[ETH Letter] Proposal for Activation of Sepolia Glamsterdam Testnet on October 6

Ethereum image. Source: Ethereum Foundation webpage
Ethereum is a network that holds the largest ecosystem base in the world in terms of key indicators such as the number of developers and total value locked (TVL).

The ETH Letter brings you the major news from the Ethereum ecosystem shared by Ethereum Korea over the past week.

Ethereum Korea is an organization composed of Korean representatives from the Ethereum Foundation and key contributors to the ecosystem.

Research Field News

1. Proposal for Activation of Sepolia Glamsterdam on October 6

A schedule for the activation of the Sepolia testnet for Ethereum's next upgrade, Glamsterdam, has been proposed.

During the recent 186th ACDC meeting, epoch 353024 was suggested as the activation point for Sepolia Glamsterdam.

In terms of time, this is set for October 6 at 13:53 UTC.

ACDC is a meeting where core developers of the Ethereum consensus layer discuss matters related to upgrades.

Sepolia is a major public testnet for Ethereum.

Public testnets are networks where developers, app teams, and infrastructure operators test new rules before applying them to the actual mainnet.

However, the activation schedule for the Hudi testnet and mainnet has not yet been determined.

This indicates that while Glamsterdam is approaching the testnet application stage, stability verification has not yet been fully completed.

In fact, a caching bug related to builder deposits was discovered in Devnet 8.

Caching is a method of temporarily storing frequently used data for quick retrieval.

This bug occurred during the data processing of builder deposit-related information, and non-determinism was observed in Lighthouse, Prism, and Teku.

Lighthouse, Prism, and Teku are Ethereum consensus layer clients.

Non-determinism refers to a state where results can differ between clients even when executed under the same conditions.

In blockchain, all nodes must produce the same result for the same input.

Therefore, non-determinism is a critical issue that must be resolved before applying to the mainnet.

In simple terms, while the upgrade date for Sepolia has been proposed, it cannot yet be considered that a stable Devnet has been completed.

This discussion shows that while Glamsterdam is moving to the actual testnet stage, consistency among clients and the stability of builder-related logic remain the final hurdles.

2. Monthly Update from the Protocol Cluster

A monthly update from the Ethereum Foundation's Protocol Cluster has been released.

Will Cochran highlighted both the achievements and mistakes in the preparation process for Glamsterdam in this update.

He noted the confirmation of ePBS and BAL as the initial headliners as an achievement.

Headliners refer to the core proposals representing the upgrade.

ePBS is a proposal to separate the roles of block proposer and block builder within the Ethereum protocol.

Currently, block proposers and builders often operate separately, but they rely significantly on external infrastructure.

ePBS attempts to draw this structure more into Ethereum's own rules.

BAL refers to the block access list.

It organizes which accounts and storage spaces a specific block has read and modified in advance, helping nodes to verify and synchronize blocks more efficiently.

On the other hand, Will Cochran viewed not placing the gas re-estimation proposal EIP-8037 as a headliner as a mistake.

Gas re-estimation is the process of readjusting the costs of commands or state access in the Ethereum Virtual Machine to match the actual network burden.

Gas refers to the computational cost required for transactions or smart contract executions in Ethereum.

If gas costs are set lower than the actual burden, certain operations may be overused, and conversely, if set too high, costs for developers and users may unnecessarily increase.

In other words, gas re-estimation is an important task for Ethereum's long-term scalability and stability, even if users may not feel its impact immediately.

Will Cochran also revealed that the guiding principle for the next upgrade, Hegota, is quantum resistance.

The guiding principle refers to the direction that is placed at the center of various discussions.

Quantum resistance involves preparing cryptographic systems that are not easily broken even as quantum computers advance.

During the same week, a new precompiled EIP for ML-DSA verification was also created.

ML-DSA is one of the quantum-resistant digital signature algorithms.

Precompiles are functions provided at the protocol level to handle cryptographic operations that are frequently used or computationally expensive more efficiently in Ethereum.

In simple terms, if Glamsterdam is an upgrade centered around ePBS, BAL, and gas re-estimation, Hegota has begun to focus on cryptographic transitions in preparation for the era of quantum computers.

This update shows that Ethereum protocol development is preparing for both short-term performance improvements and long-term security transitions simultaneously.

3. Proposal for Formal Verification of Client Changes

Pascal Carvassio proposed that Ethereum client changes be formally verified before upgrades.

Formal verification is a method of mathematically verifying that code or protocols operate exactly as intended.

Ethereum clients are software that nodes run to participate in the Ethereum network.

Execution layer clients are responsible for transactions and smart contract executions, while consensus layer clients handle validator voting and block confirmations.

Whenever there is an Ethereum upgrade, new rules and code changes are introduced to the clients.

The problem is that if there are bugs in these changes, they can affect the entire network.

If a specific client accepts an incorrect block or, conversely, rejects a valid block, chain forks or failures can occur.

Pascal Carvassio's proposal is to more rigorously verify major client changes before upgrades to reduce such risks.

However, formal verification is not a panacea that solves all problems.

Trent Van Eps pointed out that to perform formal verification, one must first determine what to verify, and that the individuals and organizations making that judgment must continuously be funded.

In practice, formal verification is a costly and time-consuming task.

It is difficult to perfectly verify all code, and priorities must be set on which parts are most important.

Also, if the verification target is poorly defined, even if a mathematically correct proof is created, it may not sufficiently reduce actual system risks.

In simple terms, formal verification is a powerful tool for enhancing the stability of Ethereum clients, but it requires judgment on where to apply it and ongoing funding.

This discussion shows that as Ethereum becomes an infrastructure that protects increasingly larger assets, a higher level of verification system is required in the client development and upgrade process.

Ecosystem News

1. Coinbase Launches 6 Tokenized Stocks on Base

Coinbase has launched 6 tokenized stocks on Base.

This product includes companies like Amazon, Microsoft, Tesla, and SpaceX.

The target audience is limited to eligible users outside the United States.

Tokenized stocks are assets that represent actual stocks or stock-related rights as blockchain-based tokens.

Users can trade assets linked to stock prices on-chain, and in some structures, dividends or rights processing can also be connected.

The significance of this launch is that tokenized stocks have entered a stage of transitioning from simple trading targets to collateral assets.

Abe has announced that V4 will soon drive the on-chain credit layer for these assets.

The credit layer provides a foundation for borrowing against assets as collateral, assessing the risk of assets, and facilitating lending and borrowing in on-chain finance.

For example, tokenized Tesla or Amazon stocks are not just assets to buy and sell, but can also be used as collateral in the DeFi lending market.

Aave V4 aims to provide a lending infrastructure that can more flexibly reflect various assets and risk conditions.

In simple terms, Coinbase allows trading of tokenized stocks on its platform, while Aave prepares a financial layer where these assets can be used as collateral to borrow money.

This trend shows that tokenized stocks can extend beyond simple stock tracking products to become fundamental collateral assets in Ethereum-based on-chain finance.

2. Robinhood Chain Experiences Delays in Batch Posting Due to L1 Blob Market

Robinhood Chain has experienced delays in batch posting.

Arbitrum announced that the batch posting on Robinhood Chain has been delayed.

However, there were no issues with direct user transaction processing or network operation.

Batch posting is the process of aggregating multiple transaction data processed on Layer 2 and posting it to Ethereum Layer 1.

Layer 2 handles transaction execution on its own network, but relies on Ethereum Layer 1 for data and settlement.

Recently, Layer 2s have been uploading transaction data in blob form to Ethereum.

Blobs are a data space introduced by Ethereum to reduce the cost of posting Layer 2 data.

The problem is that the blob market can also become congested.

If multiple Layer 2s try to upload a lot of data simultaneously, the data bandwidth of Layer 1 can become insufficient, leading to delays in batch posting.

The Robinhood Chain case illustrates how this structural dependency can manifest as actual disruptions.

From the user's perspective, transactions may appear to be processed immediately, but the process of final posting of that transaction data to Ethereum is affected by the conditions of the Layer 1 blob market.

In simple terms, while Layer 2 may seem to operate independently, it still relies on the data space of Ethereum Layer 1 for final settlement and data posting.

This delay shows that the expansion of Layer 2 is not just a matter of processing performance of each chain, but also depends on the data bandwidth of Ethereum Layer 1 and the design of the blob market.

3. MAMO Market Exploit in Moonwell Results in Approximately $6.8 Million Loss

An exploit occurred in the MAMO market of the Base-based lending protocol Moonwell, resulting in a loss of approximately $6.8 million.

Moonwell reported a shortfall of around $9.1 million.

An exploit refers to an attack that takes advantage of vulnerabilities in code or design to siphon off funds or misuse the system.

This incident was explained as resulting from a combination of collateral accounting inflation and oracle price manipulation.

Collateral accounting inflation is the issue where the system calculates that there is more collateral than the actual collateral value.

In a lending protocol, the amount of assets that can be borrowed is determined based on the value of the collateral deposited by users.

Therefore, if the collateral is inflated in calculations, attackers can borrow more assets than they should.

An oracle is a system that brings price information from outside the blockchain onto the chain.

For example, to know the market price of a specific token, the lending protocol needs oracle prices.

If oracle prices are manipulated, the protocol will calculate collateral values and liquidation conditions based on incorrect prices.

The Moonwell incident can be seen as a case where these two issues acted together.

In the same week, Balancer also announced a legacy v1 bug.

Balancer stated that there could be a potential outflow of liquidity provider funds from the old v1 pool.

That pool was already in a deprecated state and was structured in a way that made it impossible to pause temporarily.

As a result, users had to directly recover their funds.

In simple terms, the cases of Moonwell and Balancer show that outdated code, oracles, and collateral calculation logic are all significant risk points in DeFi.

Especially, even protocols that are deprecated or in a legacy state can become targets of attacks if funds remain.

These incidents highlight that DeFi security encompasses not only audits of new protocols but also ongoing management of older markets and inactive pools.

Community News

1. Ethereum Foundation Summarizes 35 Releases in August

The Ethereum Foundation summarized 35 ecosystem releases and upgrades in August with the message "Ethereum is where releases happen."

This thread emphasizes that the Ethereum ecosystem is not just limited to research and discussion but is actively deploying real products and infrastructure.

The first example mentioned is the successful vote for the ZK rollup transition of the Nosis chain.

Nosis is a chain compatible with Ethereum that has been active in payment, DAO, and DeFi ecosystems for a long time.

The ZK rollup transition means moving to a structure that verifies transaction processing results using zero-knowledge proofs.

Zero-knowledge proofs are a technology that can prove that calculations were performed correctly without revealing all the details.

BlackRock's BSTBL was also included.

BSTBL can be seen as a case linked to BlackRock's tokenized financial product flow.

The Uniswap v4 permissioned pool was also mentioned as a major release.

A permissioned pool is a liquidity pool where only approved investors or institutional addresses can trade.

This structure can be utilized in real-world asset-backed and institutional on-chain financial markets.

In simple terms, the Ethereum Foundation demonstrated that throughout August, there were actual releases in various areas such as ZK rollups, tokenized financial products, and institutional DeFi infrastructure.

This summary is significant as it shows that the Ethereum ecosystem is not merely discussing long-term roadmaps, but is in the execution phase where multiple teams are simultaneously bringing products and infrastructure to market.

2. Tokenized Stock Debate Shifts from Costs to Legitimacy

The debate over tokenized stocks is evolving from issues of fees and accessibility to a legitimacy debate over who has the right to tokenize stocks.

Adam Aron, CEO of AMC, strongly criticized Robinhood's tokenized stocks and brought in securities counsel.

He publicly expressed his displeasure regarding Robinhood's tokenized stock products.

AMC is a movie theater chain in the United States.

It has also been at the center of the meme stock craze among individual investors since the COVID-19 pandemic.

Robinhood's tokenized stocks are products that create tokens that can trade actual stocks on-chain.

The issue is that even if the issuing company does not directly participate or approve, a third party can create a structure that provides tokens linked to stock prices.

In this case, the key issues are how much the tokens reflect actual shareholder rights, whether the issuing company's consent is needed, and what rights are granted to investors.

Hayden Adams, the founder of Uniswap, summarized this debate as a clash between a CEO attempting a citizen's arrest on Twitter and a product designed by a former SEC commissioner.

This is a satirical expression of the conflict between emotional backlash and financial products with regulatory design.

In simple terms, the tokenized stock debate is shifting from whether stocks can be traded cheaper and easier on-chain to who has the authority to tokenize those stocks.

The rights and responsibilities among issuing companies, tokenization operators, investors, and regulators have not yet been clearly defined.

This debate shows that as the tokenized stock market grows, legal rights, shareholder status, corporate consent, and investor protection issues may become central points of contention.

3. Uniswap UNI Burn Approaches $200 Million Annually

The scale of UNI burns in Uniswap has recently approached an annualized $200 million based on the last 7 days.

Hayden Adams, the founder of Uniswap, recently stated that if swaps increase by just 10%, Uniswap could surpass Tether to become the number one crypto platform based on fees.

Uniswap is a leading decentralized exchange in the Ethereum ecosystem.

Users can exchange assets through a smart contract-based liquidity pool without going through a centralized exchange.

UNI is the governance token of Uniswap.

Burning refers to the act of permanently removing tokens from circulation.

An increase in the scale of burning can be interpreted as a sign of active trading activity on Uniswap and a strong operation of the fee-based value accumulation mechanism.

Tether is the world's largest stablecoin issuer, a company that generates massive profits through the management of stablecoin reserve assets.

The fact that Uniswap is approaching Tether in terms of fees indicates that the economic scale of decentralized exchanges has grown to a level comparable to that of centralized stablecoin issuers.

In simple terms, Uniswap has established itself as an on-chain financial infrastructure that generates large-scale trading fees across multiple chains, going beyond just being a simple DeFi app.

The potential for swap transactions to increase even slightly suggests that Uniswap could reach a level comparable to the highest profit platforms in the crypto industry, showcasing its multi-chain expansion and market dominance.

This trend suggests that the discussions around Uniswap's fees, burning, and token value accumulation may grow even larger in the future.

Weekly Ethereum Data

Annual Inflation Rate: 0.870%

Weekly Net Supply: 20,358.04 ETH

Staking Ratio: 34.27%

Stablecoin Market Cap: $147.885 billion

Net Inflow of U.S. Ethereum Spot ETF: $215.3 million

Source: Ultrasound Money, DeFi Lama, Dune, Parsec Investors

This article was written by a contributor from Strong Ethereum Korea and The Ticker is ETH.

You can view individual real-time news from this letter here.