April 30, 2025

Exploring the tech behind crypto

one block at a time

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Welcome to The Protocol, CoinDesk's weekly wrap-up of the most important stories in cryptocurrency tech development. I'm Margaux Nijkerk, the Ethereum protocol reporter on CoinDesk's Tech team.

In this issue:

Inside Movement's Token-Dump Scandal: Secret Contracts, Shadow Advisors and Hidden Middlemen
Ethereum Could Supercharge Transaction Speed to 2,000 TPS Thanks to Bold New Proposal
Bitcoin Debate on Looser Data Limits Brings to Mind the Divisive Ordinals Controversy
Coinbase's Base Network Achieves 'Stage 1' Status, Reducing Centralization Risk

Network News

MOVEMENT'S TOKEN DUMP SCANDAL: Movement, a buzzy crypto startup supported by Trump's World Liberty Financial, was rumored to be closing a $100M series B round. Instead, following a CoinDesk investigation, the network is now at the center of an insider-dealing scandal that has exposed a seedy corner of crypto deal-making. Movement Labs is investigating whether it was misled into signing a market-making agreement that granted an obscure middleman control over 66 million MOVE tokens, triggering a $38 million selloff after the token's debut. Internal contracts show Rentech, a firm with no digital footprint, appearing on both sides of the deal, once as a Web3Port subsidiary and once as an agent of Movement Foundation, raising questions about self-dealing. Foundation officials initially flagged the Rentech deal as "possibly the worst agreement" they had ever seen; experts warned it created incentives to pump MOVE's price before dumping tokens onto retail investors. The incident has exposed a rift within the Movement's top leadership: executives, legal counsel and advisors are all under scrutiny for their roles in facilitating the arrangement despite internal objections. — Sam Kessler Read more.

ETH PROPOSAL AIMS TO RAISE GAS LIMIT CEILING: Ethereum Foundation researcher Dankrad Feist filed EIP-9698, a plan to let the blockchain's gas limit grow on autopilot over the next four years. The EIP introduces a deterministic "exponential" schedule baked into client defaults, which nudges the gas limit upward by a tiny preset amount every epoch. These predictable gas limit increases allow current validators to keep their machines up to speed, cutting the need for sudden upgrades. If approved and implemented, the gas limit ceiling would climb from 36 million units to roughly 3.6 billion, allowing an estimated 6,000 simple transfers per block and over 2,000 transactions per second (TPS). Ethereum's current TPS is around 15-20 TPS. — Shaurya Malwa Read more.

BITCOIN BLOCKCHAIN DATA DEBATES REIGNITES AS DEVELOPERS WEIGH DATA LIMITS: Bitcoin developers are again at odds over how the world's oldest and largest blockchain should handle storing information on-chain, with a proposal to relax long-standing limits on the size of data held sparking fierce debate reminiscent of 2023's battles over Ordinals. The blockchain's OP_RETURN feature allows people to attach a small piece of extra data to a transaction. It is often used for things like notes, timestamps or digital records. The proposed change would remove the 80-byte cap on such data, a limit originally designed to discourage spam and preserve the blockchain's financial integrity. Supporters argue the current limit is pointless because users are already bypassing it by using Taproot transactions, to hide data inside parts of the transaction meant for cryptographic signatures. Bitcoin Core developer Luke Dashjr called the proposal "utter insanity" and warned that loosening data restrictions would accelerate what he sees as the degradation of Bitcoin's financial-first purpose. — Sam Reynolds Read more.

BASE REACHES STAGE 1 ROLLUP STATUS: Base, the popular layer-2 network from cryptocurrency exchange Coinbase (COIN), is now a "stage 1" rollup, said the company, setting up its path towards full decentralization. The transition to a "stage 1" rollup comes as other layer-2s have also reached that milestone, making these networks less reliant on centralized entities. The move means that Base will now have a security council, a network of ten "independent entities, which we chose from all around the globe," said Tom Vieira, the head of product at Base, in an interview with CoinDesk. — Margaux Nijkerk Read more.

In Other News

BlackRock is preparing to bring blockchain to the back office of one of its largest funds, filing to offer a digital share class of its $150 billion Treasury Trust money market fund through BNY Mellon. The new "DLT Shares," short for distributed ledger technology, won't hold crypto. BNY Mellon, the fund's exclusive distributor, intends to use blockchain to mirror share ownership records, an incremental step that could pave the way for broader adoption of tokenized cash, digital assets, or blockchain-based settlement infrastructure in traditional finance.— Sam Reynolds Read more.
Libre, a tokenization firm that works closely with the likes of hedge fund Brevan Howard, investment management firm Hamilton Lane and Nomura's digital assets unit Laser Digital, plans to tokenize $500 million worth of Telegram debt as the blockchain-based Telegram Bond Fund (TBF) on the TON network that's linked to the messaging platform. TBF will offer accredited investors exposure to some of the around $2.35 billion of outstanding bonds issued by Telegram, providing institutional-grade yield products that will also be available as collateral for on-chain borrowing and product development on TON, Libre said. — Ian Allison Read more.

Regulatory and Policy

Coinbase (COIN) filed a brief in the U.S. Supreme Court case involving an Internal Revenue Service request for data on hundreds of thousands of its customers back in 2016, arguing the court should "protect Americans' privacy interests in digital information stored by third-party service providers." — Jesse Hamilton Read more.
Arizona has broken new ground in what's been a race among U.S. states to see which may become first to set up a crypto reserve as a formal part of their fiscal strategy, getting legislation approved with mostly Republican lawmakers in support. It's unclear whether Governor Katie Hobbs, a Democrat, will look favorably on the legislation that was rejected by most Democratic lawmakers. She has vetoed a long list of bills in this session, and if she vetoes this, too, the matter is closed for the year. — Jesse Hamilton Read more.