Change, it seems, is inevitable. And so is compromise.

US senate reject crypto amendments to Infrastructure Bill

The US Senate has rejected a bipartisan compromise on crypto definitions and taxation to the $1 Trillion Infrastructure Bill. In the current language, the bill widens the definition of who a crypto asset ‘broker’ is, which means; miners, software engineers, hardware manufacturers, node operators, and validators are required to have the same level of oversight and regulatory reporting as traditional brokers.

There was a feverish attempt to change the definition of broker to exempt non-brokers from the legislation by Senators Ron Wyden (D), Lummis, and Toomey (R). Another set of senators got White House backing to introduce an amendment that would only exempt proof-of-work and proof-of-stake validators, but ultimately they supported the Wyden, Lummis, and Toomey amendments.

However, by the time there was an accepted revision, the amendment required unilateral agreement, meaning a single objection would revert the bill back to its first proposal, which is ultimately what happened.

In something out of a Netflix political drama, after weeks of debate and coming so close to the finish line, in the final moments, Senator Richard Shelby (R) attempted to attach his own £50 billion increase in military spending to the amendment which was rejected by Bernie Sanders (D), and in doing so Shelby objected to the entire amendment.

Quite the rollercoaster and you can imagine the sense of disappointment for those that had worked to get a meaningful change to the bill, arguing that such an over-zealous approach will push the industry away from the US and ultimately reduce tax revenue, only for a lone statesman was able to stop it in its tracks. It would’ve made for a great season finale.

One of the reasons why it came so close to the wire was the ability for the crypto industry to galvanize and lobby groups were able to put pressure on senators and fight the corner for the industry. Some in Washington are reported to have been surprised by the action and were not expecting much if any, resistance. Moreover, the passionate crypto holders were making calls and tweeting their dissatisfaction to their senators in an attempt to sway their vote on the amendment.

There have already been a few within the industry vocalizing their views and displeasure with the new reporting standards and will be looking to either move operations abroad fully or at the very least will not be hiring from the US.

Ethereum London hard-fork live with 5 Ethereum Improvement Proposals attached

The latest hard fork upgrade dubbed ‘London’ went live last week (05 August 2021) at Block 12,965,000.

The fork includes EIP 1559, 3554, 3529, 3198, and 3541. All are aimed at improving the network across a wide range of metrics from usability, value proposition, and stability. It is however a backward-incompatible fork, so there is a risk that there will be another chain split in the future.

EIP 1559

  • Aims to make gas prices more predictable and stable.
  • Replaces how gas prices are calculated from an auction-style to an algorithmically set gas price.
  • Introduces a burn rate to Ethereum base fees to improve stability.
  • Introduces greater block size variance, so blocks can expand up to twice the current maximum limit during times of network congestion.
  • Miner transaction fees have been reduced, meaning there will be more reliance on block rewards and ‘maximal extractable value’ (MEV) for rewards.
  • This previously led to front-running on trades across decentralized exchanges and resulted in extortionate gas fees as traders attempted to put such a large fee on that miner’s accepted it before bots were able to front-run the trade.

Let’s hope they know what they’re doing!

EIP 3554

  • Freezes the block reward by delaying the ‘difficulty bomb’, known as the ‘Ice Age’.
  • Lays the groundwork for the move from Proof-of-Work to Proof-of-Stake model.
  • Intended to disincentivize miners once the switch to Ethereum 2.0 and PoS is complete.
  • This is the fourth time the difficulty bomb has been delayed.
  • The new date for the start of the difficulty bomb is the 1st of December, suggesting a merge with Ethereum 2.0 may come at the end of the year.
  • Likely to be delayed again in further preparation to move to PoS

EIP 3529

  • Reduces gas refunds for developers reducing/deleting unused smart contracts and addresses
  • The system got gamed by various ‘gas coins’ which took up space during periods of low gas fees and ‘sold’ them by deleting the contracts during times of high gas fees.
  • These tokens will become obsolete in EIP 3529.

EIP 3198

  • Developer usability upgrade
  • Makes it easier for developers to call, and use any block’s base fee for decentralized application estimations

EIP 3541

  • Groundwork from future improvements for the Ethereum Virtual Machine
  • Removes the ability to start contracts with 0xEF or Executable Format.
  • No effect at the moment but will eventually restrict the EVM from consuming specific data types

Cross-chain DeFi platform Poly Network hacked for at least $611million

Poly Network takes the top spot on the Rekt Leaderboard with the biggest loss to date due to a hack as a combined $611 million is siphoned from three networks.

In a tweet, the Poly Network announces an attack on Binance Chain, Ethereum, and Polygon. Asking miners and exchange operators to black-list the wallets the finds were sent to. So, decentralized gains, appeal to centralize with losses? Sounds like the UK railways, privatized gains, socialized losses.

Poly Network is a protocol for swapping tokens across networks including Bitcoin, Ethereum, and Ontology. Stolen assets were $273 million of Ethereum tokens, $253 million tokens on the Binance Smart Chain, and $85 million of USDC.

The cause of the hack was down to a cryptography issue — which is not the norm for DeFi hacks. The cause is still being investigated and there have been several second-order effects as other pools making use of the Poly Network suspended trading once the hack was realized.

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