Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most significant stories in cryptocurrency technology development. I’m Margaux Nijkerk, the Ethereum protocol reporter at CoinDesk’s Tech team.
In this issue:
- Inside Movement’s Token-Dump Scandal: Secret Contracts, Shadow Advisors and Hidden Middlemen
- Ethereum Could Supercharge Transaction Speed to 2,000 TPS Thanks to Bold New Proposal
- Bitcoin Debate on Looser Data Limits Brings to Mind the Divisive Ordinals Controversy
- Coinbase’s Base Network Achieves ‘Stage 1’ Status, Reducing Centralization Risk
Network News
MOVEMENT’S TOKEN DUMP SCANDAL: Movement, a prominent startup in the crypto space backed by Trump’s World Liberty Financial, was anticipated to close a $100M Series B funding round. However, following an investigation by CoinDesk, the network now finds itself embroiled in an insider-dealing scandal that unveils questionable practices in crypto deal-making. Movement Labs is currently investigating whether it was misled into signing a market-making agreement that granted control over 66 million MOVE tokens to an obscure middleman, precipitating a $38 million selloff post the token’s debut. Internal documents reveal Rentech, a firm with a negligible digital footprint, operating on both sides of the deal, raising significant concerns about potential self-dealing. Foundation representatives initially described the Rentech contract as possibly the worst agreement they had encountered, cautioning that it incentivized a price pump of MOVE before dumping tokens onto unsuspecting retail investors. The situation has revealed a rift among Movement’s leadership, with executives and advisors under scrutiny for their roles amid internal dissent. — Sam Kessler Read more.
ETH PROPOSAL AIMS TO RAISE GAS LIMIT CEILING: Ethereum Foundation researcher Dankrad Feist has submitted EIP-9698, proposing a mechanism to allow the blockchain’s gas limit to increase automatically over the next four years. This EIP introduces a deterministic “exponential” schedule integrated into client defaults, facilitating a gradual increase in the gas limit by a small preset amount each epoch. If adopted, this framework would raise the gas limit ceiling from 36 million units to approximately 3.6 billion, translating to an estimated 6,000 simple transfers per block and over 2,000 transactions per second (TPS), a significant improvement from the current 15-20 TPS. — Shaurya Malwa Read more.
BITCOIN BLOCKCHAIN DATA DEBATES REIGNITE AS DEVELOPERS WEIGH DATA LIMITS: Bitcoin developers are once again divided over the management of storing information on the blockchain, ignited by a proposal to lift long-standing data size limits. This contention echoes the fervent debates surrounding Ordinals from 2023. The OP_RETURN feature of the blockchain allows additional data to be appended to transactions, typically for notes, timestamps, or records. The proposed modification would eliminate the 80-byte cap on such data, a restriction initially imposed to prevent spam and uphold the blockchain’s integrity. Proponents argue that users have already started circumventing this cap via Taproot transactions, embedding data within cryptographic signatures. However, Bitcoin Core developer Luke Dashjr warned that easing such restrictions could compromise Bitcoin’s purpose of financial integrity. — Sam Reynolds Read more.
BASE REACHES STAGE 1 ROLLUP STATUS: Base, Coinbase’s layer-2 network, has attained “stage 1” rollup status, paving its route toward enhanced decentralization. This development aligns Base with other layer-2 networks that have also made significant progress, reducing reliance on centralized authorities. As part of this new status, Base will establish a security council composed of ten global independent entities, according to Tom Vieira, the head of product at Base, in a recent interview. — Margaux Nijkerk Read more.
In Other News
- BlackRock is preparing to integrate blockchain into the back office of its prominent $150 billion Treasury Trust money market fund. It has filed to introduce a digital share class titled “DLT Shares” through BNY Mellon, designed to maintain traditional share ownership records in a blockchain format, potentially leading to broader acceptance of tokenized cash and digital assets in conventional finance. — Sam Reynolds Read more.
- Libre, a tokenization platform associated with hedge fund Brevan Howard, plans to tokenize $500 million worth of Telegram debt, creating a blockchain-based Telegram Bond Fund (TBF) on the TON network. This initiative aims to give accredited investors access to Telegram’s substantial bond offerings, ensuring institutional-grade yields that could also serve as collateral for on-chain borrowing and product development on TON. — Ian Allison Read more.
Regulatory and Policy
- Coinbase has filed a brief in a landmark U.S. Supreme Court case surrounding an IRS request for data on hundreds of thousands of its customers, advocating for the protection of Americans’ privacy regarding digital information held by third-party service providers. — Jesse Hamilton Read more.
- Arizona is pioneering a legislation aimed at establishing a crypto reserve as part of its fiscal strategy, recently securing approval, primarily with Republican backing. Whether Governor Katie Hobbs, a Democrat, will support this initiative remains uncertain, given her history of vetoing bills during this legislative session. — Jesse Hamilton Read more.
Calendar
- April 30-May 1: Token 2049, Dubai
- May 14-16: Consensus, Toronto
- May 19-23: Solana Accelerate, New York City
- May 20-22: Avalanche Summit, London
- May 27-29: Bitcoin 2025, Las Vegas
- June 30-July 3: EthCC, Cannes
- Oct. 1-2: Token2049, Singapore
