Welcome to The Protocol, your weekly cryptocurrency tech development update from CoinDesk. This week, we're covering key stories in the space.
Our top stories include: Network updates, where Ethereum's validator exit queue has reached its longest wait time on record, potentially signaling that stakers are looking to withdraw funds following a significant ether price rally. Nearly 625,000 ETH, worth around $2.3 billion, is currently waiting to exit the network, resulting in over 10-day withdrawal delays.
This congestion stems from Ethereum's proof-of-stake model, which limits the rate at which validators can join or leave the network. The exodus is likely driven by profit-taking, as those who staked ETH at lower prices are now cashing out after the price has increased by 160%.
"When prices rise, people tend to unstake and sell to lock in profits," explained Andy Cronk, co-founder of staking service provider Figment. "We've seen this pattern across many cycles, both at the retail and institutional levels." Unstaking spikes can also occur when large institutions change custodians or wallet technology. The Jito Foundation has launched the Block Assembly Marketplace (BAM), a system designed to improve block building and transaction sequencing on the Solana blockchain.
BAM aims to make transaction sequencing transparent and verifiable, enabling programmable innovation and unlocking new revenue opportunities for developers, while reducing the negative effects of Maximal Extractable Value (MEV). The system consists of three key components: BAM Nodes, which privately organize transactions using secure hardware, BAM Validators, which run the updated Jito-Solana software client and execute ordered transactions on-chain, and Plugins, which offer a programmable interface for developers, traders, and applications to interact with the scheduler. BAM is set to launch on mainnet in the coming weeks, with an initial set of validators led by key Solana ecosystem participants. Ethereum validators are also considering increasing the gas limit to 45 million units, with 49% of staked ETH currently in favor of the change.
The gas limit determines the maximum amount of computational work that can be performed in a block, and increasing it could allow for more transactions to be processed. However, it also increases the risk of network congestion and higher fees. Finally, Dogecoin is exploring the introduction of zero-knowledge proofs (ZKPs), which would enable the network to verify cryptographic proofs natively.
This could allow for more advanced, off-chain applications, such as rollups and smart contracts, while maintaining the main chain's speed and simplicity.