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This Week In DeFi – February 9

This Week In DeFi – February 9

Alex Miguel
February 09, 2024

Happy Friday, DeFi readers!

This week…

First ERC-404 Token Spikes to $260M Market Cap
New SEC definition of “dealer” may rope in DeFi
Wormhole announces airdrop & tokenomics plan
Ethereum’s Dencun upgrade scheduled for March 13

First ERC-404 Token Spikes to $260M Market Cap

A novel Ethereum token standard, ERC-404, has been introduced on the network, with the first token using the standard surging to a $260 million market cap.

ERC-404 merges the characteristics of ERC-20 fungible tokens and ERC-721 NFTs, aiming to address the challenges of liquidity and shared ownership in the NFT market.

Pandora was launched just a week ago on February 2, available for trading both on Uniswap and NFT marketplaces such as Blur. The token includes built-in fractionalization, a rarity component for NFTs and mechanisms for automatic NFT minting or burning upon token transactions.

ERC404 - token standard not found.
This new "standard" has opened up a Pandora's box on crypto twitter over the last couple of days.
Is it an NFT, a fungible token, or both?
Here's a simple explanation of what ERC404 tokens really are 🧵:
— cygaar (@0xCygaar)
9:47 PM • Feb 8, 2024

New SEC definition of “dealer” may rope in DeFi

The U.S. Securities and Exchange Commission (SEC) has expanded the definition of a dealer, a move that may require DeFi platforms or services as dealers.

This expansion is part of a broader effort to bring more financial operations, including those dealing with crypto securities, under its regulatory purview, despite objections from the crypto and DeFi communities regarding the feasibility and implications of such regulations.

Critics including SEC Commissioners Mark Uyeda and Hester Peirce, argue that this rule creates regulatory confusion and is impractical for the DeFi sector, with some calling the rule "misguided and unworkable" and hostile towards the industry.

1/ The SEC took a shot at DeFi yesterday by finalizing its proposed “dealer” rule, which explicitly targets DEX LPs with at least $50m in assets.
It's far from the end of DeFi, but it's a good time to step back and discuss where we stand in "Crypto v. SEC" and what's up next 🧵
— Jake Chervinsky (@jchervinsky)
2:47 PM • Feb 7, 2024

Wormhole announces airdrop & tokenomics plan

Cross-chain protocol Wormhole has announced an airdrop for its native “W” token, as well as a plan to lock 82% of the tokens to be released over four years – aiming for a decentralized governance model.

The W token will have a total supply of 10 billion, with an initial circulating supply of 1.8 billion, allocated across various groups including guardian nodes, the community, ecosystem partners, core contributors, strategic participants, and the foundation treasury.

The move comes after Wormhole secured a $225 million funding round, valuing the company at $2.5 billion despite previously suffering one of the largest hacks in DeFi history in 2022.

WORMHOLE ANNOUNCES $W AIRDROP
Tokenomics are now official
• 17.00% for the community
• 11.00% from these 17.00% distributed through an airdrop at TGE
$W $W
— Mingo Airdrop (@MingoAirdrop)
4:20 PM • Feb 7, 2024

Ethereum’s Dencun upgrade scheduled for March 13

Following extensive testing across various testnets, the Ethereum network is set for the Dencun upgrade on March 13, at slot number 8626176.

Dencun will implement “proto-danksharding” – an important scalability upgrade – through EIP-4844. This will also introduce “blob transactions” – transactions that include large chunks of data (blobs) that are not immediately executed, but made available for use by layer-2 platforms.

The estimated time for the upgrade is around 8:55 am American Eastern Time.

Going to clear up some confusion:
The word 'Dencun' is an amalgamation of the words 'Cancun' and 'Deneb'
Cancun is the name of the execution layer part of the upgrade
Deneb is the name of the consensus layer part of the upgrade
Yes we like to confuse people in Ethereum
— sassal.eth/acc 🦇🔊 (@sassal0x)
12:34 AM • Feb 9, 2024

Dencun is coming

Dancun will be a significant upgrade for Ethereum, involving proto-danksharding – a precursor to the full implementation of danksharding. It's part of Ethereum's ongoing efforts to improve scalability and reduce gas fees through more efficient data handling and transaction processing.

Here's a breakdown of its key aspects:

1. Scalability Improvement: Proto-danksharding aims to increase the Ethereum network's capacity to handle a larger volume of transactions. By doing so, it addresses one of the main challenges faced by Ethereum – its limited throughput, which can lead to network congestion and high transaction fees during peak times.

2. Data Sharding: The core idea behind proto-danksharding (and danksharding) involves sharding the blockchain's data. Sharding is a database partitioning technique that splits the network's data into smaller, more manageable pieces (shards), which can be processed in parallel. This parallel processing capability significantly increases the network's throughput.

3. Blob Transactions: One of the key features introduced with proto-danksharding is the concept of "blob transactions." These are transactions that include large chunks of data (blobs) that are not immediately executed but are made available for use by layer 2 scaling solutions. Blob transactions aim to improve the efficiency of data storage on the Ethereum network, enabling it to support more complex applications and use cases without compromising on speed or increasing costs.

4. EIP-4844: Proto-danksharding is closely associated with Ethereum Improvement Proposal (EIP) 4844, which outlines the technical specifications for implementing blob transactions. EIP-4844 proposes a way to include these blobs in Ethereum blocks in a way that optimizes data availability and security while maintaining the network's decentralized nature.

5. Foundation for Full Danksharding: Proto-danksharding serves as an intermediary step towards the full implementation of danksharding. The full danksharding upgrade is expected to introduce even more significant improvements to Ethereum's scalability by fully implementing shard chains that can process transactions and smart contracts in parallel.

By laying the groundwork for full danksharding, Dencun represents a crucial step in Ethereum's evolution towards becoming a more efficient, scalable, and user-friendly platform.