February 13, 2025 | Read Online

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Vitalik joked that we should make communism great again. Fueled by poor price action, ETH people got really mad on Twitter. Meanwhile, Arbitrum is one step closer to realizing the bold decentralized vision of the rollup-centric roadmap.

BoLD's impact on Arbitrum decentralization:

Source: L2Beat

Arbitrum One's release of BoLD (Bounded Liquidity Delay) marks a major leap for the Stage 1 optimistic rollup. It will turn the state validation wedge green on L2Beat. The new dispute resolution mechanism ensures permissionless validation, providing several improvements over the status quo related to challenge speed, economic security and censorship resistance.

Parallel challenge resolution vs. sequential challenges
- Pre-BoLD: Traditional optimistic rollups process challenges sequentially — if an attacker keeps submitting disputes, they can extend withdrawal times indefinitely.
- Post-BoLD's: Disputes are resolved in parallel, meaning even in a worst-case attack, withdrawal delays never exceed ~12.8 days (two challenge periods).
Lower costs for defenders, higher costs for attackers
- Pre-BoLD: Attackers could engage validators in long, costly challenge battles.
- Post-BoLD's: Attackers costs rise higher relative to defenders. Failed attacks burn the attacker's bond, while honest validators get reimbursed. Plus, validators can trustlessly pool resources to defend the correct state — without needing to coordinate — and with lower verification costs.
Stronger censorship resistance
- Pre-BoLD: If the sequencer censors transactions, users must wait out the long inclusion window.
- Post-BoLD's: The censorship timeout mechanism dynamically reduces the forced inclusion window, speeding up censorship recovery.

The bottom line is by ensuring faster finality, lower costs for honest validators and stronger economic security, BoLD closes major attack vectors while furthering Arbitrum's permissionless security model. As such, the move gets one step closer to Ethereum's principles of openness and verifiability.

— Macauley Peterson

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Ethereum is not communism

When I interview Web3 founders, I like to ask one question: "Which thinkers in history inspire you?"

One name invariably comes up more than any other: Friedrich Hayek.

Aave's Stani Kulechov, Base's Jesse Powell and many more said the same.

Stani.eth @StaniKulechov

Reality: Ethereum is the most capitalistic network.

8:34 AM • Feb 13, 2025

944 Likes 85 Retweets

118 Replies

Polymarket founder Shayne Coplan even mandates Hayek's famous essay "The Use of Knowledge in Society" as compulsory reading for employees, according to Forbes.

I don't know what Vitalik would say. But given his close association with many George Mason scholars — like Tyler Cowen and Robin Hanson — it wouldn't be a stretch to consider him something of a Hayekian (George Mason is a university renowned for its Hayekian scholarship).

For the uninitiated, Hayek was a 1974 Nobel Laureate and a pioneer of the Austrian School of Economics, a school of thought closely associated with free market libertarianism and early Bitcoin thinking.

Hayek's key insight was that markets work best when individuals can freely act on their local knowledge.

For individuals to do so requires economic certainty provided by a rule of law, a free price system, robust property rights and a profit-loss calculus that is not distorted by state regulation.

When this "recipe" of institutions is in place, the outcome is market innovation.

These ideas are consistently applied in crypto. For example:

The idea of immutable smart contracts comes as close to having sacrosanct property rights in a rule of law. In the real world, laws are subject to constant rent-seeking pressures to change.
Capital markets are permissionless. Anyone can write a smart contract and issue assets without approval. In the real world, regulators give approval.
Anyone can launch an unsustainable liquidity mining campaign with their token, but the unsustainability inevitably shows up in falling prices in a free price system. In the real world, prices are distorted by regulations that benefit incumbents like tariffs.
Ethereum's open source culture enables the endless code-forking of protocols with incremental improvements and the composable nature of DeFi. This is closely related to Hayek's ideas around "spontaneous orders" (and how market competition acts as a knowledge "discovery procedure"). In the real world, intellectual property laws don't allow for this.

The institutional design of the Ethereum protocol (or any other blockchain for that matter) is the furthest thing from "communism," where market processes are controlled from the top-down and where people are outlawed from acting on individual information.

Even Ripple cannot unilaterally inflate the total token supply of XRP. That's the rule of law (immutable smart contracts) at work.

Ethereum critics complain that the "culture" of Ethereum is left-leaning. They point to the Ethereum Foundation or Gitcoin's initiatives on "public goods" funding.

But these public goods are crowdsourced by private funding. No taxpayers were fleeced.

Gitcoin's quadratic funding mechanism matches more central funds based on the amount of individual contributor funding.

That is a blatantly market-oriented idea. It's a fundraising process that works best when markets signal they want it — plus it's all onchain (property rights).

Contrary to popular belief, capitalism is not about unbridled greed. Neither is it against communal public goods. Both exist in all political systems.

Capitalism is a liberal archipelago. You're free to work on Wall Street, or go live in a socialist commune.

Therein lies the beauty of the crypto industry. No one cares what your political identity is. You can be a raging Milton Friedman acolyte or a diehard 19th century Trotskyist.

But no matter which political tribe you preach, everyone has to abide by the blockchain's rule of law.

— Donovan Choy

Tapping "the Savings Standard"

The Sky ecosystem recently adjusted its USDS Savings Rate (SSR) from 12.5% to 8.75%, effective Feb. 10. The SSR had been increased to 12.5% in December 2024.

The decision to lower the SSR was influenced by weakening market conditions affecting the protocol's main collateral assets. The Sky community recognized that maintaining a high savings rate was unsustainable under these circumstances, leading to the recent adjustment.

Timely adaptation to market dynamics is a natural challenge to a decentralized governance system, and prevailing market rates had been lower for several weeks before Sky governance was able to act.

For stablecoin maxis looking to put their USDS to work, there are still solid yield opportunities across multiple chains. Here's where you can currently park your USDS for the best returns:

Base: Euler Finance (~14%)
Ethereum: Yearn Finance (~12%)
Solana: Save Finance (~11%)
USDS is living up to its "Savings Standard" tagline, but you might need to bridge to the right chain first.

While Across Protocol is my go-to bridge for near-instant finality and low fees, it only supports DAI and not yet USDS — although the newer token now has a larger total supply. To move USDS from Ethereum to Base, use one of the official bridges.

Euler's 14% rate is a combination of USDS and EUL rewards, which may decline soon.

For Ethereum to Solana, use the Portal Bridge (powered by Wormhole). Transferring USDS from Ethereum earns additional rewards compared to swapping native Solana stablecoins.

Once there, yields on Kamino Lend are about 9%, while Save Finance has been topping 11% of late.

Wherever you prefer to hold USDS, double-digit yields are still available. Just stay sharp as to protocol-specific risks and keep an eye on shifting APYs — rates this good don't tend to last in a crab market.

— Macauley Peterson

Liquity @LiquityProtocol

The Liquity team was informed of a potential issue affecting Liquity V2 Stability Pools ("Earn"), and is currently investigating a potential impact.

The team is currently working on confirming this potential issue and solutions. The protocol continues to work as expected and to… x.com/i/web/status/1…

2:38 PM • Feb 12, 2025

260 Likes 70 Retweets

12 Replies

vitalik.eth @VitalikButerin

This is a solid demonstration of Railgun's privacy pools mechanism ( papers.ssrn.com/sol3/papers.cf… ) working in practice, allowing Railgun to avoid serving proceeds of crime without using any snooping / backdoors.

How it works:

* Anyone can deposit into Railgun.
* After you deposit,… x.com/i/web/status/1…

tw profile: Vladimir S. | Officer Vladimir S. | Officer's Notes @officer_cia

Eventually, @zkLend has suffered a $9.5M exploit on the Starknet network. Stolen funds were bridged to Ethereum and laundered via Railgun, but due to protocol policies, the funds were returned to the original address by Railgun! x.com/officer_cia/st…

11:09 AM • Feb 13, 2025

1.85K Likes 232 Retweets

392 Replies

Mustafa Al-Bassam @musalbas

Let's get it done. This proposal locks staking rewards for locked tokens on Celestia.

Previously, most PoS networks such as Solana/Sui/Aptos didn't lock investor staking rewards. This fixes that for Celestia, and other Cosmos SDK chains can also adopt this.

This CIP had many… x.com/i/web/status/1…

tw profile: Marko Polo Marko Polo @MarkoBaricevic_