Unchained - Unconfirmed: How Taproot Could Improve Bitcoin -- If It Gets Adopted - Ep.243

Episode Date: June 4, 2021

Jeremy Rubin, a Bitcoin Core contributor and founder of Judica, a Bitcoin R&D Lab, joins Unchained from the Miami Bitcoin Conference (2021) to discuss all things Taproot. Show highlights: a general update on the Miami Bitcoin Conference  what Taproot will do for the Bitcoin network how Taproot will make Bitcoin transactions more private what effect Taproot might have on on-chain analytics companies what parts of Bitcoin transactions will be public if/when Taproot goes live what new wallet features Taproot will unlock for Bitcoin how Bitcoin vaults might work a user-friendly definition of MASTs (Merklized Abstract Syntax Tree) how Taproot signaling works when/if Taproot will lock-in why network updates strain the relationship between miners and users   Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2021  Tezos: https://tezos.com/discover?utm_source=laura-shin&utm_medium=podcast-sponsorship-unconfirmed&utm_campaign=tezos-campaign&utm_content=hero  NEAR: https://near.org    Episode Links:  Jeremy Rubin Twitter: https://twitter.com/JeremyRubin  Judica: https://judica.org/  Personal website: https://rubin.io/    Taproot Signaling status of Taproot: https://taproot.watch/  Bitcoin Magazine on Taproot: https://bitcoinmagazine.com/technical/taproot-coming-what-it-and-how-it-will-benefit-bitcoin  Why Taproot matters: https://www.coindesk.com/bitcoins-privacy-and-scaling-tech-upgrade-taproot-just-took-a-big-step-forward  Marathon lifts block mining censorship: https://www.coindesk.com/marathon-wont-censor-bitcoin-transactions-says-mining-ceo  MASTs: https://bitcointechtalk.com/what-is-a-bitcoin-merklized-abstract-syntax-tree-mast-33fdf2da5e2f Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unconfirmed. The show that reveals how the marking names in crypto are reacting to the week's top headlines and gets the insight skip on what they see on the horizon. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the June 4th, 2021 episode of Unconfirmed. Next week is the five-year anniversary of Unchained. If you want to send in a question or comment for next week's show, which will be a mini AMA, the deadline to get your submissions in is Thursday, June 10th at 5 p.m. Eastern, 2 p.m. Pacific. Send it via email to hello at unchainedpodcast.com and write anniversary

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Get $25 when you download the crypto.com app with code Laura. The link is in the description. Today's guest is Jeremy Rubin, a Bitcoin core contributor and the founder of Judica.org a Bitcoin Research and Development Organization. Welcome, Jeremy. Hey, yeah, thanks so much for having me on the show. You're in Miami for BTC Miami, the first crypto conference since the pandemic started. How is it? What's the atmosphere like?

It is a little bit wild. It's like the combination and constructive interference of both a Bitcoin event and whatever usually happens in Miami. So I would say the perspective here is the pandemic is definitely over. You know, there's a lot of close social contact, which takes a few days to get used to after the long stretch of not really seeing so many people. but it's really good to be back. That's great. That's great. Yeah, I am very much missing out, but for good reason. And I look forward to kind of keeping up on social media. So while you're there, Bitcoin is kind of undergoing a momentous event, which is the potential Taproot upgrade to the Bitcoin network. What is Taproot?

Cap root is a new feature coming to Bitcoin pretty soon, hopefully. What it does is essentially an optimization of things that people are using Bitcoin to do today, but it's a little bit too inefficient or it reveals too much information about what you're trying to do. And Taproot helps Bitcoin users be more efficient and more private. That's what it helps you do, how it actually works, we can also get into as well. Yeah, so let's just start with the first one, how to be more private.

What are the ways in which it does that? Imagine that you are a business, and you have a super secure, cold storage solution that you use, and you have 10 keys that need to come online in order to be able to redeem your funds. In Bitcoin today, what you would end up doing is you would have a script that is, protecting your coins. That's how Bitcoin works. There are these little predicates that you use

to protect your coin. And when they're satisfied, you're allowed to spend. That could be something like Alice has a key and Bob has a key. And they've both unlocked this coin to be spent in a specific transaction. With Cap root, it changes it slightly. So in the old world, what you would have is if you needed 10 keys, you would see all 10 of those keys broadcast to everyone in the world, and they would all be able to see that those are the keys that signed. In the taproot world, you are able to combine those keys into a single key. And so if you're using one key, 10 keys, or 100 keys, it all looks the same to the Bitcoin network.

So it really helps people who want to use a more secure service, have a little bit more privacy. And there are examples of applications that people use today, such as the Lightning Network, where they are a two-of-two signing key, and you can show the network that you're a two-of-two. They might be able to guess that you're doing a lightning channel, but with TapRoot, it's easier to hide what you're actually doing. One thing that I was wondering about is we have often used these kinds of analytics, looking at these different types of transactions,

to make observations about the network, such as how quickly the Lightning Network is growing. Will that make it more difficult to do those things? I believe it may. People always have a way of finding some piece of metadata about what people are doing. There are different behaviors that people do. So I think that the way that I like to think of it is that people pay these chain analysis firms for something. So, you know, may as well make their job a little bit harder.

And for the multi-sig transactions is another effect of the change that, those will become cheaper? Yeah, those will become less expensive to use. And the hope is that means more businesses and users will choose to adopt when there's less of a cost obstacle for them to adopt the technology. So once, well, assuming that taproot is implemented, what parts of Bitcoin will still remain public? Everything still remains public.

Taproot is, in some senses, even a little bit more public. That's another feature that people are excited about. Taproot exposes the public key directly on the network, which previously it was hashed. This seems like maybe a minor point, but there's some applications people have created that exploit that functionality. And we can get into that too. But everything basically remains the same. The main thing that is hidden more so is in cases where you're doing a multi-signature, the keys are collapsed down into a single one.

So it basically remains the same. You can see all the transactions going by. You can audit the supply. You can make sure that no points have been minted that should not have been. There are a few other things that Taproot helps with as well around, depends on who you ask, but either a Merkleized abstract syntax tree, that's a mouthful or a Merkleized alternative script tree, which allows people who are doing something even a little bit more non-standard

than a multi-signature to express a bunch of different conditions, more efficiently, and you would still see all of those scripts on the main chain. So in terms of what remains public, it's not, you can think of it as helping users be a little bit more private with what they're doing, but it's not removing information that's already public today. And so you referenced two things to answer. One was more, I can't remember how you phrased it, things where you can kind of exploit the fact that now the public key will be available, something like that.

And then this other piece, more features, which I think maybe it's like more wallet functionality or something. Can you expound on those and tell us a bit more about each? Yeah. So one of the cool things that you're able to do when you have all of the public keys available is something called a ring signature. What that has been proposed to be used for is you go, you scan the blockchain and you collect all of the public keys that you see. and then for transactions that are currently unspent on the network, and then you aggregate them, again, into a single key, and then you can produce a signature that comes from one of those UTXOs.

So what you might be able to do is prove to somebody that I own one Bitcoin, but I don't tell you which Bitcoin that I own. So that's an exciting application that people are working on that depends on that. There are some use cases for that that are, those are going to take a little bit of time to be fully developed out. So it's more of a neat thing that you can do. People also do have a mild concern around that because exposing the public key means that there's perhaps some small element of worse quantum security if quantum computers existed.

But the general consensus has been among the Bitcoin developers that the quantum computing risk is pretty negligible at this point. and there will be a lot of other problems to solve if that becomes broken. And so we'll probably have a migration plan for that in any case. The other bit was about when you have a Bitcoin script, and really a script is kind of like a weird way of thinking of it. I like to think of it as like a permission slip. So when you are writing this permission slip,

you want to write down all the different people who could access this coin. that aggregated key that we talked about earlier, that can only express certain limited types of logic. There could be other things that you might want to do. For example, you might say, Alice and Bob can spend today, but next week, if Alice and Bob haven't spent, then Carol can spend. And that next week, that you can't express in that sort of combined private way. This is sort of what's called the tacker assumption that for every contract, there's some

group of people who you just want to let sign, and they can cooperate in order to spend the transaction without revealing that there was some other logic existing in the contract. So in this example, Alice and Bob can spend it a day or Carol can spend it a week. What you would do as a taproot tree is you would say at the top level, there is Alice, Bob, and Carol. If Alice, Bob and Carol all agree, then the coins can move. But then if just Alice and Bob later today, then they can spend or just Carol later. And what Taproot will do is you will bundle those up all into a single key.

And then if you need to use one of the more specific clauses like Carol in a week, you have to extract it. You would reveal that script fragment to the network. So not the entire permission slip. Just that small little bit that says, you know, the way that I like a, to think of it is you lift up your driver's license, and they don't need to see all the information on your driver's license. They just need to see that you're 21, right? So you could have a little template in front of your thing, and you could say, hey, look, I'm 21. And they wouldn't, maybe they need to

see your photo and that they don't need to see your home address. So kind of a similar thing, you would pull up the permission slip and you would say, look, Carol can spend after a week, and it's been a week. So please let me spend the coins. But they wouldn't know any of the other spending conditions of that script. So that's the way that it's a little bit more private. And there's sort of a fundamental link between the concept of privacy and efficiency. If people don't need to know something, why tell them. It'd be more efficient not to tell them. So that's sort of why Taproot bundles these concepts together of privacy and efficiency. Great. So in a moment, we're going to discuss a few more features of Taproot as well as another part of the upgrade, Schnoor's signatures.

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Back to my conversation with Jeremy Rubin. So one other thing that kind of interested me was I did see also that this would enable more vault-type features, which I know has been discussed in Bitcoin for kind of a long time. And ever since that New York Times article came out a few months ago about somebody who lost access to hundreds of millions of dollars in Bitcoin, I've had so many random people who don't know anything about crypto mentioned this to me and they think only this, that this has happened to only one person. Anyway, the point is that when I read that this was coming, I was like, oh, well, for the next generation of Bitcoin holders, like this maybe won't be so much of an issue.

But anyway, can you explain what that is? Yeah. So, Waltz refers to a family. of types of Bitcoin wallet that are a little bit different than a normal wallet. A normal wallet is essentially you get the keys, you get the coin. That would be like a single signature wallet. You could do multi-signature and you could say, well, if you get two out of three of these keys, then you get the coin and maybe one of them's in cold storage. That's not really not quite yet a vault. The way that I think about a vault is where there's a lot more structure to how you're allowed to spend.

So for example, you can take one Bitcoin out per month. That would be a vault. And it's like, okay, well, I can withdraw a little bit, but I can't withdraw everything all at once. Another type of vault that exists is anytime I try to withdraw, I have a week to say I didn't actually mean to withdraw. And you can cancel it and send it somewhere else. So there are different types of things that get lumped under the concept of a vault. And they all rely on ideas of you wanting to. have multiple steps and factors of authentication before you're actually able to get access to

the coin and having multiple chances to being able to subvert the funds back into maybe a more secure custody facility. Taproot itself does help with making vaults possible, but I personally don't think that just taproot is going to get us vaults. It will get you multi-sig being cheaper. it will let you do more sophisticated multi-sigs, but I do think that in order for the structured spending, you need a few other things. And those do happen to be things that I'm working on. So I'm happy to get into detail on that.

There's a proposal, BIP-19, Check-T-Up, Let Verify, that I've been working on in a programming language that uses it called Sapio, that helps people being able to define and implement things like vaults. So those I think are around the corner. And Taproot, the IT. of having a mast that mercilized abstract syntax tree or alternative script tree, people use different terminology, so given your listeners both, those do help with being able to make vaults with

alternative spending conditions because you could say, well, the fund can move this way or it could move this way or it can move this other way, and then you only need to show one of them to the network. So Tapperut is a part of that, but it's not by itself, I think, enough to get vaults really fully functional. Okay. And can you just actually give as user-friendly an explanation as possible of MAST and like these technical terms that you were using? Yeah. So what amassed is is a type of tree. And a tree is a computer science data structure that you can use to efficiently look something up. We're familiar with trees from things like a, I think like the Dewey Decimal System is kind of like a little bit of a tree where

the first numbers tell you like a more general category and then the later numbers tell you a more specific category. So I could be getting this wrong. I haven't used a Dewey Decimal System, you know, since like third grade or something. But you know, you might start with some number that corresponds to fiction and then you would say, okay, well, if I'm looking at in somebody who's a librarian is probably going to hate me for this part because I'm going to get all, everything wrong. But you might look at like a nine and you'd be like, well, nine is the fiction section. Okay, so eight is the nonfiction section. And so if the number starts with nine, it's this. If it starts with eight, it's something else. And then you go nine dot five. And five is

science fiction. And you might keep on going. And then, well, nine dot five. three, that's science fiction that happens in space. So you're kind of traversing and it's narrowing down the number of things. And if you were to imagine in your head, all of the shape of how you might go number to number to number, it kind of looks like the spanning out of a tree of where you would start at the base at nine, and then you would go up to five, and then to three, and there are these branches that you kind of go down. That's the concept of a tree. Now, what a mercilized tree is something where you take the tree and let's flip it upside down. So you're thinking of the things that are at the bottom, All of the books just lined up in a row.

And what you do is you take two books and then you say, okay, each book has a serial number. Let's take that serial number and let's take the other serial number. And then let's add them together. And now we've got another serial number that refers to that bucket that has two books in it. And then in Merkelization, the sort of very brilliant idea is that you're using a special type of serial number called a hash that specifically, refers to the exact content of that book. And what you do is you say, okay, I've got two books. Their serial numbers cover the entire content. So we'll always get this exact book back. And then I add together both their serial numbers and then I hash that again. And that keeps

those serial numbers from growing to be too long. If you just add them together so that you have serial number A than B, they would get really, really long. And then it would take forever for you to tell somebody which bucket you were looking for. But by hashing, you get these compact identifiers. And as you go up this tree, you have buckets that represent more and more and more books so that you would say, okay, well, first we start with two, and then we have four, and then we have eight, 16, 32, 64, 128, 256, et cetera, et cetera. You keep on growing the number of books that your serial number refers to. And then at some point, somebody can say, hey, look, here's this hash.

And then this is the really important part is you can then say, okay, well, give me the book with this specific set of serial numbers going down. And Merkel trees provide a really easy way to look up and verify a specific book and being able to check later when somebody does give you that book. You can say, wait a minute, I read this book and I computed what the serial number should be, and you gave me a different book. You've checked that it was the correct book in the correct bucket. Now, the last concept, and this is, like I said, it's a mouthful,

So it's a lot of different things coming in is the notion of it being an alternative script tree or an abstract syntax tree. They kind of mean the same thing. The alternative script tree is a little bit easier to understand. Instead of books, we use pieces of the permission slip. So what you say is you say, hey, I've got this permission slip. And I built a Merkel tree out of it. And that window that I talked about on the driver's license, you would say, just give me this little bit of it that tells me if Carol's allowed to spend today. and then you would provide what's called this Merkel lookup path into the tree,

and then they would be able to check that this was actually the correct document inside of the permission slip and the spending is authorized. I know that's probably not easy, but that's sort of the most faithful explanation I could give for it to give your listeners a little bit of that sense. Okay. Okay. Yeah, that I could see how it just enables developers to kind of more easily create new things that people can do with Bitcoin. That's kind of like the main thing. But actually, I loved this description. It's obviously more technical than I normally

would learn about. But I've always heard people use these terms and I didn't really understand what they were saying. So before we go, so actually, quickly we should touch on the short signatures, but also we should explain why it is that it's not certain yet whether or not the taproot upgrade will go through. So we should kind of go into a little bit about how this is being decided upon. Yeah. So do you want the snore signatures or the upgrade process? Yeah. Why don't we do both?

Because we're at time. And I know you want to get back to the conference, but these are both important topics. So for snore signatures, it's mostly what I covered earlier. earlier, they allow for that aggregation. There are a couple other cool things that you can do with them that previously you couldn't. It has to do with a niche property of how the signature equations are structured, such that they can be added together. And previously they were not, you couldn't add them together, kind of like, you know,

you can't just like add two fractions together in kind of an obvious way. It made it difficult with the previous scheme to be able to make protocols where you can add signatures together. The Schnorr signatures, you can just take the signatures from multiple parties and add them together a little bit more easily. And so that enables a lot of new protocols. But I think that those things are a little bit niche or specific. The upgrading stuff, I can tell you a bit more about, I actually have here this hat made by one of the Blockstream employees, Samson, which talks about the notion that there is this whole question of signaling. And there's lock in on timeout. True. There's no lock in on timeout.

There's a website that you can check out taproot.watch that kind of shows you a visual interactive to see what's happening. Essentially, when you come up with a change for Bitcoin and upgrade, nobody has the authority to make the network run that code. So it's really difficult to know when a fundamental upgrade to Bitcoin can actually be enforced. So if there's a new feature like Taproot, when would you feel comfortable actually putting coins that could be stolen if nobody's enforcing that new rule. It's pretty tricky. And so what we've

adopted as more or less a norm. And I use the word norm very specifically because it's not how it has to be. It's just a norm that we've used is that miners have the ability to signal in a block that they are ready and upgraded to enforce the new rule when they validate and mine a block. And that's sort of the minimum thing that you need for the network understood as being the union of users and miners to be able to know that the rule is safe to use. If you didn't have the miners and just the users were enforcing it, it would still be safe for those users, but they wouldn't have the hash rate and they would see network disruption in terms of like a loss of blocks being mined and things would get a little bit

wonky. Like it could take, you know, 200 minutes for your transaction to get. confirmed, even if you're paying the top fee rate. So that's where the idea of miners signaling, it's sort of like the easiest thing. If miners say universally, they're all going to enforce a new rule, then it's probably going to be okay to use on the network. And what's happening right now is the signaling window for taproot, where minors have been able to mark in their blocks that they are ready for taproot to be locked in. And over the last week, miners have started signaling basically universally that they are ready for taproot.

And that means at the end of this two-week period, taproot will lock in, which means that the entire network knows the rule is going to take effect. And then in November, it will actually activate. And that means that the rule will actually be usable. So there's a gap between when we, as a network, say, the new rule is going to turn on. and when the rule actually turns on. And that's to ensure that any stragglers actually have time to be fully upgraded. All right.

And so, but it hasn't reached the threshold yet, right? But it's quite close. So does it look likely that it will be adopted? Yeah. So the way that the threshold works is, I believe it is either 1814 or 1815 out of 26. of the last group of blocks mine, and it's not a sliding window. It's like concrete chunks, like, you know,

starting at zero, then 2016, then it goes like that. If that threshold, which corresponds to 90% of block signal, then it will lock in, and then at some point in the future, it will activate. So you need a certain number. If you don't have that enough miners, then it's unclear that there won't be issues around the stability of consensus in the future. So we set a pretty high threshold.

And then minors have, I think we said around three months in order to signal sufficiently. If miners don't, and this is where there's a little bit of controversy, if miners were to not have signaled in that three-month period, then the upgrade, which you heard about all, the great things that people are going to get out of it. So we really, really want this thing to go through. We wouldn't get that upgrade. And so there's a group of people who at the outset of this process said, and that's what the hat is about, is they said, under no circumstances, are we not going to get this upgrade? And in fact, if you don't signal, we will throw away any blocks that you mine that do not

signal for TAPRoot. And we will do that two years from now. And so it's kind of a very, aggressive maneuver to tell miners, you know, either our way or the highway, a lot of developers feel very uncomfortable with setting ultimatums like that. They want things to be a little bit more often and voluntary, but a lot of users felt miners have no business deciding what transactions should be valid or invalid. They're there that serve us. We pay them via a subsidy. If they're not going to do what we want, they can hit the road. And so there's definitely a little bit of disagreement around how that should happen. I think you can see a more clear-cut example

where with the recent marathon mining pool that said that they're going to be OFAC compliant and they're going to censor transactions where everybody kind of said, this is Bitcoin, like, you know, screw you guys. We couldn't stop them for mining. You know, we couldn't say you can't do it.

But everybody else said, no, like, you know, you might our transactions, like, you know, we're not here to serve you, you know, so we're not going to participate. in your KYC scheme or whatever. So I think that there is a very delicate relationship between what miners want to do and what users do and what developers are like willing

to personally advance. And I think we got to see a little microcosm of that with the tap root process. But the overall reality is that taproot was so uncontroversial. It was sort of like people discussing how one day we might go to war about something in the future

based on some battles that were fought in the past over some other upgrades. in a more turbulent time. But it's basically a time of peace right now. And so the upgrade was pretty quickly picked up by minors and looks like it will shift uncontroversially. Yeah. Yeah.

This is not like the block size debate. And just to be clear about marathon, the blowback was so intense that they reversed course. Well, I think they even got like a new CEO, right? That's what I had heard that it was like very, very intense. Yeah. Yeah, he started a month ago. So and, and yeah, now they're saying they're not going to do that. I mean, it was very not with the Bitcoin ethos.

So it's not surprising that they got pushed back. But anyway, okay, well, this has been so informative. I really appreciate that you took the time, especially during Bitcoin Miami. So, yeah, thanks so much for explaining Taft Root and coming on Unconfirmed. Thank you for having me. This was a pleasure. Don't forget, next up is the weekly news recap. Stick around for this week in crypto after this short break. With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies.

Grow your crypto with crypto.com earn, which pays up to 8.5% interest on your Bitcoin and 14% interest on your stablecoins. When it's time to spend your crypto, nothing beats the crypto.com visa card, which pays you up to 8% back instantly and gives you 1% 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 by using the code Laura. The link is in the description. Thanks for tuning in to this week's news recap. First headline, the U.S. Treasury is IAing expanded crypto regulations. Last week, the Biden administration released its 2022 budget proposal.

Tucked inside was an emphasis on expanding. the IRS in order to combat tax evasion. Specifically, the U.S. Treasury highlighted crypto as an area to focus on, saying, quote, tax evasion using crypto assets is a rapidly growing problem. The global nature of the crypto market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore crypto exchanges and wallet providers. Treasury's proposal looks to expand the reporting requirements of crypto brokers to include the beneficial owners of accounts internationally, which basically would fore. force financial institutions to collect and verify information from customers holding or transacting

in crypto assets. According to the block, this new proposal is not quite as groundbreaking as it initially sounds as crypto exchanges are already expected to keep information on their clients. However, Treasury is now focused on tracking information internationally. The White House did not just stop at expanding the IRS in combating tax evasion on Tuesday in light of the recent ransomware attack against meat processing company JBS. a White House spokesperson said, quote, expanding cryptocurrency analysis to find and pursue criminal transactions is part of its strategic review on ransomware. Next headline. The SEC is filing charges against BitConnect. For those who remember the

heady and unsavory days of the last crypto bubble, here's some overdue news. The SEC is filing charges against five individuals over their involvement with BitConnect. According to the SEC's complaint, Bick Connect raised $2 billion in unregistered securities from 2017 and 2018 through the use of a network of promoters. Laura Shalov Mirabin, the associate regional director of the SEC's New York office, said in a press release, quote, these defendants unlawfully sold unregistered digital asset securities by actively promoting the BITConnect lending program to retail investors. She added, we will seek to hold accountable those who illegally profit by capitalizing on the public's interest in digital assets. BikConnect, BCC, was, to put a bluntly, a Ponzi scheme. BCC was a cryptocurrency built on top of

Bitcoin with a simple premise. Trade your Bitcoin for BCC, lock in the instantaneous value of BCC for a set period, and earn massive amounts of interest, calculated daily. On top of the too good to be true promise of daily compounding, BikConnect also used a system of invite. and referrals, where users could invite friends to join the platform in exchange for business. BitConnect crashed in 2018, thanks to cease and desist orders from Texas and North Carolina, with its token collapsing from over $470 to below $1. While it may seem that BicConnect is getting its due justice, Gabriel Shapiro, a partner at BSV law, was skeptical, tweeting, quote,

this case could become a blueprint for action against non-fraudulent DAWs, as the SEC's case describes BitConnect as a, quote, unincorporated association. Next headline. Marathon will no longer censor Bitcoin blocks. Marathon Holdings, a prominent Bitcoin miner, announced in a press release that the mining firm, quote, will be updating all our miners to the full standard Bitcoin Core 0.21.1 node, including support for taproot. The announcement comes about a month into Fred Teal's tenure as chief executive officer, where he appears to be taking the miner in a slightly different direction than previous leadership.

The latest press release is important for two reasons. One, previously, Marathon had described itself as an OFAC compliant pool, meaning they would only mine blocks compliant with U.S. regulations, excluding transactions associated with sanction addresses from the blocks at mine. From now on, Marathon will no longer censor transactions, with Thiel saying, quote, Marathon is committed to the core tenants of the Bitcoin community, including decentralization, inclusion, and no censorship.

The next thing to note is that Marathon will now be signaling in favor of TapRut. Over the past month, not all of Mara pool, which is Marathon's mining pool, has signaled for TapRut activation, with half of the non-signaling blocks for TapRut coming from Mara this epic. Bitcoin's Taproot update, which Jeremy and I just discussed at length, should enable improvements to Bitcoin's scaling, privacy, and custody software. And it recently began its three-month activation period. Miners who wish to adopt the update can signal support by adding what is called a signal bit

in blocks they mine. At the time of publishing, miners have signals for activation at a ratio of 97.67% with 251 out of 257 blocks signaling readiness for taproot. However, there is a long way to go before taproot is activated, as well, we're 1,562 additional blocks are needed for the protocol to lock in. Funding Roundup. VC Giant A16Z is doubling the size of its third crypto fund. Previously, it was reported the fund was looking to raise $800 million to $1 billion. However, according to blogger Eric Newcomer, the fund has now ballooned to $2 billion, which could lead to $50 million in annual fees for A16Z. Circle, the payments

behind USTC raised a $440 million round led by Digital Currency Group, Fidelity, and FTC. At the time of publication, USDC is the second largest stable coin trailing to others USDT. One of Coinbase's earliest backers, Union Square Ventures, has invested in Mirror.xyZ, a crypto-publishing tool at a valuation of $100 million. Mirror uses Ethereum to help writers leverage blockchain's unique advantage of P-2P relationships between creator and consumer to crown fund its projects. Next headline. Mike Novagrata's and Christian Engermeyer's firm Cryptology Asset Group has committed to

investing $100 million in crypto venture funds over the next two years, with a particular focus on first-time funds, emerging managers, and seed funds. Next headline. Looking back at crypto statistics in May, May was a brutal month for hoddlers, whether Bitcoin Maxi or Hardcore Ethereum. In May, BTC finished the month down 35%, its third worst monthly loss ever. Ethereum ended the month at about where it started, which is somewhat underwhelming after Heath skyrocketed past $4,300 on the 11th, before landing back under 3K to round out May.

The news was not all bad. Even with the crypto industry's market cap dropping from $2.2 trillion down to $1.5 trillion, a 30% decrease, the market still found a way to reach a few all-time highs. All numbers here are courtesy of the block. Crypto exchange volume topped $2 trillion in May, marking the fourth month in a row with volume over $1 trillion. For context, in May of last year, total crypto exchange volume was at $107 billion. Defi protocols generated a record amount of revenue last month, bringing in $370 million. Not surprisingly, Uniswap took the lead, producing 41% of total DeFi protocol revenue.

In another all-time high, Ethereum miners made $2.35 billion, increasing April's previous record by a whopping 42%. The spike in minor revenue most likely stems from the fact that Ethereum's on-chain volume surpassed Bitcoin's for the first time, with Ethereum hitting $66 billion in volume and Bitcoin sitting down at $407 billion. Lastly, stable coin supply suddenly topped $100 billion for the first time, with Tether leading the market at a 63.3% share. Since the start of 2021, stable coin supply has increased 255%. Next headline, Coinbase Pro is letting the Doge out. In a blog post on Tuesday, Coinbase Pro announced that it would begin accepting Doge transfers and that Doge trading would go live sometime on Thursday, depending on liquidity conditions. The market immediately reacted as Dogecoin jumped up roughly 32%

in the 24 hours after the blog post, breaking 40 cents once again. After the announcement, CoinDesk asked several knowledgeable market participants for their take. I'll highlight two bullish quotes and bear. Edward Moya, a senior analyst at Oanda, noted, quote, people are still going to be cautious long term, but his debut will eventually have some ability to attract traditional investors and not just the Robin Hood slash Reddit Army. Voyager CEO, Stephen Erlick, said, quote, we've had consistent net buyers on Dogecoin, which which indicates the general bullishness around it as it gains popularity across all demographics. James Butterfill of coin shares was hesitant to endorse Doge, saying, quote,

when you invest in any digital asset, you have to look at the fundamentals behind it. With Dogecoin, there's a lack of these. Next headline. NFTs are still a thing. After relatively quiet May in the realm of NFTs, it seems June has brought about a small resurgence in NFT mania. On Thursday, Sotheby's, a renounced art house, began an online NFT auction, featuring the first NFT ever minted, Kevin McCoy's Quantum, which was created in 2014. Also on sale is Cryptopunk number 7,523, one of nine alien cryptopunks in existence, two of which

have already sold for more than $7 million. FTCX, the crypto exchange announced its own NFT marketplace where tokens from both Ethereum and Solana can be bought and sold. with FDX taking a 5% cut from both the buyers and sellers. For now, the NFTs are stuck on FTCS, though customers will soon have the ability to withdraw their tokens. One unique token for sale is SBF Lunch, redeemable for a 30-minute in-person chat with FTCS CEO Sam Bankman-Fried.

The latest bid is $100,000. All right, time for FunBits. The Uniswap Queen nailed it. This week's FunBits is, visual. So for our podcast listeners, it's time to swipe out over to Twitter and type in Eva Balin, E-V-A-B-E-E-Y-L-N, into the search bar. Once there, go into the media section, and the first picture you see, you should see, is the most glorious set of fingernails in the cryptosphere. Predominantly white, tipped with a sci-fi-looking computer chips, and adorned

with two Uniswop unicorns on the nails of the ring fingers, Ashley Shapp, the growth lead at Uniswap, certainly wins the competition for the most fashionable crypto protocol homage I have ever seen. All right, thanks for tuning in. To learn more about Jeremy and Taproot, be sure to check you the links in the show notes. Don't forget, June 14th is the five-year anniversary of Unchained. If you want to send in a question or comment for a next week's show, which will be a mini-A. The deadline to get your submissions in is Thursday, June 10th at 5 p.m. Eastern, 2 p.m. Pacific. Send it via email to hello at Unchainedpodcast.com and write anniversary in the same. septic line and also let me know how to pronounce your name. Unconfirmed is produced by me,

Laura Shin, with all from Anthony Yoon, Mark Murdoch, and Daniel Ness. Thanks for listening.