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ETH Testnet merge

The biggest news out of the Ethereum space in March 2022 was the successful “merge event” on the Kiln testnet. As background, the Merge refers to Ethereum’s transition to a fully Proof-of-Stake protocol that will reduce the energy consumption of the network by over 99%. It’s hoped that Kiln will be the last merge testnet before the actual upgrade. This testnet simulation acts as a “trial run” for the transition from Proof-of-Work to Proof-of-Stake for the Ethereum mainnet. While the overall transition was successful, it wasn’t perfect. According to developers, the Prysm client, the majority client in Ethereum, proposed invalid blocks during the change and the Erigon client got stuck due to an incorrect hash calculation. These issues illustrate there’s more work to be done before the specs can be frozen and an actual Merge date is finalized.

The success of the Kiln merge has led to an increase in staked ETH, especially in Lido, Ethereum’s leading liquid staking solution. The total amount of ETH sent to the Ethereum staking contract accelerated past 10 million on March 8th and now sits at ~11.1 million ETH. Depositors are staking their ETH as technical risk gets reduced and in preparation for the ~8-12% yield staked ETH is calculated to return post-merge thanks to issuance, transactions fees, and MEV.

And despite a successful "shadow merge" just days ago, it seems the network is still not quite ready to make the shift in June. 

NFTs

For the last couple months, NFTs seemed impervious to the slowing market. However, over the course of March, the NFT market has shown signs of cooling off after a huge year in 2021. Daily sales volume on OpenSea has fallen to less than $100 million per day in March. Daily sales followed a similar pattern.

Although sales slumped, NFTs continued to grab headlines in March when Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) collection, bought the intellectual property rights to CryptoPunks and Meebits, two other leading NFT projects. With the purchase, Yuga intends to grant commercial rights to holders of Punks and Meebits. Prior to this, Larva Labs fully controlled the intellectual property of CryptoPunks and Meebits and had restrictions on what the NFT holders could do. 

Quick bites

• The Ronin Network bridge, which bridges the popular P2E Axie Infinity game to Ethereum, was exploited for 173,600 ETH and 25.5 million USDC due to poor multi-sig wallet security from the Sky Mavis team. The Ronin bridge was secured by a 5-of-9 multi-sig in which Sky Mavis controlled four. Rather than the attacker needing to compromise five different validator keys, they simply needed to compromise the Sky Mavis team and one other AxieDAO node. The Ronin bridge and Katana Dex have been halted by the Sky Mavis team. 
• Avalanche announced a $280 million subnet incentive program as well as a $100 million creator fund focused on web3.
• Crypto.com will be an official sponsor of 2022 FIFA World Cup
• El Salvador delayed its $1 billion BTC bond
• Decentralized lending protocol Compound discloses details surrounding a critical vulnerability previously patched by developers.
• A Cosmos Ethereum Virtual Machine (EVM) compatible-hub named Evmos was forced to roll back its launch due to technical problems with the initial launch. Evmos is designed to enable developers to easily port over Ethereum dApps and implementations into the Cosmos ecosystem. The new launch is expected in mid-April.
• Check out this fun visual for Bitcoin and Ethereum transactions making their way into blocks in real time.