Welcome to The Protocol, CoinDesk’s weekly summary of key developments in cryptocurrency technology. I’m Margaux Nijkerk, a reporter at CoinDesk.
In this edition:
- Ethereum Developers Gear Up for Fusaka, the Second Upgrade of 2025
- Anthropic Research Indicates AI Agents are Approaching Real DeFi Attack Potential
- Ethereum Developers Move Forward with ZK ‘Secret Santa’ System Deployment
- Bitnomial Set to Launch First CFTC-Regulated Spot Crypto Market
Network News
FUSAKA SET TO LAUNCH ON ETHEREUM: Ethereum developers are getting ready for the network’s second upgrade of 2025, scheduled to go live later today. Fusaka – a combination of Fulu and Osaka – includes two simultaneous upgrades on Ethereum’s consensus and execution layers. The upgrade aims to enable Ethereum to accommodate the high transaction throughput from layer-2 chains that rely on the blockchain as their foundation. Fusaka encompasses 12 code modifications, known as “Ethereum Improvement Proposals” (EIPs), aimed at making the layer-2 experience faster and more cost-effective. The most significant change, PeerDAS, permits validators to verify only portions of data rather than entire “blobs,” thus easing bandwidth requirements and reducing costs for both validators and layer-2 networks. Currently, layer 2s submit thousands of transactions to Ethereum through “blobs,” requiring validators to download all transaction data to confirm its accuracy, which creates bottlenecks. With this enhancement, validators will only need to verify a segment of a blob, accelerating the process and lowering transaction fees. — Margaux Nijkerk Read more.
ANTHROPIC STUDY ON DEFI AI AGENTS: AI agents are becoming sufficiently adept at identifying attack vectors in smart contracts, making them potentially exploitable by malicious actors, according to recent research from the Anthropic Fellows program. A study conducted by the ML Alignment & Theory Scholars Program (MATS) and Anthropic Fellows tested cutting-edge models against SCONE-bench, a dataset containing 405 compromised contracts. GPT-5, Claude Opus 4.5, and Sonnet 4.5 together generated $4.6 million in simulated exploits on contracts hacked post-knowledge cutoff, providing a lower bound on potential actual theft. The findings revealed that frontier models could not only detect bugs but also create complete exploit scripts, sequence transactions, and drain simulated liquidity in ways resembling real attacks on the Ethereum and BNB Chain networks. The research also assessed whether these models could identify vulnerabilities that hadn’t been exploited yet. GPT-5 and Sonnet 4.5 analyzed 2,849 newly deployed BNB Chain contracts with no previous compromise signs and discovered two zero-day vulnerabilities with a simulated profit of $3,694. One flaw was a missing view modifier in a public function that allowed the agent to inflate its token balance, while another permitted a caller to reroute fee withdrawals by using any beneficiary address. The agents created executable scripts to exploit these vulnerabilities for profit. Although the monetary values were modest, the discoveries highlight that autonomous exploitation is technically possible. — Sam Reynolds Read more.
ETHEREUM DEVELOPERS ADVANCE ZK PROTOCOL FOR PRIVACY: Ethereum developers are perfecting a zero-knowledge protocol aimed at enhancing privacy guarantees for on-chain interactions, starting with a “Secret Santa”-like matching system that could develop into a broader toolkit for private coordination. Solidity engineer Artem Chystiakov revived the research on Monday in an Ethereum community forum post, referencing work first shared in January on arXiv. The concept seeks to recreate the anonymous gift-exchange game on Ethereum, where participants are paired randomly without revealing the identities of senders and receivers. Accomplishing this on a transparent blockchain involves addressing several persistent challenges related to randomness, privacy, and Sybil-resistance. Chystiakov emphasized the core issues: “Everything on Ethereum is visible to everyone,” blockchains lack true randomness, and the system must prevent users from multiple registrations or self-assigning gifts. The suggested protocol employs zero-knowledge proofs to confirm sender-receiver relationships while keeping identities concealed, along with a transaction relayer to submit moves to prevent linking individual wallets to actions. In the proof-of-concept, participants register their Ethereum addresses in a smart contract and commit to a unique digital signature, blocking duplicate entries. Each participant then inputs a random number into a shared list via the relayer. Since the relayer broadcasts the transactions, no one can determine which address contributed which number. Recipients encrypt their delivery details using these shared numbers, ensuring only their matched counterpart can decrypt them. — Shaurya Malwa Read more.
BITNOMIAL LAUNCHES SPOT TRADING IN THE U.S.: Bitnomial, a derivatives exchange based in Chicago, is poised to introduce the first spot cryptocurrency trading platform regulated by the U.S. Commodity Futures Trading Commission (CFTC). The self-certified rules of the Chicago-based derivatives exchange were effective last week, allowing it to list both leveraged and non-leveraged spot crypto products. This approval enables customers to buy, sell, and finance digital assets directly on a federally regulated commodities exchange — a first in the U.S. market. Caroline Pham, the acting head of the CFTC, mentioned in November that discussions were in progress with regulated exchanges about the potential launch of spot crypto products. Bitnomial’s approval coincides with the CFTC’s intensified efforts to regulate retail-facing crypto markets under federal commodities oversight. Pham has contended that the agency possesses adequate authority to supervise spot crypto commodities. The CFTC and the Securities and Exchange Commission recently clarified that current legal frameworks do not prevent exchanges registered with either agency from listing certain crypto commodity products, including those with leverage, as long as they coordinate with agency personnel. This approval may pave the way for other exchanges with designated contract market (DCM) status, such as Coinbase and prediction market platforms like Kalshi and Polymarket. — Oliver Knight Read more.
In Other News
- Kalshi, a U.S.-based prediction market, has successfully closed its $1 billion financing round, enhancing its valuation to approximately $11 billion, according to a press release. The latest round was led by Paradigm, alongside participation from established venture capital firms like Sequoia Capital and CapitalG, Alphabet’s growth-equity arm. The financing news surfaced last month when TechCrunch revealed the $1 billion raise. Kalshi, which provides binary event contracts allowing users to speculate on outcomes of actual events like political races and legislation, surpassed rival Polymarket in Q3, accumulating $4.47 billion in trading volume compared to Polymarket’s total of $3.5 billion, based on TokenTerminal data. — Oliver Knight Read more.
- Antithesis, a startup from Northern Virginia, branding itself as the infrastructure for fail-proof software, raised a $105 million Series A led by Jane Street, underscoring the importance of stress-testing distributed systems for both blockchains and high-speed trading. The platform employs deterministic simulation testing, executing large-scale, production-like simulations to identify edge cases that could cause failures in live networks, Antithesis stated in a press release. In the event of a failure, Antithesis can replay the issue exactly, aiding engineers in isolating problems without the common “can’t reproduce” issue, a frequent pain point in crypto protocols where minor glitches can result in chain instability. — Will Canny Read more.
Regulatory and Policy
- The U.K. has officially recognized cryptocurrency as property following the recent enactment of a new law. The Property (Digital Assets etc) Act received Royal Assent, marking the final stage for a bill to become law after passing through Parliament. This act, approved by King Charles on Tuesday, aims to modernize property law to encompass digital assets. Previously, property was categorized into two types: tangible objects and actionable claims, such as debts. The new law introduces a third category for digital assets, including cryptocurrencies and non-fungible tokens (NFTs). Industry associations welcomed this legislation, viewing it as a vital step toward the legal acknowledgment of digital assets, thereby boosting confidence among users.— Jamie Crawley Read more.
- President Karol Nawrocki of Poland has vetoed a bill he deemed to impose excessively strict regulations on the cryptocurrency market. He rejected portions of the bill, citing concerns that they “pose a real threat to the freedom of Poles, their property, and the stability of the state,” as noted on his website. The Cryptoasset Market Act was Poland’s attempt to align with the European Union’s (EU) Markets in Crypto-Assets (MiCA) regulations, which establish a unified framework for overseeing the crypto sector. President Nawrocki expressed concern that the act could enable the government to disable crypto company websites “with a single click,” citing transparency issues and potential for abuse regarding domain blocking regulations. — Jamie Crawley Read more.
Calendar
- Dec. 11-13: Solana Breakpoint, Abu Dhabi
- Feb. 10-12, 2026: Consensus, Hong Kong
- Feb. 17-21, 2026: EthDenver, Denver
- Mar. 30-Apr. 2, 2026: EthCC, Cannes
- Apr. 15-16, 2026: Paris Blockchain Week, Paris
- May 5-7, 2026: Consensus, Miami
