• Back in 2023, the buzz was all about basic AI integrations in crypto - think chatbots for trading tips or simple NFT generators.

• By 2024, things heated up as “crypto agents” exploded in popularity. These were fun, token-backed bots that entertained users on platforms like X, handling tasks from meme creation to basic predictions. They captured the crypto community's imagination, blending hype with early utility.

• Fast-forward to 2025, and the narrative has matured. Speculation has given way to substance: decentralized AI moved from whitepapers to real products, Darwinian AI—where agents compete and evolve—drew in top talent to accelerate progress, and DeFAI emerged as a powerhouse, enhancing crypto’s promise of borderless finance.

We’re seeing agents handle complex trades, fact-check in real-time, and even coordinate physical tasks.

But with growth comes fragmentation, as teams pursue different strategies. Some focus on abstraction layers, simplifying how users interact with AI without diving into the tech weeds. Others prioritize automation flows or co-pilots—tools that assist humans in tasks like coding or trading. Then there are the deep strategists, using agents for sophisticated decision-making in markets or games.

We can’t predict which path will dominate human behavior or reshape economies just yet.

But here’s the key insight: amid this diversity, the coordination layer stands out as the most valuable.

Why?

Agents don’t thrive in isolation. They need seamless ways to discover each other, negotiate, transact, and verify work. Without strong coordination, even the smartest agents hit walls—trust issues, clunky workflows, unreliable payments.

Why Virtuals Protocol Stands Apart

Instead of niching into one layer, Virtuals is constructing a complete, interconnected ecosystem. Every component— from commerce protocols to tokenization tools—serves a purposeful role in fostering an autonomous agent economy.

It’s not about isolated features; it’s about creating a self-sustaining network where agents can operate independently, generate revenue, and scale.

Think of it like building a city: roads (coordination), markets (commerce), funding (tokenization), and even bridges to the physical world (robotics) - laying the groundwork for aGDP, a measure of economic output driven by agents.

And the results?

• ACP has surpassed $400 million in aGDP generated from AI agent activities.

• Powers over 17,000 agents serving 164,000 total users.

• Cumulative ecosystem market cap exceeds $600 million

• Dominance on Base with tokens capture 9.89% of trading volume across all Base tokens, 9.45% of trading volume on the Base chain (excluding stables and majors).

• Brought 53,554 new unique users to the Base ecosystem.

• Represents 30% of x402 volumes and 22% of its all-time unique users.

• Holds 26% of the market cap among all AI projects in crypto (with most liquidity on Base).

• Attracted 120+ doxxed founding teams (plus many more undoxxed) to Base.

Defining Agentic GDP: The Next Economic Shift

So, what exactly is aGDP?

Virtuals defines it as the total economic value generated by autonomous AI agents through commerce, services, and production on-chain without relying heavily on human input. It’s like traditional GDP, but powered by agents compressing coordination delays that plague human economies.

Why does aGDP matter?

In today’s task market, bottlenecks aren’t about raw capacity; they’re about waiting—approvals, reviews, handoffs.

Agents play important roles in slashing these timelines, turning months into minutes.

As agents specialize and collaborate, they unlock a “next shift” in productivity: scalable, 24/7 execution across digital and physical realms and redefine labor markets, creating a trillion-dollar opportunity where agents co-produce value.

The Agentic Stack That Enables aGDP

Agentic GDP does not emerge spontaneously. It requires a minimum viable economic stack. Virtual defines this through four core components, each solving a specific coordination failure.

• ACP enables agent-to-agent commerce. It provides registries for discovery, smart-contract escrows for trust, and automated settlement for payments. Agents can negotiate tasks, delegate work, verify outcomes, and compose into larger workflows without intermediaries.

• Butler enables human-to-agent collaboration, allowing humans to define goals and intervene at high-risk checkpoints while delegating execution to agents. The current Butler interface is directly on X.

• Next, agents need capital to grow as independent actors. Unicorn mechanism enables on-chain tokenization of AI agents and agent-based businesses, pairing them with liquidity and allowing transparent, performance-based capital formation. This makes agents become investable economic units rather than disposable tools.

• And finally, G.A.M.E - it’s a tool that provides the decision and execution layer. It enables agents to perceive environments, plan hierarchically, manage on-chain wallets, interact across modalities, and learn from long-term feedback

The Rise of Online Agents: From Luna to Swarms of Specialized Powerhouses

It all kicked off with Luna—the pioneering AI-generated content agent that turned simple prompts into viral, monetizable attention. As the first to demonstrate autonomous production and on-chain revenue, Luna paved the way for specialization across entertainment, trading, and research.

Since then, Virtuals has exploded with standout agents dominating sectors from different builders:

• AIXBT: The leading crypto market intelligence agent—now one of the top KOLs in 2025—delivering narrative detection, alpha calls, and strategic insights with massive token holder value.

• ArAIstotle: Multimodal fact-checker achieving ~92% accuracy (3x fewer hallucinations than competitors), built on Facticity AI, positioning itself as the “truth layer” for posts, podcasts, and videos.

• Ethy: On-chain trading execution agent, optimized for reliable swaps and the first to hit major aGDP milestones.

• VaderAI: Autonomous trader managing AI agent portfolios, acting as a decentralized fund for users. (now pivoting to robotic data engine)

• Cookie: Entertainment and companionship bot offering games, quizzes, and personalized chats for fun, sticky interactions.

• Others gaining traction: Wach (verifications, 3M+ completed), BaseVol (high-yield DeFi vaults), Aixbet (prediction markets), Burnie (content retention marketplaces).

Bridging to the Physical: The Next Frontier in Agent Autonomy

If you’ve been following robotics lately, you already know the hardware race is on fire. Chinese and US giants are pouring billions into machines that can walk, grasp, and navigate real environments.

Warehouses, factories, and even homes are starting to see these robots deployed for practical tasks—picking orders, assembling parts, or handling repetitive labor.

The hardware is arriving fast.

What’s been missing?

A unified, trustless way for these robots to coordinate at scale, discover work, get paid, and collaborate across owners, manufacturers, and locations without centralized middlemen.

That’s the leap Virtuals team is making: taking these heavily invested, real-world robots and bringing their operations on-chain.

Let’s consider precision agriculture:

A fleet of robots from different vendors coordinates via blockchain.

• One pulls real-time soil and weather data via an on-chain oracle agent.

• Another plans optimal planting paths.

• A third handles physical seeding.

⇒ Payments flow directly based on verified completion, with reputation scores updating across the network.

By extending ACP to physical machines, those are 3 key partnerships that they made to fuel the robotics wave in 2026:

• Partnering with OpenMind AGI - the team building open-source OM1 robot OS and FABRIC decentralized control layer - to extend ACP directly to a physical robot.

• Building the strategic alliance with xMaquina - a DAO investing in humanoids like Figure AI and Agility Robotics - to launch a joint community-first $DEUS token to provide tokenized access to private robotic markets.

• And the collaboration with BitRobot Network building Seesaw.io - a crowdsourced verified egocentric task platform to accelerate advances in manipulation and navigation - turning Virtuals’ digital agents into capable physical operators.

What we are we expecting in 2026 with this wave?

With the foundational pieces now in place, we expect Virtuals to emerge as the decentralized coordination system that lets robots in different usecases to discover, hire, and outsource work to each other globally.

• Global Task Outsourcing: Robots in high-cost regions will routinely delegate repetitive work to lower-wage teleop fleets overseas, slashing costs while streaming training data back on-chain.

• Cross-Manufacturer Swarms: Mixed fleets from Figure, Unitree, Agility, and others will bid and collaborate on jobs via ACP.

• Dynamic Specialization: High-end robots handle planning and oversight, outsourcing execution to cheaper hardware for maximum efficiency.

• Open Reputation Markets: Robots build on-chain track records, creating competitive, liquid markets for physical labor worldwide.

Closing - where things are heading

As Virtuals matures, we’re on the brink of a seamless fusion where virtual agents start coordinating directly with physical robots.

Imagine a virtual orchestration agent spotting a supply chain opportunity and instantly delegating to a robotic fleet: one pulls on-chain data for optimization, another plans paths, and a third executes seeding or packing—all autonomously via the decentralized control layers baked into Virtuals’ stack.

This coordination happens trustlessly through existing infrastructure like ACP, which extends to physical machines for discovery, negotiation, and payment. Virtual agents act as the brains, outsourcing execution to robot “bodies” that can be rented on-demand, slashing costs via global arbitrage while capturing real-time data to refine models.

By collapsing digital-physical divides, agents unlock productivity in trillion-dollar sectors and turn isolated tasks into composable swarms that generate compounding aGDP value.

Written by Cris Nguyen

As stated in the announcement article by Paradigm https://www.paradigm.xyz/2025/09/tempo-payments-first-blockchain

Stablecoins are quickly moving from the edges of crypto into the mainstream. As that happens, it’s becoming increasingly clear that most of today’s blockchain infrastructure isn’t well-suited for real-world payments.

Tempo exists because Stripe and Paradigm reached the same conclusion: payments are a fundamentally different problem than speculation, and they need different infrastructure.

Much of the existing crypto stack—by design or by accident—optimizes for trading. That’s a valuable use case, but it comes with tradeoffs: volatile fees, unpredictable performance, and infrastructure that works well for speculation but poorly for everyday financial activity.

Payments have very different requirements. They need to be fast, cheap, reliable, and easy to integrate into existing systems. Tempo exists because we believe stablecoins deserve infrastructure that is built for those needs from the ground up.

What is Tempo?

Tempo is a payments-first blockchain, purpose-built for stablecoins and real-world financial flows. It draws directly from Stripe’s experience operating global payments infrastructure at massive scale, combined with Paradigm’s work building and researching crypto protocols.

The goal is simple: create a chain that actually works for payments—not as a side effect, but as its primary function. Their involvement ensures that Tempo is shaped by real operational constraints, regulatory requirements, and user needs—not just theory.

Tempo is designed to support a wide range of real-world use cases, including:

These are areas where stablecoins already show enormous promise—but where existing infrastructure often falls short.

Key Findings: Performance, Predictability, and Partnership Concentration

Analysis of Tempo’s design specifications and early ecosystem development reveals a highly focused and institutionally validated approach to market entry.

Tempo is engineered for elite performance, aiming for enterprise-grade throughput that directly rivals existing centralized payment networks. The targeted throughput exceeds 100,000 transactions per second (TPS), coupled with a commitment to deterministic finality in approximately 0.6 seconds. This sub-second, guaranteed settlement certainty is critical for integrating with existing financial systems that require immediate confirmation of funds transfer.

The platform achieves economic stability and predictability through several core protocol features. The implementation of dedicated payment lanes guarantees blockspace for payment transactions, insulating them from network spikes and ensuring low, stable transaction fees, targeting an efficient cost of one-tenth of a cent ($0.001) per transaction.

Furthermore, users pay fees directly in USD stablecoins, an approach known as stablecoin-native gas, which eliminates enterprise exposure to the price volatility of a separate, speculative native token.

Protocol Specification

The Tempo protocol is a blockchain specifically purpose-built for global payments, making deliberate technical choices optimized for scale rather than functioning as a general-purpose platform.

The Tempo protocol is designed to address the limitations of standard blockchain tokens like ERC-20, particularly in the context of global payments.

Consensus Mechanism: High-Speed Byzantine Fault Tolerance (BFT)

To achieve its speed and finality guarantees, Tempo employs a high-speed Byzantine Fault Tolerance (BFT) consensus mechanism for secure and rapid block creation. BFT protocols are typically favored in environments that require immediate finality and high transaction throughput, which are common characteristics of permissioned or enterprise-focused blockchains.

The implementation of BFT, particularly when coupled with an initially permissioned validator set, confirms Tempo’s deliberate prioritization of institutional requirements—namely speed, compliance control, and guaranteed finality—over the immediate pursuit of maximal retail decentralization. This calculated structural choice provides the operational assurance equivalent to a Real-Time Gross Settlement (RTGS) system, which is a necessary prerequisite for integrating high-value traditional banking assets like tokenized deposits.

The table below summarizes Tempo’s target performance against established payment systems:

Structured Memo Field

Unlike standard ERC-20 transfers, which only show the transfer address and amount, Tempo allows structured details to be attached directly to the payment. These details can include items like order IDs, invoice references, or short descriptive notes, mirroring the globally adopted ISO 20022 format used by banks.

This functionality offers significant benefits:

• For Merchants: It enables automatic reconciliation of payments.

• For Customers: It provides clear receipts displayed within their crypto wallets.

Essentially, Tempo transforms a typical crypto transfer into a proper, comprehensive payment message.

Ecosystem Partners

Design partners are companies that help shape the system before it exists at scale. They bring real requirements, constraints, and feedback into the protocol itself. This approach is slower and more demanding, but it produces infrastructure that works in practice, not just in theory.

Tempo’s design partners span AI, commerce, fintech, and traditional financial services, including Anthropic, Coupang, Deutsche Bank, DoorDash, Lead Bank, Mercury, Nubank, OpenAI, Revolut, Shopify, Standard Chartered, Visa, and others.

Each of these organizations engages with payments in a different way:

• Banks care about settlement finality, compliance, and liquidity management.

• Fintechs care about cost predictability, integration, and scale.

• Commerce platforms care about reliability and user experience.

• AI companies care about microtransactions, automation, and machine-driven payments.

By involving all of them early, Tempo is being shaped to support the full spectrum of real-world payment flows—not just one narrow use case.

Tempo represents a necessary evolution in blockchain technology, moving the industry beyond generalized, speculative protocols toward specialized, highly reliable financial infrastructure. The project’s genesis—jointly incubated by Stripe, which requires massive scale and compliance for its commerce flows, and Paradigm, which provides cutting-edge Web3 technical expertise—establishes an exceptionally robust foundation.

The decision to launch in 2026, following a rigorous testing schedule, reflects a strategic adherence to the high-assurance standards of traditional finance. By prioritizing performance, compliance, and cost predictability over rapid deployment or speculative tokenomics, Tempo is strategically positioned to become the definitive infrastructure layer upon which institutional stablecoin payments and tokenized deposits are executed globally. The success of Tempo will not be measured in the appreciation of a native asset, but in its ability to process trillions of dollars in real-world economic activity with unprecedented speed and efficiency.

But that era is ending. We are shifting toward the Agentic Web.

In this new world, the main users of the internet won’t be humans browsing—they will be Autonomous AI Agents. These aren’t just chatbots that talk; they are software entities that perceive, plan, and actually do work. According to LangChain’s 2024 report, companies are already moving past the “hype” phase, deploying agents to handle customer service and internal tooling.

But how do you prevent a swarm of independent, decision-making bots from descending into chaos? The answer requires a new stack of technology that merges the “Brain” of modern AI orchestration with the “Spine” of blockchain infrastructure.

The Agent Builder’s Toolkit: How to Build a Swarm

Before we get to the blockchain layer, we need to understand how developers are actually coding these swarms today. It helps to think of the technology in two layers: the Brain (Orchestration) and the Economy (Infrastructure).

The Tool Nerd

Best Tools & Frameworks to build AI Agents in 2025

I strongly believe that 2025 will be the year of AI agents. We will witness the usage of agents across every field and sector. Companies worldwide will begin building AI agents tailored to their specific needs. Organizations that fail to adopt this may find themselves outclassed by competitors who embrace it…

Read more

a year ago · 15 likes · Akhil

Part 1: The Brain – Orchestrating the Swarm

You can’t just spin up 50 AI bots and hope for the best. You need a manager. Below are some of the most popular options for you to use to build the agent swarm.

• OpenAI Swarm (The Sandbox): Released as an experimental framework, this is great for learning the basics. It uses a concept called “Handoffs”—where one agent (e.g., a Triage Agent) explicitly hands a task to another (e.g., a Sales Agent). It is lightweight and stateless, making it perfect for simple, linear chains of command, but OpenAI explicitly warns it is not yet meant for heavy production.

• LangGraph (The Factory): If OpenAI Swarm is a whiteboard sketch, LangGraph is the assembly line. It treats agent workflows as a “cyclic graph,” allowing agents to loop, remember past mistakes (state), and retry tasks. It supports complex patterns like “Hierarchical Teams” (a boss agent managing worker agents) or “Network” patterns (peer-to-peer collaboration), making it the go-to for production-grade swarms.

Part 2: The Society – Search, Discovery, and Negotiation

Once you have the “Brain” built in LangGraph, you need to give it an economy to live in. This is where recent blockchain protocols shine.

Blockchain has proved its standing as one of the most secure technologies in the last two decades. I believe when you come to this article, you are already aware of how secure a blockchain is; if not, there are thousands of research papers and articles explaining this. We recommend this article, “Blockchain Security” from IBM, to prepare you with some prior knowledge about blockchain, not too long, not too short. Below are some blockchain technologies that are involved in the innovation of agent swarm:

Infrastructure & Ecosystems

These projects focus on the foundational layers, allowing agents to be built, deployed, and interact effectively.

• Virtuals Protocol (The Launchpad): This project positions itself as a full-stack platform and AI-agent launchpad, often called the “Shopify of AI agents.” It uses a specific framework and an Agent Commerce Protocol (ACP) to allow developers—even those without extensive coding skills—to build, own, and monetize multimodal, tokenized AI agents (e.g., trading bots, gaming NPCs) on chains like Base and Solana.

• Kite (The Payment Backbone): Described as the “First AI Payment Blockchain,” Kite is a purpose-built Layer 1 blockchain for the agentic economy. It focuses on providing essential services for agents, such as:

  • Cryptographic Identity: Giving AI models and agents a unique, verifiable identity for traceability and governance.

  • Programmable Governance: Offering granular control over the permissions and constraints of autonomous agents.

  • Agentic Payment: Enabling near-zero fee, instant value transfers with native stablecoin access for machine-to-machine transactions.

• Fetch.ai / ASI Alliance (The Marketplace): This is the most established network for Autonomous Economic Agents (AEAs). Instead of a single bot working in a silo, Fetch.ai creates a decentralized world where agents can find each other and negotiate. For example, a “Supply Chain Agent” can autonomously search the network for a “Shipping Agent,” negotiate a price in FET tokens, and book a delivery without human help. (Reference: https://fetch.ai/blog/agent-anatomy)

• Phala Network (The Safe): One big fear is that a “rogue admin” could peek at an agent’s private data. Phala uses TEEs (Trusted Execution Environments)—special hardware enclaves that ensure the agent’s code runs exactly as programmed and its data is encrypted, even from the server's owner. (Reference: https://phala.com/posts/aiagent-ready-blockspace-by-phala-network)

Data & Trustworthiness

These projects are focused on providing high-quality, verifiable data and computation necessary for reliable, non-hallucinating agents.

• **OriginTrail (The Knowledge Graph):** OriginTrail is critical for ensuring AI agents can reason with trusted, verifiable data. It powers the Decentralized Knowledge Graph (DKG), a network that anchors real-world facts and enterprise data into AI systems. This prevents agents from making decisions based on hallucinations, supporting applications from supply-chain traceability to DeFi risk modeling.

• SingularityNET (The AI Service Marketplace): As a key part of the ASI Alliance, SingularityNET’s core focus is a decentralized marketplace for AI services. Developers can deploy AI models as services that agents can access and pay for using the native token, creating a global, open-source platform for AI development and deployment.

• Crust Network (Decentralized Storage): While not purely an agent platform, Crust provides essential decentralized cloud storage. Agents often need to store the data they process and learn from. Crust ensures this data is stored privately, securely, and in a decentralized manner, supporting protocols like IPFS.

• Giza Protocol (The Translator): Agents are good at code, but bad at DeFi nuances. Giza uses the Model Context Protocol (MCP) to “translate” complex financial concepts into something an AI can safely reason about, allowing agents to manage portfolios without accidentally draining funds.

Nature’s Lesson: Stigmergy

How do these tools work together without a manager shouting orders? They use Stigmergy—a fancy word for “leaving a sign for the next guy”.

• Nature: An ant finds food and leaves a chemical trail (pheromone) on the ground. The next ant smells it and follows.

• Crypto: Blockchain is the digital ground. An AI agent doesn’t need to DM every other agent to say, “I finished the job.” It simply records a transaction on the ledger.

The rest of the swarm sees this immutable “digital footprint” and reacts immediately. This allows thousands of agents to sync up without ever speaking directly.

The Real Problems with Agent Swarm

However, we are moving from AI that just talks (like ChatGPT) to AI that actually does things. Giving software the freedom to act on its own can lead to messy problems. Before we can let swarms of autonomous agents run critical infrastructure, we have to fix three major issues identified by researchers at IBM and MIT.

• https://www.ibm.com/think/insights/ai-agent-governance

• https://www.media.mit.edu/projects/blockchain-a-new-framework-for-swarm-robotic-systems/publications/

The “Black Box” Problem (Trust)

The scary thing about modern AI is that it doesn’t follow a strict rulebook like old software. It makes guesses based on probability.

• We don’t know “Why”: If an agent denies a loan or crashes a drone, we often can’t look inside to see exactly why it made that choice.

• They move too fast: Agents can make thousands of decisions in the time it takes a human to blink. There is no way for a human manager to approve every single action, which means we are often flying blind.

The “One Brain” Weakness (Security)

Right now, most AI agents are controlled by a central server. In security terms, this is a nightmare.

• Single Point of Failure: If you hack the central server (the “brain”), you control the entire fleet of agents.

• Easy to Trick: If an attacker feeds bad data to that central brain, every agent connected to it starts making mistakes. It’s like putting all your eggs in one very fragile basket.

The “Liar” in the Group (Coordination)

This is the specific problem that stops robot swarms from working in the real world (often called the “Byzantine Generals Problem”).

• Who do you trust? Imagine a swarm of drones delivering packages. If one drone gets hacked and starts sending fake GPS data to the others, how does the group know it’s lying?

• The Ripple Effect: Without a way to verify the truth, one “bad apple” can confuse the whole swarm, causing them to crash or fail the mission. Current systems don’t have a good way for robots to vote on what is true without checking with a central boss.

Part 3: The Infrastructure – Ethereum’s New “Agent Standards”

For this agent society to function at scale, the underlying blockchain needed to evolve, here, we mainly talk about innovations in the Ethereum ecosystem, as Ethereum is a leading smart contract chain in the space right now. A swarm of 10,000 agents cannot operate if every transaction costs $5 or requires a credit card. Three recent innovations have specifically targeted these bottlenecks.

1. The Wallet Problem: x402 and the Machine Handshake

x402 protocol and How it empowers the Agentic Economy

In the traditional web, payments are designed for humans: credit card forms, CAPTCHAs, and billing addresses. An AI agent cannot navigate these.

The x402 Protocol solves this by reviving the dormant HTTP 402 “Payment Required” status code. Elastic Hub did publish an article talking about x402, which can be read here.

• The Mechanism: When an agent requests a premium resource (e.g., a high-end GPU cluster), the server denies the request with a 402 error and attaches a crypto invoice.

• The Resolution: The agent automatically signs a micro-transaction (e.g., 0.01 USDC on Base or Solana) and resends the request with the proof of payment in the header.

• The Impact: This enables “Streaming Payments” for APIs. Agents don’t need subscriptions; they pay strictly for what they use, millisecond by millisecond, allowing for a fluid, permissionless economy.

2. The Cost Problem: ERC-8003 (Sentinel Storage)

Economic viability is the biggest threat to agent swarms. On Ethereum, initializing a storage slot (like setting a new account balance from 0 to 1) is one of the most expensive operations (20k gas). If a swarm spawns 1,000 temporary agents, the “setup costs” alone could bankrupt the operation.

ERC-8003 introduces Sentinel Storage. It allows a master contract to “pre-initialize” storage slots during periods of low network congestion (low gas prices). Effectively, the swarm “buys” the storage capacity in bulk when it’s cheap. When the agents actually activate and start working, they write to these pre-paid slots at a fraction of the cost. This is the difference between buying retail and buying wholesale for computational resources.

3. The Identity Problem: ERC-8004 (Trustless Agents)

If an agent scams you and then deletes its code, how do you hold it accountable? ERC-8004 decouples the agent’s code from its reputation by minting the agent’s identity as a Non-Fungible Token (NFT).

• Reputation Registry: Successes and failures are recorded against the NFT, not the ephemeral server instance. If an agent wants to be hired for a high-value task, it must present its NFT passport showing a history of successful jobs.

• Portability: This identity is portable. An agent can move from AWS to a decentralized cloud like Akash, carrying its reputation (and its wallet) with it, ensuring that “Code is Law” applies to the entity, not just the server.

Part 4: The Safety Layer – Protecting the “Ghost in the Machine”

The challenge of securing an Autonomous Economic Agent (AEA) is fundamentally the “Confidential Computing” problem: how to process sensitive data (like an agent’s private keys or its proprietary trading strategy) in a cloud or network environment where the hardware owner (the node operator) is untrusted.

The solution, pioneered in the decentralized space by projects like Phala Network, is the use of Trusted Execution Environments (TEEs). These are not unique to Web3; they represent a major area of focus for hardware manufacturers and cloud providers aiming to protect data in use.

TEEs: The Core Security Mechanism

A TEE is a hardware-level secure enclave within a CPU or GPU. It creates a small, highly isolated environment that is entirely separate from the main operating system (OS), the hypervisor, and any other software running on the host machine.

Expanding the Landscape: TEE Providers & Protocols

The underlying hardware and general confidential computing solutions come from major technology providers and other decentralized protocols.

Hardware-Based TEE Vendors (The Foundation)

TEEs rely on specific features built into modern processors. These vendors are the foundation of all confidential computing solutions:

• Intel SGX (Software Guard Extensions) / Intel TDX (Trust Domain Extensions): Intel’s technologies are widely used to create secure enclaves (SGX) and more robust Trust Domains for virtual machines (TDX). They are the most common TEEs deployed in cloud and Web3 confidential computing.

• AMD SEV (Secure Encrypted Virtualization): AMD’s technology focuses on encrypting the entire virtual machine memory, protecting it from the hypervisor. This is often used for broader workload confidentiality rather than small, granular enclaves.

• NVIDIA TEE: More recently, high-performance GPUs (like the H100) are including TEE capabilities to protect large AI model weights and inference data during execution, which is vital for running large language models (LLMs) securely within decentralized agent networks.

Decentralized TEE Protocols

These projects leverage the hardware TEEs to build a decentralized, censorship-resistant network for agents.

• Phala Network: As you mentioned, Phala abstracts the TEE hardware into a decentralized confidential computing cloud. It allows developers to deploy standard applications (including AI models) into TEEs without needing to be the cloud provider themselves, making agent execution verifiable and private.

• Secret Network (for Confidential Smart Contracts): Secret Network pioneered the use of TEEs to create “secret contracts,” which allow smart contract inputs, outputs, and state to remain encrypted. This is key for agents that need to manage private inputs (like market orders or sensitive data) while running on a public blockchain.

• Oasis Network: Oasis uses TEEs (specifically Intel SGX) to power its ParaTimes (separate execution environments) for privacy-preserving computation, enabling agents to process sensitive data with both confidentiality and scalability.

By combining the decentralization of the network layer (Fetch.ai, ASI) with the hardware-enforced security of TEEs (Phala, Secret, IBM), the “Ghost in the Machine” is finally protected, allowing true, auditable, and secure Autonomy.

The result is a shift from Automation (scripts that do what they are told) to Autonomy (agents that decide how to achieve a goal best). By moving the logic from centralized servers to decentralized, verifiable ledgers, we are building antifragile systems—swarms that don’t just survive volatility, but use it to negotiate, adapt, and optimize the world’s digital work.

The challenge with blockchain has always been that its technology is typically perceived as highly technical and filled with low-level jargon, creating a steep barrier for non-technical audiences. But with Base it is different.

Base positions itself as an “open stack for the global community”, an open stack that allows anyone, including developers and creators, to build onchain without knowing much about how the base layer works.

To learn more about Base ecosystem and its long-term direction, we actually also have an article for it here: https://x.com/elastic_hub/status/1984210892767326211

Imagine having a giant, perfectly organized garage filled with the best tools, blueprints, and a huge community of fellow builders ready to cheer you on. That’s essentially what Base is. Incubated by Coinbase and built on the super-scalable Optimism OP Stack, Base’s mission is simple: to make going “onchain” as easy as going online.

Sounds interesting, right? Here’s a closer look at the actual toolkits and the Base ecosystem that make building on Base so genuinely exciting.

Onchain Flywheel for Base Builders

Based on my experience building on Base and my professional experience as a devrel, I have constructed a flywheel for my own journey to maximize the resources to grow with the Base ecosystem. In fact, the flywheel below can be applied to any blockchain ecosystem you join as a builder, not only for Base. From my perspective, as a new builder (or even existing builders), you should follow the cycle below:

Learn

When you join a new ecosystem, the first and most essential step is to learn.

Prepare yourself with the domain-specific knowledge and skills that the ecosystem requires. In blockchain, this means understanding more than just the technology — you need to know the culture, the people, the strengths and weaknesses of the ecosystem, and how it differentiates from others.

If your goal is to grow long-term in this space, take time to explore:

• The core technologies (Layer 2 solutions, SDKs, APIs, onchain primitives)

• The builder resources (grants, hackathons, incubators)

• The values and vision of the ecosystem (for Base, that’s onchain summer, open onboarding, and being the bridge to the next billion users)

Resources

Once you build context and understanding, you’ll not only code better — you’ll communicate, collaborate, and innovate better too. The below are list of resources for anyone want to learn about Base:

• Base Docs – the core technical documentation to understand architecture, APIs, and deployment.

• Base Learn Hub – curated tutorials, guides, and ecosystem walkthroughs.

• Base Blog – insights from the Base team and ecosystem partners.

• Base Discord – the central hub for developer discussions, questions, and announcements.

• Build on Base Workshop Series – recorded sessions and bootcamps to get hands-on with the tech stack.

Build

After understanding the ecosystem, it’s time to build.

Start small — create something that solves a real problem or showcases a new possibility. Whether it’s an onchain app, a developer tool, or a creative experiment, building is how you apply what you’ve learned and gain real feedback from the ecosystem.

The “build” phase is also about iteration — shipping MVPs, joining hackathons, and integrating ecosystem tools. Don’t chase perfection; focus on momentum.

Within Base (or any blockchain ecosystem), there’s always support from the community:

• Open-source repos and starter kits

• Builder communities and meetups

• Ecosystem-specific funding and mentorship programs

Remember: every small project is a stepping stone to something bigger.

Resources

Aside from that, Base also provides a lot of playgrounds and competitions for new builders to build your idea on top of Base chain.

• Base Starter Kits – official templates and examples for smart contracts, full-stack dApps, and NFTs.

• Base Explorer – track transactions and smart contract activity.

• Onchain Summer Builders Program – join Base’s flagship builder campaign that rewards creativity and innovation.

• Base Batches - Hackathon and incubation that helps builders to build and grow on Base.

Earn

Once your work starts to bring value to others, you’ll naturally move into the Earn phase.

Earning here doesn’t only mean financial gain — it also means earning credibility, opportunities, and relationships. As you contribute to open-source projects, share tutorials, or collaborate with teams, you build reputation and trust within the ecosystem.

In Web3, “earning” can take many forms:

• Ecosystem grants for builders who add value

• Bounties and collaborations from projects seeking help

• Revenue and token incentives from your own products

• Speaking, writing, or teaching opportunities as your expertise grows

Earning is the fuel that allows you to reinvest in your next cycle of learning and building — it sustains your journey.

Resources

Base provides a lot of resources for any project to get their idea funded:

• Aside from Base Batches and other competitions, you can request grant funding via Base Ecosystem Fund: Supports early stage projects to build on Base.

• There are also Base Builder Rewards or Paymaster Gas Credits to empower infrastructure contributor as well. Learn more in the Base Documentation - Get Funded

• Bounties & Ecosystem Rewards – find Base-related bounties and open tasks.

• Coinbase Ventures – potential for early-stage investment if your project aligns with Base’s mission.

• Showcase on Base Ecosystem Directory – get featured among official Base projects to attract collaborators and users.

Engage

The final part of the flywheel is Engage — and this is where you turn from a participant into a contributor.

Engagement is about giving back: mentoring new builders, joining community calls, writing content, or even contributing to governance discussions. This is how you create network effects — by helping others learn and build, you strengthen the entire ecosystem (and indirectly, your own growth).

As a DevRel, I’ve seen how consistent engagement transforms individual builders into ecosystem leaders. When you become a trusted voice, opportunities start coming to you: collaborations, partnerships, and visibility that compound over time.

How to Engage

• Join the Base Guilds – connect with interest-based communities (builders, designers, educators, etc.).

• Contribute to Open Source Base Projects – help improve SDKs, docs, or community tools.

• Participate in community calls & Base Builders Office Hours in Base Discord – network with the Base core team and fellow innovators.

• Create content – share learnings via blog posts, workshops, or tutorials; Base often amplifies community voices on X.

Base Developer Ecosystem

OnchainKit

OnchainKit is the core full-stack SDK for the Base ecosystem — built to let developers ship on-chain web or mini-apps quickly, without needing to build every component from scratch. docs.base.org+2docs.base.org+2

• Pre-built React components & TypeScript utilities: wallet connection, identity (ENS/Basename), transactions, swaps, checkout. docs.base.org+1

• “Framework-agnostic” (for React-supporting frameworks) and deeply integrated with Base’s protocol features. docs.base.org

• Templates and starter flows (NFT minting, funding flow, social profile, commerce) to get a project running in minutes.

For builders in Base (or any blockchain ecosystem), OnchainKit means you don’t always start from zero. You get a battle-tested base, focus on unique value (UX, features) rather than plumbing. It accelerates your cycle: learn → build → earn → engage.

AgentKit

AgentKit is a toolkit designed for building AI agents that interact with the blockchain. In the Base ecosystem, you can use AgentKit to give agents “wallets”, on-chain actions (transfer, swap, smart contract deploy) and multi-chain support.

Key features

• Secure wallet management for agent identities.

• Framework flexibility: works with various AI frameworks (LangChain, Vercel AI SDK, etc.).

• Multi-Network support including Base.

As blockchain meets AI, the “agent” layer becomes powerful: automatic on-chain ops, autonomous wallets, composable services. With AgentKit, you’re not just building a dApp — you’re building an intelligent actor inside the ecosystem.

x402

x402 is an open payment standard/protocol for micropayments (especially for AI agents/APIs) that supports networks like Base and enables pay-per-use monetization (no subscriptions, API keys, etc). x402.org

• Supports stablecoins and on-chain payments (USDC on Base) for autonomous agent-to-agent or machine-to-machine payments.

• Discovery layer “Bazaar” for services: agents can discover payable endpoints through x402.

• Multi-network support (Base, Solana, etc).

This opens a new dimension: not just building apps for humans, but building services consumable by agents or machines, where payments happen automatically in tiny increments. In Base, you can integrate x402 so your service is monetizable out of the box. For builders, this means new business models.

Base Mini Apps

Mini Apps in the Base ecosystem are lightweight web apps that run inside the Base App (and compatible clients) with minimal friction: no installation, immediate access, social discovery and built-in on-chain features.

• Launch instantly from social feed inside the Base App.

• Use MiniKit or Farcaster SDK to build; convert existing web app into a Mini App with minimal changes.

• Built-in features: wallet integration, gasless transactions (via Paymaster), social sharing, discoverability.

Distribution and engagement are notoriously hard in Web3. Mini Apps reduce friction for users and give builders viral edges: one-tap access, social sharing, friend graphs, embedded in conversations and feeds. For you as a builder, this tool lets you go from code to users rapidly with less infrastructure overhead.

The Base ecosystem is more than a Layer 2 — it’s an open playground for builders, creators, and innovators who believe in the onchain future.

From learning the fundamentals with Base Docs and workshops, to building with OnchainKit and Mini Apps, to earning through grants and open opportunities, and finally engaging with the global community — every step you take spins the Builder Flywheel faster.

With the rise of developer-first frameworks like OnchainKit, AgentKit, x402, and Base Mini Apps, building on Base has never been more accessible or more powerful. Each tool represents a piece of the onchain stack — from user experience to AI agents to micro-payments and frictionless distribution — all designed to accelerate innovation without gatekeepers.

So keep the flywheel turning:

Learn → Build → Earn → Engage → Repeat.

Your journey isn’t just about creating dApps — it’s about co-creating the next generation of the internet.

And that journey starts right here, on Base.

Written by Twitter @chungquantin

In Q4, not quietly, but with conviction, Coinbase is crafting a narrative of continuity and construction—each new announcement from Coinbase hints at an ambition far beyond the usual “scaling solution” story. The company is positioning Base as the main infrastructure for the next phase of the economy onchain.

So, What’s Going On at Base?

BASE Token Exploration

It started when Jesse Pollak revealed that the network is exploring a network token at Basecamp. That single tweet sparked a wave of speculation — and more importantly, capital. TVL surged past $5 billion with new capital into the chain, giving builders fresh incentive to deploy apps while users chased both yield and future airdrop potential.

Momentum is compounding.

Coinbase’s Strategic Acquisitions

Coinbase made headlines with its acquisition of Echo, bringing onboard crypto personality Cobie and purchasing UpOnly NFTs for $25 million. Beyond the financials, it’s a signal: Coinbase is expanding beyond its institutional image. With Cobie’s credibility among “degen” circles, Coinbase gains a bridge to the culture layer of crypto — a rare move for a regulated giant.

Not just that, to expand Base beyond a developer playground into a true onchain economy, Coinbase acquired Echo, the platform founded by Cobie, along with his podcast project UpOnly NFTs, with a total valuation of $400 million.

This move wasn’t just about talent or branding; by merging Echo’s social and financial primitives with Base’s infrastructure, Coinbase gains a pathway to redefine how creators, startups, and users raise and trade value through a fairer, community-driven, verifiable ownership model.

Cobie’s addition also strengthens the cultural bridge between Coinbase and his “degen” circles, opening the door to a combination of Wall Street-grade structure with crypto-native distribution.

x402: The Agentic Payment Standard

Coinbase's lead engineer (programmer) has also introduced x402, an agentic payment protocol designed to make crypto the default settlement layer for AI and global apps. Working with major SaaS like Cloudflare, Vercel, and Amazon, Base is positioning itself as the AI payment rail of the internet — an infrastructure play that extends far beyond crypto. Even other ecosystems like Solana are aligning with the standard, a sign of cross-chain collaboration.

https://x.com/elastic_hub/status/1982034635447255161

The Banking Charter & DeFi Integration

Underpinning all of this is CEO Brian Armstrong’s very public fight for clear crypto regulation in the U.S. and the pursuit of a banking charter. Why does it matter? A charter would allow Coinbase to gradually and legally expand its DeFi and stablecoin rail into its retail app for millions of users.

https://x.com/brian_armstrong/status/1981789362242093202

What are included in BASE Network?

Base isn’t just another L2 blockchain, it’s a complete network stack — a coordinated suite of products from Coinbase designed to move an entire business journey onchain.

From infrastructure to applications to payments, Base acts as both a launchpad for builders and a gateway for the next generation of users to build, create, and earn in a fully onchain world.

BASE Chain

A Layer 2 network built on Ethereum’s proven Optimism technology. In simple terms, it inherits Ethereum’s security but operates as a dedicated express lane.

• For Users: Experience lightning-fast transactions (1-second block times) at a fraction of the cost.

• For Developers: Build scalable applications that can handle thousands of transactions per second.

But importantly, it serves as the bedrock of Coinbase’s ecosystem strategy: a secure, compliant, and scalable environment where all other Base products can interoperate natively.

BASE Build

This is BASE’s secret weapon and a colossal advantage for any startup.

While other chains offer developer tools, BASE Build is a comprehensive dashboard and toolkit that feels like a venture studio in a box. It provides the APIs, frameworks, templates, and analytics needed to go from idea to launched dApp at an incredible speed.

This drastically reduces the friction and capital required to build something great. For startup builders, this isn’t just a nice-to-have; it’s a reason why developers are choosing BASE blindly.

BASE App

While BASE Build powers developers, the BASE App connects them to users. It reimagines what was once Coinbase Wallet into a WeChat for web3: a single interface where you can chat with friends, post updates, trade assets, earn yield, play games, and coin everything. It’s the seamless, user-friendly gateway designed to invite millions to experience the on-chain world without realizing they’re doing so.

BASE team also views the BASE App as primary growth engine by positioning it as the core product offering within the Base ecosystem the App into a strategic distribution layer for builders. creating a powerful reason — another “why build on Base” — for builders to join the network.

BASE Pay

With BASE Pay, the payment infrastructure that ties the ecosystem to the real world. Working closely USDC as primary stablecoin partner, BASE Pay enables instant, near-zero-fee transactions, compliant for everything from transfers and in-app purchases to merchant payments and remittances.

It turns the Base network into a true economic engine, where users can earn, spend, and transact globally.

Each of these layers feeds into the next, forming a self-sustaining growth loop:

• Base Chain provides secure, low-cost blockspace.

• Base Build turns that infrastructure into applications and innovation.

• Base App delivers those experiences directly to users, as a main distribution layer of the ecosystem.

• Base Pay converts activity into real economic value.

As users transact, build, and spend within this network, liquidity and engagement increase — driving further demand for scalability and performance. In turn, that growth attracts more developers and businesses, reinforcing the cycle.

Ecosystem Building from the Inside Out

One thing that stands out about Base and Coinbase is their conviction in helping projects succeed —not just exist within the ecosystem —by strategically investing in them.

They make two key types of ecosystem investment:

1. Major Native Investments: Large-scale bets to build the fundamental playground, like Morpho (Credit Market), Aerodrome (Liquidity Core), Zora (Creator Economy).

2. Targeted Incubations: Smaller, strategic investments across diverse sectors to ensure a vibrant ecosystem, like Noice (Social tokenization), Giza (AI Yield Optimizer), Iron Fish (Privacy Layer)

The real value of an investment goes far beyond capital; teams gain something far more powerful: distribution and network. Backed teams are often featured across Base’s community campaigns, integrated into ecosystem events, and connected with strategic partners to accelerate.

But, you are looking to build on BASE? Start with this → Base - Base Launch Playbook

Or, you can really look into their BASE Batches Program → Base Batches 2025

Below is an important ecosystem landscape that you might want to check out

How Can We Position Ourselves on the Upcoming Token Launch?

To build up a strong position in the BASE ecosystem for a potential $BASE airdrop, you can consider following these steps.

Step 1: Your first and most crucial step is to get a BASE Name. This is your on-chain username and identity with a human-readable name (e.g., yourname.base.eth) instead of a cryptic wallet address.

→ Get it here: https://base.org/name

Step 2: Download the Base App and, crucially, use the same wallet where you hold your BASE Name.

Port some funds (ETH or USDC) into it. This app is your main portal to the entire ecosystem.

Literally just use the BASE App for everything.

Step 3: The Keyword is being “On-chain”.

• Swap and provide liquidity on Aerodrome Finance, the central liquidity hub of Base. Then, farm yields with Morpho to put your assets to work. For more advanced strategies, try perpetual contracts on Avantis.

• Post content on Farcaster (the native social layer) and mint or collect on Zora. Cross-engage with other creators. Your on-chain social graph is your resume.

• This is specifically for Builders: Your proof is your product and reputation. Gain a score on Talent Protocol to showcase your skills and contributions. This is your verifiable CV for the on-chain world.

Step 4: Try out other products (Optional)

It is highly recommended to explore the miniapps within the Base App. Every interaction is a way that enriches your on-chain score. You can easily check the “search” button to start.

Closing

BASE is no doubt Coinbase’s massive play to move everything on-chain. It’s the big bet that matches the tech philosophy they’ve been pushing for years.

And when you check out the BASE ecosystem now on their social, you can feel the vibe of a new economy starting up, getting ready to be part of everyone’s life.

Let’s be real: BASE isn’t just another chain. It’s actually changing how people think about building and earning.

And yes, positioning for the token launch is important. But there’s a whole economy already running over there, and you can just earn on those on-chain apps.

So make sure you try it out.

Stripe: Making Online Payments Click

And with that core problem in mind, Stripe was born to solve the payment complexity of the internet.

*“The future Stripe co-founders, the Collison brothers, understood that while many consumer payment methods could succeed, what was truly missing was a platform designed for businesses — a way to manage the full complexity of operating online.

This included not just payments, but also treasury management, legal issues, and compliance. Solving this became their core mission, and they worked tirelessly to bring that vision to life.” -* Stripe’s Founders: The Story of Collison Brothers Who Changed Online Payments Forever

Stripe didn’t invent credit cards, but it transformed the payment layer by making it:

• Developer-First: Their focus was on software engineers, not just CFOs. They treated payments as a technical problem that needed a clean, easy-to-use software solution.

• Simple and Accessible: They abstracted away the messy parts—the security compliance (PCI), the bank relationships, the fraud checks—into a single, clean service. This dramatically lowered the barrier to entry for any online business, from a tiny startup to a massive marketplace.

Stripe essentially created the modern standard for Human-to-Business (H2B) digital commerce by making it smooth and programmable for humans buying things. Plus, there is a good article from Stripe that explains how Stripe works.

Payment in the Agentic Era

Agents are no longer a buzzword in 2025, as can be found from several reports:

• Google Cloud Study Reveals 52% of Executives Say Their Organizations Have Deployed AI Agents, Unlocking a New Wave of Business Value

• Langchain State of AI Agents Report

The internet is filling up with increasingly powerful AI agents every day. AI isn’t just about the old-school chatbots anymore—it’s changed. These new agents are like super-employees: they speed up coding projects (The Rise of Cursor), create tons of articles, posts, and images across the web, and they’ve even gotten into the finance world, completely automating stock trading and portfolio management.

That shift in capability, from simple chatbots to autonomous workers in finance and development, highlights a critical, often-overlooked problem: how do these AI agents pay for things?

Stripe solved the friction problem for human users paying human-run businesses. But now, we’re facing a new problem: the agentic economy.

From the recent report of a16z, it is mentioned by Gartner’s estimation that by 2030, there will be more than 30 trillion US dollars in purchases across the Internet. But to enable a seamless payment process for the agent to make payments on behalf of users, we need an infrastructure that operates in a decentralized, automated way, and blockchain is a great fit for this global payment use case.

x402 protocol and how it transforms the digital commerce

According to Stripe’s guide to micropayment processing, micropayments bring significant benefits to digital businesses and their customers. However, current traditional infrastructure is not well supported for tiny amount transactions, a $0.10 payment, for example, can cost more to process than its actual value. This forces platforms to rely on bundling or subscriptions, limiting user flexibility in monetization options.

x402 is built with the goal in mind: “HTTP for payment”; it is an open protocol introduced by Coinbase to enable seamless, internet-native payments directly via HTTP.

In fact, the protocol works in a very simple client-server HTTP communication mechanism. A bit about low-level implementation of the protocol, like ERC-3009 (which is a core EVM feature that empowers the x402 protocol), is what you can explore more aside from the main documentation.

The x402’s Facilitators

The most interesting part of the x402 protocol, in my opinion, is the facilitator. The facilitator is an optional yet recommended component that streamlines the verification and settlement of payments between clients (buyers) and servers (sellers).

The facilitator provides two key endpoints:

• /verify — validates payment payloads.

• /settle — finalizes transactions on-chain.

This removes the need for your server to run its own blockchain node or handle complex wallet operations. The Coinbase Developer Platform (CDP) offers a hosted facilitator to help you get started quickly, supporting fee-free USDC payments on Base in the initial phase.

Currently, a few core facilitators are empowering x402 transactions on Base and Solana. However, the horizon for the facilitator’s capabilities has not yet been identified, and more and more facilitator use cases are still in the research and development phase.

As the facilitator is the middle layer between server and the settlement layer (blockchain network), facilitator can empower multiple blockchains as far as the verification process is handled securely. Moreover, this also opens up cross-chain payment use cases: imagine micropaying the agent on Base with USDC on Solana. Hence, making the x402 protocol chain agnostic.

x402 integration and compatibility ecosystem

To drive interoperability, x402 now supports integration with multiple emerging protocols and platforms, bridging traditional, web2, and web3 infrastructures:

Cloudflare Pay Per Crawl (PPC) with x402

Cloudflare Pay Per Crawl enables websites to charge AI crawlers for accessing content. When a crawler requests data, the server can respond with an HTTP 402 to indicate payment is required — a model perfectly aligned with x402. Integrating x402 allows publishers to monetize content access dynamically, processing tiny payments per request instead of relying on monthly licenses or bulk APIs.

• Cloudflare blog: Introducing Pay Per Crawl

Visa TAP

Visa TAP introduces a secure identity layer for AI-driven and device-based payments. It defines how trusted agents can authenticate and transact safely — both for physical NFC payments (“Tap to Pay”) and digital AI commerce.

By combining Visa TAP with x402, developers can bridge on-chain microtransactions with real-world payment identity. An AI agent or API could settle payments in USDC (via x402) while using Visa TAP to verify user identity and compliance.

• Visa Developer Platform – Tap to Pay

• Visa Trusted Agent Protocol Announcement

Google A2A

Google’s AP2 tackles the fundamental problem of trust by requiring “verifiable intent, not inferred action.” It uses cryptographically signed digital contracts, known as Agent Mandates, which serve as non-repudiable proof of a user’s instructions. This prevents AI agents from “hallucinating” purchases or acting outside their defined limits.

The A2A x402 extension, developed with Coinbase, Google, and the Ethereum Foundation, is the production-ready solution for agent-based crypto payments and is the only stablecoin facilitator extension for AP2. In short, Google’s AP2 provides the necessary trust and intent layer (the mandate), while x402 supplies the lightning-fast settlement layer (instant stablecoin payments). This powerful alignment with a major web and AI player speeds up x402’s path to becoming a mainstream standard.

Integrating x402 into A2A flows allows one agent to pay another for services or compute — turning cooperative agent ecosystems into self-sustaining micro-economies.

• Google Blog: A2A – A New Era of Agent Interoperability

• A2A GitHub Project

Vercel MCP x402

Vercel’s x402-MCP brings open-protocol micropayments into the Model Context Protocol (MCP) ecosystem. It allows developers to integrate pay-per-inference, pay-per-token, or pay-per-API-call models directly into their AI tools and agents — all without managing wallets or blockchain nodes.

• Vercel Blog: Introducing x402-MCP

• x402 Starter Template on GitHub

Challenges and Opportunities

Getting Everyone on Board: The Adoption Challenge

Even with a strong, elegant design, widespread adoption is challenging because a payment protocol only becomes useful when everyone uses it. While it’s technically easy for service providers to integrate (as little as one line of code), true success requires major platforms—like e-commerce providers and cloud services—to adopt it.

The x402 Foundation, leveraging the combined muscle of Coinbase and Cloudflare, is focused on driving this platform integration to achieve comprehensive network effects, with early platform adoption already visible, such as Gate Web3’s x402 trading zones.

Wallets and Keys

While x402 is built for agents, a human still needs to initiate and fund the overall process. The user experience of current Web3 technology—specifically managing wallets and private keys—remains a barrier for the average person.

For x402 to fully succeed, paying $0.01 must feel as simple as tapping a credit card.

Wallet service providers like Dynamic or Privy are currently in research and development phase to roll out a solution for the seamless with x402 protocol which can solve the problem we have with managing the user private key.

On the other hand, integration with AP2, which allows for “one-click confirmation” of transactions, and the design of the facilitator, which abstracts away blockchain complexities, are critical steps toward building a payment system that is both incredibly efficient for machines and seamless for the people who control them.

• AP2 and x402

To summarize, x402 enables instant, pay-per-use micropayments directly over the internet. This is foundational for the AI agent economy, allowing automated services to buy and sell resources autonomously, efficiently, and at scale, unlocking the next wave of agentic applications.

To dive deeper, let’s begin with a simple scenario:

A shop accepts crypto payments. When a customer pays, the cashier can instantly look up that wallet’s past activity, where it’s been used, how much it holds, and even the pattern of spending.

That’s like making your entire credit card history public for anyone to see.

This is the world of transparent blockchains today. Every transaction is visible. While transparency helps build trust in decentralized systems, it also opens the door to data abuse, tracking, and profiling, risks that limit everyday use.

Actually, most of us have seen this story before. In the early days of the internet, websites used a protocol called HTTP (Hypertext Transfer Protocol). It was fast, but not private; anyone could intercept your personal data. The problem was solved by HTTPS (Hypertext Transfer Protocol Secure), which added encryption and made online banking and e-commerce possible in today‘s internet.

And the next wave of blockchain innovation promised to do for finance what the internet did for information, making it faster and borderless, but its radical transparency turned out to be a double-edged sword. People often assume that because blockchains use wallet addresses instead of names, they are anonymous. But in truth, they are pseudonymous.

As the Bitcoin White Paper warned:

Once a user’s wallet address is linked to a real-world identity, that person’s entire financial history becomes public for anyone. What was meant to represent decentralization and freedom instead exposes users to the kind of visibility no one would accept in normal life.

Without balanced privacy, the blockchain economy cannot evolve to become a system people trust for real-world use. Everyday users need to feel safe, like online banking or e-commerce provides today. They must know that their activities are protected, that transactions are private by design.

In the same way that encryption trans formed the early internet from a fragile experiment into a trusted global infrastructure, on-chain privacy represents the next layer that will make decentralized systems truly usable at scale.

Types of Privacy-Enhancing Technologies (PETS)

When we talk about privacy on the blockchain, there isn’t just one way to achieve it. Different technologies are being explored, from mixnets and confidential transactions to privacy layers built directly into smart contract protocols.

Zero Knowledge Proof

ZK-proof is a cryptographic method that allows one party, called the prover, to convince another party, the verifier, that something is true without revealing any of the information that proves it. In other words, it allows users to prove they know something without revealing the data itself.

A simple way to think about this is how websites check your password. When you log in, you don’t actually send your real password every time; instead, your password is turned into a cryptographic hash, and the website only checks whether that hash matches what it already knows. You’ve proved you know the password — without ever revealing the password itself.

ZK Proof works in a similar way but with much greater complexity: you can prove a statement is valid without revealing any of the private information behind it.

On blockchain, this means users can verify transactions, ownership, or eligibility without exposing their full wallet balances, history, or identity. Instead of revealing everything, they share a succinct proof that confirms the transaction’s validity.

This approach unlocks two major advantages: privacy and scalability.

• Confidential Transactions:

  ZK-proofs can hide transaction details such as the sender, receiver, or amount being transferred, while still proving that the transaction follows all network rules. This is the foundation of privacy-focused projects like Zcash, which pioneered shielded transactions, and newer designs like privacy pools, which allow users to prove their funds are not linked to illicit sources without revealing their entire transaction graph.

  Aside, Zcash is becoming very famous as a privacy token due to the vision as a pure privacy token at the top of mind and simple privacy functionality of the network itself, even Sergey Brin (Google Founder) mentioned Zcash when talking about privacy.

  X post

• Efficient Scaling:

  ZK-proofs also make blockchains more efficient. Instead of requiring every node to re-check every transaction, validators can verify a small proof that batches thousands of them at once. This technique is what enables high-performance projects like zkSync, StarkNet, and Succinct to deliver faster, cheaper, and more scalable blockchain environments — all while maintaining full security.

There are two main types of ZK systems: SNARKs (Succinct Non-Interactive Arguments of Knowledge) and STARKs (Scalable Transparent Arguments of Knowledge). SNARKs are compact and efficient but rely on a trusted setup, while STARKs remove this dependency, offering greater transparency, stronger cryptographic assumptions, and even protection against future quantum attacks.

Although generating these proofs still requires heavy computation, continuous progress in acceleration is rapidly reducing costs and latency, making ZK-proofs increasingly practical for real-world use.

Recent Succinct launch’s SP1 zkVM and decentralized prover network make zero-knowledge proofs more widely used and popular by enabling efficient and scalable generation of proofs and providing an on-demand marketplace that lowers barriers for developers across various applications.

Fully-Homomorphic Encryption (FHE)

The core idea behind FHE is simply about performing calculations on encrypted data without ever decrypting it.

In normal encryption, data must first be decrypted before any operation can take place. Imagine sending an encrypted note to a service and asking it to add two numbers written inside. To do that today, the service would need to decrypt your note, read the numbers, perform the addition, and then re-encrypt the result, which exposes your private information in the process.

With Fully Homomorphic Encryption, the same calculation can be performed while the note stays encrypted. The system manipulates the encrypted data itself, never seeing the underlying numbers, yet the result is exactly the same as if it had been done on the original plaintext.

This unlocks entirely new possibilities for how privacy can exist in blockchain and cloud environments:

• Confidential Smart Contracts:

  FHE could enable a new generation of on-chain applications where data never leaves its encrypted state, even while it’s being processed. Developers could build private decentralized exchanges, lending protocols, or tokenized asset systems where user balances, bids, and collateral values remain hidden but still fully verifiable.

• Secure Data Processing:

  Users can send sensitive information — such as financial records, medical data, or machine-learning inputs — to be processed on-chain or off-chain, without validators, service providers, or algorithms ever seeing the raw data. This approach could protect user privacy while still enabling valuable analytics or AI-driven insights to occur.

The latest partnership between Zama and OpenZeppelin offers an open-source Confidential Contracts Library on GitHub, providing primitives for secure, encrypted computations on EVM-compatible blockchains via Zama’s fhEVM coprocessor.

Trusted Execution Environments (TEEs)

While most blockchain privacy tools rely on cryptography, Trusted Execution Environments (TEEs) provide privacy at the hardware level. A TEE is a secure enclave within a processor that runs code and processes data in isolation, keeping it hidden even if the operating system or surrounding software is compromised. In essence, it creates a small vault inside the chip where sensitive data can be safely used without ever being exposed.

A good example is in cloud computing, where TEEs allow encrypted data to be analyzed without revealing it to the service provider. The information is processed inside the enclave, then re-encrypted before leaving, meaning the system completes the computation without ever seeing the raw content.

In short, TEEs are highly efficient. Their main computational cost is small and only occurs when entering or leaving the secure hardware area and encrypting/decrypting data.

Multi-Party Computation (MPC)

Multi-Party Computation takes a different approach to privacy by enabling several participants to jointly compute a result without revealing their private inputs to one another, creating a form of shared computation where everyone contributes, but no one exposes their data.

Imagine a group of people who want to calculate the average of their salaries without anyone disclosing their actual income, each input staying private while the correct output is still computed collectively. This principle now underpins many blockchain applications, especially key management systems like Fireblocks, Privy, where private keys are split into cryptographic shares distributed across multiple devices or servers so that no single party ever holds the full key, yet all can still sign transactions together securely.

Ring Signatures

With Ring Signatures, when a user wants to authorize a transaction, their digital signature is combined with those of several other participants to form a group. To anyone observing the blockchain, the transaction appears to have been signed by someone in that group, but it’s mathematically impossible to determine who the real signer was.

The most recognized project in crypto community is Monero, one of the earliest and most consistent projects to prioritize privacy as a default. Every transaction in Monero uses ring signatures to obscure the sender’s identity, making it extremely difficult to trace the source of funds back to a single person. This level of anonymity has made Monero a point of debate in the larger conversation about privacy and regulation.

The debate on privacy solutions

There is an ongoing debate on “who wins privacy” in crypto, which centers on balancing privacy, verifiability, and interoperability, while ensuring regulatory compliance and user-friendly performance. The general consensus is that no single solution dominates; the best approach depends on use cases like transactional privacy, encrypted computations, or enterprise needs.

• Privacy Coins ( Zcash): Simple, sovereign privacy for transactions, but isolated and regulation-constrained.

• ZK Infrastructure (ZKSync’s Prividium, Starknet): Scalable, compliant proofs with Ethereum compatibility; strong for enterprises but faces UX challenges.

• Encrypted Computation (Arcium): Enables private data processing (e.g., AI); powerful but computationally heavy and early-stage.

• Enterprise Models (Canton): Private, consortium-based DLTs for businesses; limited by silos and lack of public verifiability.

• Hybrids (Fairblock): Combine ZK, FHE, and MPC for programmable privacy across use cases; favored for flexibility but complex.

Check the debates:

https://x.com/0xMert_/status/1980034554434900145

https://x.com/kayprasla/status/1980036861226889433

https://x.com/JasonYanowitz/status/1980016838269366504

https://x.com/s33dkn33/status/1980267170400530591

Opportunities For Application Builders

The shift is already happening: privacy is moving from a backend feature to a front-end experience that shapes how users trade, pay, build, and interact on-chain.

Across the ecosystem, several projects are leading this wave:

• Payy: Private payment rails for seamless, confidential crypto transactions.

• Paradex: Decentralized perpetuals exchange focused on trader privacy and compliance.

• Privy: Privacy-first identity and wallet infrastructure for onboarding and data control.

• nilGPT: Privacy-preserving AI chatbot using Nillion’s blind computation for secure encrypted inference.

And many more, privacy would be a default optional feature for users in every consumer application. For developers, this new landscape represents more than just protecting user data; it’s about building trust into every layer of the product stack.

Closing Thoughts

Not just a major innovation in privacy infrastructure, the real shift today is about how privacy can coexist with regulation without sacrificing the open, verifiable nature of blockchain. As networks evolve, privacy is no longer a niche feature. The goal isn’t to hide, it’s to protect users while proving the truth. I’ll explore how these principles unfold in real-life case studies in an upcoming article.

Written by @crisnguyen99 (Twitter)

For anyone who knows me and my past work, over the past two years, I have been researching and speaking about Polkadot at conferences in SEA. For the reader’s context, Polkadot is well-known for its rollup-as-a-service (RaaS) infrastructure, which enables anyone to easily launch a new rollup and customize the runtime logic.

And one of the analogies I love the most and use nearly every time I talk about rollups is the game cartridge analogy. Imagine rollup hub technology is like the game console, while the game cartridge is the rollup, which has its own storage space with different kinds of logic coded in the ROM card (except that execution is sharded and handled on the rollup, not on the base layer in this analogy).

This design is applied to most of the RaaS infrastructure that you can find in the industry at the time this article is written: Polkadot, Optimism, ZK Sync, or Arbitrum Orbit. They differ slightly in some components, but the overall idea remains the same. In the early days of modular blockchain design, the appchain paradigm promised sovereignty. Every project could own its own blockspace, customize its economics, and scale independently.

“Blockspace is the commodity that powers the heartbeats of all cryptocurrency networks.” - Ethereum Blockspace - Who Gets What and Why, Paradigm

General-purpose network is not a one-size-fits-all

However, the cost of independence soon became apparent — liquidity isolation. As liquidity splintered across dozens of sovereign chains, capital efficiency collapsed. Bridges emerged to patch fragmentation, but they only reintroduced the one thing crypto was supposed to eliminate: trust in intermediaries.

Today, the paradigm is shifting again.

As RaaS technologies involve, launching a new chain is much easier compared to the early stage of layer 2. Application-specific chains will be more demanding, as they solve certain problems that are hard to solve if you share the blockspace with other applications.

We will dive into more use cases in future articles, but today, we will talk about liquidity chains where the exchange becomes the chain, and the chain becomes the matching engine.

This is the philosophy behind new architectures like HyperLiquid or Lighter — systems that no longer treat trading as an application, but as a first-class consensus process.

From Application to Consensus: When Trading Becomes the Chain

When we think about traditional blockchains, we imagine applications built on top of consensus - protocols that submit transactions to a shared state machine. The blockchain sequences, validates, and settles those transactions, but it doesn’t understand their economic meaning.

• For general-purpose compute, that abstraction works beautifully.

• For trading systems, it breaks.

A trading engine is fundamentally a temporal consensus mechanism — it coordinates not what trades happen, but when they happen and in what order.

That sequencing defines price, fairness, and ultimately liquidity itself.

At its essence, liquidity measures the rate at which collateral transforms into risk-bearing exposure. That transformation depends on three tightly-coupled factors:

• Sequencing speed — how fast orders can be observed, ordered, and committed.

• Execution determinism — how reliably those orders execute (no unexpected delays, reordering, variable latency).

• Capital fluidity — how efficiently capital moves across exposures without bottleneck, fragmentation, or delay.

Most general-purpose blockchains (and even many optimized L2s) are built with goals like throughput (TPS) or cost efficiency (low fees) in mind — but not temporal precision (low and predictable latency, highly deterministic ordering). That trade-off is acceptable for general computation, where a delay of a few hundred milliseconds or even seconds may not be significant.

But markets are fundamentally temporal machines — systems where time itself becomes a dimension of risk and value. In a high-frequency context, a 200-millisecond delay in order inclusion or in when that order becomes final can reprice the entire book, shift market state, or provide an edge to someone with faster access.

Why general-purpose chains fall short

• Many chains rely on mempools, asynchronous order propagation, dynamic block inclusion, and probabilistic finality. That means the timing from user-submission to final settlement is variable.

• When you cannot predict when your order will appear (and when it becomes irreversible), you introduce temporal variance per trade. That variance raises uncertainty, widens required spreads, degrades liquidity depth.

• For a liquidity-focused environment (especially for high-frequency trading, perpetuals, tight spreads), what matters is notand just raw TPS, but how predictable and tight the latency and order-sequencing bounds are.

• The consensus mechanism in a generic blockchain solves “state agreement” (what the ledger looks like after some block) but not necessarily “time agreement” (when exactly the trade hit, in what order relative to others, with negligible jitter). That gap is critical when milliseconds matter.

The liquidity-chain paradigm

In a chain designed for liquidity (e.g., a hypothetical or actual architecture like HyperLiquid), the objective is inverted: instead of maximizing TPS, you aim to minimize variance per trade. You aim for temporal determinism + tight latency bounds + capital fluidity.

In this paradigm:

• Consensus is not just “what block” but “when in that block” and “in what sequence relative to all peers”.

• The network is optimized for predictable latency, deterministic matching/sequencing, and deep shared liquidity pools that any participant can tap into quickly.

• Orders, cancellations, trades, liquidations — all operate in a regime where timing uncertainty is very low, removal of arbitrary delay or mempool racing, and capital can shift between exposures with minimal friction.

• When participants share a deterministic view of time, the “uncertainty premium” — the extra spread or cost required to protect against latency/ordering risk — shrinks. That means tighter spreads, deeper liquidity, and more efficient use of collateral.

• The metric of interest becomes variance per trade (or “latency-uncertainty per trade”) rather than simply “transactions per second”. A chain delivering 200,000 trades per second but with large temporal jitter is worse for a liquidity machine than one delivering 50,000 trades per second with sub-10-millisecond determinism. (”In-depth analysis of the HyperLiquid Project” - Chain Catcher)

To compare it more easily, let’s take Uniswap and HyperLiquid into comparison. The determinism in the transaction status of Uniswap relies on the chain on which its smart contract is deployed. For example, if it is on Ethereum, the settlement depends on the network status of Ethereum and fees taken to follow the gas mechanism.

As an application built on top of Ethereum, there are a lot of externalities you need to consider and optimize, especially for the onchain orderbook.

CLOB = Central Limit Order Book. There is a detailed explanation that you can read more here

HyperLiquid has proved its position in the current market as one of the fastest-growing chains in trading volume since its launch and created a brand new narrative around the liquidity chain. Let’s dive into how HyperLiquid is designed to support the high-demand trading use cases.

HyperLiquid’s architecture is uniquely optimized for high-frequency trading through two core innovations — the HyperEVM and its dual block mechanism — both designed to ensure that every block directly serves the central limit order book (CLOB).

At its foundation, the HyperEVM extends the familiar EVM model while removing its general-purpose constraints. Instead of handling arbitrary smart contract logic, HyperEVM is tuned for deterministic, low-latency order processing, integrating the matching engine directly into the execution layer. This means that every on-chain operation — from order placement to cancellation — executes as a native primitive rather than an interpreted contract call, minimizing gas overhead and execution delay.

The dual block mechanism further refines how blockspace is allocated. HyperLiquid separates block production into two synchronized layers:

• Consensus blocks, which finalize and order transactions for state consistency.

• Execution blocks, which handle high-frequency order flow and trade matching in parallel.

This separation allows the chain to process trades continuously without waiting for full consensus cycles, effectively decoupling latency-sensitive execution from finality. As a result, the network achieves both sub-second responsiveness for traders and robust settlement guarantees for the underlying ledger.

Together, HyperEVM and the dual block mechanism transform blockspace into specialized market bandwidth — a vertically optimized environment where every computation contributes to liquidity, matching efficiency, and capital throughput, rather than competing for gas or generalized compute.

HyperLiquid provides a super detailed documentation to explain their architecture, which you can find here: About Hyperliquid

In essence, the liquidity chain is the future of financial-grade blockspace. It proves that for applications where milliseconds translate to billions in value, blockspace must be designed around the specific physics of that application—be it trading, gaming, or high-throughput data processing—rather than treating it as a general-purpose utility. The appchain model isn’t dead; it’s just getting its specialization down to a science.

Written by

Traditional forecasting systems — political polls, expert panels, even algorithmic models — often struggle with bias, lag, or selective sampling. But prediction markets flip the logic: they turn conviction into capital, and capital into computation.

When the Intercontinental Exchange (ICE), parent of the New York Stock Exchange, announced a $2 billion investment in Polymarket, it marked a turning point. What started as a crypto-native experiment is now becoming a financial data infrastructure — a system where the global crowd, not centralized institutions, sets the odds of the future.

In 2020, Polymarket founder Shayne Coplan had a conviction: that markets could outperform pundits in predicting real-world outcomes. For five years, he built quietly, iterating through regulatory setbacks and liquidity droughts.

Then, July 2024 changed everything.

When a failed assassination attempt on former U.S. President Donald Trump and President Biden’s campaign withdrawal reshaped global politics, Polymarket’s volumes exploded. For the first time, people from over 100 countries were trading political probabilities via this event, a global referendum powered by crypto rails.

Unlike a poll that asks, “Who do you support?”, prediction markets ask, “What outcome will you stake your money on?”

And that difference changes everything: it turns belief into measurable signal.

Polymarket Resolves U.S. Presidential Election Market After $3.6 Billion Volume

This wasn’t just an equity deal. It was institutional capital validating the onchain model — signaling that traditional markets see DeFi rails not as competitors, but as the next evolution of financial data systems.

ICE’s move effectively bridged Wall Street liquidity into decentralized infrastructure, opening the door for other institutions — from hedge funds to data providers — to explore how blockchain-based truth markets could power new forms of risk modeling, policy forecasting, and alternative data trading.

Polymarket’s journey from startup to institutional magnet mirrors crypto’s broader transition: from speculative playgrounds to infrastructure that legacy finance now needs.

Following Polymarket’s rise, a new wave of platforms has emerged — each blending prediction mechanics with on-chain liquidity, composability, and user experience to capture this momentum.

Kalshi — Regulated, Institutional, and Expanding On-chain

Founded in 2021, Kalshi took the opposite route from Polymarket.

Rather than operating permissionlessly, it became the first CFTC-regulated U.S. prediction exchange, proving that event-based trading could fit inside the walls of traditional finance.

But after Polymarket’s explosion, even Kalshi began pivoting toward crypto via hiring John Wang as Head of Crypto as the first step.

• Valuation: $5B (post–$300M raise, 2025)

• Volume: $1.4B monthly

• Institutional Market Share: 60% of U.S. event-trading volume

  https://x.com/Kalshi/status/1968307024799879505

• Kalshi: Partnered with Pyth Network to publish live event probabilities across 100+ blockchains — turning regulated forecasts into composable onchain data feeds.

This move was more than a technical integration; it was a recognition that the next frontier of prediction markets won’t live behind paywalls or APIs — it will live onchain, transparent, programmable, and open to builders.

Myriad Markets — Decentralized, Multichain, and Builder-Led

Meanwhile, Myriad Markets, launched in 2025 by DASTAN (the team behind Decrypt and Rug Radio), took Polymarket’s ethos and pushed it fully into the Web3 stack.

Built for permissionless participation, it runs natively on Abstract, Linea, and Celo, with expansions planned for EigenLayer.

• Volume: $20M+ USDC, 5M+ trades, 500K users

• Innovation: Chrome extension trading, $MYR token incentives, AI-assisted prediction bots

• Philosophy: Build markets like protocols, not products.

Where Kalshi connects institutions to DeFi, Myriad connects communities to conviction — making prediction markets part of daily onchain life.

How Prediction Markets Work — and Why They’re Smarter Than Polls

At their core, prediction markets are information aggregation systems — economic computers that convert human belief into quantifiable probabilities.

Every trade, every price, and every correction represents millions of micro-decisions made by people acting on their own fragments of knowledge.

Mechanism in Motion

It starts when a user creates a clear, verifiable question — something that can be proven true or false later, such as “Will Bitcoin exceed $100K by December?” or “Will a certain candidate win the election?”

The event must be objective so the network can confirm it without dispute.

That question becomes a tokenized market with two outcomes: Yes and No.

Each is priced between $0 and $1, representing the crowd’s belief.

If “Yes” trades at $0.65, it implies a 65% chance of the event occurring.

These outcome tokens are freely tradable across the network like any other onchain asset.

As trading begins, users buy or sell based on their conviction.

If they think the market underestimates the odds, they buy “Yes”; if not, they sell.

Every trade refines the collective probability, as new data, news, or sentiment instantly shifts prices.

The more participants there are, the sharper and more accurate the forecast becomes.

Behind the interface, smart contracts handle everything automatically — issuing tokens, recording trades, holding collateral, and distributing payouts once the market resolves.

They act as neutral referees, enforcing the rules transparently and without intermediaries.

When the event concludes, oracles verify the real-world result and feed it onchain.

Once confirmed, the smart contract settles instantly: holders of the correct outcome receive $1 per share, while the others expire at zero.

The beauty of this design lies in how markets outperform experts, not by knowing more, but by integrating more.

Traditional forecasting depends on concentrated expertise — analysts, polling firms, or institutional models. These systems are hierarchical by nature: insight flows from the few to the many.

Prediction markets invert that structure.

They harness distributed conviction, where every trader, no matter how small, becomes part of a collective feedback loop that constantly prices new information.

As liquidity deepens, accuracy compounds.

Each trade nudges the market closer to equilibrium, absorbing new data, correcting false narratives, and translating scattered intuition into quantified consensus.

The power of prediction markets isn’t that they eliminate human bias — it’s that they crowdsource its correction.

With crypto, prediction markets scale beyond borders. Anyone, anywhere can create or trade on events — from global elections to sports outcomes or token prices — all verified and settled onchain. This openness draws data from a far larger and more diverse crowd than any traditional market or poll, turning billions of micro-opinions into live, global probabilities. The result is a system that doesn’t just forecast outcomes — it captures how the entire world feels about them in real time.

What’s Next for Prediction Market?

Mainstream Adoption

News consumption is changing. What used to be passive scrolling has turned into active participation — audiences don’t just read headlines anymore; they trade on them.

Prediction markets capture this shift perfectly. They merge the culture of engagement with the structure of finance, giving people a way to act on conviction instead of just commenting on it.

From “Google it” → “Polymarket it”

In 2025, Polymarket became a cultural shorthand — the place where people check probabilities before checking opinions.

NFL legend Tom Brady joked on X, “Check the Polymarket,” while South Park aired an episode explaining prediction markets as “peer-to-peer betting” — a moment that marked their entry into mainstream consciousness.

These viral moments show that prediction markets are no longer confined to DeFi circles. They’ve crossed into everyday language, where markets are becoming the new media.

Builders Are Already Experimenting

Across crypto, developers are pushing prediction markets far beyond speculation:

• Lending with conviction: Using Polymarket positions as collateral in DeFi loans.

• Social trading bots: Integrating market odds into Telegram and X.

• Forecast dashboards: “Bloomberg for Prediction” tools built on Myriad and Pyth.

• Modular integrations: Protocols using event data for insurance, governance, or tokenomics triggers.

In this sense, prediction markets aren’t just apps — they’re an economic infrastructure for uncertainty.

In the next few years, prediction markets are poised to become a core layer of crypto infrastructure — sitting alongside AMMs, stablecoins, and oracles as part of the base toolkit for decentralized systems.

They won’t just reflect sentiment — they’ll help generate and direct it.

We’re already seeing the early signs:

• DeFi protocols are beginning to integrate market probabilities into risk models.

• Media outlets referencing prediction data alongside polls and analytics.

• Institutional traders using event markets to hedge political or macro risk.

As more liquidity and builders enter the space, these markets will evolve from simple betting venues into information engines that feed the entire ecosystem — from governance and pricing to reputation and coordination.

Markets, in this sense, are becoming the collective feedback loop of the crypto economy — a way to measure conviction, verify consensus, and navigate uncertainty in real time.

In a world flooded with speculation and noise, prediction markets bring something different: clarity priced in truth.

Closing

Prediction markets are becoming the connective tissue between information and value — a place where belief is priced and accuracy is rewarded.

They turn speculation into structure, transforming how we understand what’s true.

In the noise of the modern world, they offer something simple but powerful.

Market everything!

Author: chungtin.eth

Why Rollups?

When I first started following rollup research, one recurring tension struck me: we build all this off-chain complexity to make Ethereum scalable, yet we often recreate central points of trust—namely, the sequencer. It felt like a paradox: “let Ethereum be trustless,” we say, but then hand over ordering to a trusted operator.

Rollups have successfully addressed the bottleneck problem of the Ethereum mainnet, enabling billions of transactions within the Ethereum ecosystem with low gas fees and fast execution times. However, the “old but gold” blockchain trilemma remains relevant in this context of chain development.

When the scalability (each rollup shard executes transactions on its base layer and sends them to Ethereum for settlement in batches) and security (offloading security to the Ethereum mainnet) are considered, decentralization is definitely ensured.

What’s the current deal with Rollups?

Also mentioned in the article written by me on Elastic Hub about the Lean Roadmap, Ethereum is losing its value proposition to rollups running on top of the L1. Leading to several issues in multi-layer fragmentation on liquidity and UX/DX.

And how to fix all the problems above? A simple solution is, to entrust one single entity to sequence all L2 rollups. And yes, that is when we mean “get based” in the title of the article. But first, let’s dive into why the centralized sequencer should be replaced.

Centralized Sequencer Incidents

Let’s take a look at one of the most active rollups nowadays, Base from Coinbase. It is undeniable that Base draws a huge traffic and consumer adoption to the Ethereum ecosystem. But the current rollup infrastructure Base is following is not perfect.

If you go to L2 Beat and go to the Liveness section, you can find that in the past 10 months, Base has faced several incidents, including 2 critical block production halts on mainnet.

All of these incidents share a single point of failure — the sequencer.

In the most recent case, the outage stemmed from a handoff between a healthy sequencer and a backup that wasn’t. When control shifted, the secondary sequencer failed to produce blocks correctly, causing the entire network to stall.

This highlights a structural fragility in today’s rollup architectures: even with redundancy, sequencing remains a centralized dependency, and a misconfigured or degraded node can halt an otherwise healthy system.

That tension is what gives urgency to based rollups. We’re not just chasing higher throughput. We’re chasing trust coherence — making sure that every piece of the stack lives under Ethereum’s security umbrella, not beside it.

What is Based Rollup?

The based rollup we are talking about is what introduced by Justin Drake in the discussion posted on the Ethereum forum around late 2022 - To be clear, prior the the forum post of Justin Drake, there were several variants of the mentioned concept that had been researched and pushed in the market, but here we only talk about the standard term “Based rollup” introduced by Justin Drake

To keep it simple, Based rollups aim to enhance Ethereum scalability by integrating L2 operations with L1 for improved data availability and security. They leverage L1 for sequencing and settlement, avoiding the need for centralized sequencers, which promotes decentralization.

“A rollup is said to be based, or L1-sequenced, when its sequencing is driven by the base L1. More concretely, a based rollup is one where the next L1 proposer may, in collaboration with L1 searchers and builders, permissionlessly include the next rollup block as part of the next L1 block.” - Justin Drake, Based rollups—superpowers from L1 sequencing

How does Based Rollup work?

So, how based rollup can solve the issue of centralized sequencer rollup infrastructure? As mentioned in the definition, as the sequencing process now happens directly on the L1, the requirement for a third-party-controlled sequencer setup is no longer needed. Hence, improving the security, handling maximum decentralization of the rollup, and economic alignment with the L1.

Limitations and Potential Solutions

However, there are also significant concerns in the design. When we say “economic alignment with the L1”, rollups now are no longer able to extract MEV economic value and reorder transactions before sending them to the L1. Even though this is a boost in the security model, there is a huge trade-off for the rollup’s revenue model.

Advantages and disadvantages comparison of Based Rollup and Centralized Sequencer Rollups

MEV / Ordering Revenue

As stated in an article of Alchemy about the revenue model of rollups:

“With the right sequencing and ordering policy, a rollup can capture. MEV as transparent chain revenue. MEV capture is a design choice & isn’t guaranteed income. Example: Arbitrum Orbit recently launched Timeboost, which replaces naive FCFS with an express-lane auction each round. Traders bid off-chain, proceeds go on-chain. The auction fees go to the Arbitrum sequencer and are then distributed to the Arbitrum DAO and Developer Guild. Timeboost crossed $3M+ in fees collected post-launch and has continued to ramp. If you run an Arbitrum chain, you can enable Timeboost and keep your chain’s auction revenue.”

In traditional rollups, the sequencer sits at the center of MEV capture, deciding transaction ordering and directly profiting from auction mechanisms like Timeboost.

However, in a based rollup, sequencing is delegated to Ethereum’s own block proposers, not an independent sequencer. This alignment means that MEV revenue — instead of flowing to a centralized rollup operator — is recaptured by Ethereum’s validator set through the L1 PBS market.

In short, while systems like Arbitrum’s Timeboost allow rollups to monetize MEV locally, based sequencing routes that same value back to Ethereum itself, strengthening the network’s economic security but removing MEV as a direct revenue stream for rollup operators.

But these critical issues with MEV are also covered by Justin Drake and Vitalik (Reference “MEV for Based Rollups”). Vitalik proposed a method called “Total Anarchy”.

Preconfirmations

Preconfirmation can be explained in a form as “a reliable preview of the final confirmation”. In a traditional rollup with a centralized sequencer, users can receive instant feedback. The sequencer can preconfirm transactions almost immediately — even milliseconds after submission — giving users and applications (especially traders and dapps) a strong inclusion guarantee and smoother UX.

But in a based rollup, sequencing is performed by Ethereum L1 proposers, whose timing is tied to Ethereum’s 12-second slot cadence and probabilistic proposer selection. That means:

• The next L1 proposer may not yet be known (until the slot begins).

• The rollup itself cannot give strong inclusion guarantees before the next proposer is active.

• The latency for preconfirmation could stretch to multiple seconds or more — too slow for DeFi users who expect sub-second response times.

As based rollups inherit Ethereum’s timing constraints, making near-instant preconfirmation more complex than in centralized sequencer models. Below are some references related to preconfirmation in based rollups. If you want to research more, or short “based preconfirmations”:

• Taiko - based preconfirmations: https://docs.taiko.xyz/taiko-alethia-protocol/protocol-design/based-preconfirmation/

• Based on preconfs FAQ: https://hackmd.io/@samlaf/based-preconfs-faq

Plus, a few other issues of based rollups are also discussed in this forum post: https://ethresear.ch/t/understanding-based-rollups-pga-challenges-total-anarchy-and-potential-solutions/21320

To conclude this article, there are trade-offs in each design of the rollup, based and non-based. But as can be seen, this direction of based rollup will likely be the reasonable approach for the sake of Ethereum mainnet and its rollup ecosystem. Even though there are challenges but as always, Ethereum is “the longest chain,” so it always faces the problems that only the frontier chain faces.

We will cover more about preconfirmation and based rollup ecosystem in another article and hope that you already get the idea why we need based rollup and the exciting things coming ahead!

Current state of Ethereum Virtual Machine

For over a decade, the Ethereum Virtual Machine (EVM) has been the backbone of decentralized computation — powering millions of smart contracts and enabling the rise of decentralized applications. Its simple, stack-based architecture made it approachable and extensible, fueling the explosive growth of the Ethereum ecosystem.

However, as blockchain technology matured, the limitations of the EVM became increasingly apparent. High gas costs, difficulties with formal verification, and inefficient execution models have all exposed the cracks in its once-revolutionary design.

The EVM worked well in its early years as Ethereum’s execution environment. But the advent of rollups, parallelized blockchains, and zero-knowledge systems now demands a more efficient and verifiable virtual machine. Competing designs such as the SVM (Solana Virtual Machine) and MVM (Move Virtual Machine) showcase alternative philosophies — from parallel execution to resource-based safety — that make the legacy EVM look increasingly dated.

That said, the EVM remains dominant today, serving billions of transactions and wallets across multiple chains. Yet, the opportunity for innovation is clear — we can do better.

Vitalik’s Proposal for the Long-term L1 execution layer

With those problems in mind, the co-founder of Ethereum, Vitalik Buterin, has published a proposal on the Ethereum Magician’s discussion forum to discuss what a reasonable future for Ethereum’s execution layer is. The idea of the proposal is to replace the EVM with RISC-V as the virtual machine language. Long-term L1 execution layer proposal: replace the EVM with RISC-V

This idea isn’t unique to Ethereum. Across the blockchain landscape, RISC-V has been gaining attention as a potential next-generation execution environment.

• In 2023, core developers in the Polkadot ecosystem discussed exploring RISC-V as an alternative to WASM for executing smart contracts. The discussion — Exploring alternatives to WASM for smart contracts — reflected similar motivations: simplification, performance, and verifiability. (For more, see the resource repository I compiled on the transition from WASM to PolkaVM for the upcoming JAM era: learn-jam).

• The Nervos CKB blockchain has already implemented a RISC-V-based VM, demonstrating the feasibility and advantages of adopting RISC-V as a base instruction set for blockchain computation. Learn more about Nervos here.

The proposal itself is highly technical, and it wouldn’t be practical to dive into every low-level detail of the suggested changes within this article. On a high level, Vitalik mentions these key problems and changes to the current design.

Why are changes needed?

The current EVM is packed with precompiles, which increase the complexity when adding new features to the EVM. Compared with a simple blockchain like Bitcoin, the EVM is more general-purpose and complicated. (Reference: Simplifying the L1)

RISC-V provides a compelling alternative.

It is a standardized virtual machine language, similar in concept to EVM bytecode, but designed with minimalism (~47 base instructions) and backed by a mature LLVM ecosystem (Rust, C++, Go).

Other advantages of using RISC-V as the execution layer include:

• Better tooling and developer familiarity.

• Easier integration with zero-knowledge proving systems.

• A strong path toward long-term optimization and formal verification.

More than that, RISC-V is an important piece for the zkEVM (Reference: Instruction Set Architecture -Ethereum zkEVM book). As mentioned in the handbook of the zkEVM, RISC-V brings a strong tooling ecosystem and developer familiarity. Different from the EVM bytecode, RISC-V is used widely in system programming as well.

How the VM migration will be executed?

Opcodes Evolve, Core Concepts Remain

This is a breaking change to the current execution layer, but it does not eliminate the entire thing we currently have on the EVM. Concepts of accounts, cross-contract calls, storage, etc, are not changed. But on a deeper level, like some Opcodes are eliminated and likely will be replaced by RISC-V syscalls (For reference only, RISC Linux syscall table).

RISC-V is compatible with smart contract languages

Developers can write smart contracts in Rust or in Solidity, but the expectation for the smart contract language would still be Solidity (or Vyper) as the common approach to writing smart contracts. Even though Rust is a strong and type-safe system language, it is not a beginner-friendly approach compared to scripting languages like Solidity and Vyper, which are relatively similar to JavaScript and Python.

As I am originally coming from the Polkadot ecosystem, the current design that Polkadot has for PolkaVM could be a good material to learn from how things would work if this proposal is passed.

Backward Compatibility is Ensured

Old-style EVM contracts will continue to work and will be fully two-way interoperable with new-style RISC-V contracts. There are a couple of ways to do this, which I will get into later in this post.

As confirmed by Vitalik, legacy smart contracts that are already deployed on Ethereum will continue to work without any changes. Think of it like Java bytecode evolving to run on modern JITs: the developer experience stays the same, but the engine underneath is radically better.

Vitalik also breaks it down further in Simplifying the L1 to identify the goal for a seamless VM transition, which does not break things but can still bring the EVM to a new state.

Lean Roadmap’s Execution Layer

Lean execution is EVM 2.0: a minimal, SNARK-friendly instruction set (possibly RISC-V; pronounced “risk five”), boosting performance while preserving EVM compatibility and its network effects - Lean Roadmap, Justin Drake: Lean Ethereum

A while ago, Elastic Hub also published an article about the Lean Roadmap and the vision of Justin Drake for the next decade of Ethereum’s protocol. In the aforementioned proposal, the execution layer will be replaced by RISC-V to tackle the challenging problems of the current EVM.

Ethereum’s move toward a RISC-V-based execution layer marks the next major evolutionary step for its virtual machine. The transition won’t abandon the EVM’s legacy but will refine it — simplifying the base layer, unlocking new performance potential, and positioning Ethereum for the next decade of innovation.

Author: Tin Chung

Attending DevCon 7 in Bangkok was an incredible experience, filled with fresh insights and exciting promises for the future of Ethereum. It was my first time sitting among the audience, listening to presenters share updates on new EIPs and Ethereum’s roadmap. Among all the sessions, the highlight for me was the Main Stage discussion where Justin Drake introduced Beam Chain—the most exciting topic of the event, at least for me.

Justin Drake’s presentation about Beam Chain.

To understand why Beam Chain is one of the most key upgrades Ethereum has in the next decades. Let’s step back and see what Ethereum has changed over the years and what is waiting for us in the future.

For your context (we will revisit this in the later part of the article), the Ethereum Foundation has released a new blog post called “Lean Ethereum,” which is a strategic direction for Ethereum in terms of long-term protocol development, and Beam Chain is the former name for the project now known as Lean Consensus.

Current state of Ethereum

Ethereum has undergone a series of major protocol-level upgrades that have fundamentally reshaped the direction of the entire ecosystem. From The Merge or Beacon Chain upgrade, which transitioned the network’s consensus mechanism from Proof of Work to Proof of Stake, to the more recent Dencun Upgrade, which introduced proto-danksharding (EIP-4844 as the next milestone on the Ethereum roadmap.

And if counting other minor to major protocol improvements from the number of approved EIPs, we can find that there are more than a hundred EIPs deployed/reviewed on mainnet every year. (https://eipsinsight.com/)

Number of yearly EIPs growth chart

Ethereum Mainnet Challenges

Although Ethereum’s token price has been performing strongly in recent months, supported by growing institutional interest and Wall Street adoption (CNBC), the challenges facing the Ethereum mainnet tell a different story.

So, what exactly is the issue with the Ethereum mainnet? Here, we’re not referring to its broader ecosystem of rollups, Plasma chains, or side-chains such as Optimism or zkSync. We’re talking specifically about Ethereum as a standalone Layer 1 network.

The Dencun Upgrade addressed throughput bottlenecks by introducing blob storage, which lowered costs and spurred the creation of more rollups on Ethereum. However, this shift also meant that most new applications migrated to these scalable rollups or alternative L1s, causing user activity on the mainnet itself to decline.

Future of Ethereum (1): Beam Chain

On top of that, Dencun changed the rollup fee model completely: rollups stopped submitting fees directly to Ethereum, raising concerns about the long-term economic sustainability of the base chain.

In this context, criticisms began to surface—claims that “Ethereum’s rollup-centric roadmap is flawed” or that “Ethereum’s development is too slow to succeed.” These critiques highlight the tension between Ethereum’s long-term vision and the immediate realities of its evolving ecosystem.

About Justin Drake

Justin Drake’s Twitter/X

If you are not familiar with Justin Drake (LinkedIn), he is a prominent researcher at the Ethereum Foundation (since December 2017). Justin is widely recognized for his expertise in cryptographic protocols and blockchain technology.

He has played a central role in the development of Ethereum 2.0, with a focus on Proof of Stake (PoS) and sharding. His contributions also tackle challenges like data availability and block withholding attacks, introducing innovative ideas such as the “Blob” concept in the mentioned Dencun Upgrade.

Lean Consensus Breakdown

Beam Chain Overview

Beam Chain was proposed by Justin Drake and was introduced first time at the DevCon 7 in Bangkok.

And to understand what work needs to be done, take a look at the timeline below from the DevCon presentation.

Check out the Youtube Link for more information

Feeling overwhelmed? That’s understandable. These are significant changes to the Ethereum protocol, and they’re part of a long-term roadmap—a four-year plan, not something that can be accomplished overnight.

As can be see on the timeline, Drake’s Beam Chain proposal touches every part of the Ethereum protocol, covering 3 core layers: ***Data layer (DL), Execution Layer (EL), and Consensus Layer (CL)***

“The goal is to try and transition in a safe and fast manner from the Beacon chain that we have today, to this Beam chain, which is much, much closer to the final design of Ethereum” - Drake said.

The proposal aims to upgrade Ethereum’s Beacon Chain by addressing legacy technical issues, introducing advanced cryptographic techniques, strengthening defenses against future threats such as quantum computing—which could compromise current encryption—and improving transaction speed.

As Justin Drake noted, blockchain innovation moves quickly, and the Beacon Chain, built five years ago, is now showing its age. His “Beam Chain” proposal forms part of a broader effort to scale Ethereum, especially as competitors like Solana gain traction with faster and cheaper transactions. A key feature of Beam Chain is the integration of ZK-SNARKs, a cutting-edge cryptographic technology.

Deep Dive Into Lean Roadmap

Based on the Lean Ethereum Roadmap, there will be a different upgrades proposed applying to all the sub-layers of the Ethereum Layer1, including:

• Lean Consensus (Beacon Chain 2.0): A stronger, more secure, and more decentralized version of the Beacon Chain that delivers transaction finality within seconds. It was previously called “Beam Chain.”

• Lean Data (Blobs 2.0): An upgrade to blobs that makes them resistant to future quantum computers, while also allowing flexible blob sizes so developers can use them more like traditional calldata.

• Lean Execution (EVM 2.0): A streamlined, SNARK-friendly version of the Ethereum Virtual Machine (possibly based on RISC-V) that improves performance but still keeps compatibility with the existing EVM and its large ecosystem.

The latter part of the Lean Roadmap is about Lean Cryptography, which aims at solving the looming quantum threat and pushes Ethereum to keep up-to-date with the rise of SNARKs.

If you are interested, you can find all the progress of the Lean Roadmap at the Lean Consensus Roadmap

- This contains all the resources, calls, and meeting notes related to the Lean Consensus implementation.

Wrap up

Yes, it can feel overwhelming at times. But this four-year plan reflects Ethereum’s core strength: a community of researchers, developers, and builders committed to long-term innovation rather than short-term hype. As cryptography advances, quantum risks loom, and new blockchains challenge the status quo, Ethereum continues to adapt while preserving the network effects that make it the world’s most trusted smart contract platform.

The coming years will define whether Ethereum can maintain its leadership in an increasingly competitive landscape—but one thing is certain: the protocol is not standing still.

Summary

At the time of writing, the total cryptocurrency market capitalization has reached $4.3 trillion (one sixth the marketcap of Gold), with Bitcoin trading at $116,000 and Ethereum at $4,600. These milestones underscore a historic transformation underway in the global financial system.

For over a century, financial infrastructure has been dominated by centralized institutions—banks, governments, and payment networks. Today, that paradigm is being challenged as decentralized technologies like Ethereum emerge as the foundation of a new digital economy.

While the current financial infrastructure has empowered trillion transactions across the globe in the past centuries, there are a lot of inefficiencies and huge barriers for entry and systematic risks. Hence, Ethereum from an ascent project turns into the robust infrastructure for the upcoming financial innovations and daily asset transfers.

The Origin of Ethereum

To grasp the long-term value of Ethereum, it’s essential to first understand why it was created. While Bitcoin established itself as a “store of value” or “digital gold,” Ethereum emerged with a broader vision.

Rather than focusing on a single monetary use case like its predecessor, Ethereum was designed as a programmable blockchain — a platform where anyone can build and launch new financial technologies with minimal barriers to entry.

This critical distinction lies in its ability to execute automated, self-executing smart contracts, which function as digital agreements that run independently once deployed.

This capability is the fundamental engine altering the very economics of finance, offering a new "Internet of Value" where money, credit, ownership, and trust are created and managed by code rather than by traditional institutions. The transformation is so significant that it threatens to shift value away from legacy intermediaries and toward open, programmable networks, making finance more competitive, transparent, and borderless for all participants.

Last Decade of Innovations on Ethereum (2014 - 2024)

The first decentralized exchange

Was introduced initially as a smart contract application on Bitcoin but adopted widely on Ethereum, proving the core value of Ethereum as the “programmabe blockchain”. The concept of a decentralized exchange (DEX) emerged from the same motivation that led to the creation of Bitcoin and Ethereum: removing reliance on centralized intermediaries. Unlike centralized exchanges (CEXs), which custody user funds and act as trusted third parties, DEXs allow peer-to-peer trading directly on the blockchain through smart contracts.

Decentralized exchange nowadays are no longer a rare concept, and we have seen thousands of Automated Market Makers (AMMs) operated and secured user’s fund in a decentralized way across the globe. Most common one can be named like Uniswap, KyberSwap, CoW Swap…

But the early history of decentralized exchange on blockchain was not originally AMMs:

1. Bitcoin-based protocols (2014–2015): The first attempts at decentralized trading were built on Bitcoin. Projects like Counterparty and Bisq introduced ways to exchange assets without relying on centralized order books, but adoption was limited by Bitcoin’s scripting constraints and low throughput.

2. EtherDelta (2016–2017): Widely recognized as the first Ethereum-based DEX, EtherDelta allowed users to trade ERC-20 tokens through smart contracts. It was revolutionary in proving that an exchange could run entirely on-chain. However, EtherDelta relied on an order book system, which made it slow, clunky, and expensive during periods of high gas fees.

Evolution of DEXs

As outlined in the introduction, the traditional financial system we rely on for everyday payments has never been flawless.

• Centralized trust: Financial services depend on intermediaries—clearing houses, correspondent banks, custodians—each introducing friction, costs, and counterparty risk.

• Limited accessibility: Billions remain underbanked or entirely excluded due to geography, regulatory barriers, or high fees.

• Slow innovation cycle: Legacy rails such as SWIFT, ACH, and card networks evolve at a glacial pace, constrained by decades-old infrastructure.

The 2008 financial crisis highlighted the fragility of this architecture, sparking demand for decentralized alternatives.

The breakthrough came with Uniswap (2018), which introduced the Automated Market Maker (AMM) model. Instead of using an order book, AMMs rely on liquidity pools and algorithms to determine prices. This dramatically improved user experience and liquidity efficiency, kicking off the modern era of DEXs.

• From order books to pools: Traditional exchanges rely on buyers and sellers placing orders. Uniswap replaced this with liquidity pools where anyone could deposit assets, and an algorithm determined the price dynamically.

• Open participation: Instead of relying on professional market makers, anyone could become a liquidity provider and earn fees.

• Improved efficiency: By abstracting away order books, AMMs made trading smoother, especially for long-tail assets with limited demand.

This model revolutionized the user experience of decentralized exchanges (DEXs). No more waiting for counterparties, no intermediaries—just instant swaps directly on-chain. The success of Uniswap sparked an explosion of innovation: DEXs became the backbone of DeFi, liquidity provision turned into a global yield opportunity, and Ethereum cemented its position as the digital backbone of programmable finance.

The Merge: From “Proof of Work” to “Proof of Stake”

Ethereum’s ability to serve as a foundational financial layer is rooted in its innovative technical and economic architecture. A pivotal moment in this evolution was "The Merge" in 2022, when the network transitioned from a competitive, energy-intensive Proof-of-Work (PoW) consensus mechanism to a more sustainable Proof-of-Stake (PoS) system.

Originally, "the Merge" referred to the most important event in the Ethereum protocol's history since its launch: the long-awaited and hard-earned transition from proof of work to proof of stake. - Vitalik Buterin, Possible futures of the Ethereum protocol, part 1: The Merge

In the PoS model, network participants known as "validators" are chosen to create new blocks and confirm transactions based on the amount of cryptocurrency they "stake" as collateral. To run a solo validator node, a user must stake a minimum of 32 ETH, though staking pools and centralized platforms allow for participation with much smaller amounts, thereby lowering the barrier to entry.

This new economic structure is not just a technical curiosity; it addresses a major barrier to the adoption of digital assets by professional investors. For a long time, traditional finance struggled to apply its familiar valuation frameworks to a purely speculative asset like ETH. The shift to a yield-bearing asset that generates cash flow from network activity changes that equation entirely. The ability to earn a staking yield of around 3% annually, coupled with the potential for a deflationary supply , allows professional investors to analyze ETH using time-honored valuation models, such as discounted cash flow. This fundamental transformation bridges a critical conceptual gap, making Ethereum a more comprehensible and attractive asset for institutional strategies focused on long-term value creation.

As shown in the beaconcha.inStaked ETH Chart - Open Source Ethereum Blockchain Explorer …, since The Merge —which transitioned Ethereum’s Mainnet from Proof of Work to Proof of Stake — the amount of staked ETH has grown steadily. This sustained growth highlights the broader adoption of Ethereum’s model within the global economy.

Layer 2 brings Ethereum closer to institutions

Also fall into the protocol-level breakthroughs, if Proof Of Stake opened a new window for Ethereum in the consensus mechanism and the economic model, Ethereum's mainnet (Layer 1) has historically faced significant scalability challenges, leading to network congestion, slow transaction times, and prohibitively high fees, or "gas fees," during periods of high demand.

These limitations have been a major impediment to its widespread adoption for microtransactions and large-scale enterprise applications. The solution has been a focus on developing Layer-2 (L2) solutions, which are built on top of the main blockchain to handle transactions off-chain while still leveraging Ethereum's core security.

In this article, we don’t mention much about the underlying infrastructure of the Layer 2, but there are some valuable articles from Vitalik

• Different types of Layer2

• Layer 2s as cultural extensions of Ethereum

• How do layer 2s really differ from execution sharding?

By moving transaction execution off the Ethereum mainnet while anchoring security and finality back to Layer 1, L2s unlock the kind of performance institutions expect from global financial infrastructure.

• Scalability at institutional grade: Rollups—whether Optimistic or Zero-Knowledge (ZK)—are now capable of handling thousands of transactions per second, reducing settlement times from minutes to seconds.

• Predictable, lower costs: With batching and compression, transaction fees on L2s can be magnitudes cheaper than L1 Ethereum. This makes microtransactions, high-frequency trading, and complex financial instruments economically viable.

• Customizable environments: Application-specific rollups and modular execution layers allow financial institutions to design settlement systems tailored to their needs while still inheriting Ethereum’s security.

We are already seeing the results:

• JPMorgan has piloted tokenized bond transactions on Ethereum-based networks.

• BlackRock launched its tokenized money market fund on Ethereum, settling billions of dollars in assets.

• Visa has experimented with stablecoin settlement on Ethereum and L2s, citing efficiency gains.

Not only that, top crypto-native companies also decided to build a Layer 2 on Ethereum:

• https://www.superchain.eco/chains

• https://www.linkedin.com/pulse/robinhoods-l2-just-beginning-six-key-drivers-rollup-boom-gogol-ndske

• https://help.coinbase.com/en/coinbase/other-topics/other/base

• https://www.optimism.io/blog/welcoming-ink-to-the-superchain

For institutions, Layer 2 is the bridge between Ethereum’s open innovation and the requirements of enterprise-scale finance. It ensures that Ethereum can evolve from being a “sandbox for experimentation” into the backbone for global settlement, tokenized assets, and institutional-grade financial products.

Global Payment System with Stablecoin

“Our vision for Ethereum is the Infinite Garden. Ethereum is more than a technology, it is a diverse ecosystem of individuals and organizations that build and grow alongside a protocol. The Ethereum ecosystem wasn't something that was designed by any one individual or organization, but it organically evolved with the support of people who nurture the ecosystem to become more vibrant and diverse.” - Ethereum Foundation, Infinite Garden

With the rise of Layer 2 networks, Ethereum now hosts a diverse set of sub-ecosystems, each extending its scalability while ultimately reinforcing the value of the Ethereum mainnet.

At the heart of this shift is a reimagined global payment system, among these, one of the most significant names is Base—Coinbase’s Layer 2 built on top of Optimism—which is rapidly emerging as the leading infrastructure for stablecoin payments. For decades, cross-border transfers have been burdened by high fees, delays, and reliance on intermediaries. Ethereum’s programmable architecture is rewriting the rules by enabling fast, borderless, and low-cost settlements.

• Stablecoins as a universal settlement layer: Assets such as USDC, USDT, and DAI already process billions of dollars in daily transactions. On Ethereum and its L2s, these stablecoins serve as the backbone of near-instant global payments. (CNBC report on stablecoin adoption)

• 24/7 availability: Unlike banks, which close on weekends and holidays, Ethereum-based payment networks operate continuously, in sync with a digital-first economy.

• Borderless access: From entrepreneurs in Vietnam to freelancers in Nigeria to enterprises in the U.S., Ethereum enables equal participation in the same global payment rails.

Base exemplifies this evolution. Built with Optimism’s OP Stack, Base is optimized for payments at scale. With the introduction of Flashblocks, Base can process up to 200 million transactions per second, unlocking near-infinite capacity for stablecoin-driven commerce. (Base Flashblocks documentation)

On top of this infrastructure, new protocols are emerging to bridge payments with intelligent automation. One example is x402, an open standard designed for agent-to-agent financial interactions. Backed by initiatives from Google and the broader agentic commerce ecosystem, x402 enables payments to be embedded directly into AI-powered applications. (Google announcement, x402.org, GitHub)

Together, stablecoins, Base, and protocols like x402 point toward a future where Ethereum is not just the settlement layer for decentralized finance—it becomes the universal backbone for global payments, connecting people, businesses, and autonomous systems at planetary scale.