Code is L̶a̶w̶ Against the Law
Yesterday, the US Treasury Department imposed sanctions against Tornado Cash – a privacy-preserving crypto-mixing service that improves transaction privacy by breaking the on-chain link between source and destination addresses. Not only that, but the US Treasury has also put the Ethereum addresses on the sanctioned list of those who interacted with Tornado.
Subsequently, Circle Pay’s USDC has officially blacklisted every Ethereum address sanctioned by the US Treasury. It doesn’t even end here, Github has deleted the Tornado’s repository and even went ahead and deleted accounts of individuals who contributed to the Tornado repo.
It’s a black day for privacy indeed. As per the US Treasury, apparently even writing open-source code is illegal. This is ironic since it's already been established in the US through the landmark case Bernstein v. Department of Justice, which resulted in establishing code as speech and changed United States export regulations on encryption software. Therefore, limiting the code is limiting the individuals’ right to free speech.
I believe it’s an important juncture to take a moment and have a look at the history of the struggle for privacy and understand the roots of this concern. The concerns for privacy were first raised by individuals following the Cypherpunk movement. The cypherpunks were 1990s digital activists who challenged White House policies aiming to prevent the use of strong cryptography and privacy-enhancing technologies as a route to social and political change.
The Cypherpunk movement gave the necessary push to the creation of cryptography techniques that we’re using today in our daily lives. One of these cryptography techniques is called public-key cryptography, which is the foundation on which modern cryptocurrencies are built.
It was John Adams, the 2nd President of the United States, who once said, "I must study politics and war so that my sons may have the liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain."
Similarly, the pioneers of privacy advocates devoted their lives to advocating the cause of privacy so that the next generation could build systems like public key cryptography. Using public key cryptography, we built encryption in modern tech products and that also led to the invention of Bitcoin.
Today, the responsibility is in our hands to expand the horizon of privacy-preserving mechanisms and do our part in this multi-generational movement. And we will.
Tornado Cash might be dead, but our fight for privacy won’t. In Crypto Nos Confidimus.
This week in web3 Wednesday:
- 😲US Treasury imposes sanctions on Tornado Cash
- 😍Kujira launches a decentralized stablecoin – $USK
- 🤺WazirX - Binance ownership drama
- 🤔ETHPOW vs. ETHPOS Fork possibilities, Chainlink confirms support for ETHPOS
- 📖Delphi Labs’ The Complete Guide to Rollups
- 🤨Aptos vs Sui: new Layer-1s in town
- 😇Coinbase partners with BlackRock to offer crypto services to institutions
😲US Treasury imposes sanctions on Tornado Cash
The US Treasury in its latest notification has sanctioned Tornado Cash. Subsequently, the website registrar Google took down the website, Github deleted the Tornado’s repo, individuals’ accounts who contributed to the repo, and Circle Pay has frozen 75,000 USDC belonging to unsuspecting Tornado users, as well as 149 USDC donated to a Gitcoin project.
This series of events has raised some important questions – how long will we abide by the rules and whims of bureaucrats completely out of touch with technological developments? Can a decentralized financial system work without decentralized money? Will we ever be able to build truly decentralized domain name systems that actually work and be seizure-resistant?
Hopefully, one day, we’ll have answers to these questions.
😍Kujira launches a decentralized stablecoin – $USK
With the fall of Terra stablecoin and its ecosystem, the web3 ecosystem lost its one and only decentralized stablecoin (DAI is not decentralized since it’s backed by USDC). Well, seems like not all is lost.
Kujira, the team behind ORCA which provided high capital efficiency to Anchor liquidations in Terra pre-crash, has moved on to Cosmos as a layer-1 blockchain. Yesterday, it announced the launch of its decentralized stablecoin $USK, which will be backed by $ATOM and subsequently $KUJI.
This is the first stablecoin to be backed by $ATOM and the first native stablecoin for the Cosmos ecosystem. Learn more about Kuji & implementation of $USK on their Medium announcement page.
🤺WazirX - Binance ownership drama
Seems like not all is well with India’s one of the biggest crypto exchanges. Zanmai Labs, the firm licensed to operate WazirX has been lately in trouble with the Directorate of Enforcement (ED), India’s law enforcement agency responsible for the investigation of offenses of money laundering and violations of foreign exchange laws.
Now with ED at the gates, both WazirX and Binance are throwing balls at each other’s court to wash their hands of the criminal investigation. WazirX’s CEO Nischal claims WazirX is owned by Binance (Which was a well-known ‘fact’ until this drama). Binance’s CEO CZ, on the other hand, claims the acquisition deal never went through and Binance doesn’t actually own WazirX.
Check out the public spat between founders on Twitter.
🤔ETHPOW vs. ETHPOS Fork possibilities, Chainlink confirms support for ETHPOS
As the day of The Merge inches closer, the conversations around the possibility of the Ethereum chain getting forked between PoW & PoS chain are getting interesting. First of all, the biggest oracle network Chainlink has confirmed the support for the PoS chain.
Now, the ball is in the court of centralized stablecoin issues such as USDT and USDC to announce their support. It’s very likely that these two will also support the PoS chain and subsequently rendering the DeFi on the PoW chain unusable.
Curious to learn more about all the possibilities of a hard fork and what it could lead to? Check out this ELI5 Twitter thread to understand all the nuances.
📖Delphi Labs’ The Complete Guide to Rollups
Delphi Labs has published a very comprehensive report about Rollups and modular blockchain. The report delves fairly deep into the modular economics, Ethereum Rollup stack, and Celestia Rollup stack.
Some key takeaways from the Report as noted by Phil Lao are:
1) Fees
- L2 fees are dominated by calldata costs today. But costs will plummet
- Long-run L2 fees will be mostly L2 gas
- L1 is not constrained by execution performance, but L2 certainly will
- Need better EVM execution
2) L1 Security
- Price of the L1 token matters for security
- The higher the price, the more expensive an attack
- Price = speculation (growth) + fee revenue (value) + Store of Value premium
- Security conscious devs: beware of low-fee revenue networks with SOV narrative
3) The future of Ethereum and the EVM depends on the continued evolution of the EVM execution environment. As DA (Data Availability) solutions come online, the constraint moves from DA costs to L2 gas costs. Thus, "let a thousand augmented evms flourish".
Read the full report here.
🤨Aptos vs Sui: new Layer-1s in town
With the Solana and Nomad hack happening during the last couple of days, other L1’s have been becoming increasingly popular. Aptos & Sui are one of the most discussed chains recently.
What are their differences, and which one should you be more bullish on? Well, here’s a comprehensive Twitter thread that answers all your questions – Aptos vs Sui - Which one should you be more bullish on?
😇Coinbase partners with BlackRock to offer crypto services to institutions
Coinbase has finally turned the well-known crypto twitter phrase “Institutions are coming!” true. With this announcement, BlackRock will provide Aladdin clients access to crypto trading and custody via Coinbase Prime.
For those who aren’t aware, Aladdin is Blackrock’s portfolio management software that provides investment professionals a way to view and manage daily investments. Importantly, Aladdin also serves ~300 other large asset managers, representing another $22 trillion in AUM.
To understand the importance of this milestone for the crypto ecosystem, check out this Twitter thread by Max Branzburg, VP of Product at Coinbase.