October saw a mild retreat across the crypto markets, with ETH price declining and DeFi activity significantly slowing down. Despite that backdrop, Metronome continued to demonstrate solid fundamentals. Although protocol revenue continued to rise, MET followed the general market trend and went down in price slightly. USD-denominated TVL also decreased with the market, but TVL in ETH terms climbed, indicating that underlying protocol usage remained strong.

This report walks through the changes in MET price and esMET, TVL by chain, protocol revenue and token-holder income, msAsset liquidity and peg quality over the month, liquidity incentives on Aerodrome and Velodrome, and the current treasury allocations.

MET Price and esMET

Although protocol revenue and buybacks were larger in October, the general market sentiment dragged MET price slightly down.

Total MET locked grew quite substantially, around 10% with respect to last month. The average lockup period also increased, showing that MET holders are maintaining conviction and locking their tokens for the maximum period despite market uncertainty.

Total TVL

In dollar terms, TVL moved lower in October, following the broader market downturn. All networks experienced declines, with Base showing the steepest contraction. Despite this, overall participation in Metronome’s markets remained stable, and the drop was largely driven by asset repricing rather than capital outflows.

This becomes more evident when looking at TVL in ETH terms, which shows solid growth during the month. Ethereum mainnet led the increase, offsetting minor declines on Base. The steady accumulation of TVL within Metronome’s markets indicates that msAssets remained actively used and trusted, showing the protocol’s resilience amid broader market weakness.

Protocol Revenue & Token-holder Income

Protocol revenue grew meaningfully in October, with token-holder income rising at a similar pace. The primary drivers were steady fee generation from msAsset activity and continued earnings from treasury positions in lending and LP markets. Even with lower market volumes, the protocol captured a larger share of on-chain yield, translating into stronger support for esMET streaming.

Mint Headroom & Morpho Liquidity

Mint caps and liquidity conditions remained well balanced. Ample mint headroom on Ethereum, Base, and Optimism will allow for renewed growth once activity picks up. Morpho pools stayed highly utilized through most of the month, which proves that demand for msAssets remains strong.

Peg Quality

With the exception of the black swan event on October 10th, peg behavior was broadly solid through the month. In particular, msETH continued to trade very close to target across all pools, rarely deviating outside its narrow range even during periods of volatility.

msUSD also remained stable, but was hit harder during the crash, as heightened volatility primarily affected stablecoin markets. The extreme downsides reflected on the table all happened on October 10th.

The Ethereum Curve pool showed the tightest behavior, while Base pools experienced a few deeper wicks during risk-off sessions. Even so, msUSD spent the vast majority of the period near parity, confirming the effectiveness of liquidity management through incentives.

MET Incentives

Liquidity support on Aerodrome and Velodrome remained active, with emissions and incentives on msETH and msUSD pairs.

The table shows native emissions in AERO or VELO and the USDC amounts paid as voter incentives.

Treasury Allocations

Metronome’s protocol-owned treasury declined in October to 17.0 million USD, due to the general drop in asset prices across DeFi. The structure of the treasury, however, remained largely intact, continuing to center around liquidity provision and yield generation as the main sources of recurring income.

Liquidity positions on DEXs remained the largest allocation by a wide margin. These pools, located primarily on Aerodrome, Velodrome, and Curve, continue to anchor trading activity for msAssets and MET. Lending on Metronome Markets and yield vaults followed similar patterns, both decreasing modestly in line with market repricing.

Direct holdings increased relative to September, now representing about a quarter of the total portfolio. Meanwhile governance positions in veAERO, veVELO, CVX, and veCRV decreased by a similar amount.

External lending rose modestly as part of a broader effort to maintain a steady yield and diversify income sources. Smaller allocations in leveraged LPs and farming wrappers remained roughly unchanged and continued to play only a minor role in the overall profile.

Despite the market contraction, the treasury remains liquid and continues to generate yield, with capital spread across the same core areas that have supported Metronome’s income growth throughout the year. Its liquidity base supports msAsset stability, and funds ongoing incentives and MET buybacks.

Key Takeaways

Although October was generally a weak month for DeFi, Metronome weathered the storm with little impact, and several performance indicators even show improvement. Protocol revenue expanded strongly, supported by the steady performance of the treasury, while ETH-denominated TVL climbed to a new high despite lower USD valuations.

Treasury operations continued to play a central role in sustaining Metronome’s growth. By funding liquidity incentives, the treasury reinforces the stability of msAssets, which in turn encourages greater usage and higher TVL. Rising activity then feeds back into higher protocol revenue, further strengthening the treasury’s capacity to support incentives and MET buybacks. This cycle continues to generate substantial yields for long-term MET lockers.

September brought a softer market, yet Metronome still reached new highs in TVL, protocol revenue, and token-holder income, helped in part by Odyssey’s continued usage. To meet demand, mint caps for msUSD and msETH were raised ahead of October, so growth can continue if activity accelerates.

This report walks through the changes in MET price and esMET, TVL by chain, protocol revenue and token-holder income, msAsset liquidity and peg quality over the month, liquidity incentives on Aerodrome and Velodrome, and the current treasury allocations.

MET Price and esMET

Supported by growth in protocol revenue and TVL, MET finished the month stronger, rising over 5%. This good performance is particularly notable in a month when Ethereum fell about 5% and broader crypto sentiment was bearish.

Locked MET (esMET) slightly increased, from 1.27 million MET tokens at the end of August to 1.29 million at the end of September (around 9% of the total supply).

Total TVL (USD)

Protocol TVL advanced to a new high, led by Ethereum mainnet. On Base, TVL also grew, though more modestly, and on Optimism it was essentially flat. With TVL at these high levels, protocol revenue should continue to rise, strengthening Metronome’s treasury and its capacity to fund liquidity provision and MET buybacks.

Because ETH was roughly flat in September, Metronome’s TVL looks similar when expressed in ETH. Small differences reflect the precise pricing timestamps used for the snapshots.

Protocol Revenue & Token-holder Income

Protocol revenue increased substantially month over month, with token-holder income (buy and stream to esMET) rising at a similar pace. Although more protocol fees were collected in September, the main source of revenue growth were rewards from the interest accrued from AMO markets (Morpho), which was about $275k, and around $100k of regular LP rewards (CRV, AERO, VELO, KITE, OETH).

Mint Headroom & Morpho Liquidity

Mint caps for msUSD and msETH were significantly increased in September. With this, Metronome is ready to accommodate additional growth in October as new Odyssey strategies roll out and other market opportunities open up. Morpho liquidity remained tight. Strong demand for msAssets from Odyssey kept utilization on Morpho pools near the 90% target for most of the month.

Peg Quality

Both assets stayed close to target for most of the month. msETH was tighter on Base, spending almost the entire window inside the 50-bp band. On Ethereum, the Curve msETH pair hovered a touch below 1.0 on average but still sat inside 50 bps nearly all the time. For msUSD, the Ethereum Curve pool was the firmest of the three. The two Base pools were generally close to target, although they showed a few deeper downside wicks, which is why the worst-drawdown figures are larger there.

MET Incentives

Aerodrome (Base) and Velodrome (Optimism) supported msETH and msUSD liquidity through native emissions to staked LPs. In addition, Metronome paid USDC vote incentives to veAERO and veVELO holders so a larger share of weekly emissions flowed to the msETH and msUSD pools. The table shows native emissions in AERO or VELO and the USDC amounts paid as voter incentives.

Treasury Allocations

Metronome maintains a sizable, protocol-owned treasury that supplies liquidity for msAssets and earns yield. This capital provides trading depth and generates a steady revenue stream to fund ongoing incentives, MET buybacks, and other initiatives approved by governance.By far the largest allocation is liquidity positions on the venues that matter most for msAssets and MET. These include pools on Aerodrome and Velodrome, plus concentrated-range positions on Uniswap and several pairs on Curve, Sushi, and Lithos. Together, these pools handle most trading in msETH, msUSD, and MET.

The treasury also maintains direct holdings in its wallets. About seventy percent of this sleeve is held in MET, with smaller balances in msETH, WETH, USDC, and others. These balances provide price exposure to MET and, secondarily, to ETH.

Another important allocation is lending on Metronome Markets. The treasury supplies WETH, wstETH, and at times USDC or OP as collateral, and borrows msAssets such as msETH and msUSD. The borrowed assets are then paired with WETH or stablecoins in liquidity pools. This approach expands liquidity in key msAsset pools on Ethereum mainnet, Base, and Optimism.

Further down the stack are positions in yield vaults. These are token deposits, such as msETH, wstETH, OETH, or WETH, in vaults that automatically claim and reinvest rewards. The treasury also holds a few deposit-only positions on lending platforms, where tokens are lent to earn interest without borrowing or LP exposure.

The governance block consists of locked protocol tokens such as AERO, VELO, and CVX that confer voting power. Voting directs emissions toward targeted liquidity pools and helps attract outside liquidity. The locks also earn voter rewards: primarily vote incentives and, on some venues, a small share of protocol fees.

Finally, a small allocation sits in third-party lending markets. Examples include HAI on Optimism and Ionic on Ethereum. Everything else in the table falls under Other. This covers small farming wrappers, claimable rewards, and the occasional dust balance. These items are included for completeness and are not material drivers of the overall profile compared with the core allocations above.

Key Takeaways

Despite the weak crypto markets, September was a good month for Metronome. TVL set a new high while protocol revenue greatly accelerated, helped by a strong round of rewards captured by the treasury. MET held up well in a soft market, and the esMET balance inched higher.

msETH and msUSD traded with tight spreads for most of the month, with a few deeper msUSD wicks. Liquidity remained the core allocation in the treasury, supported by lending on Metronome Markets, a small set of yield vaults, and governance locks that help direct emissions to key pools.

This is the inaugural monthly report in a series that will cover all Bloq DeFi protocols. Beginning with August, we’ll publish protocol reports in the first days of each month for Vesper, Metronome, and Odyssey. This edition reviews Metronome’s August performance using on-chain metrics to assess usage, and token performance, and peg quality of msAssets.

The main driver of August activity was Odyssey adoption. Odyssey’s Loopr module offers multiple strategies built on Metronome synths, which was a major contributor to TVL this month. Moreover, broader market tailwinds with renewed interest in stablecoins and Ethereum likely helped raise several of the metrics we track.

Despite strong growth, capacity remained ahead of demand, with ample mint headroom and Morpho liquidity. Additional usage translated into higher protocol fees and supported MET distributions. Execution was stable overall: msETH held near parity throughout the month, while msUSD showed wider deviations, particularly on Ethereum mainnet. Let’s look at it in more detail:

MET Price and Market Cap

MET’s market cap grew substantially in August, outpacing ETH over the same period. The driver was likely the earnings outlook, as protocol revenue rose sharply for the month, raising expectations for MET buybacks. That made holding MET more attractive, strengthening demand and pushing the price higher.

Total TVL

The increase in protocol revenue can be explained by an expansion in TVL, which grew around 31.5% in August to ~$59.5m. The bulk of this growth took place on Ethereum and Base. One of the largest drivers of this growth was Odyssey, which continued to use msETH and msUSD for multiple strategies inside the Loopr module. The current high TVL will likely increase the treasury’s capacity to fund future MET buybacks.

ETH-Denominated TVL

Examining ETH-denominated TVL, we see that ETH’s appreciation explains some of the TVL growth shown in the previous table. Most of the increase occurred on Ethereum and Base, consistent with Odyssey’s footprint. More loops meant more msETH minted and/or borrowed, which increased on-chain balances independent of ETH’s USD price. Optimism trails, matching lighter Odyssey routing there.

Protocol Revenue and Token-holder Income

Protocol revenue stepped up to about $0.91M in August, a huge 125% jump with respect to July. As we mentioned before, the driver was more activity and TVL on Metronome. In total, $55,000 was allocated to buy-and-stream 100,329 MET to esMET holders.

Mint Headroom & Morpho Liquidity

Mint allowances on Metronome and available Morpho liquidity show that the system has the capacity to absorb more minting, and borrowing. This is important in order to maintain the TVL growth of the past few months, and helps keep pegs orderly via arbitrage.

Peg Quality

Peg stability matters because msAssets are commonly borrowed for loops and other strategies. When the price drifts away from $1, strategy returns can be distorted. For example, borrowing well below peg and later unwinding at peg can erase a meaningful portion of the position. In August, msETH pools on Base (Aerodrome) and Ethereum mainnet (Curve) tracked close to parity for most of the month. msUSD on Base was similarly orderly, while msUSD on Ethereum showed wider excursions.

MET Incentives

MET incentives are used to deepen the key msAsset LPs and stabilize their value. Liquidity providers on the prioritized pools can earn MET on top of pool fees. At the moment these are: Curve on mainnet, Aerodrome on Base, and Velodrome on Optimism. Additionally, some lending protocols (e.g., ExtraFi, Impermax) also run MET rewards.

Metronome has been on a tear lately. TVL has climbed to over $60M, participation in esMET is at its highest levels, and revenue share continues to scale month after month. A big driver behind this momentum has been Odyssey.

Odyssey isn’t just another frontend. It’s a DeFi superapp that routes capital into strategies, with some of the most efficient borrow assets being synths powered by Metronome. For us, that has meant more liquidity flowing into synths, stronger usage across Metronome strategies, and a constant stream of new participants discovering MET for the first time.

That influx of users shows up directly in the numbers. In just the past month:

• $50K was allocated to buy-and-stream 101,576 MET back to esMET holders.

• 1.25M MET is now locked with an average commitment of 1.81 years.

• At current rates, new esMET lockers are seeing projected APR between 21% and 106%.

This is what makes Odyssey so important for Metronome. More deposits don’t just pad TVL stats and synth usage, they expand the cycle of revenue, buybacks, streaming MET, and deeper esMET participation. The cycle only gets stronger as Odyssey grows, too.

For those already using Odyssey’s Loopr strategies, the fee model is designed to reward deeper participation. While a standard position carries a 10% performance fee on net APY, Metronome users see that reduced to 6%. Combine Vesper and Metronome strategies together, and the fee drops further to just 2%, aligning incentives for cross-protocol adoption.

*Additionally, Odyssey has introduced a points program (Fatstronauts) that esMET holders automatically receive just for holding. All that’s required is connecting your wallet to Odyssey. Participating in Loopr strategies involving Metronome further increases calories the longer you stay in a position. *

All of this adds up to a simple reality… Odyssey only boosts Metronome. It drives liquidity and TVL, strengthens the MET economy, broadens the userbase, and creates compounding benefits for long-term participants.

The future of Metronome looks better than ever before. And Odyssey is helping power that future.

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Overview

• What is Swell?

• Liquid Staking With Swell

• Liquid Restaking With Swell

  • How Does It Work?

• Swell and Metronome

• Summary

What is Swell?

Swell is on a mission to transform liquid staking and restaking by making it intuitive and efficient while simultaneously reinforcing Ethereum’s future.

With Swell, you can effortlessly earn passive income by staking ETH, securing both on-chain rewards and extra AVS rewards. In return, you’ll receive dynamic a yield-bearing token (LST or LRT) that doesn't just sit idle, they are your gateway to continued earnings across DeFi. This means your assets keep growing, even while they’re in use, putting your crypto to work in smarter, more powerful ways.

Liquid Staking with Swell

Liquid staking builds on traditional staking by minting a token that represents staked assets. For instance, when you deposit ETH into Swell, you get an LST token (swETH) that reflects your stake. You can then use this token in DeFi while still earning rewards.

Liquid staking was created to tackle issues with Ethereum’s native staking, particularly the steep 32 ETH entry barrier. It enables users to stake smaller amounts, providing liquidity and flexibility.

Unlike traditional staking, liquid staking keeps your assets accessible, reducing the risk associated with long-term lock-ups and offering more strategic options across DeFi protocols. Due to the reduction from 32 ETH to any nominal amount, many more users are able to participate, increasing the number and distribution to help secure the network.

Liquid Restaking with Swell

Liquid restaking takes the concept of liquid staking a step further, where users receive a yield-bearing token (like swETH) after staking ETH. Liquid restaking enables users to stake this yield-bearing token itself, unlocking additional layers of rewards that were not previously available.

Swell makes restaking easier for the user by essentially acting as a middleman. Traditionally, restaking may have required users to manually set up an operator and choose which Actively Validated Services (AVSs) to work with. This typically involves in-depth technical knowledge and effort. However, Swell simplifies this by handling the technical aspects for you. When you stake ETH with Swell, they not only give you swETH but also manage the restaking process by depositing your assets into protocols like EigenLayer.

Through this process, Swell issues rswETH, a restaked version of your yield-bearing token. This means you earn additional rewards on top of your original staking rewards without having to go through the complexities of setting up restaking yourself.

The primary benefit of liquid restaking with Swell is the ability to earn compound rewards. By staking your swETH through Swell, you earn AVS rewards in addition to the regular staking rewards. This dual-earning potential can significantly increase your returns on the same initial staked amount of ETH.

Another key advantage of using Swell for liquid restaking is the ease of access and flexibility it provides. Swell enables you to easily enter and exit staking positions, meaning you can continue to utilize your tokens in DeFi while they are staked on any supported protocols. This liquidity is a crucial advantage, as it means your assets are not locked up and can be redeployed as needed, all while still earning rewards.

How Does It Work?

Swell uses a permissioned set of professional node operators to ensure scale, reliability, and consistent yield for users. As Swell grows, the goal is to transition to a permissionless system, enabling more node operators to participate once there is sufficient liquidity, stability, and risk management technologies, such as Distributed Validator Technology (DVT).

When a node operator is whitelisted, their address is added to the node operator registry contract. This enables them to add validator keys to the contract, increasing staking capacity for Swell users.

Node operators are vital to maintaining the security and stability of swETH. Their role extends beyond just running a node, it involves active community participation and commitment to the network’s principles. This includes ensuring that their nodes are secure and stable, regularly updating their software, contributing to governance and decision-making processes, and upholding decentralization principles.

Swell and Metronome

For the first time ever, Metronome is uniquely servicing the ETH LRT ecosystem with our msETH lending market. Initially, users will have the ability to borrow msETH against rswETH collateral, enabling looping exposure to the asset's yield and points programs.

Thus far, looping strategies for ETH LRTs require naked ETH borrowing. By introducing our synthetic ETH token, we enable looping exposure in a more capital-efficient manner.

Aligning with Swell means we are able to tap into the growing demand for liquid staking and restaking, ensuring that users have access to secure and efficient opportunities.

For more, read the recent announcement here.

Summary

Swell is changing how people engage with liquid staking and restaking by making it easier to earn rewards while keeping assets liquid and flexible. With Swell handling the complexities behind the scenes, users can focus on maximizing their returns, knowing their assets are working efficiently and securely. The recent partnership between Metronome and Swell broadens the opportunities for users are they will be well-equipped to potentially grow their holdings and tap into advanced DeFi strategies that were previously not possible.

Overview

Following the successful passing of MIP-24: the External Lending Market Upgrade, Metronome is now positioned to expand its looping yield strategies to a wider range of assets and a larger user base by integrating with external lending markets.

What Does This Mean For Metronome?

With this upgrade, Metronome will now be able to mint msUSD, msETH, and msBTC into various lending markets. Similarly to Metronome Synth, these assets do not circulate until they are borrowed by overcollateralized positions.

This also means Metronome will be able to support points-accruing assets like LRTs, along with their associated points programs to broaden the scope of what Metronome can offer.

Why Is This Important?

Currently, there is a significant amount of value (billions of dollars) locked up in various yield-and-points accruing assets like ETH LSTs and LRTs. However, no existing protocol has been able to effectively service looping yield strategies through synthetic ETH loans.

Metronome's upgrade changes that. By supporting these assets in a capital-efficient manner, we are stepping into an underserved market with high demand.

Next Step Expectations

Metronome will first focus on coordinating lending pairs on Morpho Blue and Ajna, utilizing ETH LRTs as collateral and msETH as the borrowable asset. We will work closely with asset providers to ensure any non-compounding APY, such as points or airdrops, flows directly to participants engaging with these deployments.

As we move forward, we will deploy to relevant lending markets in collaboration with trusted curators, like Gauntlet on Morpho Blue. Treasury-owned msAssets will be added to these markets, giving users the opportunity to loop through the lending pairs and explore new yield opportunities.

To make the process smoother for users, we are exploring collaborations with external platforms like Contango to automate the looping process. The full implementation will include dedicated direct deposit support as well as first-party looping front-end support.

This direct deposit functionality will enable Metronome Synth assets to mint directly into approved lending pairs, managed via a specialized Manager contract designed for both efficiency and risk management. We have pre-approved up to $10 million in msAssets for deployment through direct deposit, enabling immediate integration with these markets.

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Overview

Transparency is everything in crypto, but lately, it hasn't always felt that way. That's why we're teaming up with Octav to bring you a clearer view of Metronome’s inner workings. With Octav’s intuitive dashboard, you’ll be able to take a look at Metronome’s treasury holdings, as well as protocol fees, and really see what’s going on behind the scenes.

You’ll have access to our dashboard where you can check out our total protocol assets, see what we’re holding on every chain, track where we are putting our TVL, and more. Everything you need to understand will be there in real time, from the different protocol balances to daily trading fees.

We want you to feel confident in knowing exactly what’s happening with Metronome. With these new tools, you’ll have the transparency you’ve been asking for, all packaged into reports that keep you in the loop.

Who are Octav?

Octav’s mission is to simplify DeFi and help the community better understand their on-chain interactions. By accurately labeling and analyzing your DeFi data, Octav empowers you to stay ahead in the space, making it an invaluable tool for enthusiasts looking to identify, decipher, and optimize their activities.

With a carefully crafted database, Octav makes DeFi more accessible to traders, tax experts, and asset managers, serving as an essential guide for understanding cost basis, profits, losses, and more.

What Problem Does Octav Solve?

Even though data is public on the blockchain, most of it is still fragmented and unlabeled. Unlike the traditional web, blockchains are an open ecosystem, fostering widespread innovation with low data standards.

This lack of data clarity has slowed down adoption and led to a loss of trust. Mass adoption will only happen if blockchain data is easy to understand.

Octav solves this problem by translating and reconciling complex on-chain data into user-friendly information.

Feature Highlights

• Key Metrics Report: Total funds, wallet positions, protocol positions, total funds by category, and total funds by network;

• Wallet Positions Report: Detailed breakdown of all tokens in treasury wallets, including balance, value, percentage, and network;

• Protocol Positions Report: Detailed breakdown of protocol deposits, including staked amount, yield, protocol, balance, and value;

• PDF and CSV Reports: The treasury reports will be shared as both a PDF and CSV and can be imported to other dapps/treasury tracking software to improve compliance;

• Reconciling and Categorization: Add notes and categories to transactions for easy reconciling.

This partnership will lead the way for Metronome to offer more transparency, ensuring better trust between us and the community.

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Overview

We are always on the look out for new and exciting opportunities to upgrade Metronome and broaden our reach. This dedication has led us to select Base as the next integration, following our successful launches on Ethereum and Optimism.

Having achieved $20 million Total Value Locked (TVL), we see this as the perfect opportunity to expand our horizons and introduce Metronome to a new audience. We are confident that this expansion will boost our reach, especially given the growing demand and popularity of Base and its ever-growing ecosystem.

Supported Collateral

At launch, Metronome will be supporting the following assets on Base:

• ETH

• USDC

• vacbETH

• vawstETH

• vaETH

• vaUSDC

What is Base?

Base was launched in August 2023 by Coinbase and is a Layer 2 optimistic rollup utilizing the OP Stack to increase transaction efficiency and reduce network costs.

It debuted with over 100 dapps, offering near-zero gas fees and fast transactions while maintaining the high security of Ethereum. As an initiative incubated by Coinbase, Base plans to evolve into a decentralized, permissionless platform. It simplifies asset transfers between OP Stack chains, ensuring seamless interoperability and continued reliance on Ethereum for ultimate transaction validation.

Funding Base

Users must have funds on Base to deposit to Metronome-Base. Please refer to the Base docs and community channels for further information or assistance on funding Base.

How to Get Involved

To utilize Metronome on Base, you can take the following steps:

1. Navigate to app.metronome.io

2. In the top right, click the drop-down and select “Base”

3. You will now be able to choose from the collateral currently available on Base, or click “Smart Farming” on the sidebar to begin your looping journey

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Overview

• What is Proto-Danksharding?

• How do Blobs Work?

• What is KZG?

• The Future of Danksharding

• Summary

Ethereum's roadmap initially included the development of shard-chains, designed to split the blockchain into multiple segments for scalability. However, the inception of Danksharding has changed this focus.

Danksharding introduces a more straightforward approach to scaling Ethereum by utilizing distributed data sampling through “blobs”, removing the complexities of shard-chains. While the full implementation of Danksharding is still years away, Proto-Danksharding is the crucial first step toward this. Both Danksharding and its proto version are aimed toward drastically reducing transaction costs on Layer 2s and elevating Ethereum’s capacity to handle over 100,000 transactions per second (TPS).

What is Proto-Danksharding?

The Dencun upgrade, EIP-4844, or Proto-Danksharding, introduces a more cost-effective method for rollups to integrate data into blocks. Traditionally, rollups utilized "calldata" to post transactions, a process that's relatively expensive because this data is stored on-chain indefinitely, despite rollups only needing it temporarily. Proto-Danksharding's approach involves using "blobs," temporary data attachments to blocks that aren't accessible by the EVM and are set to be automatically purged after roughly 18 days (4096 epochs). In doing so, rollups are able to send data in a more affordable way, translating to lower transaction costs for users.

How do Blobs Work?

We've touched on blobs above, but in order to go deeper into what they are and how they function, we need to first explain rollups.

Rollups are a scaling solution for Ethereum, bundling multiple transactions off-chain and then committing these to the mainnet. They operate through two core components, data and execution checks. The data component captures the entire sequence of transactions that the rollup processes to change a state on Ethereum. The execution check, on the other hand, involves re-running these transactions by a trusted entity, known as a "prover," to validate the accuracy of the state change.

The transaction data needs to be available long enough for anyone to review and verify it. This ensures any incorrect actions can be spotted and challenged. But once this data has been checked, it's not needed anymore, so storing it indefinitely on-chain is wasteful, becoming redundant and resource-intensive.

Rollups post their commitments to their transaction data on-chain and also share the actual data in blobs. These blobs let provers verify the transactions or flag any issues. Nodes store these blobs temporarily, making sure the data gets around the network and everyone who needs to check it can do so. If we kept this data forever, nodes would bloat quickly and become hard to manage. To prevent this, the data gets deleted from nodes every 18 days. This way, nodes confirm the data was available long enough for a thorough check but don't get overwhelmed. If there's a need to keep the data longer, it can be stored off-chain by rollup operators, users, or anyone else interested.

What is KZG?

KZG, named after its creators Kate, Zaverucha, and Goldberg, is a cryptographic technique that condenses a large data set (or blob) into a small, verifiable commitment. This is particularly relevant for rollups on Ethereum, where it's crucial to confirm that the data provided by a rollup is accurate and that the rollup isn't acting maliciously.

Here's how it works:

A prover, which could be an entity or a process, re-executes the transactions contained in the data blob to validate the commitment, similar to how transactions are verified on Ethereum using merkle proofs. However, KZG uses a different approach - it applies a polynomial equation to the data, creating a commitment that represents the polynomial evaluated at certain secret points.

When verification is needed, a prover reconstructs the same polynomial from the blob's data and evaluates it at those secret points, ensuring the outcomes match. This method is particularly effective as it aligns with zero-knowledge techniques, which are used in some rollups to increase privacy and efficiency in data verification.

The Future of Danksharding

Danksharding represents the next big step in Ethereum's scaling roadmap, building on the groundwork laid by Proto-Danksharding. It's set to significantly increase the space on Ethereum, enabling rollups to send more of their transaction data. This capacity boost means Ethereum could support hundreds of rollups, pushing the network towards millions of TPS.

In practical terms, Danksharding will expand the number of blobs attached to each block from 1 in the Proto-Danksharding phase to 64 in full Danksharding. This expansion requires updates in how consensus clients function, enabling them to manage these larger blobs. These adaptations are part of Ethereum's broader roadmap, with many serving multiple objectives beyond Danksharding alone.

For instance, the implementation of proposer-builder separation is crucial for Danksharding. This upgrade separates the roles of block building and proposing among various validators. Furthermore, data availability sampling will also enable the creation of lightweight clients that require minimal historical data storage.

Summary

Proto-Danksharding is Ethereum's first solid step toward achieving true scalability. It's paving the way for Danksharding by enabling rollups to incorporate data into blocks more affordably.

Instead of using "calldata" for transactions, Proto-Danksharding introduces data blobs that attach to blocks, offering a temporary storage solution that's not EVM-accessible and is purged after 18 days. This approach reduces costs for rollups, and ultimately lowers transaction fees for users.

Make sure to keep an eye out for the other upgrades coming along the way to full Danksharding.

Overview

• What is Ethereum Staking?

• What is Restaking?

• How Does it Work?

• Summary

What is Ethereum Staking?

In September 2022, Ethereum made a big shift, moving from Proof of Work (PoW) to Proof of Stake (PoS). This was a major step for the network, mainly because PoW, like what Bitcoin uses, had some serious downsides – it wasn't great for the environment and it struggled with high fees and slow transaction speeds.

Under PoW, Ethereum's network required massive computational resources for transaction validation and block mining, leading to substantial energy consumption. This was increasingly problematic from an environmental standpoint. On top of this, the network faced scalability issues, such as slow transaction processing and high gas fees.

The shift to PoS dramatically altered Ethereum's operational dynamics. Under this new consensus mechanism, the network’s energy consumption was substantially reduced, a crucial step towards environmental sustainability. It also increased transaction processing speed and lowered gas fees.

With PoS, network security, and transaction validation are handled by validators who stake their Ethereum tokens as collateral. These validators are selected randomly to perform network duties such as validating transactions and creating new blocks. In return for their service, they earn rewards on their staked tokens.

To protect the network against malicious activities, PoS includes a mechanism known as "slashing." If a validator acts maliciously, such as by validating fraudulent transactions, they risk losing a portion (or all) of their staked ETH.

What is Restaking?

Restaking is an advancement from traditional staking, enabling staked ETH to secure additional protocols and increase network trust. This approach, first introduced by EigenLayer, benefits new projects by providing access to ETH's large pool of staked assets, helping to create secure applications without the need for independent validation services.

For ETH stakers, this means their assets are not only more efficiently used but also serve a wider purpose. Validators can participate by selling pooled security to protocols through restaking, which in turn enables these protocols to buy into Ethereum's security. This benefits both developers, who gain enhanced application security, and stakers, who receive rewards for their expanded role. However, it should be noted that when users opt-in to retake, they open themselves up to more risk of slashing.

How Does it Work?

As we have previously seen, Ethereum validators traditionally secure the network by staking ETH. With EigenLayer, validators can modify their beacon chain withdrawal credentials to point towards EigenLayer smart contracts. This essentially gives EigenLayer access to enforce additional conditions on the validators' staked ETH, including the possibility of slashing these stakes under specific conditions not adhered to by the validators.

Once validators have redirected their withdrawal credentials to EigenLayer, they can opt into various modules developed on top of the Ethereum ecosystem through EigenLayer. These modules can range from data availability layers to Oracle networks, consensus protocols, and more. Validators participate by running any additional node software required by these modules, effectively extending their validation services beyond the Ethereum base layer.

By opting into these modules via EigenLayer, validators agree to subject their staked ETH to additional slashing conditions specified by these modules. This means if a validator fails to meet the performance or security standards set by a module they've opted into, a portion of their staked ETH can be slashed as a penalty. This mechanism ensures that validators are incentivized to maintain high standards of operation across not just Ethereum but also the additional modules they support.

In return for their extended validation services and assuming the increased risk of additional slashing conditions, validators earn extra revenue. This revenue is generated from the various modules they opt into, providing incentives for validators to support the broader ecosystem's security and functionality.

Additionally, EigenLayer creates an open market for security provisioning, where validators can select which modules to secure based on potential rewards and their own risk assessment.

Summary

Ethereum's shift to PoS improved efficiency and introduced staking, where validators earn rewards for securing the network. Restaking, a concept introduced by EigenLayer, utilizes staked ETH to secure additional protocols on Ethereum, expanding the network's security reach.

Validators can opt into supporting these protocols by adjusting their beacon chain withdrawal credentials to EigenLayer's smart contracts, offering them new rewards with an increased risk of slashing. This mechanism boosts the utility of staked ETH, offering more benefits in not just network security but also by providing validators with additional revenue opportunities.

What are Metronome Loyalty Points?

Metronome Loyalty Points are a way to measure your contribution and support for the Metronome ecosystem. To kickstart the campaign, users who engage in activities such as providing liquidity to msAsset pairs will earn loyalty points.

The loyalty program will run until May 12th, but keep your eyes peeled as new, time-sensitive tasks will be rolled out every two weeks.

The top 5 users will each receive individual rewards for their standout performance, alongside an NFT awarded to everyone participating in the campaign. The NFT tiers vary, with the top finishers receiving higher-tiered versions that reflect their ranking. What these NFTs unlock remains a mystery... for now.

How Do You Get Involved?

1. Head over to https://guild.xyz/metronome

2. Connect your wallet and all your relevant accounts for the best experience

3. Complete each task by following the instructions

4. Earn loyalty points and check the leaderboard to see how you are doing

Follow Metronome

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Overview

• What is Artificial Intelligence?

• Potential Applications of AI in DeFi

• Challenges Involved

• Conclusion

What is Artificial Intelligence?

To appreciate the transformative potential of AI in DeFi, it's essential to first understand the essence of AI itself, this includes its evolution, capabilities, and the groundbreaking advancements it can bring to various sectors.

AI has come a long way since the mid-20th century, evolving from a novel concept into a key driver of innovation. The journey began with Alan Turing's groundbreaking ideas about machine intelligence. It was in the 1950s that AI took its first steps as a formal field of study, opening doors to endless possibilities.

Fast forward to the late 20th century, AI transitioned from academic curiosity to practical application, thanks to the internet boom and leaps in computational power. This era saw AI stepping out of research labs and into real-world scenarios, with machine learning leading the charge.

Today, as we navigate the complexities of DeFi, AI stands as an important tool with the power to change how users interact and navigate the space. Its ability to analyze vast amounts of data, predict market trends, and automate higher-level actions positions AI as an invaluable ally for users of the DeFi world.

Potential Applications of AI in DeFi

The potential applications of AI in DeFi are vast and varied, and while it's impossible to cover every aspect in detail, certain opportunities stand out for their potential to significantly upgrade the DeFi experience.

A prime area where AI could make a substantial impact is in risk assessment and management. For instance, AI algorithms are well suited for assessing borrower risk profiles, where traditional metrics are non-existent. These algorithms could analyze large datasets to identify potential risks and vulnerabilities, learning from past patterns to improve future assessments.

In traditional finance, lenders rely on well-established methods such as credit scores to evaluate borrower credibility. DeFi, however, operates differently due to its decentralized and non-custodial nature, making risk assessment more complex. Here, AI could shine by analyzing historical lending data to provide more nuanced risk evaluations, thanks to its ability to process vast amounts of information.

Another significant potential application of AI is in detecting and mitigating fraudulent activities. Due to the way DeFi is set up, it can make monitoring for fraud challenging and time-consuming. AI, with its real-time analysis capabilities, could increase platform security by identifying suspicious patterns and addresses, even helping in preventing activities such as wash trading.

Beyond risk assessment, AI has exciting applications in trading strategies. Bots utilizing machine learning techniques could analyze market sentiment, historical trends, and various data sources (including financial news and social media trends) to predict market movements. While not perfect, these tools could help users in optimizing their trading decisions, potentially capitalizing on market shifts.

Additionally, AI-driven portfolio management algorithms are growing in popularity as their potential to offer valuable insights into asset allocation could lead to increasing portfolio performance. These algorithms could adapt to changing market conditions and user preferences, continuously refining their recommendations. They could even automate portfolio rebalancing based on market changes and user objectives, adjusting investment strategies in real time to align with predefined criteria.

Challenges Involved

Data Privacy

Integrating AI into DeFi requires handling a lot of sensitive data. This raises significant concerns about how this data is protected and used, especially since financial information is involved. It's a delicate balance to maintain - using data to power AI without compromising user privacy.

Overdependence

Leaning too heavily on AI for decision-making could backfire. AI isn't perfect, it can make mistakes or develop biases. Relying solely on AI risks missing these errors, which could have serious consequences for not just platform security but user experience too.

Adversarial Attacks

Within AI, adversarial attacks refer to the manipulation of machine learning models by carefully inputting malicious data to take advantage of vulnerabilities in the model’s design. Within DeFi, this could mean loss of assets and protocol manipulation.

Scaling Issues

Integrating AI into DeFi protocols involves more than just the initial setup, it requires handling the continuous and intensive learning process of AI algorithms. This process can be resource-intensive, demanding significant computational power, especially when dealing with large-scale data sets and the need for real-time processing. The main challenge here lies in ensuring that DeFi protocols have the necessary infrastructure to support these demanding AI systems without compromising performance or efficiency.

Conclusion

In conclusion, AI's integration into DeFi marks a significant advancement, utilizing AI's data analysis, market prediction, and automation to increase DeFi's functionality. However, challenges such as data privacy, overdependence on AI, vulnerability to attacks, and scalability must be carefully managed.

As we continue to explore and develop this synergy between AI and DeFi, the focus will be on harnessing AI's power responsibly, maintaining the balance between innovation and user protection.

Overview

Since launching the Metronome ecosystem, we've been committed to creating more liquidity and optimizing the overall user experience. We first launched on Optimism to speed up transactions and reduce fees. Now, we're pleased to announce we have successfully integrated with LayerZero, a cross-chain messaging protocol that utilizes Omnichain Fungible Tokens (OFTs). Following a thorough audit, this new addition aims to give users a multitude of benefits while improving capital efficiency.

What is LayerZero?

If you're new to LayerZero, think of its Omnichain Fungible Token standard as an evolution of ERC-20 tokens. While ERC-20 tokens are limited to apps on an EVM, OFTs can be used in dApps across any chain that LayerZero supports - no wrapped token bridging required. This is made possible through seamless contract-to-contract communication, eliminating the complications often associated with bridging between different chains.

This is because, in traditional bridging, you'd typically need multiple wrapped versions of a token for each separate chain, making token management complex. LayerZero tackles this by using a burn-and-mint mechanism for OFTs. When you move your tokens from one chain to another, the original OFTs are burned, and an equivalent number is minted on the destination chain. This ensures that the total supply remains constant and allows for tokens to exist natively on multiple chains, no matter which network you're operating on.

Upgrading with LayerZero

The upgrading of synthetic contracts to the Omnichain Fungible Token (OFT) standard will enable liquidity to be uniform across all supported networks. What this means for users is a seamless cross-chain experience with optimal rates regardless of the network you're using.

For those interested in Smart Farming, this upgrade streamlines the capacity for our synthetic assets to be arbitraged cross-chain. This means steadier rates and greater capacity for users to take advantage of Metronome's Smart Farming yield opportunities.

This upgrade also significantly streamlines the expansion to other LayerZero-supported networks, meaning we can sidestep the process of building liquidity pools from scratch as all liquidity is utilized together.

How to use Metronome with LayerZero

There are three main ways that users can interact with this integration:

1. Trade synth assets directly from AMMs and move them cross-chain through the Stargate frontend.

2. Take advantage of synchronized, cross-chain liquidity for greater access to Smart Farming yield.

3. In the future, you will be able to interact with cross-chain support within the Smart Farming module, which will trigger a transaction sequence that automatically mints synth assets and executes swaps on the network offering the most favorable exchange rate via its supported AMM.

Stay Updated

Make sure to stay tuned by following our Twitter for any news. You can also join our Discord or Telegram for community insights or to chat with the team.

Introduction

As we highlighted previously, LayerZero’s Omnichain Fungible Tokens (OTFs) captured our attention as a potential game changer in the space. This is because DeFi is changing at a rapid pace, evolving towards an omnichain future.

Over the past year, we have seen an explosion of Layer 2 solutions, with the most recent addition being Coinbase’s Base, built on the Optimism Stack. But there’s a challenge. Even as these advancements take place, achieving what seems like smooth cross-chain interoperability in DeFi remains a puzzle, with fragmented liquidity and security flaws. However, LayerZero’s solution sidesteps these issues, improving upon security while simultaneously unifying liquidity.

While bridges are an option, they come with their own set of risks, making the search for a safer, more efficient cross-chain solution a number one priority for many protocols.

Omni-Chain

Have you ever heard the term “Omni-chain” and scratched your head? In order to understand, let’s first take a step back and look at its evolution.

In the current blockchain landscape, the ecosystem heavily leans on tools like oracles (think Chainlink) and bridges (like Multichain). Why? Because blockchains, by nature, aren’t directly interoperable. Oracles bridge the gap between on-chain and off-chain data, providing precise and secure price feeds (in the context of LayerZero they also assist in sending messages and block headers). Bridges, on the other hand, are critical for moving assets between different networks. However, while this sounds streamlined, the backend process is actually quite complex and not really ideal. Typically, bridges take hold of the user’s assets and then produce a wrapped version on the target chain, which ultimately leads to multiple versions of the same asset.

Enter Omni-chain solutions, like LayerZero. Their ability to go through several blockchains in a single transaction is exactly what the space needs to carry on innovating. Imagine sending a message from Ethereum to Polygon, then to Optimism, and beyond, all in one go. It changes the way we think about protocols existing on multiple blockchains, enabling dApps on different networks to message directly.

Security

Now, security is a concern for everyone in the space. It’s such a crucial element to get right as DeFi revolves around capital efficiency and entrusting protocols with valuable assets. Yet, the frequent bridge exploits, leading to over $2 billion in losses in 2022 alone — according to Coindesk — cast a shadow on this trust. It begs the question, can LayerZero offer a safer alternative?

While it’s a tall order to label anything as entirely fail-safe, LayerZero is actively taking strides in this area to ensure the utmost security.

An instrumental component in their ability to do this is their ultra-light node. This enables the robust security features of a light node with the cost-efficiency of a middle chain. Simply put, LayerZero serves as a relayer for messages between blockchains, but crucially, never directly holds funds. This is a significant difference from traditional bridges that often struggle with custody-related security challenges.

It’s evident that Omni-chain technology is becoming increasingly more popular with leading DEXes such as Sushiswap and Stargate implementing cross-chain swapping via LayerZero.

Standout Features

LayerZero’s method for inter-chain communication is both strategic and effective. Using Oracles and Relayers, data can be sent between chains while verifying the proof of these transactions. This is done by using block headers combined with transaction proofs, ensuring every transaction’s validity. Additionally, anyone utilizing LayerZero could run their own Relayer or Oracle for the network, minimizing the risk of collusion.

How Does a LayerZero Transaction Work?

1. Transaction Initiation: Just like any other blockchain interaction, the first step is to initiate a transaction. This will notify the network of data to be transferred between chain A and chain B.

2. Communication with LayerZero: This transaction data is sent to LayerZero’s communicator. Here, it’s packaged and relayed to the validator.

3. Validator Delegation: The validator, along with the network, informs the Relayer and Oracle about their respective duties. The Relayer’s job is to get the transaction proof, and the Oracle is responsible for acquiring the block header.

4. Data Retrieval: Both the Relayer and Oracle pull their respective data from Chain A, holding it securely off-chain.

5. Transaction Verification: The Oracle forwards the block header to Chain B. To confirm the transaction’s authenticity, the network and validator cross-check the block header with the transaction proof.

6. Completion: Once the transaction is authenticated, Chain B’s communicator receives the necessary information, delivering it to the user application on the same chain.

Conclusion

LayerZero’s Omni-chain approach offers a fresh take in the fast-changing DeFi world. As the space moves more and more towards a multiple-chain future, easy cross-chain interoperability becomes more crucial every day.

LayerZero promises better communication between chains while also focusing on enhanced security. Unlike traditional bridges that can be risky, LayerZero’s method avoids directly holding onto user funds. This approach, combined with the support from big players in the space and its strong transaction validation, suggests that LayerZero could be the future of cross-chain messaging.

The Attack at a Glance

A very sophisticated attacker uncovered an exploit taking advantage of a vulnerability in certain Vyper compiler versions that enabled the malicious draining of pools that met the following criteria:

• Deployed using vulnerable Vyper compiler versions (v0.2.15, v0.2.16, v0.3.0)

• Uses naked ETH as one of the pool assets

For a deeper breakdown on the vulnerability itself and the attack vector, please see the official Vyper post-mortem.

This vulnerability was out in the wild for roughly two years before it was taken advantage of. As such, there were a number of pools, including msETH, which were effected due to the unlucky timing of when the pools were deployed.

Timeline and Nature of Events

This exploit represents a novel situation in which the original attackers largely did not make any profit. Adversarial MEV bots found the attack transactions and frontran them. This was also a novel exploit in that the original attack spurred an arms race between black hats and white hats to find vulnerable contracts and execute operations on them.

The first attack happened on the JPEG’d pETH Curve pool on the same day, July 30, at approximately 2:10pm UTC.

The msETH pool was attacked roughly 40 minutes later. It is unclear if the attacker worked in coordination with the original one or if they were a copycat blackhat.

The transaction that kicked off the attack can be found here: https://etherscan.io/tx/0xe2eb61b1ff11e447b791e030039ce89ae294423da1622d0be8c7ec3b2ff1a22a

The attacker themselves did not receive any profit from the exploit. Instead, an MEV bot c0ffeebabe.eth targeted the attack transaction and frontran it with their own attack: https://etherscan.io/tx/0xc93eb238ff42632525e990119d3edc7775299a70b56e54d83ec4f53736400964

At the time of the attack, the msETH-ETH Curve pool held the following assets:

• 1395.56 msETH

• 867.25 ETH

The “c0ffeebabe” MEV bot withdrew the majority of assets through the pool using the attackers’ same transaction code. The total drained from the pool through this transaction was as follows:

• 959.7 msETH

• 866.55 ETH

This left the pool with the following assets remaining:

• 435.86 msETH

• 0.7 ETH

Due to the nature of Curve pools, this enabled another MEV bot to swap 0.0025 ETH for 435.13 msETH: https://etherscan.io/tx/0xf94cfb5ea08db7fe0b8eaaf3cfdf072f001c0310317b199a34d69a05dcd003ea

The above MEV transaction occurred at the same block as the exploit and was carried out in a similar manner to the c0ffeebabe transaction. Therefore the activity may be treated as stolen funds in the same regard as the original attack.

In that same MEV transaction, the bot sold their msETH into the frxETH-msETH pool for frxETH. They received 253.6 frxETH and similarly unbalanced the pool. And through this trade, they effectively “forfeit” ~180 msETH profit. Further arbitrage and LP activity absorbed the rest of these assets.

This user swapped 31 frxETH in total over several trades for 201 msETH.

Several LPers and traders earned further profit, although at a smaller amount than the values above.

Metronome Response & Reclamation of Funds

The Metronome team immediately became aware of the exploit and assembled a war room to assess the best response.

Our first responses included:

• Temporary shutdown of Metronome protocol to eliminate any possible contagion.

• Immediate forensics research to pinpoint as much of the funds as possible.

• Coordinate with relevant leaders from other protocols effected to bolster our efforts.

Within the first 24 hours, the team was able to trace down the end recipients of almost all of the stolen funds. Efforts began with “c0ffeebabe” and other relevant parties.

Across several transactions in the early morning July 31, c0ffeebabe returned the majority of all funds received, keeping a small percentage as a whitehat bounty. In total, c0ffeebabe returned:

• 786.5 ETH

• 955 msETH

Through additional efforts, Metronome recovered 157,500 USDC on Aug 4. Those USDC were swapped for approximately 86.5 ETH

Recapitalization of the Pools

Following the initial return of funds, Metronome created a new Curve pool: msETH-WETH, and seeded it with all reclaimed funds. Proper steps have been taken across Curve and Convex to make the pool eligible for ecosystem incentives with minimum delay.

At the time of writing, the assets corresponding to that supplied LP is:

• 1,090.48 msETH

• 740.20 WETH

This LP will be distributed entirely to affected LPers as part of our efforts to remediate the uses as much as possible.

Metronome continues to pursue the remaining outstanding funds. And the team is additionally supportive of remediation efforts spearheaded by Vyper and Curve.

Specific instructions pertaining to how these funds will be redistributed will be shared soon.

Overview

• What Is Front-running And MEV?

• How Do They Work?

• Notable Instances of MEV

• Preventing MEV

• Real World Examples

• Summary

What Is Front-running And MEV?

Front-running isn’t a new term born from the DeFi world. In traditional finance, particularly the stock market, front-running refers to the act of acting upon prior knowledge of a big incoming purchase. Someone might get wind of this and strategically place their order just ahead of it, anticipating the price surge and aiming for a profit. However, within the context of blockchain, it gets more complicated. Given the public and immutable nature of the blockchain, transactions are visible to everyone, making it easier for people to exploit them. Therefore, users are able to see yet-to-be-executed transactions in the mempool — a sort of waiting room for transactions — and are able to jump ahead of the queue by placing their own transactions with higher gas fees than the previous ones.

Now, Maximum Extractable Value (formerly Miner Extractable Value), or MEV, is a broader term that encapsulates front-running and many other forms of value extraction opportunities within blockchain technology. MEV occurs because miners (or validators in PoS) can choose the order of transactions within the blocks they mine. Consequently, they can capitalize on opportunities to profit by inserting, excluding, or reordering transactions.

How Do They Work?

As we mentioned above, because of the public nature of blockchain, naturally people are able to take advantage of what they can see. This type of visibility enables users to see pending transactions and act on them before they are confirmed. The typical steps may involve:

Spotting a Potentially Profitable Transaction: Monitoring tools are used to watch the mempool for large or impactful transactions, especially on decentralized exchanges. For instance, if someone is about to make a large buy order of a token, its price is expected to rise.

Creating a Competitive Transaction: After spotting a potential transaction, the user will create a similar transaction.

Paying a Higher Gas Fee: The user will then pay a higher gas fee for their transaction, incentivizing miners to prioritize and confirm it before the original transaction.

Profit: Once the user’s transaction gets confirmed first, they can then benefit from the subsequent price action. If they were buying a token, they could then sell it at a higher price after the original large transaction gets confirmed.

It’s important to note that front-running is an unethical practice and is not recommended.

Now let’s talk about MEV because it’s more than just front-running and can involve more or less steps depending on what the user’s aim is:

Transaction Reordering: By determining which transactions are confirmed in what order, miners can prioritize transactions that offer them the highest reward or from which they can derive indirect profit.

Transaction Insertion: Miners can insert their transactions to capitalize on the information they have. For instance, they can sandwich a user’s transaction with their own, benefiting from the price changes the user’s transaction will cause.

Transaction Excluding: Sometimes, by excluding certain transactions from a block, miners can increase the value they extract from other transactions.

Notable Instances of MEV

Perhaps the most common and well-recognized form of MEV is arbitrage. Don’t know how it works? Imagine two markets, where a token is cheaper in one and more expensive in another. A knowledgeable trader can buy from the cheaper market and quickly sell in the more expensive one, pocketing the difference. But in a blockchain environment, there’s a difference. Other observers can see this trade waiting to happen and jump ahead by offering to pay a slightly higher transaction fee. By doing so, they will take the profitable trade before the original user can execute it. Quite often users will set up arbitrage bots in order to automate this process and they are generally must faster than someone manually doing it.

Liquidations introduce another dimension. Within DeFi, users often borrow funds by providing collateral. But if the value of this collateral drops suddenly, these loans become at risk of liquidation. Applications then need to liquidate these under-collateralized positions at a discount. Users aware of this keep an eye out, ready to take advantage of these discounted assets. Again, the race is on, as multiple actors fight to be the first to capitalize on these liquidation events, and more often than not they are bots.

Something you may have heard of more recently and a more intricate tactic is what’s called a sandwich attack. In this scenario, a trader spots another user’s trade waiting for confirmation. They decide to place a transaction right before and right after the user’s trade. This encloses, or “sandwiches”, the user’s transaction. The user’s trade, especially if it’s large, can influence the asset’s price, which the attacker exploits by the surrounding transactions, buying just before the price increases and selling just after.

One advanced strategy that’s seen a lot of action is Just-In-Time (JIT) Liquidity Provision. Traditional trading often involves traders providing liquidity and waiting for an opportunity. In contrast, JIT liquidity provision is about seizing the moment. When traders detect a profitable instance but find that there’s not enough liquidity to execute it, they borrow the required assets, provide the necessary liquidity, complete the trade, and then immediately retract their liquidity, all within a single block.

Preventing MEV

While these instances of MEV all sound concerning, there are multiple ways that the community and platforms have taken to prevent MEV. Most notable is Flashbots, a transparent suite of software products that enable Ethereum users and infrastructure providers to capture and mitigate MEV. With Flashbots, bots send transaction bundles directly to miners via a relay, bypassing the public mempool. Miners evaluate these bundles and sequence them in a way that’s most beneficial to the network’s health and their own profit. This direct channel reduces the negative externalities of MEV, like network congestion due to bidding wars in the mempool.

To combat specific MEV challenges like liquidations, user-operated networks can be effective. Platforms like the Keep3r Network decentralize operations, delegating them to registered users called keepers. These keepers manage tasks, including liquidations, thereby reducing the competitive race and mitigating the impact of MEV extractions.

Borrowing from the traditional finance playbook, time-weighted order books aim to reduce the MEV problem by altering the order-execution dynamic. Instead of the conventional first-come-first-serve model based on gas prices, this approach executes orders based on an algorithmic function of time. It reduces the advantage of speed, making it harder for bots to game the system.

Commit-reveal is an age-old cryptographic tactic that’s found utility in countering MEV. Users first commit to a particular action without revealing its specifics. Only after all commitments are gathered does the reveal phase take place, where the actual intent of the transaction is shown. By obscuring transaction details until the last moment, the window for potential front-runners is significantly narrowed.

Real World Examples

On July 30th, Curve Finance fell victim to an exploit that resulted in one of the largest MEV reward blocks ever recorded. This event increased rewards for MEV bots which capitalized on front-running opportunities. The root cause was a vulnerability with Vyper versions 0.2.15, 0.2.16, and 0.3.0 which were vulnerable to malfunctioning reentrancy locks. This led to remarkable MEV rewards, with one block alone earning 584.05 ETH — equivalent to over $1 million. Additionally, there were three more large MEV rewards during this time, totaling 345 ETH, 247 ETH, and 51 ETH.

Another example is the MEV bot called “jaredfromsubway.eth”, which in April of this year gained attention by earning over $1 million within a week through sandwich attacks on traders of two new meme coins. From April 18 to 19, this bot alone accounted for 7% of all Ethereum gas fees. Most of the bot’s profits came from trades of the meme coins, Pepe (PEPE), and Wojak (WOJAK), making it the top gas user during that time.

Summary

DeFi is driven by the blockchain’s inherent transparency, which has ultimately made revolutionary financial tools readily available. However, with this innovation comes challenges. Front-running and MEV stand out as significant pain points, with actors capitalizing on the visibility of transactions to gain advantages.

However, initiatives such as Flashbots offer direct channels for transaction confirmations, while platforms like Keep3r Network aim to decentralize certain operations to reduce MEV’s impact. Methods like time-weighted order books and commit-reveal schemes further showcase the sector’s resilience and adaptability.

Overview

• What Are Oracles?

• How Do Oracles Work?

• The Importance Of Oracles

• Different Types Of Oracles

• What Are Oracles Used For In DeFi?

• Summary

What Are Oracles?

Oracles are an extremely important piece of the puzzle when we’re talking about DeFi — they enable applications to source, verify, and transmit external data on-chain so smart contracts can actually read them. For any dApp trying to keep a pulse on real-world values — be it the price of gold or the exchange rate of the USD — accurate data feeds delivered by reliable oracles are indispensable.

It’s worth noting that oracles aren’t all the same. They vary based on their data sources, trust models (whether they’re decentralized or centralized), and the design of their system architecture. They’re not merely data transmitters, either. Certain oracles can also execute tasks off-chain.

How Do Oracles Work?

Users

Within the context of oracles, users represent certain entities, such as smart contracts, that request outside information that isn’t native to the blockchain to complete specific actions. So how does it all work? Typically, it starts off with a user putting forward a request to an oracle. These requests could revolve around several considerations:

• Which external sources are the go-to for the data in question?

• How is this raw information refined by reporters to pick out the relevant bits?

• What’s the maximum number of oracle nodes that can join the data-fetching party?

• If there’s a variance in the data from different oracles, how should that be squared away?

• Lastly, what’s the best way to sift through all the incoming reports and condense them into one comprehensive value?

Contract

Oracle contracts all have the following:

1. Two Essential Parts: Every oracle service has both on-chain and off-chain components for seamless operation.

2. On-chain Component Role: This is basically a contract on the blockchain that:

• Listens for data demands from other contracts.

• Sends out data queries to oracle nodes.

• Shares the received data with the client contracts.

3. Oracle Functions: The oracle contract showcases certain functions. When other contracts need data, they tap into these functions.

4. Data Request & Notification: Once a data request is made, the oracle contract lets everyone know via a log event. This log has all the details of what data is being asked for.

5. Off-chain Node Action: Nodes outside the blockchain, keeping an eye on these logs get into action. They pick up these logs, understand the data need, and work to fetch it as defined.

Nodes

Understanding the interaction between the off-chain and on-chain components is crucial. Oracle nodes, which represent the off-chain side of things, are designed to continuously pull information from external sources, such as APIs. Once this data is captured, the nodes then translate it into a readable format for smart contracts. It’s important for these nodes to remain active so they can respond when an on-chain oracle requests data.

To shed light on the behind-the-scenes of an oracle node’s operations, let's take a look at a simplified breakdown:

1. Web Interactions: On a regular day, an oracle node initiates communication with the external web by sending HTTP GET requests to specific APIs.

2. Data Parsing: Post receiving a response, the node sifts through it, zeroing in on the required data.

3. Format Transformation: This extracted data is then converted into a format that the blockchain can understand and process.

4. On-chain Transmission: The blockchain-readable data doesn’t just stay put; it’s pushed to the blockchain by including it within a transaction to the oracle contract.

5. Accuracy Check: It’s not just about feeding data, sometimes, oracle nodes must vouch for the accuracy of the data they’ve presented. Authenticity proofs come into play here, ensuring the information’s credibility.

The Importance Of Oracles

Smart contracts operate with a deterministic nature, meaning they consistently produce the same outcomes given the same starting conditions and inputs. Now, imagine if blockchains directly sourced raw data from real-world APIs. This would disrupt their deterministic behavior, making it a challenge for nodes to unanimously agree on updates to the blockchain’s state.

Given the amount of Ethereum nodes globally processing transactions, it’s essential that they all have the same outcome. The primary expectation is that nodes when presented with identical transactions, should arrive at the same conclusion. A discrepancy between nodes could shatter consensus and undermine Ethereum’s decentralized nature.

To maintain this deterministic harmony, blockchains restrict nodes to simple true/false decisions based solely on the data present within the blockchain. A common example of this would be “does the account in question have the balance to cover the transaction”.

Therefore, oracles play a pivotal role in bringing external data onto the blockchain for smart contracts to utilize. While this might sound similar to direct API data, there’s a significant difference: oracle data is stored on-chain, making it immutable and transparent to everyone. This ensures Ethereum nodes can use the data without risking consensus, as the imported data is consistent and trustworthy.

Different Types Of Oracles

When considering which oracle to use, you have two main choices: centralized and decentralized oracles. Each comes with its own set of pros and cons. It’s crucial to evaluate both options carefully, as your decision can have significant implications.

Centralized Oracles

Centralized oracles, as the name implies, operate under the control of a single entity. This entity takes charge of gathering off-chain data and updating the oracle contract’s data request. One of the benefits is their efficiency; there’s just one source of truth, a single trusted entity. Such oracles might be the go-to choice when you’re dealing with proprietary datasets signed and published by a trusted owner. However, centralized oracles come with their own set of challenges:

• While they may be considered a trusted source, there’s no immediate way to verify the data’s accuracy. If a hacker tampers with the data, smart contracts will still use this possibly corrupted information.

• Centralized oracles can’t guarantee uninterrupted service. Their off-chain components could be vulnerable to attacks, posing a potential risk.

• In terms of data reliability, there’s a lingering concern. Although users might pay for data services, there’s no guarantee the data host won’t be swayed by a better deal or manipulate data directly for a higher payoff.

Decentralized Oracles

Having looked at the challenges of centralized oracles, it’s worth noting that decentralized oracles were designed to address these issues. Unlike their centralized counterparts, decentralized oracles distribute the responsibility across a peer-to-peer network. This network forms a consensus on off-chain data before feeding it to the smart contract.

Ideally, decentralized oracles would be entirely trustless, permissionless, and free of central control. However, some “semi-decentralized” oracle networks still exist. These function similarly but differ in having an owner who oversees and manages nodes based on their performance. Fully decentralized oracle networks, however, operate as independent blockchains, equipped with specific consensus mechanisms to coordinate nodes and penalize misconduct.

Several advantages make decentralized oracles highly preferable to centralized ones such as:

• They utilize multiple validation methods, ensuring data accuracy and trustworthiness from external sources. Examples include authenticity proofs such as Transport Layer Security (TLS) and Trusted Execution Environment (TEE) attestations.

• While centralized oracles hinge on a single data source, decentralized counterparts pool information from numerous oracle nodes. This method of cross-referencing data from various sources helps filter out incorrect information.

• Decentralized oracles have enhanced availability. By decentralizing both data sources and the nodes transmitting data on-chain, they offer better fault tolerance. For instance, an oracle contract can lean on several nodes to process queries. In addition, certain stake-based oracles can prompt node operators for faster responses by threatening potential slashing for delays.

• There’s a stronger incentive for decentralized oracles to operate correctly, given the number of rewards available for honest service.

What Are Oracles Used For In DeFi?

Oracles are vital tools within DeFi, especially given its focus on peer-to-peer lending, borrowing, and trading. For smooth operations, DeFi platforms need a range of financial data. This includes exchange rates for cryptocurrencies, price comparisons between tokens, and values of tokenized assets like gold or the US dollar. So, if you’re depositing ETH as collateral, oracles help fetch its current market price. This enables smart contracts to assess the collateral’s value and determine how much can be borrowed from a given protocol. At Metronome, oracles are used for tracking underlying asset prices for synthetics and collateral on the application.

Various price oracles have gained traction in the DeFi sector, most notably Chainlink. While oracles serve similar purposes, their functionalities can differ from eachother. It’s essential to grasp these distinctions before settling on one. Chainlink stands out due to its decentralized approach, robust security, and versatility. It’s widely considered among the most dependable oracle networks in DeFi. Many platforms, including Metronome, rely on Chainlink for reliable price feeds, and its resistance to vulnerabilities.

Summary

Oracles serve as bridges, connecting off-chain data with the blockchain, ensuring smart contracts have the necessary external information to function properly. In the realm of DeFi, they’re indispensable. They fetch crucial financial metrics, from cryptocurrency exchange rates to the value of tokenized assets, facilitating operations like peer-to-peer lending and trading.

The world of oracles is diverse; while they all relay data, their sources, trustworthiness, and design vary. Centralized oracles are efficient but might be prone to vulnerabilities due to their single point of control. On the other hand, decentralized oracles, like Chainlink, distribute the responsibility across networks, enhancing data accuracy and system reliability. Given these differences and their pivotal role, selecting the right oracle requires a keen understanding of their functionalities and the specific needs of the DeFi application in question.

Overview

Just a few months ago, we saw our sister protocol, Vesper, secure an OP grant. Seeing their success, we decided to do the same. Today, we are thrilled to announce that Metronome has received a grant of 149k OP.

After wrapping up cycle-13, we are set to take things up a notch with our Synth offerings. So far, we have been solely operating with msETH on Optimism, however, with this grant, we’re expanding. Look out for msUSD and msOP pairs coming to Velodrome soon.

These new additions will mean we can start offering Smart Farming routes for msUSD and msOP, giving our users even more ways to optimize their yield.

Distribution

Due to a reduction in grant size, we aim to use approximately 80% of the grant (119,200 OP) for weekly Velodrome bribes, as detailed below:

• msETH-ETH: 2,980 OP

• msUSD-USDC: 1,980 OP

• msOP-OP: 1,000 OP

The remaining 20% (29,800 OP) will be strategically used for incentive matching with our partners for cooperative activities, such as partner LP pools.

In addition to the OP incentives, we will continue incentivizing these liquidity pairs from our DAO treasury. This will be done using $MET token and permanent LP incentives through treasury token holdings. We will also target at least a 1:1 match in a $ notional value of the MET incentives that we push alongside OP incentives received from this grant.

The 80% of incentives will be spread out over 20 weeks. The remaining 20%, used for partnership activities, is also expected to be distributed within the same timeframe.

Stay Tuned

Make sure to stay tuned by following our Twitter to stay updated with any news. You can also join our Discord or Telegram for community insights or to chat with the team.

Traditional financial institutions have long been the cornerstones of the investment world. However, this model is outdated, and times are changing fast. A new breed of financial applications are cropping up — decentralized, resistant to censorship, and that leverage the power of blockchain. At Metronome, we continue to participate in this revolution, creating new and promising tech for users to harness.

Why This Matters: The Power of Decentralization

If you are unfamiliar with the term “decentralization” then you might be asking yourself, why is this such an essential piece of the puzzle? The answer lies in the empowerment of the individual.

In the diverse ecosystem of Web3, decentralization wears many hats, but at its core, it seeks to restore the reins of control back to the user.

Consider this — in a truly decentralized environment, you, and only you, control your funds. The decision of when to invest, where to put your capital, and how much to stake, rests solely with you. There’s no need to navigate through intermediaries or seek permissions from a central authority. You exercise your financial autonomy directly through a decentralized wallet, such as MetaMask, reinforcing the spirit of individual empowerment that lies at the heart of decentralization.

But let’s also take a broader view. Decentralization isn’t just about personal control. It can also be about reshaping the very dynamics of governance within an organization or an entity. Here, power is transferred from a concentrated central authority to a project’s community.

Metronome operates under a Decentralized Autonomous Organization, or DAO as more commonly known. In this setup, the community becomes the voice of power. They discuss and decide the protocol’s future through a democratic system of proposals and votes. This ensures that the participants taking part are truly invested in the future of the project and can be a significant key to success, it also ensures that you are producing upgrades that your community actually wants to see.

The Age of Smart Farming

Now, let’s add another layer to the mix: Smart Farming. Within the Metronome protocol, Smart Farming enables users to generate yield on their assets, potentially turning a static investment into a lucrative passive income stream, while simultaneously supercharging already productive assets, with Vesper’s vaAssets already integrated.

Once your collateral has been deposited in Smart Farming, a sequence of meticulous and sophisticated events begins to play out. This involves minting, swapping, and looping — all executed within a single transaction.

In the case of Smart Farming, this single transaction approach is far from just an aesthetic choice. It also carries practical importance too, as it saves users from getting tangled in multiple dApps and transactions, reducing extremely high gas fees that occur through the standard manual process.

This fusion of technical sophistication with cost-effectiveness marks a crucial juncture in DeFi. In an arena where gas fees often stand as formidable barriers, the Smart Farming approach offers less friction and greater financial inclusivity. Being deployed on both Mainnet and Optimism only further compounds this.

Unleashing Potential: Metronome and Vesper Finance

The ever-evolving DeFi landscape can be complex for yield seekers. Traditionally, strategies like Vesper’s ‘set and forget’ approach have simplified the process, but the potential for even greater yields exists just beneath the surface. This is where Metronome’s Smart Farming steps into the spotlight.

When we combine Vesper’s expertise in yield optimization and Metronome’s boundless synthetic asset possibilities, we create a unique opportunity representing the partnership of these two forces.

DeFi participants now have an additional avenue to harness the productive power of their assets. With Metronome’s Smart Farming, you can deposit these assets as collateral, enabling the minting and looping of synthetic assets. This move only increases the potential use cases of assets and enables an effect designed to boost yield potential.

Summary

Venturing into the world of DeFi can initially seem intimidating, given the wide variety of applications and digital currencies out there. However, the power and control it gives to the user could be the very thing that convinces them to make the switch from TradFi.

Metronome is continuously building to become a standout DeFi protocol. It’s all about enabling users of all skill levels to access a variety of assets in a decentralized way and offering the easiest tools to boost returns for all participants.

Since launching on Optimism, Metronome has become even more user-friendly, especially for those who are reluctant to use Mainnet because of its high gas fees and slower transaction speeds. Keep an eye out for more news and updates soon. Metronome is making strides and the future looks promising.

Overview

• Introduction to ZkSync

• What are Zk Rollups?

• The Inner Workings of ZkSync

• Summary

Introduction to ZkSync

If you’re involved in DeFi, you’re likely all too familiar with the challenges of high gas fees and slow transaction times. As Ethereum continues to grow and expand, these issues have become a genuine concern, calling for robust upgrades. One solution that has emerged to address these issues is zkSync.

zkSync is a Layer 2 scaling solution that promises to help us navigate around the current limitations of Ethereum by performing operations off-chain and reducing the load on-chain.

In order to achieve this, zkSync uses zero-knowledge (ZK) rollups. Zk rollups take transaction data off the Ethereum mainnet, processes it outside the network, and then brings it back as a single proof. This dramatically reduces the amount of data that needs to be stored on-chain, thereby speeding up transactions and lowering gas fees. For more information about the features of ZkSync, check out Vesper’s overview.

What are ZkRollups?

As we mentioned earlier, zkSync utilizes what’s known as zk rollup architecture. But let’s break that down a bit more to fully understand the role zk rollups play in this process.

The principle behind zk rollups is to hold funds in a smart contract on the Layer 1 chain while performing all the heavy lifting and data storage off-chain. Remember, this off-chain approach is key as it enhances the overall efficiency and scalability of the network.

Here’s why this is so impactful: traditionally, on Ethereum, each transaction needs to be verified individually, which can be quite intensive, leading to higher costs and slower processing times. Zk rollups, however, enable multiple transactions to be ‘rolled up’ into a single transaction.

The process works by users first signing their transactions and handing them over to validators. These validators, rather than verifying each transaction individually, roll up a multitude of transactions into a single block. This block is then represented by a cryptographic commitment, specifically a root hash of the new state, which is submitted to the smart contract on mainnet.

Alongside this commitment is a cryptographic proof, known as a SNARK, that confirms this new state is legitimate. As well as this proof, a state, representing a small amount of data for every transaction, is published over the mainchain network which enables anyone to recreate the state.

Finally, the smart contract verifies the proof and the state, thereby validating the authenticity of all the transactions within the block. This method of SNARK verification is far less resource-intensive than individually verifying each transaction, and off-chain state storage proves to be significantly cheaper than on-chain EVM storage.

ZK-rollup transaction process — Source: Messari

Excluding the above, what makes Zk rollups so different and sets them apart in the realm of Layer 2s is their security capabilities. Key to this is their inability to steal funds. This high level of security is upheld even if validators stop cooperating, ensuring that users can always retrieve their funds, an advantage not shared by everyone.

Zk rollups are distinct from optimistic rollups in that they eliminate the need for continuous monitoring by a single trusted third party to prevent fraud. This feature significantly enhances the system’s reliability, as it isn’t dependent on a constant presence for its security.

The Inner Workings of ZkSync

Finality

When it comes to transaction finality, the SNARK proofs previously discussed play a critical role. Essentially, once a zkSync block’s SNARK proof is generated and acknowledged by the smart contract, the transaction reaches its finality on Ethereum. This process typically takes around 10 minutes post-submission, giving it the same level of finality as any other Ethereum transaction. When compared to Optimistic rollups, or any other fraud-based scaling solutions, zk rollups come out on top due to their finality times shorter.

Confirmations

As it stands, zkSync doesn’t quite offer instant confirmations, but the future of zkSync holds promise for instantaneous confirmations, thanks to an upcoming feature — security bonds. This feature will offer guarantees of instant economic finality. It’s an exciting progression, considering that while transactions submitted to zkSync are instantly confirmed and immediately visible to the recipient, both via the user interface and the API, they are currently promises from the zkSync validator’s perspective. This means that users who do not trust the validator are required to wait for full finality before considering the assets as fully received. The introduction of security bonds, however, will transform this, giving more trust and bringing us one step closer to real-time transaction finality.

So how exactly do these security bonds work?

1. Selected validators deposit a sizeable security bond into the zkSync smart contract.

2. These validators run a consensus, quickly confirming that a user’s transaction will be in the next zkSync block (signed by a supermajority).

3. Once a new zkSync block is made and submitted to the mainchain, it can’t be undone.

4. If the block doesn’t include the promised transactions, validators who signed the receipt and the new block will be slashed. Only validators who acted dishonestly face penalties.

5. The slashed funds are divided up: part compensates the transaction recipient, and the rest is burned.

Congestion

If we’re talking about congestion, then fraud-proof solutions like Optimistic rollups might face challenges of their own. They rely on bots to have their fraud-proof transactions mined, which could become a real problem if congestion increases, posing a potential security threat to the assets they manage.

However, zkSync is well equipped for such scenarios, thanks to its use of zero-knowledge validity proofs. With this, any asset transfer must include a proof of validity, minimizing the risk to the network. Also, zkSync’s validator nodes are designed to automatically increase their prices in response to network congestion. This ensures that zkSync blocks are given high priority in mining. While this might sound like it would raise costs for users, the reality is that because zkSync’s fees are a fraction (1/100th) of those on mainnet, users remain largely unaffected.

Security

One of the standout features that makes zkSync such a prominent choice is its formidable security. As long as there is correct implementation along with valid cryptographic assumptions, zkSync offers users a security level the same as holding funds in an Ethereum mainnet account. Here are some noteworthy characteristics:

• Users do not need to constantly monitor the network.

• The protocol is foolproof against validator's ill-intentions, making it impossible for them to either steal funds or tamper with the zkSync state.

• The ability to store private keys in cold storage.

• In any situation, regardless of the actions of validators, users retain the ability to move their assets back onto the mainnet.

A critical aspect of zkSync’s security design lies in its continuous control mechanism over funds. This is made possible through use of the ‘priority queue’, which serves as an emergency exit plan if validators unexpectedly become unresponsive. This works by:

• If validators do not respond, and transactions are being ignored, users can submit an exit request directly on the mainnet via the priority queue.

• Validators are required to process priority queue requests within a week.

• If validators fall short in processing these requests, the system activates ‘exodus mode’. During this, users can immediately withdraw all their assets by conducting a direct transaction on mainnet.

Summary

zkSync is a Layer 2 solution using zk-rollups to enhance Ethereum’s scalability by reducing on-chain data and gas fees. Its security features are robust, ensuring the same level of protection as the Ethereum mainnet, and provides users with full control over their funds. Zksync is well-equipped to handle network congestion through the use of zero-knowledge validity proofs, minimizing the risk to the network. The unique ‘priority queue’ system is an additional safety net, ensuring that users can always retrieve their funds, even in unlikely situations where validators become unresponsive. Overall, zkSync is an exciting solution with many more upgrades on the horizon, this is definitely one to watch.