Unchained - Shapella in the Rearview: After Major Upgrade, What’s Next for Ethereum? - Ep. 480

Episode Date: April 14, 2023

This week’s major Ethereum upgrade, Shapella (it was really two upgrades, Shanghai and Capella, in one), brings the network’s multi-year journey to proof-of-stake to a close. With validator withdrawals now live, the Ethereum Foundation’s Tim Beiko explains Shapella’s significance, why EIP-4844 is the next big thing, and what else is on Ethereum’s roadmap. Show highlights: how Ethereum transitioned from a proof-of-work consensus mechanism to proof-of-stake what the concerns about enabling withdrawals among developers were  why the upgrade has “de-risked” staking on Ethereum whether there are going to be more solo stakers now that The Merge is fully completed what’s next in the roadmap of Ethereum and how EIP-4844 will decrease the cost of posting data for Layer 2s what “proposer-builder separation” is and what it intends to solve Thank you to our sponsors! Crypto.com Railgun DAO  Guest Tim Beiko, head of the Ethereum protocol developer calls  Previous appearances on Unchained: Why Ethereum's Merge Was Delayed and Why It Won't Reduce Gas Fees Much Previous coverage of Unchained on the upgrade: Ethereum's Shapella Upgrade - What to Expect? How Will ETH React to Ethereum’s Shanghai Upgrade? Links Unchained: Staked Ethereum Withdrawals Enabled As Shanghai Upgrade Goes Live Nansen: The Shanghai Upgrade Dashboard CoinDesk: What’s Next After the Ethereum Shanghai Upgrade Known as Shapella Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Just a note before we begin. After Tuesday's episode with Gabriel Shapiro and Fatame Fonizadei went out, I received a message from a listener who works for the IRS. During the episode, we had wondered if the IRS would share information on whether you owned crypto to other government agencies. And it turns out, the answer is no. This listener who prefers to remain anonymous said, Section 6103 of the Internal Revenue Code prevents disclosure of taxpayer information even to other federal agencies absent specific legislation to the contrary. Thank you for clarifying that. And now on to the show. Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a

senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the April 14th, 2023 episode of Unchained. Unchained comes out twice a week, but Crypto News breaks constantly. For up-to-the-minute news stories, please check out our new website, UnchainedCrypto.com or subscribe to our mailing list. Ever wanted to use Defi without being tracked? Railgun is a leading defy-privacy solution on Ethereum, BSC, Arbitrum, and Polygon. Shield your funds and use privately in your favorite defy apps, while Railgun's cutting-edge zero-knowledge system encrypts your data from public view. Yes, that includes dextrating. Visit realgun.org or use the railway app at railway.xy-Z. With the crypto.com app, you can buy, earn, and spend crypto in one place.

Download and get $25 with the code, Laura, link in the description. Today's guest is Tim Beko, head of the Ethereum Protocol developer calls. Welcome, Tim. Hi, Laura. Thanks for having you. Congratulations on executing the Shanghai and Capella upgrades on Ethereum Wednesday. For listeners who may not be aware, can you explain what these upgrades enabled on Ethereum? Yes, of course. So at a high level, the biggest thing that came as part of these upgrades is the ability for validators to withdraw their stakes from the beacon chain. Your listeners probably know this, but just in case they don't, Ethereum launched on

proof of work and wanted to move to proof of stake. But by the time we were sort of ready and had the proof of stake design, there was already a ton of applications in value built on the proof of work chain. So we decided to launch the proof of stake chain separately, make sure that it was working, that we could stake funds on it, that the whole kind of algorithms that run the chain worked without issues before we transitioned the entire network over to that. So because of this, when people wanted to be a validator on the proof of stake chain, they had to deposit their ether in a contract on the Ethereum proof of work chain. And then the proof of stake chain reads from that contracts that activates new validators

and basically credits them to each that they've deposited on the beacon chain. So people have been doing this since late 2020. We've had the beacon chain up since then. And those validators sort of earn rewards in ETH for their work. Late last year, we had the merch. So this was basically when we got rid of fruit. of work and made the proof of stake chain kind of the main engine or kind of consensus algorithm for Ethereum.

And at that point, validators were still kind of earning rewards. They started to earn a transaction fees that, you know, people pay when they transact on Ethereum. But they still didn't have a way to get their initial stake, like the kind of 32Eath that they deposited and any accrued rewards for their work as a validator out back on the execution there. And the main reason why we didn't do this as part of the minimum. merge is just that the merge is already like a pretty complex change. So we decided to separate,

you know, combining both the proof of work and proof of stake chains and then in the future kind of allowing validators this ability to withdraw their stakes. And so this is what just happened effectively. So the Chappellella upgrade, which is Shanghai goes Capella together, is like this upgrade where we allowed validators to take the stake that they have on the deacon chain and either exit the whole thing, stop being your validator, or simply get the rewards out and keep being a validator. And as far as I understand, this is the last step of that transition to proof of stake. So in a way, this also ends this years-long process of that transition. Yeah, yeah, that's right. And I think maybe a way to think about it is like proof of stake v1 is now fully complete.

And there's probably a bunch of chains that will happen, you know, to Ethereum's consensus in the future. But the sort of initial vision of the entire chain is running on proof of state. You can validate. you can enter and exit, all of that. This is now live and working. And from a technical perspective and a security perspective, what was the development team concerned about when it came to allowing people to unstake and withdraw? And when you explain that,

I don't know if this has something to do with it, but I wondered if that was also why there's, for instance, like different types of withdrawals and like a delay and et cetera. So can you talk about what considerations you had going into this? Yeah, yeah, of course. So maybe to take like from the very beginning, when kind of the beacon chain was launched, it wasn't quite clear how we would get all of Ethereum to proof of stake. You know, back in those days, there were designs that were like maybe instead of combining

both networks, sort of we grow a whole new chain under the proof of stake chain and like somehow migrate the proof of work stuff over. So we wanted validators to have like as much flexibility as possible, which regards to where their funds will ultimately end up. So the initial validators, when they kind of activated their validator, they would use a key that has a different kind of cryptographic scheme than what we use on the Ethereum Proof of Work chain. So it's like a BLS signature. And so they would kind of have two keys, one that they use to sign messages and whatnot, and another one that's effectively like their private key. And I'm simplifying on the details here, but keep it simple.

So these validators basically, they have like a withdrawal key that's. except to this BLS key, that's not something like the Ethereum Proof of Work chain can process, or today's execution chain. Later on, as we sort of had a clearer vision of what the merge would look like and whatnot, it became clear that these funds would eventually kind of end back on the main Ethereum chain that exists today. So we added the ability for validators to create a validator and just set an eth address as their withdrawal address so that when they could withdraw, the funds would just end up there. So we sort of have this set of validators who've, like, activated with this different kind of set of keys.

And we needed a way for them to transition to just specify an eth address where we should send the funds. And so that was, like, kind of the other thing that activated at the same time as withdrawals is the ability for a validator who previously had this kind of BLS key as a withdrawal credential to change this to an eth address so that the network knows what to send the funds. So that was kind of one of the big concerns were just obviously there's a lot of validators who had kind of these old. keys and needed to update them all at the same time. And that creates kind of a huge number of messages, basically, that are sent over the network kind of in this

one time, because once they've all changed, you can only change just thing once, right? You can't constantly change your eth address to which you withdraw. So it's like we would be in the situation where we had all these messages we needed to process very quickly because everybody sort of wants to withdraw as they've been staking for years. So that's definitely

one of the areas we've focused on. There's a bunch of other things, but Yeah, that's probably one of the bigger ones. And so to come up with this plan for how the unstaking and withdrawing would work, did you run like different kinds of simulations, sort of like Monte Carlo style simulations to figure out how to enable people to withdraw while also maintaining the security of Ethereum? I don't know exactly what types of simulations we ran.

So there's a couple different considerations. One is like the credential changes. And the thing that we do there is we just cap how many you can process per block. So, you know, I forget what the exact number is. I think it's like on the order of 16, you know, give or take. Maybe it's eight, but it's not like 100. So this is just like a way where, you know, every block we know we're not going to change more than this many credentials.

And the clients can actually choose how they prioritize those because these messages are, they're not like transactions where people pay gas fees for them. Clients can, you know, use whatever heuristic, either the first ones that they see or even there was this interesting project where people who thought their keys were compromised had a way to verify their identity off-chain and this project sort of curated the list that then validators could choose to run

so if you wanted to potentially help people who thought their keys were compromised you could set your note to like prioritize those if it were to propose a block. So there's all these different approaches you can take. I think from the network's perspective it's just how many messages do you want to process by block

to not delay the whole thing. And then in the worst case, assuming everybody changed their credentials, like what would happen, right? And these are scenarios we ran on a bunch of shadow forks before. Shadow forks are basically where like we create a new network, like a new beacon chain, and we make pretend the fork happens on that beacon chain

and kind of spam it with a bunch of transactions to see what happens. So we knew that like at least on the order of like 10x more, like credential changes that, we'd expect on main net, the network could process, even though there would be, you know, a couple of misblocks and whatnot. Like, it wouldn't be like in a critical state under that load. So I think that's, you know, that's like one of the aspects of which you thought about. I think just like the flow of withdrawals, how they actually get, you know, debited from the beacon chain and credited on the execution layer is obviously something you want to make sure

you get right. Like you don't want money to get lost or, you know, like the transaction has to like be atomic basically. So how that works. And, you know, part of the design there is just that there is no transaction for withdrawals. It's a bit like the proof of work mining where it just sort of appears in the block, but it doesn't take up block space like a user transaction. And this means like smart contracts and whatnot can't like interact with that as it's happening. It just reduces the risk of some weird interaction. All right.

So in a moment we're going to talk about what has transpired since the upgrade occurred. But first, a quick word from the sponsors who make the show possible. Ever wanted to use Defy without being tracked? Railgun is the leading defy privacy solution on Ethereum. It's available on BSC, Arbitrum, and Polygon 2. Shield your funds and use them privately in your favorite defy apps, while Railgun's cutting-edge zero-knowledge system encrypts your data from public view, all without leaving your preferred chain.

Yes, that includes Dex Trading. Coming soon are integrations with leading yield, lending, and perp trading platforms on multiple chains. Defy and privacy, together at last. Visit realgun.org or use the railway app at railway. at xyz to find out more. Back to my conversation with Tim. So as of the time of recording from the last 24 hours,

which I guess now it's been like about 20-ish hours since the upgrade, net there has been about 92,000 that have been better in the process of being withdrawn. And I wondered how this compared to your, expectations. This is funny. Like, I had, I really did spend it all the time thinking about, like, how many people withdraw or, like, deposit. Like, obviously, you know, it's known there's like a couple like entities that

had to sort of withdraw everything. But I think there's like two things where it feels like it balances out. One is just, you know, withdrawals significantly, I think, de-risk staking on Ethereum for a few reasons. Like one, one is like you know that they're possible. Like even though, I don't know, like the people working on the protocol sort of knew that, you know, this would probably happen around this time. I appreciate the skepticism of maybe others in the community who feel like, okay, I'm staking this thing and I have no idea when I'm going to be able to withdraw. So I think, you know, having it actually be live and working is like a significant derisking factor. And I think

the thing that it does as well is it reduces like the commitment you have to make. Like before, you were staking on Ethereum, you sort of had to commit all the way until withdrawals at least. But you can imagine today, you know, you stake and for whatever reason it doesn't work out, you can withdraw and, you know, pretty quickly get your funds back. So I think, you know, given that, like, even though there's possibly a bunch of people who will withdraw either because they're forced to, they, you know, they want to, they've been doing this for a while or whatnot. I think, you know, the introductions of withdrawal sort of derisks the network.

And the thing as well is, like, the network rewards are kind of based on how many validators or validating. So if there's more and more people that join as validators, the rewards actually go down because at some point, the marginal validator isn't that valuable to Ethereum. But similarly, if a bunch of people leave, then the rewards will go up and that'll probably attract new people who want to stake and we'll sort of reach that equitivogram.

So it's really hard to predict what happens in the short term. I think the next probably a couple weeks are pretty much noise in terms of like a bunch of people who wanted to unspeak will probably unsake. a bunch of people who wanted to stake will stake. But I think after that we'll probably have a better picture of just, you know, what does like the average growth or, yeah, looks like in terms of stake. Yeah, Nansen had a great dashboard, and it's very clear that both withdrawals and deposits

are up. So, yeah, clearly there's a lot of movement in both directions at the moment. So now that Chappella has been executed, how do you think that this ability to withdraw will affect how decentralized Ethereum will be? Yeah, that's a great question. So I think this is also part of the withdrawals we'll see right now as kind of a resuffling, right, where people who are staking with one provider might choose to move to another one for various reasons. So I think, you know, especially if you were staking on, say, like a centralized exchange,

you sort of were locked in there, you know, for the most part as a user over the past few years. And a lot of like these centralized exchanges start offering staking before we even had like these liquid staking on-chain projects. So I wouldn't be surprised to see a bunch of people move from, say, centralized exchanges to liquid staking projects just because it's more convenient as a user experience. And I think, you know, it's also now much easier as like a solo staker to actually try it out and see, you know, okay, can I actually run a validator? And if it doesn't work out, can I, you know, I can get my money back in like a couple days. So I think one of my hopes is that, you know, by having like a bounded commitment, that people make were relative to like an unbounded one.

We do see people kind of trying it out. And also, you know, like you'll accrue the actual rewards on your validator, which before were sort of on the beacon chain, but you can't quite do anything with them. So hopefully we'll see more people trying that. I think also, you know, since the merge, like the merge sort of changed kind of quite significantly to software you had to run and like the interaction between the nodes, even though in practice, like people were supposed to run both like an execution and

consensus client since as a validator, prior to the merge, you didn't really have to run an execution client. You could sort of use infera instead and be fine. So I think the merge was like a spot where like we asked a lot of like validators and node operators. But now I feel like people have like better understood that set up. There's like much better guides. There's kind of like support for it. So yeah, hopefully we see more more solo stakers come out of this. You know, I guess the last thing I'll say is the Ethereum network sort of has this concept of like coordinated penalties if something wrong. happens. So if basically, you know, you're like all your validators are on AWS, then

AWS goes down. The penalty is much greater than if I run a validator on like my internet apartment and I'm the only one of the network going down. So, you know, if when you're using like one of these, these larger providers, the risk that you're taking is that if there is a failure, you'll be penalized much more harshly than if you have a failure that's uncorororororidated from everyone else. So even as like a solo staker, who has like, say an imperfect performance relative to like a professional operator. You might, you know, have small penalties more often. But in the case, sort of like the tail case where like a large operator actually has an issue, you would be penalized much less harshly for like those types of

issue than they would give them the correlations. I hope we'll hopefully see like kind of a reshuffling towards more decentralized alternatives. And, you know, when people try a product that they don't like, then they'll be able to change more easily, whether this is a centralized exchange, a pool, or solo staking. Yeah, I think that's quite good. Now that Shanghai and this whole transition to proof of stake are completed, what are Ethereum developers focused on next? So the most obvious big thing is EIP-4844, so this proto-dank charting. The idea there is that Ethereum's kind of path towards scaling is via roll-up. These there are two networks. of the cost of the transactions is actually posting data back on Ethereum layer 1.

So the thing that keeps them secure is that effectively, you know, they process all your transactions off chain, but they post back the data on Ethereum layer 1 or proofs of the data for ZK roll-ups. And if, you know, there was something that went wrong under L2, you could kind of reconstruct the transaction sequence on L1 and dispute the actual thing that went wrong. So for them, it's very important to be able to post the data back on a secure network. and this is why they often do it on Ethereum. But it's expensive to do that.

And I think if you look now, something like 90 to 99% of the cost of an L2 transaction is actually the cost of posting data on Ethereum L1. And so the idea with EIP 4-44 is that we want to offer, can think of it as like temporary storage, temporary data storage on Ethereum, where these layer twos, they don't actually need the data stored forever,

but right now on Ethereum, that's like the only way to post data. But, you know, optimistic roll-ups, usually after seven days, we'll kind of consider, like, a transaction final and that you withdraw your funds. Different roll-ups have, like, different numbers for this. So they only care about the data being there for, like, on the order every week. And so the idea with 444 is we can add more kind of data storage capacity to the network because we're not storing it forever. Whereas, like, usually, you know, because we store data forever, we can't store a ton of it. And so we end up having to charge a lot for it in terms of gas fees.

So 444 will basically allow just way more data that stored temporarily. And L2s can use this instead of, you know, the main theory of data and lower fees on users. So that's really where I'd say most of the focus is right now. And so what you describe here, so often I hear people talking about implementing EIP 4844, but also proto-dank sharding. Yeah, can you explain what that is? It's the same thing. Yeah, it's just.

funny name for EIP 444. Yeah. Okay. And when do you expect that to be implemented? We've been working on it for like over a year now. I think the first, I think the EIP was drafted in February of last year. So we have had, you know, several test nets and dev nets running with it. I'm pretty sure today all the clients have at least a prototype implementation. So I think, you know, it's quite far along. The biggest thing that's missing is we were implementing this sort of as prototypes in parallel to the Chapella upgrade.

So now there's a lot of work to do to just kind of, I guess, rebase all of this work on top of like the new production software that's running on MainNet today. And people were obviously reluctant to do this. Like you don't want to have like two in progress upgrades that are like being iterated on the same code base. So they sort of implemented 404 on like an old version of the clients and, you know, slowly moved it back on top of like the current version. So in the next couple weeks, I think this is what teams will be focusing on.

And then I think after that, you know, it's hard to predict how long these things take, but, you know, we'll start standing up DevNets, getting all the clients together, seeing what bugs we find and fixing those. In parallel, we also have to discuss, like, are there other things we want to bring along with this upgrade? I doubt there'd be any other kind of big change because this is already quite a large one. But just like with, you know, the upgrade for withdrawals, there's probably a handful of like small other changes that make sense to combine with it. So in the next like month or two,

I think that's what we'll be figuring out. And after that, it'll be easier to have an idea of like when this thing could go live, when we know it's when we have full implementations working on like the latest software, plus, you know, we know other features that will cover it on excited. And so Ethereum's roadmap has other elements on it after scaling. So from there, like what else do you see is kind of the next steps and what are you looking forward to? Yeah, we have a lot of stuff to do.

So on the proof of stake side, I think, you know, PBS is probably one of the things that has the most attention on right now. Proposer, builder separation. Correct. So right now, basically the MEV market, you can think of it as like the validator is the actor who has to propose a block, but it can either propose a local block, you know, using its public mempool. But there's people who can build more profitable blocks. We call those builders. And so you basically want to have sort of an auction where builders can bid to validators saying,

hey, you know, I can, I will, if you make this block for me, I will pay you this amount of money. And then the validator can check how much they would make with their own block, how much can, you know, different builders bid for their blocks and kind of choose, oh, you know, I'd like to like take this block instead. Doing this basically requires, you know, I can think of it as like a marketplace. Today, this marketplace exists outside of the protocol rules. It's like this is what NUD boost is. It's like the software that connects builders and proposers. And again, I'm skipping over a ton of technical details, but high level, this is how it works.

And because this like auction mechanism is not part of the protocol, there's just a bunch of weird trust assumptions that we have to tolerate that, you know, make it a bit less robust than like Ethereum's like core protocol. So the idea with like proposer builder separation, actually people now call it like enshrined proposal building separation because it's just bringing this like marketplace, which already exists, to be governed by protocol rules rather than like mediated by external software. So that's a big one. On the proof of stake side, another thing that, you know, I think a lot of researchers like

to see is just because it's like single slot finality. But the idea is that right now Ethereum finalizes, which means, you know, it's very low probability of reorgs every like 12 minutes or so. And it's kind of a binary thing. It's like after 12 minutes, you get a third of. the stake, like, backing your transaction. But the idea with single-flot finality is most transactions, you know, don't need billions or dozens of billions of, like, economic security behind them. You know, if you're sending 100 bucks on Ethereum, maybe, like, tens or hundreds of millions

of security is sufficient for you. So could we make, you know, instead of making this, like, a binary thing where we, every 12 minutes, you get all the economic security, could we just make this, like, a gradual thing where you go from, like, zero to a third of the stake, gradually every slots. So there's a lot of work that's being done on that. And I think on the execution layer, there's a ton of things that's happening. But I think two like noteworthy ones. One is moving to what we call stakeholders, so one of the big challenges with every blockchain is the more contracts there are on it, the more storage that takes. So ideally in the future, not all nodes store all of the contracts. And to do that, you basically, when you send a transaction, you need to

sound like a little part of the state. So imagine, you own like an FT. You need to send a transaction that says, I don't know, transfer my NFT, but also include a proof that's like in this contract, I own this NFT or whatever. This is a bit weird, but the way Ethereum data is stored right now, it looks a bit like a Christmas tree. So it's like this tree that's like long and narrow. And sending your proof is like, imagine you go from the top all the way to the bottom.

So it's like this long kind of thing. Obviously you can't cut a Christmas tree. that way, but you know, bear with me. And so just, yeah, sending those would be expensive. And we want to like move Ethereum to like a different type of tree, which looks a bit more like a bush, which is like long and short. So like the proofs would be much smaller to send over. And there's a bunch of technical work to get there. And probably the most noteworthy piece is changing self-destruct.

So if any of your listeners are like smart contract devs who rely on self-destruct, as part of Chappellea that's what life, we've actually deprecated this. So you can still use it on the network. The functionality hasn't changed, but likely in the next upgrade, it will. So obviously, you know, the goal is to not break any existing contracts. But if today you deployed some weird funky contract that, like, uses self-destruct in, like, a very novel way that nobody's, like, ever done, this is a type of use case that, you know, might get, like, bricked in a future upgrade. And I won't go into all the details like, you know, why we need to remove self-destruct. But basically, again, this future, we're like, we don't have to store all the states on all the nodes. This is kind of one of the requirements.

And so, yeah, this is something people should be aware that considers self-destruct to be deprecated on maintenance. And just to fill in self-destruct is what? It's not the same thing. Is it killing a contract? Yeah. So you can think of it. It deletes the contract and it sends any money that's in the contract to the address that called it. And obviously, you need like a privileged action.

not anybody can call that on any contract. But for example, there's a bunch of contracts that allow the owner of the contract to destroy the contract and potentially replace it with a new version or something like that. So the flow is like the self-destruck will just delete the contract, delete all the data, and send whatever ballot is what's left in the contract back to the owner. And is that also the same thing as suiciding a contract? Or is that like old terminology? Yeah, yeah.

So they actually changed the name because, you know, it was the intense of the name. So it's the same old code, yes. Got it. Okay. All right, Tim, well, congrats again. And it's really exciting to also see what else is coming up for Ethereum. Good luck with all that. And thank you so much for coming on Unchained. Thank you very much. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 50 million people using crypto.com, one of the easiest places to buy, earn, and spend over 250 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 5% cash back instantly. Plus, 100% rebates for your Netflix and Spotify subscriptions and zero annual fees.

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is considering reopening in the future, according to FTX's bankruptcy attorneys from Sullivan and Cromwell. FTCT token more than doubled in price after the news broke. lead attorney Andy Dieterick informed the court that restarting the exchange is one of many potential options being considered, with no decisions being final yet. Deerick revealed that the $7.3 billion in recovered assets include $2 billion in cash and $4.3 billion in Category A crypto, such as Bitcoin and Ethereum. A potential restart to be assessed this quarter may require raising additional capital and

could involve a 363 sale, selling the firm's assets to, to pay creditors. Talks regarding the restart are underway with FTCS' official committee of unsecured creditors. Former FtX head of institutional sales, Zane Tackett, suggested that the exchange relaunch and offer a token representing creditor claims, providing value to creditors, and immediate liquidity for those who wish to sell off their claims. Tackett cited Bitfinex's BFX token as a successful example. He believes FDX could succeed if run, quote, like a crypto company, that is, quote, able to be nimble. FTCS faces massive legal fees amidst bankruptcy. FTX faced more than $30 million in legal bills and consultant fees in February, with over 35,400

hours of work logged by six firms, according to compensation reports filed in bankruptcy court. Sullivan and Cromwell charged the largest amount billing $13.5 million for their services, while Alvarez and Marcell billed $12 million. FTC's February tab was slightly smaller than January's $38 million bill. Meanwhile, a bankruptcy court judge denied former FTC CEO Sam Bankman-Fried's motioned to access a $10 million insurance policy to cover his legal expenses. Judge John Dorsey stated that Bankman-Fried did not provide evidence or established cause for the request. However, the judge noted that SPF can return with evidence at a later time. Companies typically have director and officer liability

insurance to protect executives from legal action. The official committee of unsecured creditors had objected to the motion, stating any cash you might receive could instead go to FDX creditors. And here's the rest of your FTCS roundup. A Delaware bankruptcy court judge ordered that Alameda Research, the trading arm of FDX, should be repaid nearly $53 million for a loan made in 2021 to Dell Tech International Group. In addition, Alameda Research-backed Wren Protocol will transfer all of pegged assets, including Bitcoin and Dogecoin, to FTCS trading. Lastly, FTCS was given the green light by a Swiss court to explore the potential sale of its European business arm, FtX Europe AG, after the holding company filed for a Swiss moratorium proceeding. Winklevoss twins loan $100 million to Gemini amid

struggles. Billionaire founders of Gemini, Tyler, and Cameron Winklevoss have reportedly loaned $100 million to their crypto exchange. The personal loan comes. after unsuccessful attempts to secure external funding. Since last year, Gemini has faced multiple challenges during the crypto downturn. FtX's collapse sparked the bankruptcy of Cryptolender Genesis Global Holdco, which significantly impacted Genesis. In February, Gemini and Genesis agreed in principle to resolve their dispute, with Gemini contributing up to $100 million. However, the Winklevoss loan will be used to fund operations, not the Genesis dispute resolution. SECC summons Toronto Justin Sun, Soldier Boy, and Austin Mahone. The Securities and Exchange Commission issued a summons

for Tron founder Justin Sun, DeAndre Cortez Way, aka rapper Solgey Boy, and YouTuber Austin Mahone, following a civil complaint from last month, which involves tokens issued by Tron and BitTorrent that the SEC has deemed as unregistered securities offerings. If Sun, Mahone, and Solchiboy do not respond within 21 days, a default judgment will be entered against them. The SEC is seeking to bar son and his companies from offering securities, including digital assets again, and to impose civil penalties. Way and Mahone may face bans on receiving money-first future digital asset endorsements and pay their own penalties. In related news, Binance U.S. delisted Tron's TRX token, resulting in a 6.4% decline in its value. The exchange cited its responsive digital asset monitoring process and changing

industry circumstances for the delisting decision, stating that a token may be subject to review when it no longer meets their, quote, high standards. Solana's Saga smartphone with crypto features launches in May. Solana Labs is launching its crypto-focused saga smartphone on May 8th. The Android device features custom add-ons, a seed vault for securely storing private keys, and a dedicated DAPS store for crypto applications. Priced at $1,000, the Saga aims to bring crypto capabilities to mobile users, but will only include Saga-based protocols, leaving out the most used applications like

Curve, Ave, and Balancer. For a better understanding of how it actually works, check out the review done by Unchained Reporter Jeff Benson. Tether Blacklist Validator who exploited M.EVBots. Tether Blacklisted the wallet address of a rogue validator who managed to front-run maximal extractable value or M-EVBots last week, amassing $25 million in profits. The validator's wallet holds $3 million worth of USDT. MavBots, which have extracted an estimated $1.38 billion from users, have been widely criticized in the decentralized finance community. Tether's decision to blacklist, the validator, has sparked protests from industry experts. As Leveras Carapetzis, founder of Rodkey App, tweeted, quote, MVBots have been slaughtering retail users via sandwiching for years. Nobody blackliss them.

Somebody dare fool a MavBot and give them a taste of their own medicine, and they get blacklisted. Polygon co-founder Jane T. Counten called it, quote, a bad precedent. Sushi Swap is hit by a $3 million exploit. A Sushi swap exploit led to a $3 million loss from user Zero X-Foo's wallet due to an improved-related bug in the code. Sushi Swap CEO Jared Gray confirmed the exploit and advised users to revoke permissions for contracts on the platform.

Gray also stated that over 300 ETH had been recovered, and the team was working with Lido to recover another 700 ETH. Whitehead hackers helped return some funds, but their efforts were hindered by MEV bots that replicated and executed the exploit. Sushi Swap is working on a retrieval plan to secure stolen funds and compensate affected users. Furthermore, Sushi Swap is preparing to launch a claim's website for vested Sushi tokens held in its Merkle distributor contract, with unclaimed tokens being directed to Sushi Swap's treasury after April 23rd. Next is Mutual seeks return of $2 million from Euler Finance Hack victims. DeFi Insurance Protocol, Nexus Mutual, is looking to recover $2 million in claims paid out to victims of the Euler Finance hack, as users

have since redeemed their funds. Following the return of the stolen funds by the hacker, oiler finance enabled user redemptions, totaling $133 million. However, five policyholders have yet to repay the claims received from Nexus Mutual. The policy terms state that in the event of funds being returned by the hacker, the claim value must be returned to Nexus Mutual. The insurer is considering potential legal action against those who haven't returned their claims. U.S. lawmakers probe Circle and BlockFi's banking terms with Silicon Valley Bank. This week, U.S. Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez sent letters to Circle and BlockFi, among 14 firms, questioning their decision to bank with the now-collapsed Silicon Valley Bank.

The lawmakers are investigating SVB's potential, quote, white-glove treatment of certain depositors, including possible mutual backscratching arrangements that may have led to massive uninsured deposits. Circle and BlockFi held approximately $3.5 billion in uninsured deposits at SVB, with Circle accounting for $3.3 billion. The letters addressed to Circle CEO, Jeremy Allaire, and BlockFi CEO, Zach Prince, inquire about the history of their relationships with SVB, amounts deposited and maintained, and any investment relationships between their firms, their relationships, entities and SVB. In other regulatory developments, the SEC's Investor Advisory Committee

requested that the SEC provide formal guidance for the crypto industry, but is still endorsing Chair Gary Gansler's efforts to enforce securities laws. Meanwhile, Wyoming Attorney General Bridget Hill filed a motion to intervene in Custodia Banks' lawsuit against the Federal Reserve Board and Kansas City Fed. The lawsuit alleges that they unfairly delayed and denied the crypto-friendly bank's application for a master account and membership. Hill seeks to defend, quote, the legitimacy and viability of Wyoming's special purpose depository institution or SBDI framework, which the Fed reportedly criticized as inadequate. Arbitrum community against proposals to return 700 million tokens. Following the controversial Arbitram Foundation proposal last week, the community

is now voting over a new proposal, AIP 1.05, which calls for the return of 700 million. million ARB tokens, quote, unjustly allocated to the foundation. The proposal also asks for a token buyback from Marketmaker Wintermute and disclosure of the Arbitrim Foundation's deal terms with Wintermute. However, this AIP is not getting much traction, as over 80% of voters are against it. The proposal's author has also requested putting AIP 1.1 and AIP 1.2 on hold until community faith in the governance process is restored. Some community members believe the new proposal goes too far, calling it an overkill. Bitcoin reaches the $30,000 line. Bitcoin surpassed the $30,000 mark for the first time since June 2022, continuing a crypto rally that began at the start of the year. So far this

year, Bitcoin has risen 89% while ether has increased by 59%. Some attribute this surge to the recent bank runs that have called into question the resiliency of the banking system. However, Bitcoin is still down 25% from this time last year. Meanwhile, microstrategories, Bitcoin holdings are now in the green, as the cryptocurrency's price rose above the company's average purchase price of $29,803. However, the firm's profit margin remains slim, and a large-scale sale of its holdings could potentially cause prices to drop. Bitcoin Ordinals bug results in 1,200 orphan inscriptions. A bug in the Bitcoin Ordinals protocol caused 1,200 valid inscriptions to be excluded, leading to debates within the community on how to address the issue.

Ordinals collector Leonidas.org revealed it the bug on Twitter, explaining that it was found in the indexer function of the protocol, which only counts inscriptions in the first input of a transaction. Two potential solutions are being discussed. The first would retroactively index the missing inscriptions, aligning with the on-chain logical ordering. The second solution would change the indexing rules going forward, keeping the current inscription numbers and leaving the orphaned inscriptions out. The Twitter poll indicated that the community leans toward the second option. Zhao, founder of NFT Marketplace Magic Eden, argued that history should be immutable. Some believe the orphaned inscriptions could be worth more if a fix is ever made. Time for FunBits. Unchained Ginny Hogan has a take on Bitcoin reaching $30,000 again.

Oh, I'm really so grateful the Gemini locked their withdrawals or I would have sold mine months ago. The rally may have something to do with speculation over interest rate hikes, which is the closest a lot of finance guys will come to experiencing PMS. I'm not quite sure if it's happening. their mood tanks and it compels them to buy all kinds of weird shit. Speaking of, is anyone interested in buying my gently use Zamboni? The rally could also be because Bitcoin is seen as a hedge against the traditional banking system. J.P. Morgan put out a report last week that said recent problems exposed weaknesses in the traditional banking system.

No offense, JP, but I don't think recent problems exposed shit. The traditional banking system's been running around naked since at least 2008. I mean, thank God for hedges or it would get arrested for public indecency. A lot of crypto guys are calling Bitcoin's rally a vindict. of the crypto ecosystem. I would make a joke about it being revenge of the nerds, except that's just a straightforward description of what it is. Others say that it's related to Bitcoin's having event that's happening in 2024, but you don't need a big event for that. You want the crypto market cut in half again? Just ask SBF if he has a free second right now. Thanks so much for joining us

today. To learn more about Tim, the Chappella upgrade, and what it means for Ethereum, check out of Shonnas for this episode. If you've enjoyed this episode of Unchained, please share it with a friend. Unchained is produced by me, Laura Shin, with up from Anthony Yun, Mark Murduck, Kevin Fuchs, Matt Pilchard, Zach Seward, Juanraman, Sam Shreveham, Ginny Hogan, Ben Munster, Jeff Benson, Leandro Camino, Pam and Jimdar, Shashok, and CLK transcription.

Thanks for listening.