Ethereum developer Paul Berg published a proposal for multiple native tokens on Ethereum that he says will improve user experience when transferring tokens, make native financial products easier to implement, and improve the potential for innovation in Ethereum Layer 2 applications.

Called EIP-7809, the proposal will add a backward-compatible extension to the EVM that will allow fungible tokens to operate with “native-like” properties if it passes Ethereum’s process for approving new proposals.

Ether (ETH) already functions as Ethereum’s native token. Nearly every other Ethereum-based token was built on top of the network without including most of the same “native” qualities that ETH has.

This limits functions such as direct token transfers using opcodes and transferring multiple tokens in a single contract call. EIP-7809 introduces four new opcodes:

• MINT & BURN, which allows token supply management through (obviously) minting and burning tokens
• BALANCEOF for checking token balances
• NTCALL for token transfers that require calling a contract
• NTCREATE for creating a contract that includes upfront token deposits

The new EIP also proposes replacing the “value” field with “(token_id, token_amount)” pairs. This new variable will be bundled with “transferred_tokens_length” in the “native_tokens_list” element.

Berg says this proposal arose from work on the now-discontinued Sablier Mainnet. The mainnet would have provided an infrastructure for token distribution. Sablier decided to launch on the L2 platform Morph instead.

One critic on EIP-7809’s GitHub page said parts of the proposal were redundant due to similarities with previous proposals. EIP-223 already proposes a standard that “allows payloads to be attached to transactions using the bytes calldata data parameter, which can encode a second function call in the destination address, similar to how msg.data does in an ether transaction.”

EIP-223’s calldata_data parameter sounded similar to the NTCALL opcode.

Read more: Did Vitalik Buterin’s girlfriend stall Ethereum development?

EIP-1155 describes another proposed method for transferring multiple tokens in a single call. EIP-1363 describes a method for executing a contract after a token transfer without having to pay a gas fee twice.

Similarities to functions that are already available on the Solana blockchain were duly noted. Solana introduced the Token Program and Token Extensions to develop a common implementation for viewing and managing Solana-based tokens.

This proposal might not affect the actual supply of ETH unless the developers decide to use the MINT & BURN opcode to adjust it. MINT & BURN likely uses the proposal’s “token_id,” or unique smart contract address.

One commenter suggested changing ETH’s token ID to 0xeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee, a value they said was already used by several decentralized exchanges.

If Berg’s EIP-7809 proposal passes, ETH may soon become one of many native or “native-like” tokens on Ethereum. It could help simplify token supply management, checking token balances, and token transfers that have to interact with a contract.

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Since spot ether Exchange Traded Funds (ETFs) began trading on US securities exchanges, five days have seen precisely $0 of Ethereum capital inflows. Even worse, since July 23, 2024, owners of the nine spot ether ETFs have actually withdrawn money from those products.

Incredibly, because trusts and other investors seeded over $10 billion worth of spot ether into the ETFs prior to their debut on US exchanges, the tally of post-launch trading activity is negative $556 million.

‘Inflows’ is a term used to describe the net US dollar flow into spot ether ETFs. It excludes all other Ethereum-related purchases and sales such as futures, options, derivatives, or spot ether itself.

Investors track ETF inflows as a way to measure how much effect ETFs are having on Ethereum’s market capitalization independent of other variables. In this case, the answer is simple: Ether ETFs have not helped.

Ether inflows crash, billions behind bitcoin ETFs

Although US spot ether ETFs have been net negative since inception, spot bitcoin ETFs as an investment vehicle have been indisputably beneficial for bitcoin inflows. Although bitcoin holders might choose to sell other products and buy spot ETFs — a roundtrip of non-economic purpose — there is significant evidence that ETFs are truly contributing to bitcoin’s market capitalization.

Specifically, since spot bitcoin ETFs began trading on US exchanges on January 11, 2024, inflows have exceeded $18.7 billion. That compares starkly with spot ether ETF outflows of -$556 million.

The disappointment is even more bitter after a promising start. On their opening day, spot ether ETFs bested the debut of spot bitcoin ETFs. Soon, however, Ethereum gave up its initial lead.

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Institutional ethereum investment via ETFs reached a historic — and dismal — milestone yesterday when for an entire day on Wall Street, zero net new US dollars flowed into spot ether ETFs.

Known as ‘daily total net flow’ or simply ‘flows’ in crypto parlance, this metric sums the total amount of money invested into spot ether ETFs (inflows) against the total amount of money withdrawn (outflows) on a daily basis.

The intention of the metric is to communicate how much effect the spot ether ETFs — distinct from other investment vehicles like spot or derivative purchases — contribute to ether’s price on a day-to-day basis.

Calculations are typically in US dollars and take into account all purchase and sale transactions across the nine spot ether ETFs listed on US stock exchanges by sponsors BlackRock, Fidelity, Bitwise, 21Shares, Franklin, Invesco/Galaxy, VanEck, and Grayscale’s two spot ETFs.

Ether ETF flows have disappointed everyone

Monday’s figure of $0 contrasts starkly with predictions from bullish investors who heralded spot ether ETFs as the advent of institutional adoption. Market predictions included all-time highs of up to $15,000 per ETH. Today, ETH is trading around $2,400 — half of its all-time high.

In the first quarter following the launch of bitcoin’s spot ETFs, bitcoin enjoyed over $12 billion of inflows. Ether, disappointingly, has actually posted net outflows since its spot ETFs debuted.

Read more: Ethereum beats bitcoin first-day spot ETF inflows

Indeed, because Wall Street entities had seeded the nine spot ether ETFs with $10.2 billion of capital for their debut — most of which came from Grayscale’s ether trust — there was some money available to withdraw from these funds.

Taking that opportunity, investors have withdrawn capital from spot ether ETFs on a net basis since their US listings. Specifically, spot ether ETFs have shed $548 million in net outflows since July 23.

There are many reasons for investors making decisions about capital reallocation away from spot ether ETFs. One salient contributor to poor performance — in addition to ether underperforming bitcoin — might be the lack of yield in spot ether ETFs.

Large holders of ETH may earn 3.3% in native yield by participating in Ethereum’s proof-of-stake while most ether ETFs, in contrast, do not pay any yield and actually charge a management fee.

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Against the backdrop of a crypto market in freefall, ETH has found itself an unlikely bidder to the tune of $40 million.

Crypto positions worth well over a billion dollars have been liquidated in the last 24 hours, per Coinglass’ dashboard, though some suspect the true figure could be much higher.

However, one enterprising hacker saw an opportunity in the bloodbath, scooping up ETH shortly before the token bottomed out at around $2,200, according to data from CoinMarketCap.

Read more: Cross-blockchain bridges keep breaking as crypto startup Nomad hacked for $190M

Blockchain monitor Lookonchain noted on X (formerly Twitter) that the Nomad Bridge exploiter had spent 39.75 million of Maker’s DAI stablecoin for 16,892 ETH, an average execution price of approximately $2,350 per ETH.

The proceeds were then sent on to sanctioned crypto mixing service Tornado Cash in order to obscure their onward trail.

Nomad Bridge free-for-all

Just over two years have passed since the Nomad Bridge was drained in a free-for-all that saw copycats and white hats alike duplicating the original exploiter’s actions.

A routine upgrade to the bridge’s smart contracts introduced a bug that treated all ‘process’ calls as valid, bypassing any proof that withdrawals were being requested by genuine depositors.

Losses eventually reached a total of $150 million, with the top three addresses grabbing over $95 million between them, according to crypto security firm Peckshield’s analysis.

Easy come, easy go

The Nomad hacker wasn’t the only shady figure making moves amongst the chaos, however.

Rather less successfully, another hacker attempted to make use of their loot from 2021’s $45 million exploit of Binance Smart Chain-based yield farm Pancake Bunny.

The hacker was labelled ‘On-chain clown of the day’ by blockchain sleuth ZachXBT who noted a costly error in sending $3.6 million worth of DAI directly to the token’s contract address, from which it is unrecoverable.

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Crypto gambling project ZKasino has announced a ‘two-step bridge back process’ for users to finally withdraw their share of what was branded, at the time, as a $33 million rug pull.

However, users have only been given a 72-hour window (that’s until 2pm UTC on May 31) in which to ‘sign up’ to withdraw their funds, which are now worth over $40 million in total.

Read more: ZKasino $30M ‘favor’ to users — seamless transition or rug pull?

The original incident was sparked by an April 20 announcement that ETH deposits made as part of a bridge-to-earn rewards program would be converted into the project’s own ZKAS token, as a “favor” to users.

Despite previous assurances that the deposits would be available to withdraw 1:1, the 10,515 ETH had instead been transferred into a multisig address controlled by the team. Nine days later, the funds were sent to three wallets in the form of Lido’s wrapped staked Ether token (wstETH).

The decision to enable users to withdraw their funds comes almost a month after Dutch authorities announced the arrest of “a 26-year-old man who is suspected of fraud, embezzlement, and money laundering” in connection with ZKasino, as well as seizing over €11.4 million ($12.4 million) worth of “various assets.”

The involvement of law enforcement seemingly had an effect on the team, as the funds were returned to the project’s multisig on May 9.

The same day, ZKasino’s pseudonymous Derivatives Monke took to X (formerly Twitter) to “strongly reject” the claims of a rug pull as “completely false and damaging to the ZKasino brand.”

The post points out that the “ETH is safe and secured by ZKasino in the ZKasino Multisig,” but makes no mention of why it had been removed in the meantime.

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Unless Joe Lubin’s massive Ethereum conglomerate has lied in a court document filed yesterday, “the Securities and Exchange Commission (SEC) now claims that ETH is a security subject to SEC regulation.” That’s a quote from ConsenSys’ new lawsuit filed in the US District Court for the Northern District of Texas. It’s the first time a major crypto company has credibly claimed that the SEC itself has designated ETH a security.

For years, the SEC has designated certain crypto transactions as securities transactions and occasionally, commissioners have referred to current coins or tokens as unregistered securities.

Now, according to ConsenSys, the SEC currently classifies ETH as a security. The news comes seven years after Ethereum’s initial coin offering (ICO). It has also been 19 months since the Merge switched Ethereum from proof-of-work (PoW) to proof-of-stake (PoS) validation.

Why is this news coming from a complaint by ConsenSys?

Maddeningly, the public still doesn’t have definitive proof from the SEC that it has classified ETH as a security. Nor has it designated particular sets of ETH transactions as securities transactions. The news comes instead from ConsenSys’ claim in a corporate lawsuit that “the SEC now claims that ETH is a security.”

Given this ambiguity, it’s helpful to start with the undisputed evidence. The SEC undeniably sent ConsenSys a Wells Notice — a formal document that explains the agency’s intent to sue unless the recipient responds with convincing counterarguments and evidence to prevent commissioners from filing the lawsuit.

A Wells Notice is typically a formality — an advance warning of a future legal action — but on rare occasions allows a prospective defendant to talk their way out of a lawsuit.

In this instance, ConsenSys has described the Wells Notice it received from the SEC. ConsenSys also characterized some of its telephone conversations with SEC staff relating to the Wells Notice.

According to ConsenSys, the SEC doesn’t designate ETH as a security in its Wells Notice. Instead, ConsenSys summarizes the SEC’s complaints about MetaMask Swaps and MetaMask Staking transactions. Importantly, section 68 of the suit doesn’t mention ETH at all.

Read more: Gary Gensler can’t say if ETH is a security because of the SEC

The redacted document that claims ETH is a security

So when and where did the SEC designate ETH a security? ConsenSys doesn’t answer, nor does it claim that the SEC designated ETH a security within the Wells Notice document; ConsenSys merely claims that the SEC, elsewhere, “now claims that ETH is a security.”

Instead of clearly specifying where and when the SEC made this designation, ConsenSys redacted this information. Specifically, section 10 claims that the SEC “secretly cemented its power-grab” over ETH as a security by issuing some document. That document is redacted and is “a document the SEC has designated non-public.”

Obviously, the reader is left to wonder what that document is. Unless the SEC or US District Court for the Northern District of Texas agrees to unredact that document’s description, the public might never know precisely where and when the SEC ostensibly designated ETH as a security.

It’s also possible that ConsenSys is lying by mischaracterizing actions by the SEC as designating ETH a security. Although lying in a court filing carries severe penalties, this is a remote possibility. It’s certainly in ConsenSys’ interests to make the argument about whether ETH is a security — an argument that has broad appeal and public support — instead of whether or not it illegally operated MetaMask Swaps or MetaMask Staking services.

If ConsenSys can reframe the argument about something related to but not actually about its allegedly illegal actions, it might be able to win in the court of public opinion — even if it loses in the court of law.

Read more: Is ether a security? New York’s Attorney General thinks so

ConsenSys wants to frame the argument

It’s certainly in ConsenSys’ best interests that people believe that the SEC has designated ETH as a security. The more outraged and indignant, the better. ConsenSys even wrote a sweeping, aspirational blog defending its lawsuit. The company writes that it’s defending “how future generations will manage economic, financial, social, political, and technological systems, creating a more equitable, transparent, and innovative world.” It’s trying to make a hashtag trend, #ETHforAll. 

The question is: Did three of the five SEC Commissioners ever actually vote that ETH is a security? It’s been seven years since its ICO, and 19 months since the Merge. If the SEC had designated ETH as a security, it could have let the public know or explained its opinion within a lawsuit, as it has with dozens of other coin designations.

Why, where, and when did the SEC decide to seal this determination?

According to ConsenSys, the SEC made an ‘about-face’ in April 2023 and secretly classified ETH as a security. It’s the first credible allegation of this designation in court. However, at time of publication, neither the SEC nor any of its five commissioners have confirmed this alleged designation.

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Renzo Protocol’s liquid restaking token (LRT), ezETH, suffered a sharp depeg overnight, in response to an unpopular and misleading tokenomics announcement.

LRTs are popular with so-called ‘airdrop hunters’ in the decentralized finance (DeFi) sector. Many opt to take on highly leveraged exposure to the ETH-pegged assets to increase their chances of receiving a portion of the project’s own token upon launch.

However, the announcement faced significant backlash as it revealed that just 5% of Renzo’s REZ token supply was set aside for the initial airdrop (despite the disingenuous use of a not-to-scale pie chart). The image has since been adjusted.

Read more: Blast L2-based lending platform makes costly error, liquidating users for $26M

Another point of contention was the fact that ‘farmers’ of REZ’s Binance launchpool would recieve 2.5% of tokens two days earlier than ezETH holders, giving plenty of time for them to dump their share before the airdrop recipients.

The disappointment among ezETH holders led to many moving to unwind their positions.

The depeg was a result of traders looking to exit their holdings of ezETH, which doesn’t currently allow for direct withdrawals into the underlying assets. Instead, their only option was reportedly via a $200 million liquidity pool on Blast, an Ethereum layer-two network.

In what is known as a ‘liquidation cascade,’ the leveraged positions that used ezETH as collateral were automatically unwound on DeFi lending platforms. This sell-off of the collateral further depressed the ezETH price, creating a positive feedback loop and resulting in the liquidation of more positions.

Read more: Seneca Protocol hack highlights dangers of Ethereum’s token approval mechanism

The price of ezETH briefly dropped as low as $700 on Uniswap. However, the price oracle by lenders, which averages prices across various markets, reported a much smaller depeg. This had the effect of only liquidating traders that were 5x leveraged or more.

Liquidations across Morpho and Gearbox (around 10,000 ezETH each) summed over $65 million, reportedly resulting in protocol losses of $34k and $83k, respectively. DeFi security firm Peckshield noted how one unlucky individual lost around $90,000 when their $900,000 position was liquidated.

Another user lost almost $300,000 to a phishing scam impersonating the official Renzo X (formerly Twitter) account.

The incident opened a debate over the purpose of DeFi lending platforms as Aave governance delegate Marc Zeller accused Morpho, and its risk advisors Gauntlet, of not doing enough to protect its users.

Morpho’s Paul Frambot responded that its approach is different to that of Aave, allowing users to set their own risk parameters rather than manage elements such as collateral assets and loan-to-value ratios via DAO governance.

This is not the first time the two have butted heads. Just over two months have passed since the sudden departure of Aave’s long-time risk advisor Gauntlet, which then joined Morpho days later.

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A UK crypto firm allegedly used to dodge sanctions reportedly sent $4.2 million in crypto to a known member of an international Russian arms dealing network before he was sanctioned by the US. 

Crypto infrastructure firm Copper reportedly sent millions to the crypto wallet of Jonatan Zimenkov, an Israel-born Russian national accused by the US Office of Foreign Assets Control (OFAC) of helping his father Igor Zimenkov, avoid sanctions and run an arms dealing collective.

Igor Zimenkov is alleged to be the leader of the Zimenkov network, which is accused by the OFAC of selling military equipment to third-world countries on Russia’s behalf while supporting defense entities key to Russia’s military-industrial complex.

“Igor and Jonatan Zimenkov both had direct correspondence with sanctioned Russian defense firms. They have additionally been involved in multiple deals for Russian cybersecurity and helicopter sales abroad,” the OFAC sanction reads.

The Guardian and International Consortium of Investigative Journalists (ICIJ) found Copper sent Zimenkov 1,700 ETH in May 2021, worth $4.2 million, by linking his address to those sanctioned by the US. Both outlets report that the arms network was active for several years before the US issued Zimonkov’s sanction in 2023.  

Copper wasn’t obligated to perform checks

The Guardian admitted that it doesn’t know the purpose of the transactions or where the funds came from and it clarified that it’s not suggesting Copper breached any sanctions. It also claims that Zimenkov isn’t a client of Copper, absolving the firm of any legal obligation to perform any checks at the time. 

A Copper spokesperson told the Guardian it “takes its compliance, legal and regulatory obligations very seriously, and has acted in full compliance with all applicable regulatory standards, including all applicable sanctions prohibitions, in the UK.” 

Copper reportedly didn’t answer any questions inquiring about its relationship with Zimenkov, who also refused to comment when approached by the Guardian. 

Copper reportedly helped oligarch dodge sanctions

Copper, previously advised by former UK chancellor Sir Phillip Hammond, was reported last year to have helped a Russian oligarch evade US sanctions. 

Read more: For crypto and Russia: Spy ring guilty of Ukraine espionage

The Guardian claims that the crypto firm acted as an intermediary for Mikhail Klyukin when he sold his 2% of Copper shares, worth £15 million ($19 million) in May 2022. 

A Copper spokesperson denied the claim that it acted as an ‘intermediary’ for Klyukin’s share sale and claimed it intended to divest shares in Copper held by a company associated with a sanctioned individual.

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Ethereum network traffic has been up over the last two days, sustaining gas prices above the “ultra-sound” threshold for the first time since last month’s Merge.

However, the increased usage doesn’t look to be the return of a bull market, rather, it appears to be caused by just one token, XEN Crypto, which launched on Saturday.

According to the project’s whitepaper, XEN aims to solve the pump-and-dump problem facing most small-cap coin launches via a free mint system. Anyone can claim a share of tokens by simply paying the necessary gas fee.

Users rushed to mint the token, seeing an opportunity to make a quick profit while XEN’s (rapidly falling) price remains above that of the required gas. At the time of writing, XEN has almost 3,000 holders and accounts for over 60,000 transfers.

And given the low network usage in the depths of a punishing bear market, these users represent a considerable portion of traffic on the blockchain; the XEN token contract accounts for over 40% of gas in the past 24 hours according to on-chain data.

ETH supply has grown by less than 10k since the Merge

All transactions on Ethereum require users to pay gas fees (in ETH), a proportion of which is ‘burned,’ reducing the total supply.

This fraction, known as the base fee, varies according to network traffic. A recent report by crypto exchange Kraken, published just days before the Merge, calculated the threshold at which burned base fees offset ETH emissions in validator rewards:

“We find that a threshold base fee greater than 15.43 gwei is required for ETH to become deflationary post-Merge.”

Since the Merge, Ethereum’s transition to Proof-of-Stake consensus, the rate of supply increase of the network’s native token, ETH, has been dramatically reduced.

Read more: Low usage stops post-merge Ethereum from becoming deflationary

According to ultrasound.money, ETH supply has grown by less than 10k, rather than over 300k under Proof-of-Work, a net reduction of over 95%.

Despite this, low usage has meant that the supply reduction has fallen short of making ETH truly deflationary. The idea of ETH as “ultra sound money” has been one of the Merge’s most hotly-anticipated effects, which Ethereum advocates hoped would haul DeFi out of a bear market.

This weekend, though, marks the first prolonged period in which base fees have remained above the deflationary threshold since the Merge. And, as newly-minted XEN is dumped onto the market, and the price drops below minting costs, this spike in network traffic will likely die away.

David Hoffman of Bankless argues that the current fee model produces “natural interest rates,” potentially leading to increased market stability.

But for now, ETH holders may have to keep waiting for their dreams of “ultra sound money” to become a reality.

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Layer 1 blockchains like Ethereum (ETH) and Binance Smart Chain (BSC) have large communities. But while Ethereum tends to dominate most English language crypto news sites, Binance is popular in densely populated, non-English speaking countries.

Binance Smart Chain (BSC) is a fork of Ethereum (ETH) that uses Binance Coin (BNB) instead of ETH for gas. Specifically, Binance copied Ethereum’s Go client, Geth, and uses an alternative consensus mechanism, Proof of Staked Authority.

A feature of Proof of Staked Authority is BSC’s ability to arbitrarily change block times and gas limits. This allows BSC to process more, faster, and larger data transactions relative to Ethereum. As trade-offs to achieve these feats, BSC sacrifices some of Ethereum’s decentralization and censorship resistance.

Ethereum versus Binance Smart Chain

Many people have not considered a side-by-side comparison of ETH versus BNB. Many Western readers assume that ETH is self-evidently better than BSC due to the obvious disparity in media coverage.

Yet BSC is the third-largest layer 1 blockchain, has outperformed ETH since its ICO, is backed by the largest crypto exchange in the world, and has one-fifth the Total Value Locked of ETH and growing.

Readers in the US might consider their predisposition against BSC. For example, Binance.com currently prohibits use by US residents, directing them to Binance.US instead. Yet Binance.US reports less than 3% of the daily spot volume of Binance.com.

There might be no better statistic than this figure to encapsulate the underestimation of BSC by US readers who fail to appreciate that 97% of BSC use could occur abroad.

Read more: A complete career timeline of Binance’s billionaire chief Changpeng Zhao

More similarities than differences

Ethereum developers initially referred to Ethereum as a “world computer.” They meant for it to become a decentralized digital computer that could execute the smart contracts on which most decentralized apps (“dApps”) could run. The Ethereum Virtual Machine (EVM) concept could handle internal state and computation and developers initially envisioned ETH as merely the token that rate-limited the whole system.

Binance copied this concept. BSC remains an EVM-compatible blockchain that’s similarly rate-limited by BNB fees. For most users, interactions with BSC are familiar and uniform across ETH and BSC interfaces. MetaMask, for example, allows a user to toggle within seconds between ETH and BSC networks with a single click, using just one private key.

One big difference between the two systems is that ETH is famously expensive to use. The median gas fee is $0.20 compared to just $0.03 on BSC. When compounded by BSC’s faster transactions, BSC’s BNB claims to be more “spendable.” BSC also boasts integrations with popular payment processors like CoinPayments and NOWPayments.

Indeed, the number of daily transactions became one of BSC’s advantages over ETH. In November 2021, BSC demonstrated that it could handle 14.7 million transactions in a day, compared to ETH’s one million daily transactions.

Read more: Binance Smart Chain hackers made $167M with flash loans, exploits in May

In summary, both ETH and BSC blockchains allow users to send and receive, sign transactions, interact with web3 and DeFi properties, bridge assets to other blockchains, yield farm, manage loans, play games, use Layer 2 services, participate with DAOs, create and interact with dApps, and use tokens like NFTs and ERC20 tokens (called BEP20 with BSC).

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