• The U.S. Treasury sanctions Tornado Cash.

• Circle freezes USDC on Tornado Cash-tied wallets.

• ChainLink says they won’t support ETH PoW forks.

• StarkWare partners with the Aspect NFT marketplace.

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned cryptocurrency privacy tool Tornado Cash. A list of associated addresses were also added to the agency’s Specially Designated Nationals (SDN) and Blocked Persons list. The sanction prohibits U.S. persons and entities from interacting with the protocol or any of the associated addresses. The Treasury claims Tornado Cash has materially assisted cyber-enabled activity originating from outside the United States that is likely to be a threat to national security. The agency cited the protocol’s use in illicit money laundering including $455 million stolen by the Lazarus Group in the Sky Mavis hack. Since the announcement, the tornado.cash and all Github repositories associated with the project have been censored. The UI for Tornado Cash can still be forked and made accessible through IPFS. Tornado Cash is a privacy protocol that allows users to facilitate anonymous transactions by depositing funds into a smart contract, which is aggregated with all deposits and can be withdrawn to a new address without revealing the origin of the funds. Since launching in 2019, Tornado Cash has processed over $7 billion in all-time volume, most of which is not tied to illicit funds.

Circle, the company behind the USDC stablecoin, has blacklisted more than 80 addresses associated with Tornado Cash. The blacklisted wallets include Tornado Cash smart contracts for USDC deposits. So far more than 75k USDC belonging to Tornado users as well as 149 USDC donated to the project has been frozen. The USDC token contract contains a blackList(addr) function that, when enabled, prevents an address from being able to move USDC tokens. Blacklisted addresses are also prevented from being able to receive USDC. Circle CEO Jeremy Allaire has previously failed to acknowledge the company’s ability to freeze assets as a centralized stablecoin issuer. Circle Pay is yet to release a statement on the freezing of assets.

Decentralized oracle provider Chainlink announced that it will not support forked versions of Ethereum amid the upcoming merge upgrade. This includes any PoW forks. Chainlink said it will remain operational on Ethereum’s PoS consensus layer post-merge. The decision comes in alignment with the Ethereum Foundation and the broader Ethereum community. A hard fork would result in two separate tokens post-merge. Digital Currency Group CEO Barry Silbert is also opposed to a PoW hard fork and advised miners to use their resources on the existing ETC PoW chain instead. Ethereum developers who are unsure of their migration strategy during the transition are advised to pause smart contract operations during the upgrade.

Vitalik Buterin has proposed the idea of a stealth address ERC-721 token standard. The standard would provide privacy for NFTs by allowing users to send NFTs without revealing the receiving address. A sender creates a random, one-time address for each transaction on behalf of the recipient. Stealth addresses allow multiple transactions made to the same wallet to be un-linkable. Buterin shared the idea in response to an Ethereum Research post for an ERC-721 extension for zk-SNARKs.

StarkWare announced a Developer Partnership with Aspect, the first NFT marketplace to launch on StarkNet Mainnet. Aspect has built a StarkNet NFT API that allows developers to build NFT experiences with the project’s infrastructure. The Aspect API is a REST-based API and provides NFT data on StarkNet. It provides a set of endpoints that enable developers to fetch ERC-721 and ERC-1155 token metadata as well as assets, events, contracts, and other core attributes.

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• Angle Protocol integrates LayerZero.

• Akula execution layer client.

• Uniswap proposes the Uniswap Foundation.

• Optimism begins OP incentives.

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Former Uniswap Labs Chief of Staff Devin Walsh and former Ethereum Foundation Grants Lead Ken Ng have submitted a proposal for the Uniswap Foundation. As per the proposal, Walsh would serve as Executive Director while Ng would serve as Head of Operations. The Uniswap Foundation would be tasked with growing the Uniswap ecosystem. The proposal seeks a $74 million budget from the Uniswap DAO treasury, which currently holds $3.9 billion worth of assets. The budget is broken down into $14 million for an operating budget to cover a team of 12 and $60 million for an expanded Uniswap Grants Program (UGP) with a runway of 3 years. The proposal also seeks 2.5 million UNI tokens for the foundation to participate in governance. A Temperature Check Snapshot poll for the proposal will go live on Monday, August 8th. If the temperature check passes, the proposal will move into a consensus check.

Angle Protocol has integrated a LayerZero Omni-chain Fungible Token (OFT) implementation directly onto its application. Users can now bridge Angle’s agEUR stablecoin between Ethereum, Polygon, Optimism and Arbitrum within Angle’s web interface. Users can also borrow and leverage agEUR on any of the four chains. According to Angle, the bridge contracts are fully owned and maintained by the Angle DAO. Amid recent bridge exploits, the Angle DAO has set a limit on the amount of assets that can be bridged at any given time. LayerZero Labs is a cross-chain messaging protocol that uses Ultra Light Nodes to connect dapps across chains. Applications built using LayerZero’s OFT standard enable users to move assets between all chains on LayerZero. Angle is an over-collateralized, decentralized and capital-efficient stablecoin protocol.

Optimism governance fund recipients have started their incentivized liquidity mining programs. A total of 36.6 million OP tokens were distributed to 27 projects as part Phase 0. The tokens were given to existing Optimism projects to be used for driving sustainable growth to the Optimism ecosystem. Aave is currently running the largest OP liquidity mining program. The lending protocol is distributing 5 million OP tokens to Optimism Market users over the next 90 days. Aave received the 5 million OP allocation as part of Optimism’s Partner Fund. Other projects that currently have an OP liquidity mining program include PoolTogether, Lyra, Rubicon, Thales, StarGate, and Velodrome.

Akula, an Ethereum client written in Rust, is now listed as an Execution Layer (EL) client on the Ethereum website. The client supports Ethereum Mainnet, Görli, Rinkeby, Ropsten, and Sepolia. Akula claims to be the fastest Ethereum Node, capable of bootstrapping a full validation archive node in under 3 days. Akula also supports networks using Ethash, Clique, and Ethereum beacon chain consensus engines. The client requires less than 2TB of storage for an Ethereum mainnet archive node and less than 600GB for a pruned node and can even be run on a HDD.

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• Arbitrum Nitro to launch on August 31st.

• Goerli undergoes SF6 and the Bellatrix upgrade.

• Instagram NFT feature expands to 100 countries.

• Coinbase Prime partners with BlackRock.

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Arbitrum announced that it will be migrating Arbitrum One to Nitro on August 31st, marking the network’s one-year anniversary since launching to public beta. Nitro will introduce advanced Calldata compression that will reduce the amount of data sent to L1, resulting in lower gas fees. Additional features include safe retryables, Geth tracing, and gas pricing compatibility for EVM operations. Developers are advised to test their applications on the Arbitrum Goerli Testnet. Migration notes have been published detailing new features and changes to existing deployments. A shadow fork migration is also planned for August 24th to prepare developers one final time before the mainnet migration. Offchain Labs said they will have “a few fun things” in the works to celebrate their anniversary and Nitro.

The Goerli testnet successfully underwent its 6th shadow fork early morning on August 4th. The fork faced no client issues and all node combinations processed the transition correctly. Two nodes did run out of disk space, causing a slight drop in participation. Shadow forks allow developers to test different merge scenarios. MEV-boost, an open-source MEV software for Beacon Chain validators, had the chance to test its infrastructure. 9.1k Goerli validators, roughly 30% of the testnet, registered with the Flashots relay and ran through the merge without any major issues. Other than one potentially defective machine facing high latency, all validators were able to successfully source blocks from the Flashbots relay. This brings mev-boost one step closer toward merge readiness.

Goerli also underwent the Bellatrix upgrade this week. According to Ethereum developer terence.eth, the Bellatrix upgrade faced a few minor issues, including a drop in network participation from 89% to 80% due to inactive nodes. There was also a peering issue between Prysm and Teku consensus clients. Bellatrix is the first of two phases in the testnet’s transition to PoS. The official Prater/Goerli Merge is scheduled for next week between August 9th-11th. Assuming the Goerli merge goes well, developers plan to set the Bellatrix Epoch and Ethereum mainnet TTD during next week’s consensus layer call on Aug 11th.

Meta announced that it is expanding its Instagram NFT feature to more than 100 countries across Africa, Asia Pacific, Middle East, and the Americas. The feature allows users to connect a digital wallet to their Instagram account. Users can then post digital collectables they own to their feed, automatically tagging both a creator and collector for attribution. Meta also announced it will soon support Coinbase Wallet and Dapper Wallet. The integration already supports Rainbow, MetaMask, and Trust Wallet. Flow blockchain NFTs are also now supported in addition to Ethereum and Polygon NFTs. There are no fees associated with posting or sharing a digital collectible on Instagram. Instagram initially rolled out a beta launch in May for select U.S. creators.

Coinbase announced a partnership with BlackRock, the world's largest money manager with over $8 trillion in assets under management. Coinbase will be giving Aladdin institutional clients access to crypto trading and custody via Coinbase Prime. Aladdin is BlackRock’s end-to-end investment management platform for institutional clients. Aladdin clients will have direct access to crypto, starting with Bitcoin. The partnership will provide clients exposure to crypto trading, custody, financing, and staking infrastructure. The price of Coinbase shares (COIN) rose more than 31% amid the announcement, hiting upwards of $100 per share. Coinbase shares are still down 60% YTD after a decline from their ATH last November.

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