altman, is introducing World Chain, a layer two network prioritizing human users over bots. This network uses retina scanning technology to verify human identities, offering faster transaction processing for verified users. Adding to the innovations, Cracken has rolled out a new self-custodial mobile wallet, allowing users to manage assets

across blockchains. Notably, Cracken's wallet is open source, with its code available on GitHub for enhanced security through third-party reviews. Uniswop's fee Hike Sparks Revenue Surge. Uniswap Labs increased its user interface swap fee to 0.25% from 0.1%, resulting in a record daily fee income of approximately $727,000. This surge in revenue comes as Uniswap prepares for a possible legal battle with the SEC, which has issued a well's notice to the company behind the decentralized exchange. Despite the financial boost, there's growing concern that the increased costs may drive users to alternative platforms.

Already, there's a noticeable decline in unique traders, dropping 15% from 285,000 to about 241,000 shortly after the fee hike. This fee adjustment raises critical questions about its long-term impact on user retention and the platform's competitive edge. Bitcoin challenges Ethereum in daily transaction fees. In a significant shift, Bitcoin is increasingly rivaling Ethereum in daily transaction fees. Historically, Ethereum has led in fees generated, but recent data shows Bitcoin catching up, driven by the popularity of ordnals and BRC20 tokens. In recent consecutive days, Bitcoin's fees surpassed those of Ethereum, highlighting a rising demand for transactions on the original blockchain.

This surge is linked to activities like minting NFTs and trading tokens, which not only bolster Bitcoin's transaction fee revenue, but also hint at its expanding utility beyond mere currency transactions. Board Ape Yacht Club NFT Prices Plunge The Board Ape Yacht Club NFT collection has experienced a significant drop in value, with the collections floor price reaching its lowest level since August 2021. Currently standing at $10.9 Ether, approximately $34,000, this represents a drastic decline of over 90% from its all-time high of 128 ether in April 2022. Despite historically being one of the top NFT collections by sales volume, BAYC has not been immune to the broader downturn affecting the

NFT market, raising concerns about the future interest and value of the once highly coveted digital assets. Meanwhile, BAYC creator Yuga Labs has been transferring royalties, totalling over $250,000 in the past two months, to a deposit address linked to the bankrupt entity, FtX US, according to blockchain intelligence firms, Arkham Intelligence, and Breadcrumbs. In other NFT news, Blur led marketplaces in the first quarter with $1.5 billion in trading volume, capturing a 27.6% market share. Magic Eden surged in March, driven by new rewards and expanded offerings. And that's all.

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