A heartfelt pursuit of decentralization: Ethereum may not have a center, but it does have something that resembles a beating heart. The Switzerland-based Ethereum Foundation not only employs many of the researchers and developers crucial to its goal of creating a "world computer," but it also pumps moral and financial support for the community's ambitious vision throughout the ecosystem. After all, changing the world can at times be a discouraging—and expensive—undertaking.
In a new blog post, the foundation sheds some light how it intends to dole out $30 million over the next 12 months to "key" Ethereum projects. The cash has been drawn largely from the foundation's Ether holdings, which it says amount to about 0.6% of all the coins in circulation or about $155 million.
The first priority is "ETH 2.0," a long-promised software upgrade that will include a switch from proof-of-work to proof-of-stake, which will entail a wholesale change to the way the network reaches agreement about the information in its blockchain. Instead of requiring "miners" to participate by spending lots of computing resources, instead "stakers" will validate new transactions, proving themselves trustworthy by first locking up large sums of money (called "staking"). It also includes a number of other changes that together are supposed to let Ethereum operate at an efficiency and scale that would finally live up to its original promise. (Creator Vitalik Buterin has quipped that right now Ethereum is more like "a smartphone from 1999 that can play Snake.")
The foundation will dole out $19 million in grants to projects focused on "building the Ethereum of the future," including ETH 2.0 software clients, new "layer two" systems that will allow users to engage in faster transactions by not having to record each one on the main blockchain, and futuristic privacy technologies that use zero-knowledge proofs to allow users to prove things about themselves without having to supply identifying information.
Looking further down the road, though, the Ethereum Foundation is grappling with the paradox of being an organization that prioritizes decentralization. Aya Miyaguchi, the group's executive director, spoke about this earlier this month at our Business of Blockchain event. When the foundation was launched, the community was so small that the foundation essentially was Ethereum. Five years later, many independent teams are working to improve the system's infrastructure. That means her group's role must change, said Miyaguchi. "To maximize the potential that this decentralized ecosystem has, we need to find a way to subtract our power as much as possible."
For instance, it's encouraging the creation of more independent funding initiatives like MolochDAO, which crowdsources funding for Ethereum infrastructure projects. Not only is it more sustainable if the community can rely on other funding sources besides the foundation, argued Miyaguchi, it's also more decentralized.
But achieving ETH 2.0 will be a massive and complicated task, and success is far from assured. That's true even if all the necessary research breakthroughs really are already in the bag, as Buterin claimed this week in a tweet. Perhaps it can be pulled off without centralized leadership. But it will probably require at least a little bit of heart.
Could cryptocurrency help everyday people in Argentina? A number of startups think so. One in particular, called Ripio, has even started advertising in the subway tunnels beneath Buenos Aires. Ripio, a six-year-old company that used to be called BitPagos, has in recent years shifted its focus from merchants to consumers. Bitcoin and other cryptocurrencies have for years been hailed as a potential alternative store of value for people who live in places where government-backed money isn't stable. The problem, of course, has been that cryptocurrencies are volatile too.
Enter stablecoins. Recently, Ripio added Dai, the dollar-pegged, Ethereum-based stablecoin developed by a foundation called MakerDao. The idea is that perhaps Argentines, who commonly exchange their pesos for US dollars on the street, could by Dai instead. They can even use Ripio's service to change it back to pesos when they want to, so they can buy things on the popular ecommerce site Mercado Libre. Sounds great, but it also raises questions about the real risks of relying on unproven cryptocurrency systems. Read all about it in our new story, written by Kristin Majcher, an independent journalist based in Buenos Aires.
Bitfinex's multitasking is almost impressive. Its court fight with the New York Attorney General's office, which has requested documents related to the exchange's mysterious loss of $850 million, will now stretch to at least the end of July. Simultaneously, the embattled cryptocurrency exchange is angling to get into one of the hottest new games in the industry: so-called initial exchange offerings, or IEOs. The trend mostly amounts to the ICO craze all over again, except that the token sales are administered by exchanges, and investors often have to use the exchange's own token to buy the new token.
Rumors began swirling last month that Bitfinex might try to dig its way out of its $850 million hole by selling its own token. Those rumors turned out to be true, and the exchange has supposedly raised $1 billion selling a new digital currency called LEO. Not only can Bitfinex users now buy LEO, soon they will also be able to participate in Bitfinex-run IEOs. It's announced a new service called Tokinex, and today announced its first token sale. Wow! We've said it before, but the way Bitfinex has acted since it fell into legal trouble is so crypto, it's almost too crypto.
