Network Updates
AAVE COMMUNITY DIVISION: The Aave community is experiencing significant divisions recently regarding the governance of the protocol’s brand and associated assets, exacerbating an ongoing conflict between the decentralized autonomous organization (DAO) and Aave Labs, the centralized developer organization behind Aave’s technology. This dispute has gained considerable attention as it raises critical questions for many prominent crypto protocols about the balance between decentralized governance and the centralized teams that often handle execution. As these protocols grow and their brands gain value, the matter of who truly holds ownership over these assets—token holders or developers—becomes increasingly urgent. The issue surfaced following Aave’s integration with CoW Swap, a trade execution service, which resulted in fees going to Aave Labs instead of the DAO treasury. While Labs contended that the revenue was due to interface development efforts, detractors argued this highlighted a more profound concern: who truly governs the Aave brand, currently valued at over $33 billion in assets. This has sparked intense debate regarding control over Aave’s trademarks, domains, social media accounts, and other branding elements. Advocates for DAO control assert that such a shift would align governance with those who bear the financial risks, curtail unilateral control by a private entity, and ensure the Aave brand represents a protocol managed and funded by token holders rather than a sole developer. Conversely, those supporting Lab control contend that altering brand governance could hinder development, complicate partnerships, and obscure accountability in the operation and promotion of the protocol. Consequently, the proposal has polarized the community, with fierce disparities between visions for Aave’s future. — Margaux Nijkerk & Shaurya Malwa Read more.
ETHEREUM’S GLAMSTERDAM IN THE WORKS: Ethereum developers, buoyed by last month’s successful Fusaka upgrade which reduced costs for nodes, are energetically preparing for the next significant evolution of the blockchain. Enter “Glamsterdam.” This term combines two concurrent upgrades occurring on Ethereum’s fundamental layers. The execution layer, which manages transaction rules and smart contracts, will see the Amsterdam upgrade, while the consensus layer that coordinates validators and finalizes blocks will be upgraded through a process known as Gloas. Central to Glamsterdam is the enshrined Proposer-Builder Separation (ePBS), formally tracked as EIP-7732. This proposal aims to integrate a rule into Ethereum’s core protocol that distinguishes nodes responsible for building blocks from those proposing them, mitigating any single entity from controlling transaction inclusion or order. Currently, this separation largely hinges on off-chain services termed relays, which can introduce trust issues and centralization risks. With ePBS, block builders would assemble blocks and cryptographically secure their contents, while proposers would select the highest-paying block without insight into or manipulation of its content. The transactions would only be unveiled post-block finalization, minimizing the potential for manipulation and abuse concerning MEV, or maximal extractable value — the additional profit validators or builders can capture by reorganizing, inserting, or censoring transactions. — Margaux Nijkerk Read more.
BITCOIN AND QUANTUM COMPUTING DISCUSSION: Some Bitcoin developers have transitioned from debating whether quantum computing poses a risk to the network to informing observers about the timeline necessary to prepare in case it does. This shift was highlighted this week by veteran Bitcoin developer Jameson Lopp, who indicated that while quantum computers are not likely to jeopardize Bitcoin in the near future, any substantial defensive modifications could take longer than many expect. “No, quantum computers won’t break Bitcoin imminently,” Lopp posted. “We’ll continue to monitor their advancements. However, implementing thoughtful protocol adjustments (and an unprecedented migration of funds) could very well require 5 to 10 years.” This dialogue is crucial as Bitcoin’s value increasingly hinges on long-term confidence. With more institutional capital viewing bitcoin as a prolonged investment, even distant technical risks can sway allocation choices and influence market perceptions of uncertainty, as reported by CoinDesk on Saturday. — Shaurya Malwa Read more.
EIGENLAYER GOVERNANCE INITIATIVE: The foundation supporting the restaking protocol EigenLayer has submitted a governance proposal to introduce new incentives for the EIGEN token, concentrating on fostering productive network activities and generating fees. As outlined in a recent blog entry, a key component of this proposal involves a fee model designed to redirect revenue from Actively Validated Services (AVS) rewards and EigenCloud services back to EIGEN holders. AVSs are blockchain-based offerings using EigenLayer’s security, depending on staked tokens and operators to maintain their ethical and accurate operations. The team asserts that this modification will bolster long-term value accumulation for EIGEN token holders and enhance token economics to better reflect genuine utilization of EigenLayer’s network. “This framework aligns incentives throughout the ecosystem: Stakers and Operators backing active services earn greater rewards, AVSs receive necessary capital, and EIGEN benefits from enhanced tokenomics,” according to the blog entry. — Margaux Nijkerk Read more.
In Other Updates
- Upexi (UPXI), a crypto treasury firm listed on Nasdaq with a concentration on Solana, submitted a filing to raise up to $1 billion through a shelf registration with the U.S. Securities and Exchange Commission (SEC). This action provides the company the opportunity to generate capital via the sale of common stock, preferred shares, debt instruments, warrants, or other units in multiple offerings over time. Headquartered in Tampa, Florida, Upexi manages various consumer brands, including Cure Mushrooms medicinal products and Lucky Tail pet care. The firm also boasts the fourth-largest SOL treasury among public companies, holding over 2 million tokens valued at approximately $248 million. — Francesco Rodrigues Read more.
- The International Monetary Fund (IMF) lauded El Salvador’s strong economic growth in a recent statement. Notably, the update did not reiterate previous IMF recommendations suggesting that El Salvador should reconsider its strategy of accumulating bitcoin, which the country—under President Nayib Bukele—has continued since negotiating an IMF loan package months ago. Deviating from its routine of daily bitcoin acquisitions, El Salvador added over 1,000 BTC to its national treasury strategy during November amid market downturns. The government has accumulated nearly 7,500 BTC, valued at around $660 million at current rates. The IMF mentioned that discussions regarding the sale of the government’s crypto wallet Chivo are “well advanced.” “Negotiations concerning the Bitcoin initiative persist, focusing on boosting transparency, protecting public assets, and mitigating risks,” the agency noted. — Olivier Acuna Read more.
Regulatory & Policy
- Russia’s central bank has revealed a proposed framework to legalize and regulate cryptocurrency trading for both individuals and institutions, signaling a softening view on cryptocurrencies. Nonetheless, it continues to advise caution, highlighting the risks associated with crypto investments, including potential financial losses. “They are not issued or backed by any jurisdiction and are subject to heightened volatility and risk of sanctions,” stated the central bank’s press release. “Investors should be aware that they undertake the risk of possible loss of their funds when deciding to invest in crypto assets.” Additionally, the central bank has declared “digital currencies and stablecoins as monetary assets; they can be traded but cannot be employed for domestic transactions.” — Olivier Acuna Read more.
- The Council of the European Union, an EU entity responsible for amending legislation and ensuring member states adopt the bloc’s laws, has expressed support for the European Central Bank’s initiative to explore an official digital currency. Describing it as an evolution of currency and a tool for financial inclusion, the Council did assert that the ECB must impose limits on the total value that can be maintained in online accounts and digital wallets at any given time to “prevent the digital euro from being utilized as a store of value” to avoid disruptions to financial stability. “These holding limits are crucial not only for theoretical financial security but for stopping the digital euro from directly competing with bank deposits,” stated Edwin Mata, co-founder and CEO of the tokenization platform Bricken, to CoinDesk. “If unlimited amounts of digital euros could be held, deposits could rapidly shift from commercial banks to the ECB, especially in times of stress, potentially accelerating bank runs.” — Olivier Acuna Read more.
