Backpack Goes Open Source

In a significant move for the Solana ecosystem, Armani and Kordil's Backpack project has recently gone open source. This development marks a major milestone for the project, which is considered the spiritual successor to the Solana wallet. Open sourcing Backpack is a big deal for several reasons.

Firstly, it enhances security. As the old adage goes, "every smart contract is a bounty, and the best defense is transparency." By making the code fully transparent and open, the project becomes inherently more secure. This move allows developers and security researchers to scrutinize the code, potentially uncovering and addressing vulnerabilities before they can be exploited.

Secondly, open sourcing Backpack furthers the cultural shift towards greater transparency in the Web3 space. This aligns with the ethos of decentralization and community-driven development that is at the heart of many blockchain projects.

Thirdly, it opens up new possibilities for innovation. When code is open source, other developers can fork it, build upon it, and create new variants. This ability to "exit" or create alternatives is crucial in the Web3 space, fostering a more dynamic and innovative ecosystem.

Lastly, it's a boon for developers. They can now delve into the inner workings of Backpack, learning from its architecture and potentially contributing to its improvement. This kind of open collaboration can lead to rapid advancements in the technology.

XNFTs and Creator Empowerment

The conversation then shifted to XNFTs, a technology closely associated with Backpack. A particularly interesting use case for XNFTs was highlighted: default collection preferences. This feature allows creators to embed preferences directly into their NFTs, giving them more control over how their creations are traded and displayed.

For instance, a creator could set a default marketplace for their NFTs to be listed on. This puts more power back into the hands of NFT creators, especially in light of recent discussions about creator royalties not being consistently respected across platforms.

This development is significant because it addresses a pain point in the current NFT ecosystem. By allowing creators to set default behaviors for their NFTs, it provides a technical solution to ensure their intentions are respected, even if they can't be strictly enforced at the protocol level.

Helium Moves to Solana

One of the biggest pieces of news in the Solana ecosystem is Helium's decision to migrate to the Solana blockchain. Helium, which has been operating its own blockchain for its Internet of Things (IoT) and mobile networks, has officially decided to take advantage of Solana's infrastructure.

This move, formalized through proposal HIP 70, represents a significant vote of confidence in Solana's capabilities. Helium's decision to migrate its infrastructure to Solana is expected to bring numerous benefits, including increased speed, lower costs, and improved scalability.

The migration is a testament to Solana's growing reputation as a high-performance blockchain capable of handling complex, large-scale applications. It also highlights the increasing trend of projects choosing to build on existing, well-established blockchains rather than maintaining their own chains.

Helium's T-Mobile Partnership

In addition to its move to Solana, Helium has also announced a partnership with T-Mobile, one of the largest telecom groups in the United States. This partnership aims to provide continuous coverage for Helium Mobile users, leveraging both Helium's decentralized network and T-Mobile's established infrastructure.

Under this arrangement, when a Helium Mobile user is in an area without Helium nodes, T-Mobile's network will step in to provide service. This hybrid approach ensures seamless connectivity, regardless of whether the user is connected to a Helium node or T-Mobile's network.

This partnership is a significant step for Helium, as it addresses one of the main challenges faced by new, decentralized networks – achieving widespread coverage. By partnering with an established player like T-Mobile, Helium can offer its users a more reliable service while continuing to build out its own network.

The $160 Million Wintermute Hack

In a stark reminder of the ongoing security challenges in the crypto space, market maker Wintermute suffered a major hack, resulting in a loss of approximately $160 million. This incident highlights the continued vulnerability of even sophisticated players in the crypto ecosystem.

The hack was particularly interesting due to the nature of the vulnerability exploited. Wintermute had been using a tool called Profanity to generate vanity Ethereum addresses – addresses with a specific pattern, in this case, multiple leading zeros. These addresses were desirable because they resulted in slightly lower gas fees, which can add up to significant savings for a high-volume market maker.

However, a bug in the Profanity tool, which had been flagged by security researchers a week or two prior, left these addresses vulnerable. Despite the warning, Wintermute hadn't moved their funds in time, resulting in the massive theft.

This incident serves as a cautionary tale about the risks associated with using third-party tools, even for seemingly innocuous purposes like generating vanity addresses. It also underscores the importance of staying up-to-date with security advisories and acting quickly when vulnerabilities are discovered.

Tron's Surprising Activity Levels

In a surprising revelation, Tron has emerged as the blockchain with the highest daily activity. This statistic caught many off guard, as Tron is often overlooked in discussions about leading blockchain platforms.

Tron's high activity levels are attributed largely to its position as the second-highest stablecoin market cap. Many users are leveraging Tron's network for low-cost stablecoin transfers, driving up the number of daily transactions.

This data point serves as a reminder that the crypto ecosystem is much larger and more diverse than what's typically discussed on Crypto Twitter. It highlights the gap between the narratives that dominate crypto discourse and the actual usage patterns of blockchain networks.

The Rise of Meme Coins

In another unexpected turn of events, meme coins continue to hold significant positions in the cryptocurrency market cap rankings. Shiba Inu, for instance, has risen to become the 10th or 11th largest cryptocurrency by market cap, surpassing even established projects like Tron.

Similarly, Dogecoin continues to maintain a higher market cap than many "serious" projects, including Polygon. This persistence of meme coins in the top rankings raises questions about market dynamics, investor psychology, and the factors that drive value in the crypto space.

While some view the prominence of meme coins as a sign of market irrationality, others see it as a testament to the power of community and narrative in the crypto space. Regardless of one's perspective, the continued relevance of meme coins is a phenomenon that can't be ignored in any comprehensive analysis of the crypto market.

Global Currency Dynamics and Crypto

The podcast touched on the broader macroeconomic context, particularly the strength of the US dollar relative to other global currencies. This discussion highlighted how these currency dynamics are impacting the perception and valuation of cryptocurrencies.

One interesting point raised was how the dominance of USD in crypto pricing might be skewing perceptions of crypto performance. As Sam Bankman-Fried (SBF) pointed out in a tweet, if crypto prices were measured against a basket of world currencies instead of just USD, the narrative around recent price movements might be quite different.

This perspective is particularly relevant given the recent weakness of currencies like the British pound. When viewed through this lens, holding crypto assets might have actually served as a hedge against currency devaluation for holders of certain fiat currencies.

This discussion underscores the importance of considering multiple perspectives when evaluating crypto asset performance. It also highlights the potential role of cryptocurrencies as a hedge against currency instability, particularly in economies experiencing high inflation or currency devaluation.

The Future of L1 Blockchains

The podcast also delved into a thought-provoking question about the future of Layer 1 (L1) blockchains. With Ethereum scaling solutions promising to make block space much cheaper, and existing L1s like Solana already offering low-cost transactions, what value do new L1 blockchains bring to the ecosystem?

This question touches on a fundamental debate in the blockchain space – whether the future will be dominated by a few major L1s with various L2 solutions built on top, or if there's room for multiple, specialized L1 blockchains.

The hosts compared the development of blockchains to the growth of cities, suggesting that while there might seem to be redundancy now, each blockchain is like a plot of land with the potential to develop into a unique and valuable ecosystem. They argued that this competition among L1s drives innovation and provides options for developers and users.

However, they also acknowledged that not all L1s will succeed. Those that can create new use cases, draw in new audiences, or offer significant advantages over existing options are more likely to thrive. Simply being marginally faster or cheaper than existing solutions may not be enough to create a sustainable competitive advantage.

Global Crypto Innovation and Funding

The final segment of the podcast addressed the global nature of crypto innovation and the challenges of funding projects outside traditional tech hubs. While much of the usage and developer activity in crypto is happening in emerging markets like India, Vietnam, and Indonesia, the majority of venture capital funding still comes from the United States and other Western countries.

This geographic mismatch between innovation and capital presents both challenges and opportunities. On one hand, it can make it more difficult for promising projects in emerging markets to secure funding. On the other hand, it creates opportunities for investors willing to look beyond their local markets.

The hosts noted that this situation is gradually changing, with more VC firms opening offices in crypto-friendly jurisdictions outside the US. They also pointed out that truly promising projects, regardless of location, have generally been able to secure funding.

However, they acknowledged that US-based projects might still have an easier time raising funds due to proximity and familiarity. This friction could potentially slow the pace of innovation in regions outside the US, even as these regions drive much of the actual adoption of crypto technologies.

The discussion highlighted the need for more globally distributed funding sources in the crypto space to match the global nature of crypto innovation and adoption. It also underscored the opportunity for investors willing to look beyond traditional tech hubs to find the next big innovations in the crypto space.

Conclusion

This episode of the Superteam Crypto Twitter Round Up covered a wide range of topics, from significant developments in the Solana ecosystem to broader trends in the global crypto landscape. The open-sourcing of Backpack and Helium's move to Solana represent major steps forward for the Solana ecosystem, highlighting its growing strength and appeal.

The Wintermute hack serves as a sobering reminder of the ongoing security challenges in the space, while discussions about currency dynamics and the future of L1 blockchains provide food for thought about the long-term evolution of the crypto ecosystem.

Finally, the conversation about global crypto innovation and funding highlights both the challenges and opportunities presented by the increasingly global nature of the crypto space. As the industry continues to evolve, bridging the gap between global innovation and capital will be crucial for realizing the full potential of blockchain technology.

Facts + Figures

• Backpack, a spiritual successor to the Solana wallet, has gone open source, enhancing security and fostering innovation.
• XNFTs now allow creators to set default collection preferences, giving them more control over how their NFTs are traded and displayed.
• Helium has officially decided to migrate to the Solana blockchain, as formalized through proposal HIP 70.
• Helium has partnered with T-Mobile to provide continuous coverage for Helium Mobile users.
• Market maker Wintermute suffered a hack resulting in a loss of approximately $160 million due to a vulnerability in the Profanity tool used to generate vanity Ethereum addresses.
• Tron has emerged as the blockchain with the highest daily activity, largely due to its position as the second-highest stablecoin market cap.
• Shiba Inu has risen to become the 10th or 11th largest cryptocurrency by market cap, surpassing established projects like Tron.
• Dogecoin maintains a higher market cap than many "serious" projects, including Polygon.
• The US dollar has shown significant strength against other global currencies, impacting the perception and valuation of cryptocurrencies.
• While much of the usage and developer activity in crypto is happening in emerging markets, the majority of venture capital funding still comes from the United States and other Western countries.

Questions Answered

What is Backpack and why is it going open source?

Backpack is a project considered the spiritual successor to the Solana wallet. It's going open source to enhance security, further the cultural shift towards transparency in Web3, open up new possibilities for innovation, and allow developers to learn from and contribute to its code. This move aligns with the ethos of decentralization and community-driven development that is central to many blockchain projects.

How does Helium's move to Solana benefit both parties?

Helium's migration to Solana brings numerous benefits to both parties. For Helium, it provides increased speed, lower costs, and improved scalability for its IoT and mobile networks. For Solana, it represents a significant vote of confidence in its capabilities and adds a major project to its ecosystem. This move highlights Solana's growing reputation as a high-performance blockchain capable of handling complex, large-scale applications.

What caused the $160 million Wintermute hack?

The Wintermute hack was caused by a vulnerability in a tool called Profanity, which was used to generate vanity Ethereum addresses. These addresses, which had multiple leading zeros, were desirable because they resulted in slightly lower gas fees. However, a bug in the Profanity tool, which had been flagged by security researchers prior to the hack, left these addresses vulnerable. Despite the warning, Wintermute hadn't moved their funds in time, resulting in the massive theft.

Why is Tron showing the highest daily activity among blockchains?

Tron is showing the highest daily activity primarily due to its position as the second-highest stablecoin market cap. Many users are leveraging Tron's network for low-cost stablecoin transfers, which is driving up the number of daily transactions. This high activity level highlights the gap between the narratives that dominate crypto discourse and the actual usage patterns of blockchain networks.

How are global currency dynamics affecting the perception of crypto performance?

Global currency dynamics, particularly the strength of the US dollar, are significantly impacting the perception of crypto performance. As crypto prices are typically measured in USD, the dollar's strength can make crypto price movements appear more negative than they might be when measured against a basket of world currencies. This perspective is particularly relevant for holders of weakening currencies, for whom crypto might actually serve as a hedge against currency devaluation.

What is the debate surrounding the future of Layer 1 blockchains?

The debate surrounding the future of Layer 1 blockchains centers on whether the ecosystem will be dominated by a few major L1s with various L2 solutions built on top, or if there's room for multiple, specialized L1 blockchains. With Ethereum scaling solutions promising cheaper block space and existing L1s like Solana already offering low-cost transactions, the value proposition of new L1s is being questioned. The success of future L1s will likely depend on their ability to create new use cases, draw in new audiences, or offer significant advantages over existing options.

How is the geographic mismatch between crypto innovation and funding impacting the industry?

The geographic mismatch between crypto innovation and funding presents both challenges and opportunities for the industry. While much of the usage and developer activity in crypto is happening in emerging markets, the majority of venture capital funding still comes from Western countries, particularly the US. This can make it more difficult for promising projects in emerging markets to secure funding, potentially slowing the pace of innovation in these regions. However, it also creates opportunities for investors willing to look beyond their local markets, and the situation is gradually changing with more VC firms opening offices in crypto-friendly jurisdictions outside the US.