We’ve just launched NarSwap, the first-ever DEX for Lumio on EVM! Whitelisted users can already try swapping ETH, USDT, USDC, and WETH on testnet using an ERC20 address.

What is NarSwap by Pontem?

NarSwap is a DEX built on Lumio L2 and the first use case for Lumio on EVM. As you know, Lumio is the first-ever Ethereum rollup that supports both EVM and Move VM. On the Move VM side, we have added Lumio support to Liquidswap, and hundreds of users are already testing the integration. With NarSwap, we are inaugurating the Lumio EVM ecosystem.

NarSwap is already live on testnet. It supports Pontem Wallet (in the EVM mode), MetaMask, Phantom, and lots of other EVM wallets. We do recommend Pontem, however. See the Documentation page for the parameters to use when adding Lumio to MetaMask.

Lumio L2 on EVM features a faucet that distributes testnet ETH for gas to whitelisted addresses. For now, only users whose ERC20 addresses have been whitelisted can use NarSwap, but we will gradually expand access to more members of the community, like we are doing with Lumio on Move VM.

To coincide with the release of We’ve also introduced a gas fee management system in Pontem Wallet on EVM, where users can choose among four settings: Standard, Fast, Custom, and Instant. On testnet, they may not make much difference, but once Lumio goes live on mainnet, users will surely appreciate having control over their gas fees.

Why separate DEXes for Lumio on EVM and Move VM?

Lumio is an optimistic rollup: it bundles up transaction data and posts it to the Ethereum mainnet, “optimistically” assuming that all the transactions are valid. It uses the same OP Stack as Optimism mainnet.

What makes Lumio different from Arbitrum, Optimism, and other optimistic rollups is that it has two “branches”, Move VM and EVM. They both settle transactions on Ethereum and can communicate with each other using cross-VM contract calls. For its internal transactions, the EVM part uses the same set of opcodes as Ethereum Virtual Machine, but the Move VM part uses the same bytecode as Aptos.

Any Ethereum dApp can be easily migrated to Lumio EVM without re-coding, but it would need to be re-engineered to be deployed on the Move VM part, and vice versa. That’s why Liquidswap, built for Aptos, supports the Move VM part of Lumio out of the box, but we had to build NarSwap from scratch for the EVM part.

Access to NarSwap

1) For now, only a selected group of users can try NarSwap — those whose ERC-20 addresses are on the whitelist. While you can connect to Lumio with any ERC-20 address, you won’t be able to claim gas ETH unless you are on the list. If you provided an ERC-20 address as part of the first Lumio testing wave, you should be able to use the faucet and the rest of the features.

2) In Pontem Wallet, you need to have EVM features activated. The activation code can be found in the Lumio Documentation section.

3) To check if you are whitelisted:

• Make sure you are connected to Lumio (see our Lumio Liquidswap guide) and that the correct ERC20 wallet is chosen in Pontem Wallet. You can also add Lumio to MetaMask (see Documentation), but we recommend Pontem Wallet.
• On the main NarSwap page, click Claim Gas or go directly to the Lumio Claim page.
• Connect with your ERC-20 account (from Pontem Wallet or another wallet), click on Claim Lumio L2 ETH, and sign a message in the wallet.
• If the address is whitelisted, you’ll see a success message and 0.1 ETH will be added to the account balance.

If you’re not on the WL, you’ll see this message:

Click on Join and fill the form so that we can whitelist you in one of the next testing waves.

Using NarSwap

If everything has gone well up to this point, connect to NarSwap with the whitelisted ERC20 address. You can swap testnet ETH for USDT, USDC, or WETH. All these are testnet tokens that don’t have any market value.

After swapping, you can add testnet tokens to a pool to earn liquidity provider rewards — on testnet, of course.

NarSwap is the first dApp custom-built for Lumio on EVM — but we hope to see many of our partners join the ecosystem in the near future. We’ll also keep whitelisting more users to collect feedback on Lumio, both on EVM and Move VM. Keep following the announcement on Pontem’s X/Twitter!

Introducing NarSwap: swap ETH, USDT, and more on Lumio EVM was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Key Trends You Need To Know

In July, we published an article describing five key stories to follow at the intersection of crypto and AI. That was six months ago — an eternity in this space.

So, we rounded up four more crucial narratives and projects to pay attention to. This time around, the entire industry has exploded and scaled up dramatically. What was once a field of nascent prototypes is now filled with full-fledged products, and some of the biggest names in tech are venturing into the blockchain AI fold.

The AI Crypto Landscape

We recently updated our list of crypto AI projects to know, with several new additions in the Aptos ecosystem. Check it out here.

In the past few months, the crypto AI space has exploded, with an entire tech stack emerging at the crossroads of these two technologies. David Attermann of M31 Capital identifies three layers in the ecosystem: infrastructure at the bottom, then middleware, then applications at the top.

Infrastructure

At the bottom of the stack are AI infrastructure marketplaces, which aggregate computing power to run large language models (LLMs). These models undergird the AI applications we know and love. Crypto tokenomics can be used to incentivize the sharing of computing power, following the same template by which blockchains process transactions themselves.

Middleware

Crypto AI middleware can be categorized into two main categories:

• Zero-Knowledge Inference Verification

This process uses zero-knowledge proofs (Read our “Zero-Knowledge 101” article here if that’s new to you) to privately verify if LLMs are providing accurate outputs. These marketplaces allow users to compete for rewards by verifying LLM results, without sacrificing the privacy of the model, weights, or input data.

• Developer Tooling & Application Hubs

Developer tooling is an umbrella term for software, services, and more which make it simpler to code. As crypto and AI are both highly specialized and novel fields, developer tooling can significantly lower the barrier to entry to create new products. Many developer tooling providers also offer application hubs, which are “one-stop shops” where end-users can find new products built with that tooling.

Applications

The application layer is where most users interact with crypto AI tools. These are the actual functions which people use. Current use cases for crypto AI applications include risk management, supply chain management, fake news detection, gaming, trading analysis, chatbots, and much more. We covered many of these applications in our “Crypto AI Projects to Know” article, so make sure to check that out.

Now that we’ve sketched out the crypto AI landscape, let’s take a look at four key stories to pay attention to right now:

Pontem AI

The wait is finally over! Pontem AI, our game-changing chatbot for crypto traders, is here.

We have been heads down building Pontem AI for the past year, recognizing the need and opportunity at the intersection of crypto and AI. Built using GPT 3.5 and best-available blockchain data from the CoinMarketCap API, Pontem AI is more than just a chatbot: it’s a complete assistant for the web3 native.

Pontem AI is the first AI assistant to provide live prices, trading volume, price changes, and other data, across every blockchain. This is a significant advantage over other chatbots, which tend to be limited in their scope. Pontem AI can tell you all about Pontem products and the Aptos ecosystem, or anything else from around the space.

We have a packed timeline of improvements for Pontem AI rolling out this year. Soon, Pontem AI will support custom graphic generation to produce charts instantly and scan social media for live sentiment analysis. Users will be able to share their insights with the community and earn rewards for doing so. Plus, Pontem AI will be available in the Pontem Wallet mobile app, available for both iPhone and Android. Pontem AI currently supports web3 login with a wallet, but web2 social accounts will also work soon.

Try Pontem AI here!

Crypto AI Dominates 2023

If you’re reading this, you probably already know that AI was the most hyped storyline in the crypto space. But you might not know that that frenzy also translated into real, bankable gains.

According to CoinGecko, AI was the leading narrative of 2023 as measured by web traffic, garnering 11.3% of total interest. GameFi was close behind at 10.5%. Numerous tokens that CoinGecko tracks saw triple and quadruple digit pumps, including: cloud computing service Akash Network (1,247%), distributed GPU network Render (1200%), machine-learning network Bittensor (276%), AI lab Fetch.ai (660%), and application hub SingularityNET (625%).

According to CoinMarketCap, numerous AI project tokens have broken into the top 100 coins by market cap. Decentralized computing platform Internet Computer was highest at number 17.

Binance Research found that AI coins soared 185% in Q4 2023, reported by CoinTelegraph. For this report, their team categorized “SingularityNET (AGIX), Cortex (CTXC), Fetch (FET), Ocean Protocol (OCEAN), Oraichain (ORAI), and Render (RNDR)” as AI coins.

DePINs

One of the most intriguing new technologies in crypto is Decentralized Physical Infrastructure Networks (DePINs). DePINs are systems of physical infrastructure that are maintained in decentralized fashion, using crypto to incentivize individual participation. A DePIN is being used to tokenize a fleet of cars and create a blockchain-based rideshare service. Engineering giant Bosch is working to create a DePIN-based Internet of Things in Europe.

DePINs could be used to create internet hotspots using personal WiFi routers, decentralized maps based on car data, or energy systems where customers are paid to reduce consumption or contribute excess energy back to the grid. Messari recently wrote that the total addressable market for DePINs is north of $2 trillion.

Now, analysts and market players are speculating that AI could augment DePINs to accelerate their development in tandem. In CoinTelegraph, executives called the two a “power couple” and a “match made in heaven.” Many believe that DePINs can be used to provide the massive amounts of computing power that AI models require, or to incentivize feedback on outputs.

Microsoft and Aptos Collaborate on AI Tools

It’s no secret that we’re fond of Aptos here at Ponten; after all, we built both the leading DEX and wallet for the Aptos ecosystem.

That’s why we’re closely following Aptos’s new partnership with Microsoft, developing products at the intersection of crypto and AI. The collaboration includes an AI chatbot called Aptos Assistant, powered by Microsoft’s Azure cloud service. Aptos Assistant can answer user and developer questions about Aptos, making it easier to enter the ecosystem.

The collaboration will also explore innovation around AI and decentralized finance, such as “asset tokenization, payments, and Central Bank Digital Currencies.” In addition, Aptos will run validator nodes on Azure to increase security for the entire blockchain.

Fox and Polygon Introduce Verify

Microsoft-Aptos is just one of many collaborations between a major corporation and crypto-native start-up. In fact, that type of relationship is a key trend to watch in itself in the crypto AI space.

Fox, the global media conglomerate, partnered with Polygon to create Verify, a blockchain-based protocol to identify AI-generated content. Publishers register their authentic content on Verify and sign it on-chain. The Verify Tool then allows users to check if the content is authentic. Nearly 100,000 pieces of content have been signed on Verify across the Fox media brands.

Verify also licenses content to AI developers, in order to access content that can be used to compliantly train new models. This may be one of the most compelling use-cases for the product, as the usage of online material for AI training has become highly controversial, and even led to major lawsuits.

Square Enix Focuses on AI and Web3

Square Enix is one of the most successful video game developers in the world, with franchises such as Final Fantasy, Dragon Quest, and Kingdom Hearts. Now, they are doubling down on blockchain and artificial intelligence in their operations.

In his New Year’s letter, President Takashi Kiryu identified “blockchain entertainment/Web 3.0, AI, and the cloud” as “focus investment fields” for the company. He added that Square Enix is “​working to modify [its] organizational structure and optimize [its] resource allocations” to achieve those goals.

In December, Square Enix made its foray into Web3 with an NFT collection called Symbiogenesis. They have also created NFT trading cars based on the Kingdom Hearts franchise

About Pontem

Pontem is a blockchain product studio building for the Aptos ecosystem. We are currently building an AI crypto chatbot of our own, which will provide powerful insights for users and traders based on best-in-class data.

Our other products include:

• Liquidswap: the leading Aptos DEX
• Pontem Wallet: the leading Aptos wallet
• Lumio: the Move VM Layer 2
• and much more!

6 New Stories In Crypto AI was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

The first AI crypto chatbot with support for Aptos and EVM has arrived! It’s powered by GPT 3.5 and trained on a custom body of data. PontemAI can answer questions on Pontem’s products, Aptos, crypto prices and DeFi, while the full release will also have charts, social sharing, and even technical analysis. Read till the end for details on how to get access!

PontemAI is one of the first Web3-native chatbots

AI and Web3 are among the fastest-growing industries on the planet — and products that combine both can be among the biggest winners of the next bull market.

We are proud to be among the first to launch such an AI product for Web3: PontemAI, an AI-powered chatbot that uses the massively popular GPT large-language model. Pontem co-founder Alejo Pinto says:

“We’ve trained the model using a mix of curated data: Pontem’s own content, on-chain data, materials by Aptos Foundation and top blockchain projects that cover Move, DeFi, etc. We ask PontemAI hundreds of questions and feed it fresh data whenever the bot gives a wrong answer. Soon, we will also involve the community in this process of reinforcement learning. ”

PontemAI has a wider set of features than most of the other crypto chatbots currently in the market. For example, Binance Sensei offers only educational information based on the articles in Binance Academy, while AvaGPT focuses on the Avalanche blockchain. By contrast, PontemAI can also provide up-to-date cryptocurrency prices, trading volume, price changes, and other market data.

Our chatbot is able to pull all that data in real time thanks to the integration of the CoinMarketCap API. In the future, it will also support image generation, so that you can ask it to display a price chart for a specific coin on the timeframe that you need — for example, “Show me the 1D APT price chart”. While PontemAI isn’t an AI crypto trading bot, it can still be very useful to traders.

In other words, PontemAI is much more than an AI chatbot created with ChatGPT: it’s a full-scale AI crypto assistant that can perform a wide range of tasks.

Web3 and Web2 login

We’ve made sure that the crypto chatbot works with all popular Aptos wallets (Pontem, Petra, etc.), as well as WalletConnect.

But does it mean that PontemAI is just for Web3 users? Of course not! We plan to add Web2 social login, starting with Google. It’s important to us that complete beginners can use the chatbot and learn about blockchain and DeFi.

What you’ll find in the beta release

Pontem’s cryptocurrency chatbot is now in beta, but it can do a lot:

• Answer questions about Pontem Wallet, Liquidswap, Lumio L2, Space Pirate NFTs, Move Code Playground, etc.;
• Explain how to swap, stake APT, bridge, use Hydroponic Farms, buy NFTs, and so forth (though you should still read our tutorials);
• Provide info on Aptos, Move, and the Aptos ecosystem (projects, tokens, consensus…);
• Respond to more general questions about blockchain, DeFi, NFTs, and so on;
• Communicate in a natural, human-like way — remember, the chatbot is based on GPT 3.5 by OpenAI with crypto and blockchain content used for the dataset;
• Search for information using BraveSearch and DuckDuckGo.

Full PontemAI release: social features, idea sharing, and more

We are hard at work on the full public version of PontemAI, aiming for a launch in the second half of 2024. We are adding even more data, but the main innovation will be the community module.

• The chatbot will be able to scan the crypto media, Twitter, etc. to understand the community sentiment around a token — and even display it as a chart.
• PontemAI will recognize which projects are trending and what crypto influencers say about them;
• You’ll be able to share your own ideas in a visual form and access the best ideas published by others (both community and experts). Think a combination of TradingView and Crypto Twitter with AI chatbots helping humans share ideas;
• Users will even be able to earn rewards and tips from other users for sharing ideas. Monetization for creators will be a prime focus of the app;
• PontemAI should become available as part of the Pontem Wallet mobile app in addition to the browser version.

We’ll also expand the educational module:

• The crypto chatbot will be able to perform basic technical analysis for tokens, using indicators like MACD and EMA;
• Fundamental analysis will be available, too: the bot will prepare a summary of a project’s technology, team background, utility, product readiness, etc. This will save you tons of time when researching.

Help us battle-test PontemAI

We are opening our AI chatbot community testing. Just like the testing of Lumio L2, it is whitelist-based: we begin with a small group of beta testers and will gradually expand access to PontemAI to the whole community. Right now, you can access PontemAI if you:

1. Hold a Space Pirate or a Dark Ages NFT
2. Hold at least 69 DOODOO memecoin tokens.

Pick the option that applies to you on the chatbot’s starting page, and it will automatically verify that you are eligible. Happy chatting!

No DOODOOs or Pontem NFTs? No problem — keep following Pontem’s announcements on X for more ways to get WL!

Disclaimer

PontemAI doesn’t provide any financial or investment advice. It’s only a ChatGPT-powered bot that can help you get started on your research and look up information quickly, but we can’t provide any guarantees that the chatbot’s responses are correct or complete. Always do your own research (DYOR) and don’t invest any money that you’re not prepared to lose. Pontem won’t be liable for any losses, damage, missed gains, etc. that can arise out of your use of PontemAI.

PontemAI is here: how to try our brand-new crypto chatbot was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

We’ve been working on it in secret for months, and we’re finally ready to reveal it: Lumio, the first-ever rollup that brings together the best of Ethereum and Aptos. While it’s in the closed testing stage for now, we can already share all the key info with you.

What is Lumio?

Lumio is a new optimistic rollup built by Pontem Network. What makes it different from all other rollups (Optimism, Arbitrum, etc.) is that it supports both Ethereum Virtual Machine and Move VM, the virtual machine used by Aptos and in the end state will leverage Aptos to process transactions that settle on Ethereum.

The name ‘Lumio’ is connected to Latin “lumen”, which means light. We were thinking of the speed of light, since our L2 makes any dApps for Ethereum run faster.

To build Lumio, we used the OP Stack — an open-source set of development tools released by the Optimism Collective. Anyone can leverage it to build a scalable and fast optimistic rollup.

The OP Stack already powers the Optimism mainnet. It will also serve as the base of Optimism Superchain — a future network of interconnected L2s. Lumio uses a Rust implementation of the OP Stack, with the Magi client developed by a16z and Reth (Rust Ethereum), the execution layer (full node) developed by Paradigm.

The advantage of this solution is that it makes it much easier to integrate Move VM, since Move itself is based on Rust. Move itself is a secure and efficient smart contract language than Solidity.

Lumio currently settles on Ethereum Sepolia and uses ETH as its gas currency. But we designed it as a framework to be both execution- and settlement-layer agnostic, so in theory you can adjust Lumio to work as an L2 for various blockchains and virtual machines. For example, it can be integrated with Aptos, Optimism, Celestia, etc.

What we mean by this is that at present, all transactions on Lumio are rolled up into batches and submitted to Ethereum for final settlement. But there can also be an implementation of Lumio where transaction batches are submitted to Aptos instead, or even to another Ethereum rollup.

With Lumio, developers can build dApps using both Solidity and the Move stack. It’s even possible to enable Cross VM calls to deploy multichain applications. Our vision is to interconnect liquidity on all supported chains.

Important warning! Don’t believe anyone who tries to promote or sell you any “Lumio tokens”, “PONT tokens” etc. Any such offer is a scam. Lumio doesn’t have its own token: it uses bridged ETH.

Lumio rollout schedule

Pontem L2 isn’t open to the general public yet. The rollout will happen in several waves, where the first wave will include up to 1,000 users:

• Pontem Pirates & Dark Ages holders — 100 random addresses and 100 addresses selected on the FCFS basis. Go to our X page and drop your Ethereum and Aptos address in the comments to the thread for your chance to get selected.
• Liquidswap users — 100 random and 100 FCFS;
• Members of Aptos OG communities like Aptos Monkeys, Bruh Bears, and Mavericks — 200 addresses in total (100 random, 100 FCFS);
• Pontem partners (early investors, KOLs, institutionals, integrators, etc..)
• New OGs — we will have opportunities for new users to join as well. You can start by dropping your Ethereum and Aptos address in the comments to the thread on Twitter.

For Wave 2 and, please join the waitlist on lumio.io.

Lumio is already live on Sepolia — the new default Ethereum testnet that replaced Goerli. The following wallets support our L2:

• Pontem Wallet: both the EVM and the Move VM parts;
• MetaMask: EVM part only;
• Petra: EVM part only.

Lumio in action

In preparation for broader community testing, we’ll give you a sneak peek at what can be done with Lumio.

• Claiming gas coins: for the EVM side of things, we’ve created a special interface that distributes testnet ETH to whitelisted addresses. On Move VM, there is a faucet in Pontem Wallet itself that distributes NAT — just another ticker for testnet ETH that Lumio uses for gas. NAT doesn’t have any real-world value, and we don’t plan to release it on the mainnet.

• Bridging: users need to have ETH on Sepolia in order to send it to Lumio. It can be obtained from various online faucets.
• Swapping: Liquidswap supports Lumio, so that testers can make swaps or add liquidity to pools straight away. Liquidswap for Lumio features a faucet where testers can claim testnet BTC and USDT for swaps. Of course, since these are testnet pools, the prices can differ wildly from real-world prices. This is fine, since testnet coins are valueless anyway.
• Explorer: Lumio already has its block explorer where users can track the transactions.

‍We will announce the mechanics of alpha tester selection for the next stages soon on our X page. At every stage, we’ll use the feedback to polish Pontem’s L2. In the next few months, Lumio should become available to all of you — stay tuned!

Pontem announces Lumio — the first L2 to support both EVM and Move VM was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Friend.tech is a dApp on Base where you can buy “keys” or “shares” issued by influencers that give access to private chats with them. In less than two weeks, it reached $67 million in trading volume. We’ll explain how it works, which influencers use it, and how to join.

What is friend.tech?

Friend.tech is a viral SocialFi dApp on the Base blockchain where you can buy “keys” (initially called shares) — social tokens issued by Crypto Twitter influencers. In a way, friend.tech tokenizes popularity on X (formerly Twitter).

Prices are based on a bonding curve, where keys become more expensive the more people own them. The creator earns a 5% commission on each sale, and 5% more goes to the protocol. The top accounts have already made over $100,000.

The app is available for Android and iOS and needs to be connected to one’s Twitter account and funded with at least 0.01 ETH. Among the famous Crypto Twitter influencers who have already released shares are Cobie, Hsaka, Gainzy, Pentoshi, RookieXBT, and many others.

Friend.tech launched on August 11, and by August 28 it had reached $6.4 million in TVL with over $1.5 million in fees collected on some days. With $80 million in trading volume and 125,000 unique traders, it is the most viral thing in crypto after $PEPE.

So far, the only practical utility such “keys” have is to provide access to a private chat with the crypto personality who issued them. Their value is purely speculative — and it fluctuates wildly. In this sense, frenetic trading in friend.tech shares is reminiscent of the Bitcoin Ordinals and BRC-20 craze in March-April 2023.

Every Friday friend.tech distributes off-chain airdrop points depending on each user’s activity level. These points should have utility once the beta period is over.

I just joined https://t.co/Xeoir9umed
Want a friend tech invite code? Like and RT #FriendTech pic.twitter.com/4c7Lj7OmOa

— BlockVision (@blockvisionhq) August 22, 2023

On August 19, the project announced that it had closed a successful seed investment round led by the blockchain investment fund Paradigm. This sent activity on the platform into overdrive, with 250,000 transactions a day.

A few days later shares were renamed “keys” — ostensibly because this aligns with their utility of giving access to chatrooms. Some on Twitter have speculated that it was because the use of the financial term “share” could land friend.tech in regulatory trouble.

We’ve renamed Shares to 𝗞𝗲𝘆𝘀. The original name was a placeholder during development and we think Keys better illustrates their purpose as in-app items used to unlock your friends’ chatrooms pic.twitter.com/phkZky13VL

— friend.tech (@friendtech) August 21, 2023

Base, the L2 rollup by Coinbase that friend.tech runs on

Base is the new optimistic rollup created by Coinbase together with Optimism. It uses Optimism technology (the OP Stack), and its gas currency is ETH. Base doesn’t have any token of its own, so don’t fall for any scam offers of “BASE tokens”.

Read our detailed article about Base.

Base mainnet went public on August 9, and by August 11 — the day when friend.tech launched — it already had $180 million in TVL and a healthy ecosystem of AMMs, DeFi apps, and NFTs. Uniswap, OpenSea, Sushi, and Compound all support Base.

To bridge ETH to Base, you can use the official bridge (Ethereum to Base and back only), Synapse Protocol, Stargate, Portal by Wormhole, and other bridges. Later in this article, we’ll look at how to send ETH to Base and buy friend.tech shares.

With the release of friend.tech, the average TPS on Base increased by over 150% to 15.88, while the TVL had shot up to $243 million by August 23. It is now the no.5 biggest rollup.

SocialFi and friend.tech’s predecessors

Friend.tech belongs to the niche of SocialFi (also SoFi) — apps that combine DeFi features (like token rewards) with social media, user-generated content, or community management. Other well-known SocialFi platforms include Galxe, Mask Network, and STEEM.

In the past few years, several SocialFi protocols experimented with creator tokens, for example:

• BitClout — a protocol where users could issue and speculate on “creator coins” associated with influencers. Anyone could create a coin in anyone else’s name. BitClout went viral for a while in 2021 — even Coinbase CEO Brian Armstrong joined.
• DeSo Protocol — an L1 blockchain for decentralized social media that also had creator coins (social tokens). It even reached 2 million accounts, though few will have heard of it now.
• Rally.io — a SoFi platform where creators could issue their own tokens and “build digital economies” together with their communities. It hasn’t tweeted for almost a year.

So what makes friend.tech different? Psyops.capital CEO @0xtuba believes that it’s all about the creator being a crypto-native — someone who actively uses blockchain dApps and invests in crypto. And while some users pointed out that the founder of BitClout was also a crypto-native and had even founded a stablecoin (which later failed), it’s true that friend.tech’s product design shows a deep understanding of Crypto Twitter and of what can generate hype in this space.

https://t.co/tvbThJkS7Z is like bitclout but it was built by a cryptonative

big difference there and it shows in the tech choices and go-to-market strategy

— tuba 🦈 (@0xtuba) August 11, 2023

The creators of friend.tech and their earlier projects, The Tweet DAO and Stealcam

Friend.tech was created by two pseudonymous developers with a lot of experience in SocialFi: Racer (@0xRacerAlt) and Shrimp (@shrimppepe).

The Tweet Dao

Racer first became known as the lead developer of The Tweet DAO, which went viral in April 2022. It was a collection of NFT eggs where each holder was granted the right to tweet from the official @TheTweetDAO handle once every 24 hours.

It was an interesting experiment in self-expression. As the tweets weren’t moderated, NFT holders could post without the fear of repercussions. As you can imagine, this resulted in some crazy and even offensive stuff, and eventually the account was suspended.

In The TweetDAO, Racer experimented with some concepts that were later used in friend.tech:

1) Algorithmically increasing mint price. The first eggs minted at 0.1 ETH, but for every 100 NFTs sold, the price went up by 0.1 ETH to the maximum of 1 ETH. This way it’s not just the minters that have an advantage over secondary buyers — early minters also get an advantage over those who mint later, creating more hype.

2) Leveraging Twitter. Twitter is where all crypto trends start, so basing a SocialFi app around tweets is a more efficient move than trying to build a brand-new blockchain-based social network, for example.

3) No promises of utility or gain. The project never promised any financial yield or future utility. Users were aware of that and still paid thousands for the opportunity to tweet — and then brag about it. Of course, many managed to re-sell their eggs for a profit — but once the account was suspended, people were left holding worthless NFTs.

The lesson for other SocialFI projects here is that there are things that the Crypto Twitter community values more than monetary gain: clout, for example, or being early to new trends, or just some good fun.

Stealcam

Racer’s next SocialFi project — this time together with Shrimp — was Stealcam, launched in March 2023 on Arbitrum. In it, a user uploads a picture — often a selfie — to the site, where it’s turned into an NFT. The image is also pixelated so that you can’t see what’s in it — unless you “steal” it.

Stealing is like buying, only you don’t need the seller’s agreement. The first person to “steal” an NFT gets it absolutely free, but all subsequent stealers have to pay to reveal the image. If your NFT gets stolen, you’ll suddenly see that there’s more ETH in the wallet but the image is gone.

With Stealcam, we see the next step in the evolution of the ideas that later went into friend.tech:

1) Algorithmically increasing sale price. This time, it’s not the minting price that changes as the mint nears its end, but rather the secondary market price. The user who steals an image off the original stealer has to pay 0.001 ETH, and each subsequent steal of the same image costs 0.001 more plus 10% more than the previous one. There is no price ceiling.

2) Splitting proceeds. The previous NFT holder gets what they’ve paid to steal the image plus 45% of the difference between the new steal price and the previous steal price. 45% of the price difference goes to the image creator and the remaining 10% to the protocol. This way content creators earn much more than the standard 5% NFT royalties. For example, digital artist Shloms made $10,000 in one month.

3) Leveraging Twitter. Stealcam app includes a Share to Twitter button that helps creators and buyers promote their images to attract potential stealers. There are also filters to show only images offered by people with more than 1k or 10k Twitter followers.

4) No promises of utility. It’s not like you’re paying for great NFT art — you don’t even know what you’re paying for! If an image is released by a popular model in the NSFW section, you may think that it’s a revealing selfie of her… but it can turn out to be a picture of a random object. In that case, if nobody steals the image you’d paid for, you could end up holding a useless picture of a couch.

All this examination of The TweetDAO and Stealcam should demonstrate that friend.tech didn’t just pop out of nowhere: it builds and improves on its creators’ earlier ideas. Let’s now see how friend.tech works in detail.

How friend.tech works

How to register on friend.tech

Friend.tech is currently available only as a mobile app: you can’t use it on desktop. To join, visit friend.tech on your phone, agree to add the site to the home screen to install the app, then sign in with your pFriendMEXhone number, Gmail, or Apple ID. Note that since there is no privacy policy, there’s no way to know what the app will do with your phone number and other login data!

Friend.tech is currently invite-only, so users need to procure a referral code to register. To find a valid code, go to X (Twitter) and search for “friendtech code” or “friendtech invite code” in Latest. New codes are posted often, so keep trying if the first code you find is already unavailable.

A more privacy-friendly alternative is using FriendMEX — a trading app that allows you to buy and sell keys without creating a friend.tech account. You won’t have access to the private chats and the airdrop, though (see below).

Further, friend.tech has its own built-in wallet, which needs to be funded with ETH on Base from another wallet like MetaMask or Coinbase Wallet. The first step would be to get ETH on Base: the easiest way is to bridge it from Ethereum using the official Base bridge or Synapse Protocol. The app requires a deposit of at least 0.01 ETH, but you’ll need some extra for gas fees.

After depositing, you’ll be able to both buy and sell keys (shares), as well as issue your own. A person who issues keys is called a subject. Essentially you create a pool with the ETH you deposited and your shares, and others will trade into that pool, adding ETH and taking out shares.

Fees

friend.tech charges a 5% protocol fee on each transaction, plus a 5% fee that goes to the share issuer. Since around $7.8 million in fees have been collected so far, the founders of friend.tech have earned around $3.9 million — though hopefully most of it will be used for project development.

Chats and benefits for shareholders

As we’ve mentioned, key buyers get access to a gated chat with the subject. But while any shareholder can send direct messages to the influencer, the latter can’t respond individually — only to all the chat members at once. Holders can’t see each other’s messages, so it can seem like the creator is talking to himself or herself.

Technically, share issuers don’t have to do anything for their share buyers beyond responding in the group chat — but many do. For example, leverage trader RookieXBT shares his revenue with the shareholders who have at least two shares and adds them to his MagnetMoney community, where he literally gives away money.

MEV bots and tools for friend.tech users

As soon as people realized that you can make serious money trading friend.tech shares, a whole batch of tools popped up to make the process more efficient. Just like on Uniswap, there are MEV bots, which compete to snipe new keys issued by popular influencers. According to on-chain analyst @tomwahnn, 125 MEV bots have made $2.1 million in profit so far — even though most of the bot transactions fail.

There are also special bots to notify you when a new account joins the app. However, the presence of MEV bots means that regular users have almost zero chance of buying quality new shares as soon as they are issued.

Another useful tool is FriendMEX, where you can buy and sell keys, as well as view the price chart for any key, recent trades, market cap, etc.

There is also a special Dune Analytics tool that allows you to view the chart of buys and sells for a specific address.

Share pricing

The pricing of keys follows a bonding curve — a formula that describes the relationship between the supply and the price, where every purchase makes the asset a bit more expensive for the next buyer. The x*y=k formula used by AMMs like Liquidswap on Aptos and Uniswap is also a bonding curve.

You buy your own first share for 0 ETH, but the next one will already have a very low price attached to it. After that, the price grows exponentially with the growth of the number of outstanding shares (those purchased and held by users). In other words, the more popular your keys are, the more each new buyer will have to pay.

You can withdraw ETH from the app, but not the keys themselves. As a result, you can’t trade them on Uniswap or another DEX. However, crypto influencer @0xfoobar built a tool for “wrapping” shares into ERC-20 tokens, called WrappedFriends. These ERC-20 can be traded on any Base DEX, and you can already buy tokens representing the keys of @0xSisyphus, @RookieXBT, etc.

Tokens can also be unwrapped back to release the shares, at which point the tokens are burned. Importantly, there is just one canonical ERC-20 address per Twitter user handle.

Wrapped Friends charges a 5% fee on each mint or burn transaction, half of which goes to the influencer and half to @0xfoobar himself.

Points airdrop

On August 18, friend.tech launched an airdrop campaign that will last 6 months (until the end of the beta period) and see 100 million points distributed in weekly batches each Friday. These points aren’t tokens — they exist off-chain.

The app interface has a special Airdrop tab where you can request points. The amount depends on one’s activity on the platform. Points should have some utility once the beta period ends, but so far it’s not known what.

Attention: there are lots of “friend.tech airdrop” scams floating around. The standard scheme is to make a user connect their wallet to “check eligibility” — at which point your funds will be drained.

A typical scam friend.tech airdrop post and website. Note that the website address is wrong — don’t fall for such tricks!

Potential Friend.tech risks and issues

• Share prices are extremely volatile and speculative. As mentioned by crypto influencer Yazan, paying 1 ETH to access a group chat is “ridiculous”.

Remember: these aren’t tokens of serious crypto projects with useful products. If a creator gets bored and leaves the app, for example, the price can quickly go to zero. Also, the hype around friend.tech can simply die down as it usually happens with any meme project in crypto.

• The app’s surging popularity has led to lags and freezes. Users reported that screens often didn’t load and actions took over 10 seconds to complete.
• The app isn’t available in Google Play Store or App Store, meaning that it hasn’t passed their review for safety. There’s no way to know where data is stored, either.
• There is no privacy policy: clicking on “Check out our privacy policy” on the app’s home screen, you’ll get a “Coming soon!” message. So there’s no way to know which types of user data the app collects, how it uses it, if it sells your data to third parties, etc.

As your Twitter handle is now linked to the friend.tech account, anyone can match the ETH wallet used to fund friend.tech with your Twitter account.

Who’s on the platform?

The list of the most popular subjects on friend.tech reads like a “who is who on Crypto Twitter”:

• Cobie (real name Jordan Fish, crypto investor and host of the UpOnly podcast)
• Pentoshi (legendary trader)
• Hsaka (extremely influential and mysterious trader)
• RookieXBT (trader and NFT flipper)
• Inversebrah (Crypto Twitter record keeper, formerly known as Stardust, a successful trader)
• Zhu Su (CEO of the collapsed hedged fund Three Arrows Capital)
• ben.eth (creator of the controversial $PSYOPS memecoin)
• ZachXBT (Crypto Twitter’s most famous on-chain investigator)
• loomdart (NFT influencer and project founder, trader)
• Cold Blooded Shiller (trader)
• Crypto Kaleo (trader, investor and engineer)
• CryptoCred (successful trader and creator of videos on technical analysis)
• CryptoDonAlt (successful trader and TechnicalRoundup YouTube channel host)
• …and many others.

Cobie is the most successful subject so far with over $160,000 earned. His shares trade at 1.65 ETH on average.

And here are just a few prominent non-crypto personalities who are active on friend.tech:

• eSports influencers FaZe Banks (real name Richard Bengston II) and FaZe Rain (Nordan Shat)
• Grayson Allen (NBA player)
• Gracie Hartie (OnlyFans creator)
• Garry Tan (Y Combinator CEO)

Friend.tech performance

• According to the data in @Cryptokoryo’s Dune Analytics dashboard, friend.tech’s total share trading volume has reached $80 million (47,710 ETH) as of August 28.
• 125,000 unique users made at least one trade on friend.tech for a total of 2,400,000 transactions as of August 28, generating over $7.8 million in fees. Altogether, creators have earned almost $3.9 million.

Credit: @tomwahnn on Dune Analytics

• Paradigm involvement caused a sharp rise in activity starting from August 19. There were over 250,000 transactions on August 19 — that’s 25 times more than on OpenSea
• @tomwahnn also discovered that the percentage of Base accounts that were using friend.tech rose from 1.7% to 25% between August 10 and August 21 — the latter being the day of peak activity for the app. On that day, Friend.tech collected almost $1.7 million in fees, second only to the Ethereum blockchain itself and ahead of Lido, Uniswap, and the Bitcoin network. The app’s gas fees accounted for almost 44% of all the gas expenditure on the Base blockchain.
• After that, however, activity began to slow down. There were 111,000 transactions on August 24, 141,000 on August 25, only 55,000 on August 26, and 51,000 on August 27.

What’s next for friend.tech?

Though friend.tech activity has cooled down considerably, it’s still too early to say that most of the hype has died down. As the platform continues to distribute airdrop points, it will likely attract more users. Kaleo noted that every Friday there is an influx of new users and influencers as the airdrop distribution is shilled on Twitter, and prices also rise. Then the prices go down, only to peak again the weekend after, and so on.

Meanwhile, users point out many improvements that can be made to the app:

• pricing curve adjustment to reflect different benefits that subjects offer to key holders;
• an ability to see what other key holders write in the chat;
• possibility for creators to share images and other content, etc.

It will also be interesting to see if similar apps appear on other blockchains. Friend.tech isn’t open-source, but it shouldn’t be difficult to re-create it. It’s a different question though, if the same influencers will want to join another app.

At Pontem Network, we bring you analysis of the latest trends and narratives in Web3. Follow us on Telegram, Twitter, and Discord so that you don’t miss the next article!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel — the first ever implementation of the Ethereum Virtual Machine for Aptos.

What is Friend.tech — the SocialFi sensation on Base? was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

World’s no.2 crypto exchange, Coinbase, has launched its own L2 network called Base, and it already has over $200 million in TVL. Here’s all you need to know about Base’s Optimism-based tech and ecosystem, including the viral friendl.tech app.

TL;DR

‍

• Base is an optimistic rollup chain built by Coinbase in collaboration with Optimism. The public mainnet launched on August 9, and by mid-August Base already had 9.5 million transactions and $200 million in TVL.
• Base is EVM-compatible with low fees ($0.10-$0.20). For dApp developers, building on Base should mean access to Coinbase’s 110 million users and easy integrations with Coinbase exchange, fiat payments, and other centralized products.
• You can easily add Base to MetaMask and bridge ETH using the official bridge, as well as others like Portal by Wormhole, Stargate, etc. The gas currency is ETH, and there are no plans to launch any new token. Any offers to buy “BASE tokens” are scams.
• The biggest apps by TVL on Base are AMMs like BaseSwap and SwapBased, but the best-known app in the ecosystem is friend.tech. This SocialFi project allows users to trade “shares” (social tokens) issued by crypto influencers, and it already has $20 million in volume.
• Base and Optimism are the first two blockchains in the “Superchain” — a planned network of L2 chains. All of them will use the OP Stack — Optimism’s set of open-source software that will include everything from explorers to a governance module.
• For now, Base is partly centralized — for example, it has just one sequencer node that is controlled by Coinbase. However, Base and Optimism have a joint decentralization roadmap.
• Base already has 40+ collections on OpenSea and even hosts NFT mints by brands like Coca-Cola.
• Base has even had its own major memecoin rally and rug pull: on July 30–31, a token called $BALD attracted $200 million in daily DEX volume and then collapsed after its deployer withdrew all the liquidity from the pool.

What is Base?

Base is a new optimistic rollup developed by Coinbase in partnership with Optimism. It is EVM-compatible, with low fees (around $0.10-$0.20), bridges, and a lively ecosystem that includes Uniswap and Sushi.

The key advantage of the new L2 for dApp developers should be easy integrations with Coinbase products, APIs, fiat payments, and other perks that we associate with major centralized platforms. To this, you should add Coinbase’s 110-million-strong user base, which will supposedly be eager to explore DeFi on Base.

Base testnet was launched on February 23, 2023. As of August 15, it has processed over 31 million transactions. The mainnet was opened to developers on July 13, and to the general public on August 9. By mid-August, the transaction count had climbed to 9,500,000, and the DeFi TVL had reached $200 million. It’s now the fifth-largest L2 chain after Arbitrum, Optimism, zkSync Era, and dYdX, according to L2Beat.

Background: Optimism Superchain and OP Stack

Optimism ($OP) is the second-biggest Ethereum L2, with $2.78 billion in TVL in August 2023. It started out as a regular optimistic rollup but is evolving into something much bigger: a “superchain” for layer-2s based on the vast OP Stack.

OP Stack is the large set of open-source software that underlies Optimism. Anything and everything that goes or will go into Optimism, from the core L2 technology to block explorers and an eventual governance mechanism, is part of the Stack.

Optimism’s hard forks (similar to Ethereum’s Shanghai or Cancun) are basically upgrades to the OP Stack. The current version is called Optimism Bedrock.

The ultimate goal is for OP Stack to support the Superchain — a multichain ecosystem of L2 networks (they don’t all have to be optimistic rollups). You can find similarities here with the Cosmos ecosystem or Polygon 2.0.

Since the whole stack is open-source and modular, independent teams will be able to build and deploy new L2s on the Superchain permissionlessly using the features they need. For example, a dApp currently running on Optimism Mainnet can create a chain of its own.

With time, Optimism Mainnet should come to play the role of a hub for the Superchain — a bit like Cosmos Hub in the Cosmos ecosystem. App and protocol developers who contribute to the ecosystem will be rewarded through the Retroactive Public Goods funding program.

By the way, this concept of an ecosystem of interoperable L2s is something that we discussed during Pontem’s expert panel on optimistic rollups: check out the main insights here.

For now though, there is just one other blockchain in the Superchain, apart from Optimism Mainnet: Base. Coinbase is also listed as a core contributor to the OP Stack, together with OP Labs and Lattice, an EVM product studio.

Base technology

Deploying dApps and tokens

Building on Base is very close to building on Ethereum, with support for all EVM dev tools like MetaMask, Hardhat, Remix, etc. Moreover, any existing ERC-20 token can be deployed on Base and added to the official bridge (though this requires manual approval by the Base team).

Fees

Every transaction fee consists of two parts: Base’s own execution fee and the fee for posting the transaction to Ethereum mainnet. Overall, using Base should be, on average, 10 times cheaper than Ethereum mainnet.

A share of the fees earned by Base will be transferred to the Optimism Collective — Optimism’s governance organization that includes all $OP holders.

Centralization

One issue that concerns many users is centralization, especially since the only sequencer node that Base currently uses is controlled by Coinbase.

However, according to Base protocol lead Jesse Pollak, Coinbase doesn’t have the power to upgrade Base’s smart contracts or reverse transactions unilaterally, so it’s not fully centralized.

On the other hand, he notes that any chain that uses OP Stack, including Optimism itself, has a permissioned system of upgrades and authorizing transaction challenges.

This issue needs to be solved at the higher level of the Optimism ecosystem, though. Base and Optimism have an ambitious decentralization roadmap: for example, in 2023, the projects plan to make contracts upgradable by a security council with a “decentralized quorum”, as well as launch the first version of the Superchain where sequencing can be done by many nodes.

EIP-4844

Together with the Ethereum Foundation and Optimism, Base is pushing for the implementation of EIP-4844 — an Ethereum feature that can cut rollup transaction fees by up to 100x. It introduces a new type of transaction (“shard blob”) that makes it much more economical for rollups to store and submit data.

Blobs will be part of Ethereum’s eventual sharding system, but its first implementation is coming already in Q4 2023 with the “Dencun” upgrade (Deneb + Cancun).

What can you do with the Base mainnet and testnet in MetaMask?

1) Add Base to MetaMask

Click on the network icon in the top left → Add Network → Add Network Manually — and enter the following parameters:

Network name: Base Mainnet

RPC: https://mainnet.base.org

Chain ID: 8453

Currency symbol: ETH

Block explorer: https://basescan.org

If you use Coinbase Wallet, you’ll find Base enabled by default under the list of available networks.

2) Bridge ETH to Base mainnet

You can use the official, Stargate bridge, Portal by Wormhole, SquidRouter, or Orbiter.

• The official Base Bridge supports only transfers between Ethereum and Base in ETH, USDC, DAI, and cbETH (Coinbase ETH, a liquid staking derivative). It’s also the most reliable way to send ETH to a brand-new Base account with zero balance.
• With Portal by Wormhole, you can send various tokens between Base and 20+ other blockchains, including Aptos. However, you’ll need to have some ETH on Base already to pay the bridging fee.
• Stargate Finance allows you to transfer ETH, USDC, STG, and MIM, between Base; Optimism; Arbitrum; Ethereum; Polygon; Avalanche; and BNB Chain — and swap them for other tokens in the process. For example, you can send USDC from Base and receive USDT on Polygon.

3) Swap

As of August 15, there are quite a few working DEXs on Base, both multichain and built specifically for the new blockchain :

• BaseSwap
• SwapBased
• AlienBase
• Sushi
• Uniswap
• DackieSwap
• RocketSwap and others

Apart from major cross-chain assets like ETH, DAI, and USDC, you’ll find Base-native tokens: BASIN, USDbC, BSWAP, ALB, etc.

4) Get a .base domain name

Masa Finance is the biggest provider of Web3 domain names on Base. A .base name with 5 or more characters costs just $1 to mint; one with 4 characters is $5, and so on. .base names are already traded on OpenSea.

5) Use DeFi

Farming: BaseSwap, AlienBase, and SwapBased all have farms. As usual in DeFi, APR is higher for pools with smaller native tokens (up to 500%), while pools with large assets like USDC and ETH will earn you 20–30%.

Yield aggregation: Beefy Finance has auto-compounding vaults for LPs of the main Base AMMs that can earn a higher yield than if you deposit into farms on the AMMs themselves.

Lending & borrowing: on Compound and Moonwell, you can supply and borrow ETH, cbETH, and USDC.

Cross-chain swaps: SquidRouter can help you swap between dozens of tokens on Base and around 30 other chains.

NFT staking: stake a Dackie NFT on DackieSwap for rewards in WETH.

6) Trade shares on friend.tech

Friend.tech is the latest SocialFi sensation — a dApp where you buy “shares” released by your friends or Twitter influencers. Famous crypto personalities like Hsaka (@HsakaTrades), Cobie (@Cobie), and Gainzy (@gainzy222) are already on friend.tech, and the platform has accumulated over $20 million in trading volume as of August 20.

Holding a share allows you to enter a private chat with the influencer and view other NFT-gated content by them. The issuer gets a percentage of the proceeds from each share sale.

6) Mint and trade NFTs

OpenSea supports Base, and there are over 40 collections, including DeeKay Motion, DackieOnBase, Tiny Based Frogs, Based Fellows, Based Rekt Chickens, and other variations on the “based” theme. Here we should note that in the jargon of Crypto Twitter “based” means “awesome”, so the potential for puns is endless.

On top of this, Base has launched an NFT initiative called On-Chain Summer. Some of the daily NFT mints are partnerships with leading Web2 and Web3 brands, such as Coca Cola, Global Masterpiece collection, Atari, and Optimism.

The rise and rug-pull of $BALD

In a year of memecoin rallies, it shouldn’t surprise us that the first project to explode (and collapse) on Base was a memecoin: $BALD. The interesting twist is that lots of people thought Sam Bankman-Fried himself could have been involved.

When $BALD launched on July 30, when Base mainnet was still in developer-only mode. The memecoin’s name allegedly hinted at the founder and CEO of Coinbase, Brian Armstrong, who is completely bald.

At that point, there were already a couple of working DEXes on Base: LeetSwap and RocketSwap. LeetSwap quickly became the hub of degen action as speculators with developer access rushed to trade memecoins like $BALD, $COIN, and $BASED.

In a single day on July 30, almost $60 million in ETH was bridged to Base. Trading volume on LeetSwap rose to $200 million, and $BALD accounted for over half of that. The token price skyrocketed over 3,000% in 24 hours, and the market cap reached almost $300 million. It was a memecoin rally on steroids: new token, new DEX, new chain — and no easy way to even bridge funds out of it yet.

The very next day, on July 31, however, the creator of the $BALD pool unexpectedly withdrew all the liquidity from the pool — around $25 million. The price of the memecoin quickly dropped 90%. This is known as a rug pull: a crypto project’s developer “pulls the rug” from under the users and disappears with the money.

Is it possible that the culprit is someone we all know, though? Some Crypto Twitter users pointed out that the wallet addresses used by the deployer were associated with Sam Bankman-Fried, the disgraced CEO of FTX. The wallet received many transfers from FTX over the years, and even the language of the tweets in the official $BALD account contained phrases that SBF often used (e.g. “quite well”). Others wrote that it could be someone else from FTX or Alameda.

However, @zachxbt, Twitter’s leading on-chain investigator, soon dashed this conspiracy theory. His analysis suggested that the man behind $BALD was likely @milkyway16eth, a well-known DeFi speculator. Indeed, SBF was under house arrest at that point, and, as pointed out by Tiffany Fong, he didn’t have access to Twitter and could hardly run an account for a memecoin or manage a DEX pool.

We may never know for sure who launched BALD and got away with $25 million in liquidity. Since then, many more memecoins have pumped and dumped on Base: $PONZI, $MEMES, $CocaCola, $BALD2.0, etc. Perhaps the takeaway here is that episodes of memecoin mania always end the same way: just because it’s Base and not Ethereum doesn’t make any difference.

Attention: there is no BASE token!

Coinbase doesn’t plan to release any new token for Base. Like other rollups, the network will use ETH for gas fees.

If anyone tries to get you to buy BASE tokens, know that it’s a scam. By the way, the same goes for any offers of Pontem (or PONT) tokens or LayerZero tokens: they are all scams.

Base is interesting in the context of Optimism’s larger Superchain project — and optimistic rollups as a whole remain one of the most dynamic areas of the blockchain industry. We’ll keep covering the latest trends in the L2 space, both optimistic and ZK — make sure you follow Pontem on Telegram, Twitter, and Discord so that you don’t miss the next article!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel — the first ever implementation of the Ethereum Virtual Machine for Aptos.

Base blockchain by Coinbase: a full guide was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Iris-Scanning Orbs, Sam Altman, and Eth Layer 2s

Crypto offers us a never-ending stream of new projects, new tokens, and new personalities that dominate the hype cycle. It’s enough to tire out even the most passionate citizens of web3. But gleaming chrome iris-scanning orbs? That still gets our attention.

The shiny spheres that have been dominating our feeds are the product of Worldcoin, an ambitious new venture from Sam Altman (the man behind ChatGPT). Worldcoin claims goals as lofty as “universal access to the global economy” and “welcoming every person on the planet … to benefit in the age of AI.” Let’s take a look at Worldcoin’s history, tech, roadmap, controversies, and finally figure out what those silver balls actually do!

History and Team

Worldcoin was created by Tools for Humanity, a San Francisco-based start-up founded in 2019 by Sam Altman, Alex Blania, and Max Novendstern.

Sam Altman is the best known of the trio, with a prominent public profile as CEO of OpenAI, creators of ChatGPT. Not only did he lead ChatGPT to be the fastest ever app to reach 100 million users, Altman’s illustrious resume includes stints heading Y Combinator, Reddit, and Loopt. Alex Blania, CEO, joined Tools for Humanity fresh out of a physics masters program at Caltech. Max Novendstern recently left the company to start Mana, an AI venture capital fund.

In 2022, Andreessen Horowitz led a $10ew projects, new tokens, and new personalities that dominate the hype cycle. It’s enough to tire out even the most passionate citizens of web3. But gleaming chrome iris-scanning orbs? That still gets our attention. The shiny spheres that have been dominating our feeds are the product of Worldcoin, an ambitious new venture from Sam Altman (the man behind ChatGPT). Worldcoin claims goals as lofty as “universal access to the global economy” and “welcoming every person on the planet … to benefit in the age of AI.” Let’s take a look at Worldcoin’s history, tech, roadmap, controversies, and finally figure out what those silver balls actually do! History and Team Worldcoin was created by Tools for Humanity, a San Francisco-based start-up founded in 2019 by Sam Altman, Alex Blania, and Max Novendstern. Sam Altman is the best known of the trio, with a prominent public profile as CEO of OpenAI, creators of ChatGPT. Not only did he lead ChatGPT to be the fastest ever app to reach 100 million users, Altman’s illustrious resume includes stints heading Y Combinator, Reddit, and Loopt. Alex Blania, CEO, joined Tools for Humanity fresh out of a physics masters program at Caltech. Max Novendstern recently left the company to start Mana, an AI venture capital fund.0 million investment round, catapulting WorldCoin to an astonishing $3 billion valuation. On July 24, 2023, WorldCoin launched out of beta with operations in 20 countries.

Technology

Worldcoin’s technology stack spans three interconnected products: World ID, World App, and the WLD token.

World ID

World ID has generated most of the attention, largely because of its striking hardware: a gleaming chrome orb used to scan irises (the colored part of our eyeballs.)

World ID uses iris scans to generate proof-of-identity for each user. The biometric information is used to create an “IrisHash,” which is stored on the orb. To prevent duplicates. Worldcoin uses a zero-knowledge proof to check if the IrisHash already exists in their database.

The user then continues registration with email, phone number, or QR code to create a World App wallet. World ID can be used to authenticate users across web platforms, mobile apps, and decentralized applications.

As of July 2023, 2 million people had been “orb-verified” with a World ID. Most of those people are located in the developing world, for reasons we’ll cover later.

World App

World App is Worldcoin’s native wallet, and proprietary to World ID and Worldcoin. It can be used for World ID-verified log-in, transactions, and other typical crypto wallet use cases. Note that you’ll need to find an Orb and get scanned in order to use World App.

WLD

WLD is the native token for Worldcoin. It is implemented as an ERC-20 token on Ethereum. The token’s initial supply was 143 million and is capped at 10 billion, with a controlled inflation rate of 1.5% after 15 years of existence. Notably, 20% of these tokens have already been allocated, with 10% designated for WorldCoin’s full-time employees and another 13.5% for investors like Andreessen Horowitz.

People are compensated in WLD for having their irises scanned. Approximately $25 worth of WLD is granted per scan, reflecting the project’s novel approach to incentivizing participation.

Use Cases

Worldcoin anticipates a number of novel use cases for its combination of biometric identity verification and crypto:

Social Networks: Mitigating bot activity, enhancing community moderation, and ensuring content attribution.

Voting: Enabling DAO governance, facilitating government elections, online polls, and census efforts.

Financial Services: Facilitating undercollateralized lending, combating card fraud, and streamlining compliance measures.

Customer Incentives: Revolutionizing loyalty programs, coupons, referrals, and free trials.

Marketplaces: Bolstering reputation systems, combating fake reviews, thwarting fraudulent transactions, and preventing scalping.

Money Distribution: Redefining government welfare programs, aiding non-profit initiatives, supporting scholarships, and executing crypto airdrops and UBI (universal basic income) initiatives.

Controversy

For all the fanfare and attention Worldcoin’s launch has attracted, its operations have also attracted a fair bit of controversy and regulatory scrutiny.

Many have criticized Worldcoin’s methods for amassing World ID scans, which involves paying users to be scanned, particularly in developing parts of the world. New users earn $15 worth of Worldcoin for the scan, plus $5 more when they log in to their Worldcoin wallets. Some more recent users have received $25 in total. Some have said this is too low for the amount of data received, and that participants are not adequately made aware of what they are participating in and how their data will be used.

Numerous countries have narrowed their eyes on Worldcoin. Kenya forced them to suspend operations, citing concerns about data privacy and unfair business practices, as did Turkey and Sudan. Data watchdogs in Germany have investigated Worldcoin since 2022, as well. Worldcoin has even preemptively made its products unavailable in the United States and China out of concern.

In May 2023, it was reported that malware had been installed on Worldcoin’s Orbs which compromised their security. Hackers were able to access operator passwords and post them on the dark web. The issue was eventually resolved, and a spokesperson said that no sensitive personal user information was accessed or compromised due to the Orb’s encryption of biometric data.

Worldcoin is still brand new, so the next few months are sure to be fascinating. We’ll keep you updated on everything, so follow Pontem on Telegram, Twitter, and Discord!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel — the first ever implementation of the Ethereum Virtual Machine for Aptos.

Worldcoin 101: History, Controversy, and What Those Silver Balls Are was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

The SEC is reviewing seven Bitcoin ETF bids, including one from BlackRock, the world’s largest asset management firm. Many think that this could be the first successful bid, making a spot Bitcoin ETF a reality. But how does a spot crypto ETF work, and why is BlackRock’s filing different from the rest?

TL;DR

• An exchange-traded fund (ETF) is an investment product that tracks the price of another asset or basket of assets. It’s often cheaper and easier to buy an ETF than the underlying asset.
• Bitcoin ETFs come in two types: spot and futures. Spot ETFs allow you to invest in BTC at the current price and hold real bitcoins in reserve. Futures ETFs hold only futures contracts and track the spot price less accurately.
• Futures Bitcoin ETFs have been around in the US for years, and other countries (Canada, Germany, etc.) have spot ETFs. But the SEC has not approved any spot Bitcoin ETFs in the US.
• The most famous exchange-traded product for Bitcoin, Grayscale GBTC, does provide exposure to spot BTC, but it’s a trust (a different kind of exchange-traded product) rather than an ETF. Grayscale’s filing to convert GBTC into an ETF was rejected.
• The latest bid by BlackRock, however, could be the best crypto ETF bid yet, because it features a surveillance-sharing agreement with Nasdaq as a way to prevent the “manipulative acts” that the SEC is so concerned about.BlackRock is the world’s biggest asset management firm, with $8.6 trillion under management.
• The SEC is reviewing six other spot Bitcoin ETFs. The first deadline is in early September, though many expect the SEC to postpone the decision.
• An approval could trigger a rally, but, according to JP Morgan, it won’t be a game-changer for the crypto market.

What is an ETF?

ETF stands for “exchange-traded fund”. It’s an investment asset (a security) that tracks the price of some other asset or basket of securities. An ETF can track just about anything: gold, corporate stocks, baskets of fiat currencies, stock indexes, cryptocurrency, grain, oil, market volatility,etc. There is even an ETF (VICE) that tracks a basket of stocks linked to bad habits: tobacco, gambling, and alcohol.

Globally, exchange-traded funds have almost $10 trillion in assets under management (AUM). But why do people buy ETFs? Usually because it’s easier, cheaper, or safer than buying the underlying asset.

1) Easier to diversify. The most popular ETFs track the S&P 500 index, which includes 500 companies. It would be a huge task to invest in all of them directly, while the ETF makes it simple to diversify your portfolio.

2) Easier/lower taxes.ETFs are usually more tax-efficient than buying primary assets. They also simplify your return, by consolidating many investments into just security. This is especially true for cryptocurrencies, where capital gains for different transactions need to be reported separately.

3) Lower processing costs. If you buy physical gold, you need to transport it, store it, secure it, etc. A gold ETF gives you immediate exposure without high processing or storage costs. ETFs do charge a management fee, which is usually quite low (0.5–1%).

An ETF will normally hold the underlying asset in the quantity that corresponds to the investments in the fund. For example, if a gold ETF has $1 billion under management, it needs to own at least $1 billion of actual gold, parked in secure storage with a reliable custodian.

As fresh investor capital flows into the fund, it needs to acquire more of the tracked asset. When investors leave the fund, selling shares, the underlying assets are also sold. This is called the creation/redemption mechanism.

Spot and futures cryptocurrency ETF: the differences

There are two different types of Bitcoin ETFs: spot and futures.

1) A spot ETF allows holders to invest in BTC at its spot price. True, you are buying ETF shares rather than actual BTC, but you are still getting direct exposure to Bitcoin. To do this, the fund needs to hold actual cryptocurrency. This is a problem in the US, where the SEC has been extremely skeptical of cryptocurrency investing.

2) A futures ETF doesn’t hold Bitcoin; only futures contracts for Bitcoin. A futures contract obliges two parties to buy and sell an asset at a specific price on a specific date in the future. This price can differ a lot from the spot price, making at a crucial method for investors seeking to hedge their risk or increase profits. At the end of each month, these contracts expire and are normally traded for new ones.

Futures are a derivative: when you trade a Bitcoin futures contract, no actual Bitcoin is exchanged. . In the US, BTC futures are regulated by the Commodity Futures Trading Commission (CFTC) and not the SEC; they are traded freely on the Chicago Mercantile Exchange (CME).

Bitcoin Futures ETFsin the US

There are already BTC futures ETFs in the US. The biggest is ProShares Bitcoin Strategy (BITO). It launched in October 2021 and attracted $1.2 billion in just 3 days — one of the fastest ETF launches in history. BITO trades on NYSE Arca (an ETF subsidiary of the New York Stock Exchange) and has $1.09 billion under management as of July 2023, charging a 0.95% annual management fee.

The second-biggest Bitcoin futures ETF in the US is the much smaller VanEck Bitcoin Strategy (XBTF), with only $47 million under management (0.65% annual fee); the third is Valkyrie Bitcoin Strategy (BTF) with $31 million (0.95% annual fee).

Are spot BTC ETFs better?

Even though BITO and other futures ETFs are easily accessible, web3 can’t stop talking about the pending Bitcoin ETF applications. Why is ther so much hype about spot funds — and what’s wrong with futures-based funds like BITO?

1) For some, futures ETFs aren’t “real investments in Bitcoin” because they don’t track the real BTC price as closely as spot funds do.

2) A spot-based ETFs can hold BTC indefinitely, while a futures ETF has to sell and rebuy contracts every month. If the new contracts are more expensive, investors incur additional costs: over 5% a year, according to some expert estimates.

3) The CME allows each ETF to hold no more than 4,000 contracts for the nearest expiration date (the end of the current month). To grow beyond this point, an ETF has to buy contracts for the subsequent month, where the settlement price can turn out to be even further from the spot price. A spot ETF, by contrast, can hold as much Bitcoin as it needs.

Spot Bitcoin ETFs in other countries

Many people don’t realizethere are already a lot of spot Bitcoin ETFs trading outside the US. Creating a spot-based crypto ETF depends on the specific regulations for both ETFs and cryptocurrencies in a specific country.

Here are some of the best known crypto ETF products in 2022:

What about GBTC?

Grayscale Bitcoin Trust (GBTC) is actually bigger than any existing crypto ETF and approved by the SEC. As of July 2023, it has $18.8 billion under management — more than all Bitcoin ETFs put together. This is possible because Grayscale is a trust: a different type of security than an ETF.

Like a spot ETF, GBTC is a publicly-traded investment product that holds physical bitcoins as reserves. But there are differences:

• The minimum investment is $50,000, and only accredited and institutional investors can buy in. Compare this to BITO, where any person with a brokerage account can buy just one $16 share.
• Grayscale charges a 2% fee — much higher than ETFs. A trust doesn’t automatically buy more of the underlying asset when investors purchase shares. Instead, it adds a premium to the share price. Conversely, investors selling their shares results in a discount relative to the spot price. In fact, a trust doesn’t have a redemption program at all: it can create new shares, but it never destroys them.

This creates price discrepancies between GBTC and Bitcoin. It also makes GBTC more expensive for new investors. GBTC used to trade at a 30% premium to Bitcoin, but since February 2021 it’s been trading at a discount — around -27% in July 2023.

In 2022, Grayscale filed to convert the GBTC trust into a proper spot Bitcoin ETF, but the proposal was rejected by the SEC. In response, the asset management firm sued the SEC, calling its decision “capricious and discriminatory”. As of March 2023, the District of Columbia Court of Appeals seemed to be siding with Grayscale, but there is no decision yet.

What does the SEC have against spot Bitcoin ETFs?

Spot ETF investors can sell their shares at any time to get exactly the same price as they would for real BTC, so investing in such products is practically like investing in bitcoin. In theSEC’s view, direct investments in cryptocurrency make users vulnerable to “manipulative acts and practices”.

What is meant by “manipulative”? According to the Commission, crypto exchanges often falsify their trading volumes and don’t share data with regulators. This means an inaccurate representation of BTC liquidity and price, from which the SEC wants to protect American investors.

At the same time, Commissioner Gary Gensler has said he doesn’t have a problem with futures ETFs, as they are “different products and contain different underlying holdings” compared to spot ETFs.

According to ETF Store head Nate Geraci, the SEC is unlikely to approve any spot ETF bids until it has the power to regulate major crypto exchanges. So far it has shut down numerous Bitcoin ETF proposals:

• VanEck, November 2021
• Kryptoin, December 2021
• First Trust & SkyBridge, January 2022
• Fidelity, January 2022
• Global X, March 2022
• NYDIG, March 2022
• Bitwise Asset Management, June 2022
• Wisdom Tree, December 2021 & October 2022
• Grayscale, June 2022 & December 2022
• Ark21Shares, April 2022 and January 2023

However, the SEC is now dealing with its most serious proposal yet from BlackRock, the world’s largest investment management firm.

BlackRock Bitcoin ETF filing

BlackRock has an incredible $8.6 trillion in client assets. It also has an ETF subsidiary called iShares, with $2 trillion under management. iShares offers 800+ ETFs across the globe, including almost 400 in the US.

You can imagine the industry’s excitement when iShares filed a proposal for a spot Bitcoin product called iShares Bitcoin Trust on June 15, 2023. While it has “trust” in the name, it would have a redemption mechanism — a key difference between an ETF and a trust like Grayscale. So the iShares product can be called a spot ETF.

Coinbase Custody would act as the custodian for the BTC reserves, and Coinbase Inc. would be the trust’s prime broker. However, the SEC recently sued Coinbase, which makes it an imperfect fit for this role. So iShares took extra steps to describe how iShares Bitcoin Trust would protect investors from those “fraudulent and manipulative practices” that Gary Gensler is so concerned with.

Bitcoin’s spot price will be taken from Chicago Mercantile Exchange’s CF Benchmarks, a fully regulated and transparent source of asset price benchmarks. But the most important detail is that iShares plans to enter a “surveillance-sharing” agreement with the Nasdaq exchange to ensure transparent data. In fact, the SEC has written that an exchange that lists a spot Bitcoin ETF would need such an agreement with a regulated market.

Initially, the SEC rejected the filing, saying it wasn’t clear enough. BlackRock refiled at the start of July, and on July 13, the SEC formally acknowledged the bid. On July 19, the filing appeared in the Federal Register (a daily publication by the US government). From that point, the SEC has 45 days to either approve the bid or extend the review, so the first decision deadline is due in early September. But, the SEC is likely to postpone the decision; the maximum review period is 240 days

BlackRock’s Bitcoin ETF filing is the most serious challenge to the SEC in the Bitcoin ETF field so far. Crypto Twitter is already looking forward to a “battle” between Gary Gensler and BlackRock’s powerful CEO Larry Fink.

What will happen if the BlackRock ETF is approved?

Right before ProShares futures ETF (BITO) started trading in October 2021, the price of Bitcoin hit $60,000. However, it fell back below $40,000 within three months.

If a spot Bitcoin ETF gets approved, it could trigger another BTC rally, at least in the short term.. Expert estimates vary wildly: Morgan Creek Capital’s Mark Yusko expects $55,000, while the investment research firm Fundstra believes $180,000 is in the cards.

Meanwhile, JP Morgan wrote that an approved spot crypto ETF in the US won’t be a “game-changer”. None of the spot ETFs in Canada and Europe have managed to attract $1 billion in capital, and BITO has similar assets under management to when it launched.

We don’t provide financial or investment advice, but rallies in crypto are often of the “buy the rumor, sell the news” kind: the price tends to go down soon after a much-anticipated event. This could end up being the case with the iShares Bitcoin ETF, too.

Other active spot Bitcoin ETF proposals

BlackRock Bitcoin ETF is the one everyone’s talking about, but the SEC is currently reviewing six more ETF filings. All of them have tried before and got rejected.

• Fidelity: an asset manager with $11 billion AUM
• WisdomTree: the third attempt by the global ETF management company with $97 billion AUM
• Bitwise Asset Management: the industry’s largest crypto index fund manager
• Valkyrie: a digital asset ETF manager that operates Bitcoin Miners ETF (WGMI), among others
• Invesco: an asset management firm with $1.4 trillion AUM that’s part of S&P 500
• Ark Investment Management:run by Cathie Wood, who believes that BTC will hit $1 million by 2030

For now, we just have to wait for September, though it’s likely the SEC will postpone the decision on the BlackRock Bitcoin ETF. The maximum review period is 240 days. We’ll keep updating this article, so follow Pontem on Telegram, Twitter, and Discord and stay tuned!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel — the first ever implementation of the Ethereum Virtual Machine for Aptos.

Spot Bitcoin ETF: BlackRock vs. the SEC was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Ethereum’s Cancun upgrade will feature a scaling solution called proto-dankharding. It’s a good occasion to dive into sharding, how it’s implemented by blockchains like NEAR, TON, and Zilliqa,and why Ethereum rejected its original sharding design.

TL;DR

• The concept of sharding comes from traditional IT, where it means splitting a database into several smaller subsets (shards) that are stored and handled by separate servers.
• In blockchain, sharding can improve scaling, especially in networks where each validator has to process every transaction. Effectively, you split the blockchain (state, storage, transaction processing, or all of these) and assign each shard to a group of validators, with some sort of a central chain linking them all.
• Blockchain sharding is challenging. You need to decide how exactly to split the network, how to record shard blocks on the main chain, how to ensure communication between shards and their security, etc.
• Ethereum has had sharding on its roadmap since 2018. The original plan (2018–2022) was to have 64 shards with at least 128 validators in each, reshuffled every epoch (6.4 minutes). In 2022, the roadmap changed in reaction to the rise of rollups. The new design is called danksharding, and its first version will be proto-danksharding, to be introduced in the Cancun-Deneb (Dencun) upgrade.
• Proto-danksharding introduces blob-carrying transactions, where blobs (Binary Large Objects) are chunks of raw data that can’t be read by the EVM. Rollups will send transactions to Ethereum as cheap blobs instead of writing them on the mainnet as expensive calldata. Blobs will be stored on the Beacon Chain for only a few weeks.
• Cancun was supposed to go live in October 2023, but it will probably get delayed to 2024.
• The first blockchain to implement sharding in practice was actually Zilliqa in 2017. It has four shards, each processing a specific type of transactions. The whole thing is presided over by the Directory Service Committee. However, each node still has to store the whole blockchain state.
• The Open Network (TON) has a more advanced sharding model: the number of shards can grow or shrink, and their potential number is truly massive.

What is sharding in traditional IT?

Sharding means splitting a dataset into smaller parts that can be stored and processed separately. It’s widely used in traditional IT to manage very large applications that would cause a single server to lag or freeze.

We’re used to talking about scaling in the context of blockchains, but it can be a problem for centralized databases, too. Popular applications receive thousands of queries a minute, far more than any blockchain or dApp. Eventually, the CPU or RAM memory will get overloaded and overheat, the network will run out of bandwidth, or the server will run out of storage.

There are two approaches to database scaling: vertical and horizontal.

• Vertical scaling means increasing system capacity by adding processors, memory, or storage space to the existing servers. However, there are practical limitations to such upgrades, and if something goes wrong, the whole database will become inaccessible.
• Horizontal scaling means adding servers (nodes) as an application grows. It’s easy, and you can have as many machines as you need. The costs of maintaining the data center (server cooling, electricity etc.) will also increase, but in a predictable way. But, horizontal scaling usually requires additional coding. In general, this method is recommended for databases with more than 1,000 users.

Furthermore, horizontal scaling can be done in two ways: replication and sharding.

• Replication involves creating copies of the entire database and storing them on multiple machines. Changes are made only to the primary copy and are automatically replicated in the copies. This method increases fault tolerance and system availability (if some servers break down, the database will still work), but it doesn’t help to deal with growing database size.
• Sharding means dividing a database into smaller subsets (shards) that all live on separate servers. Each machine processes queries sent to its assigned shard and doesn’t deal with other shards (known as a shared-nothing architecture). Sharding is supported by leading database providers like Amazon Web Services and MongoDB.

Sharding is the most affordable solution for growing databases, but comes with several issues:

1. Fault tolerance: if one of the servers fails, the rest of the database will keep working — but you won’t be able to use the data in the affected shard.
2. Load distribution: if you put the most popular data in a few shards, they can still get overloaded with queries and freeze, while other shards are underused.
3. Data distribution: not omitting any data and not replicating the same piece on several machines.

Now that you understand the concept of sharding, let’slook at sharding in the blockchain space.

Sharding in blockchain

Scaling a blockchain vs. scaling a centralized database

A blockchain is a decentralized database that needs to handle queries (transactions) like payments and smart contract calls. But unlike a centralized database on a single powerful server, a blockchain state resides in thousands of copies across all of its validator nodes — most of them much less powerful than a traditional data center server.

You could say that a blockchain network already uses horizontal replication by design. Some nodes can go offline and the blockchain will keep operating. But, while replication ensures fault tolerance, it doesn’t help with high workload.

In fact, scaling for higher workloads is a much bigger problem in blockchains like Ethereum than in centralized databases, because every blockchain validator has to process every transaction. It’s a cornerstone of transparency and security, but the result is a network that’s only as fast as a single node.

The challenges

Since a blockchain is a database, it can be sharded. Each validator is assigned to one shard and processes only the transactions related to that shard. As nodes can now divide the workload instead of having to process all the transactions, you can avoid bottlenecks and achieve the ultimate goal: scaling.

At the same time, every node requires less storage space, as it presumably doesn’t need to store the whole blockchain state. This allows more users to run nodes and increases decentralization.

Sounds good, right? There are several serious decisions to be made, though.

• Partitioning logic: Blockchain sharding is more complicated than having some dApps live on one shard and other dApps on another. Are you going to split just transaction processing among the shards, or will they also store separate parts of the blockchain state?
• Collation: All the data recorded on different shards will need to be collected in a single place, which can be called a beacon chain, a mother chain, a masterchain, etc. You’ll also need to come up with an economical way to record the information about shard blocks.
• Communication: How do you enable the transfer of data and assets between shards and the dApps that run on them? For example, if Bob has an account on Shard A and wants to use a dApp that resides on Shard B, how will he do that?

The two main solutions to this are synchronous and asynchronous sharding. In synchronous sharding, when a transaction involves two shards, the blocks that will include it have to be produced simultaneously (or at least added to the same slot on the mother chain/beacon chain).

In the asynchronous approach, the shard where the transaction originates (i.e. the one that the money is sent from) processes the transaction first. The second shard receives some sort of confirmation and then processes its part, “crediting” the money to the recipient.

• Security. A single shard has fewer validators than a whole unsharded blockchain, making it easier to attack and take over. Basically, if you need 51% of the votes to take over a chain, then on a blockchain with 1000 validators it translates into 510 validators; but if you split the network into 10 shards with 100 validators each, you’ll need just 51 votes to stage a successful attack.

Sharding in action: Ethereum, ZIlliqa, TON, NEAR

Now that you understand how sharding works in blockchain, let’s see how different blockchains implement it in practice.

Ethereum: from 64 shards to danksharding

The plan to introduce sharding in Ethereum was announced in April 2018, and now, five and a half years later, we are finally close. However, the final design, set to become part of the Cancun upgrade, is completely different from the original idea.

We’ll publish a separate deep dive into Cancun and its corresponding Beacon Chain fork, Deneb (“Dencun”). In this article, we’ll give you the gist.

ETH2 sharding (deprecated): the 64-shard network

According to the original plan, Ethereum was to be split into 64 shards: the current chain plus 63 more. Each shard was to have at least 128 validators. Every epoch (around 6.4 minutes), the Beacon Chain would reshuffle validators among the shards in a pseudorandom way, with one validator on each shard given the role of block proposer. In addition, 128 randomly selected validators would form a committee on the Beacon Chain.

This block proposer would create a shardblock (a collation of transactions) and propose it to the others for verification. If at least ⅔ of the validators attested (approved) a collation, its header would be sent to the Beacon Chain, and the block proposer would receive a reward.

In turn, the Beacon Chain committee would verify the attestations on all the block headers coming from different shards and form Beacon Chain blocks.

The first implementation phase would have shards as a data layer, without communication between them and without an ability to host smart contracts and user accounts. In the second phase, shards would be able to run dApps and host accounts independently and communicate with each other. Ethereum’s overall processing capacity would rise from today’s 27 TPS to 100,000 TPS.

The whole system would be very secure thanks to the pseudo random validator selection and constant reshuffling. An attacker would have a one-in-a-trillion chanceto take control over ⅔ of the validators in a single shard.

Danksharding and proto-danksharding: coming with the Cancun upgrade

In 2022, Ethereum developers came up with a totally different design following the explosion of optimistic and ZK rollups. Instead of splitting Ethereum L1 into shards, the plan is to create a cheap way for rollups to send transaction data to the L1.

The first version of this paradigm was “proto-danksharding,” described in the Ethereum Improvement Proposal (EIP) no.4844. The term comes from the names of two key contributors: Dankrad Feist and Protolambda (real name Diederik Loerakker).

Proto-danksharding will be the main feature of the upcoming Cancun-Deneb (“Dencun”) upgrade. It was supposed to go live in October 2023, but we may have to wait until 2024.

Why do we need proto-danksharding?

Rollups like Arbitrum, Optimism, and zkSync Era have to make their transaction data available on the Ethereum mainnet so that any interested validator (“prover”) can verify that the rollup operator isn’t committing fraud. The problem is that this information is currently sent using calldata and every non-zero byte of calldata costs 16 gas. The rollup transaction fees that you pay as an end user are almost entirely L1 calldata fees.

Danksharding proposes an alternative: wrapping rollup transaction data into “blobs” (Binary Large Objects). They will be attached to special blob-carrying transactions instead of using the calldata field. A blob consists of the body and a small header and can be up to 125 kilobytes, which is a lot for Ethereum.

Blobs can’t be read by the EVM and won’t come into contact with it. As they land on the mainnet, the Beacon Chain will just check that the data in them is available. They will be stored on the L1 only for a few weeks or a couple of months, though other participants like rollup operators can keep storing blobs as long as they want.

To verify blob data, proto-danksharding uses a cryptographic scheme known as Kate-Zaverucha-Goldberg (KZG). It consists of applying a polynomial function to the data in a series of points to get the value of the function in those points (“commitment”).

A rollup operator posts a commitment together with a blob. A prover can apply the same function to the same points to check that the values match. The fact that the prover doesn’t have to check the whole blob but only a few points makes this a cheap and efficient way to verify rollup transactions on the mainnet.

It’s important for rollup operators and provers to come up with a series of points that nobody else will know. The procedure is called a KZG ceremony, and Ethereum recently held a huge one, with over 141,000 users contributing random numbers to create a truly secure string.

By the way, if all this seems very complicated, wait for our detailed article on Cancun and danksharding.

Another interesting thing about proto-danksharding is that it separates block builders and block proposers. Builders are validators with powerful hardware who will place bids to form a new block. The proposer will select the highest bidder, and the winner will be responsible for producing the whole block.

Will Ethereum gas fees go down?

Proto-danksharding won’t affect the gas fees on Ethereum mainnet, but it should cut rollup fees by as much as 100x. That’s why many expect L2 chains to benefit and even rally after the Cancun fork.

Zilliqa: only simpler transactions are processed by shards

Back in 2015, Zilliqa’s team authored what appears to be the first-ever paper on blockchain sharding. Launched in 2017, Zilliqa ($ZIL) is thus positioned as “the first sharding-based blockchain.” It’s also EVM-compatible.

Zilliqa has four shards that produce “microblocks”. Every epoch, nodes are reshuffled among the shards, but there needs to be at least 600 nodes per shard.

Some of the nodes also participate on the Directory Service (DS) Committee. They collate microblocks into proper Transaction Blocks; determine which node will join which shard; generate special DS blocks; and process complex transactions that aren’t assigned to shards (see below).

The important thing to understand about Zilliqa is that it shards transaction processing but not network storage: each node still stores the whole blockchain state. How transactions are assigned to shards depends on the type of transaction:

1. A simple payment between two users: assigned to ashard based on the first few bits of the sender’s address.
2. A user interacting with a smart contract: same as above. If the last two bits of the user’s and the contract’s address are the same, the transaction will go to one of the shards.
3. All other transactions are processed by the DS Committee. This includes those in which the last 2 bits of the addresses are different, as well as complex interactions, such as when a user calls a contract, which calls another contract.

Zilliqa relies on Proof-of-Work, and the fees are a bit higher than you’d expect from a sharded blockchain. It costs $0.1 to transfer tokens and NFTs and $0.01 to send ZIL. Finality time is around 30 seconds — a far cry from Aptos’ sub-second finality, for example.

The team is working on Zilliqa 2.0, which will have a new sharding model. Developers will be able to play with small customizable shards, setting their own security rules and finality time, and nominating validators.

Each shard in Zilliqa will also have an encryption key, allowing projects to build private shards whose data only they can decrypt. A long-term objective is to add ZK proofs to allow shards to share data in a private and compliant way. Right now, there is little communication between shards in Zilliqa.

TON: dynamic sharding and millions of smart contracts

TON (The Open Network) started out as Telegram Open Network, a brainchild of Nikolai and Pavel Durov, the creators of Telegram. After Telegram had to close down the project, it was picked up by the community and is now run by the TON Foundation. TON is not EVM-compatible and uses a smart contract language called FunC.

TON’s sharding model has three very interesting features.

1. The number of shards changes dynamically: it can both increase and decrease. If the transaction load becomes too large for a specific shard, it splits in two; but if the load falls, shards can be joined together. TON is the only L1 to support shard merging.
2. The sheer potential number of shards is enormous. TON can have up to 2³⁰ workchains — that’s over 1 billion. In turn, every workchain can be split into up to 2⁶⁰ shards. The total potential number of shards in the system would be an incredibly large 2⁹⁰. According to the TON blog, each person on the planet would get over 100 million shards.

For now, there are just two workchains: BaseChain, where regular transactions are processed, and MasterChain, which gathers information about the general blockchain state in its masterblocks.

Anyone can create a workchain, but it is rather costly, so for now all projects on TON are content to run on the BaseChain.

1. Smart contracts can also be sharded — divided into many small instances. This way, if a workchain is split into shards, different instances (parts) of a contract can end up on different shards and yet the contract will continue to work.

How many instances there should be is up to each smart contract engineer to decide. When dealing with a fungible token, you can have an instance (essentially a separate contract) for every user balance, plus a parent instance to host the basic information on the token. If there are 1,000,000 token holders, there would be 1,000,001 smart contracts in total just for that token. Similarly, every NFT in a collection has its own smart contract on TON, in addition to the collection smart contract.

Like Aptos, TON already has what’s needed to scale But the actual load isn’t high: as of October 2023, TON processes less than 1.5 transactions per second.

NEAR: splitting a single transaction between shards

NEAR’s sharding protocol is called Nightshade, and its introduction is split into four phases. Phase 0, Simple Nightshade, launched in November 2021 and involved splitting the blockchain state in 4 shards. The list of transactions in a block is split into chunks, one chunk per shard.

The shards aren’t separate chains, though: every NEAR block contains all the information about transactions from all the shards, and every validator (block producer) tracks all the shards.

Phase 1, Chunk-Only Producers, launched in September 2022 and sharded transaction processing as well as the blockchain state. Now, for every block and every shard, a node is assigned to produce the chunk of transactions that corresponds to that shard. So with fourshards, you have four chunks per block, created by four different producers.

A chunk-only producer doesn’t produce full blocks and doesn’t approve anything. They don’t have to stake a huge amount of NEAR or to download the full network state. A computer with 200 GB of free space and 8 GB of RAM should be enough for the task. As of July 2023, NEAR had 100 staking validators and 119 chunk-only producers.

‍Phase 2, or Nightshade proper, will do away with the need for all validators to verify all the shards. Finally, Phase 3, or Dynamic Resharding, will enable splitting and merging shards as needed — something that TON can already do. Phases 2 and 3 were originally scheduled for 2022, but as of September 2023, there is no clear date set for implementation.

We’ll keep you posted on the progress of sharding in Ethereum and other blockchains. Meanwhile, we have lots of updates and new features of our own coming up, including concentrated liquidity on Liquidswap and the new PontemAI chatbot. Follow us on Telegram, Twitter, and Discord and stay tuned!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE pluginfor developers, and the Solidity-to-Move code translator ByteBabel– the first ever implementation of the Ethereum Virtual Machine for Aptos.

Blockchain Sharding 101 was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

AI tokens like FET, AGIX, and ALII grew 400% and beyond in early 2023, while Worldcoin took center stage in Q3. It’s hard to keep up with every new project, so here’s our detailed guide to AI in blockchain — especially timely since Pontem is working on an AI product of its own!

Is Blockchain a Good Match for AI?

The beginning of 2023 was marked by a huge rally in AI tokens, with assets like AGIX and ALI growing 1000%. The rally had a clear trigger: the success of ChatGPT, a natural language processing model developed by OpenAI. There was another short-lived rally in July, after Elon Musk announced the creation of xAI, a potential competitor to ChatGPT.

There is little doubt that AI will revolutionize many industries. Fortune Business Insights forecasts that the AI market will grow by 20.1% annually to reach $1.39 trillion by 2029. However, the question remains if AI needs blockchain, and vice versa.

View no.1: AI & blockchain is just a narrative

Andre Cronje, the creator of Yearn Finance, wrote that “AI and blockchains do not mix.” He even went so far as to say that crypto projects that “jump on the AI bandwagon” do so only to pump their tokens.

If Cronje is right, then the AI narrative in crypto will fade away like many narratives before it. For example, during the first ICO boom in 2017–2018, many claimed that blockchain would “disrupt” healthcare and supply chains but that hasn’t happened yet.

Pratik Thakar, head of creative strategy at Coca-Cola, recently advised marketing executives to invest in AI rather than blockchain, as the former will be “more fundamental”.

To be fair, many of the AI blockchain projects that we examine in this article were founded in 2017 and 2018, long before ChatGPT. It would be unfair to say that they jumped on the bandwagon as AI became a household name.

View no.2: Blockchain is needed to verify data

Contrary to Andre Cronje, Aptive Resources Program Director Ralph Wallace believes that blockchain can solve the issue of data integrity and trust in AI, by verifying data sources. According to him, if the data is low-quality, you’ll get “garbage in, garbage out” as a result.

View no.3: Blockchain as a way to detect AI-generated content

Kamlesh Nagware, co-chair at Hyperledger India writes that blockchain can become “the trust layer” for the AI industry, verifying the authorship and origin of a piece of content, rather than the provenance of training data. We’ve actually discussed this topic during the recent Move Tuesday.

This use case could become especially important as more future AI models on content generated by other AI algorithms. Research shows that this feedback loop leads to a decline in quality and even “model collapse”.

View no.4: Web3 products that incorporate generative AI are the way forward

The easiest way to incorporate AI into Web3 here and now is to integrate generative AI, especially large language models (like the ChatGPT API) into blockchain products like wallets and exchanges For example, imagine a crypto wallet that can answer questions about the tokens it supports, or a DEX that can provide basic technical analysis insights.

Pontem Network is actually working on something in this vein. We won’t show our hand just yet, but keep an eye out for our beta launch soon!.

The use of generative AI could even go deeper than dApps. IntoTheBlock CEO Jesus Rodriguez writes that AI-generated natural language could be used in blockchain transactions and smart contracts.

It’s impossible to predict which of these views will turn out to be correct In any case, it’s important to get familiar with this section of the space and its core projects.

AI Blockchain Projects At A Glance

AI-related blockchain projects can be categorized by their core features::

• Services provided by AI ( processed data, market predictions, etc.);
• AI algorithms (image generation, language processing, virtual assistants, etc.);
• Data needed for training AI models (though not an AI product proper, it’s a crucial resource for developing ML models. In January and February 2023, Big Data tokens pumped together with AI tokens);
• Computing resources for training AI models;
• Secondary products,, such as generative AI characters or DeFi..

(Note that we’ve included only those projects that directly address the AI industry and have a market cap above $2 million. That’s why Big Data and decentralized computing protocols like The Graph and Render Network are omitted.)

The Top 16 Crypto AI Projects You Should Know About

Pontem Network’s mystery AI blockchain product — coming very soon!

For the past couple of months, we’ve been working on a very useful new feature — and yes, it’s powered by a large language model. We won’t reveal the details yet, but you’ll be able to join beta testing very soon!

Worldcoin

Worldcoin is a controversial project headed by Sam Altman, CEO of OpenAI, the company behind ChatGPT. The idea is that soon the internet will be so full of AI bots that we’ll need a way to prove that we are human. For this purpose, Worldcoin proposes “World ID” — a digital passport based on your iris.

To get verified and create a World ID, a user needs to have their eyeball scanned by a silver ball called an “orb”. Only verified users will be able to use WLD tokens and the corresponding payment app. World IDs will be stored on the blockchain, and the creators insist that users’ privacy will be protected.

The 18-month beta testing period attracted over 2 million users. On July 24, 2023, Worldcoin finally launched: orb verification should soon expand to 20 countries, bringing the number of potential registrations to 200,000 a week. On the same day, WLD token started trading on Binance.

As the CEO of one of the most famous AI startups in the world, Sam Altman understands the risks of AI and insists we will need a new way to distinguish humans from bots. However, Worldcoin’s practices have raised concerns: Vitalik Buterin himself writes that privacy risks are too great with biometric proof of identity (as an eyeball scan can reveal a lot about a person). Plus, he notes, it will be difficult to get orbs to everyone who wants a World ID, and some governments might even decide to ban the technology altogether.

SingularityNET (AGIX)

SingularityNET envisions a future where decentralized AI performs many of our daily tasks. The project uses the term “Artificial General Intelligence” (AGI) to show that neural networks will be versatile, rather than specific to just one job. The token symbol AGIX, comes from AGI.

Their key difference from Fetch.ai (which we’ll look at next) is that instead of monetizing the services performed by AI agents, users can monetize AI models themselves. A developer can train a new machine learning algorithm, upload it to SingularityNET using a special Publisher tool, then sell it on the marketplace. Customers pay with AGIX or fiat.

The marketplace already features a few free AI demos. They include an image generator and an algorithm that generates music lyrics based on a seed you type into it.

Fetch.ai (FET)

Fetch.ai is a decentralized AI blockchain platform centered on the concept of Autonomous Economic Agents (AEAs): AI algorithms that perform tasks on their own, without human inputs.AEAs can make decisions, communicate with each other, and improve at their job over time.

Fetch.ai envisions a future Internet of Things (IoT) as a multi-agent system of AI workers who do their job as instructed by their “masters”. Users can then monetize the results of their AEAs’ work.

Autonomous agents might gather and process data generated by various sensors and thus power smart energy grids and whole smart cities. FET tokens would be used to pay for their services. Other use cases include crypto market analytics and social networks.

Fetch.AI is built using Cosmos SDK and the CosmWasm programming language. It also supports Cosmos’ Inter-Blockchain Communication Protocol (IBC).

The FET token “lives” both on Ethereum as an ERC-20 and on the Fetch.ai mainnet. You’ll need Fetch Wallet to use the native token, as this blockchain isn’t supported by MetaMask.

Ocean Protocol (OCEAN)

Ocean isn’t an AI protocol in itself, but it deals with the thing neural networks need most: data. Ocean is building a decentralized marketplace for data where providers and customers are matched without intermediaries.

Ocean uses special ERC-20 datatokens and ERC-721 NFTs as access keys for datasets. Customers need to pay with datatokens when buying datasets. Data itself can be stored anywhere, including centralized servers, but access to it is decentralized.

Users can lock OCEAN to earn around 6.5% APY and receive special veOCEAN tokens in return. If you also allocate your veOCEAN to participate in the curation of certain data, you’ll get additional rewards.

Currently, the marketplace mostly features crypto trading data, such as ETH/USDT order books and CEX aggregators.

Alethea AI (ALI)

Alethea uses generative AI to create characters based on a text description. You can describe the desired appearance, personality, profession, skills, and so forth. The technology is called CharacterGPT.

Every virtual character is minted as an iNFT, which consists of three parts: soul, mind, and body. iNFTs are dynamic;users can add new data to them to change the way the virtual character behaves or looks. The characters can even blink, nod, and do other movements. They also learn, like any neural network. Very interestingly, you can turn a regular NFT (like a Bored Ape) into an iNFT.

You can try CharacterGPT in action with the MyCharacter.ai dApp, which allows you to create 5 characters for free. We entered “A Space Pirate who loves crypto and swashbuckling”, but for some reason the result was a friendly young baker — a far cry from the real Pontem Space Pirate NFTs!

Another innovation of Alethea is the AI Protocol. It allows developers to integrate CharacterGPT and iNFTs into their own projects. Users need ALI tokens to create and upgrade iNFTs, or to interact with the AI Protocol. The token also powers the DAO, whose members elect the Content Moderation Council.

Numerai (NMR)

Numerai is a combination of a hedge fund and a community of data scientists. It trades using crowd-sourced AI algorithms to predict crypto prices. Outside investors can put money in the hedge fund to hopefully enjoy the returns.

In economics, a numeraire is a unit used to compare the prices of different assets. USD is the traditional numeraire for stocks. Combine “numeraire” and “AI”, and you get Numerai.

At the heart of Numerai is a system of tournaments in which community members compete to create the best machine learning algorithms. They stake NMR, and if one’s AI model does a good job predicting prices, the author is rewarded with more NMR. But if the algorithm performs poorly, the user’s stake is slashed.

This motivates data scientists to submit better models, which Numerai combines into a weighted meta model. Considering that some users earn over 300% APY in NMR thanks to their algorithms (crowdsourcing the leaderboard), crowdsourcing AI is working so far .

Cortex (CTCX)

Cortex is positioned as a decentralized computer for AI dApps. The challenge with running AI models on a blockchain is ito achieve deterministic inference an algorithm which produces the same result based on the same input regardless of the environment. Cortex purports to be the first L1 blockchain to have the necessary characteristics for decentralized AI.

The project features an EVM-compatible virtual machine (CVM) and supports Solidity. Cortex also has its own ZK (zero-knowledge proof) rollup called zkMatrix. It should help scale the network and reduce fees by processing many transactions on a sidechain.

Cortex introduced a system of rewards for independent AI developers who add their algorithms to the ecosystem. dApp developers will be able to select those that better match their use case. There is already an AI dApp for you to try: DigitalClash, a game where users compete to draw pixels on a board.

Phoenix (PHB)

Phoenix is a new blockchain optimized for Web3 AI dApps and IoT. It includes an EVM-compatible Layer 1 (mainnet is live with around 1,000 transactions per day) and a Layer 2 (computation layer) that will host applications. You can stake PHB to earn around 17% APY.

The project proposes to connect on-chain applications with off-chain datasets, models, and machine learning frameworks. For that, Phoenix has a built-in oracle, though it currently only supplies simple data like crypto and stock prices, Covid-19 cases, and the temperature in Hong Kong.

SingularityDAO (SDAO)

SingularityDAO is an AI-powered DeFi platform built by a team of machine learning scientists, data engineers, and quant trading experts. It is built and incubated by the SingularityNet Foundation.

SingularityDAO’s key innovation are DynaSets: portfolios of tokens created and automatically rebalanced using AI. In other words, they are trading strategies controlled by an AI-powered Dynamic Asset Manager.

The two DynaSets currently on offer are dynBTC (WBTC & USDC) and dynETH (WETH & USDC). Users can also test several new beta strategies in the DynaLab section.

DeFi functionality also includes a swapping DEXand vaults and farms where you can earn over 10% APY by staking tokens.

Vector Space AI

Vector Space AI is a subsidiary of Vector Space Biosciences, which hopes to use machine learning to send humans into space. In order to reach Mars, astronauts will need special systems to protect them from radiation and the effects of very low gravity in the spaceship.

Vector Space’s idea is to use AI to construct datasets and reveal hidden relationships between genes, molecules, etc. This should speed up breakthroughs in space bioscience. Interestingly, Vectorspace applies the same AI technology to uncover connections between the prices of cryptocurrencies, global events, and other factors to build whole portfolio strategies.

The project uses blockchain to verify the provenance of data in each dataset. Institutional customers require VXV tokens to pay for access to datasets.

VAIOT (VAI)

VAIOT creates AI-powered mobile virtual assistants. They can be used by businesses to sell products like insurance to customers, prepare personalized offers, and even draw up legal contracts.

The VAIOT assistant uses a natural language model, so communicating with it is more pleasant than with a standard support bot. Unlike bots, AI assistants can also finalize offers, concluding sales on their own. In the process, they gather valuable information that can help improve business processes.

The first real-world product — a solution for social media campaigns with rewards — should be released soon. Transactions are recorded on VAIOT’s own blockchain, and VAI tokens are needed to pay for services and receive payback (cashback). You can also farm VAI on Uniswap.

GNY (GNY)

GNY is building an AI prediction platform for crypto trading. The first product is the BTC Range Report — an AI-generated prediction for the Bitcoin price range for the next 7 days, updated daily.

A machine learning algorithm analyzes millions of trades to find patterns, though the range is admittedly wide: between $21,500 and $28,000, for example.

Access to the Range Report costs $20 a month, and Ethereum has just been added. In the next few months, GNY plans to expand to 10 cryptocurrencies.

GNY has its own blockchain, where the GNY token is used to pay for AI products, launching new assets, voting, etc. There’s also a mainnet wallet. GNY is available on Ethereum and BNB Chain, as well.

DeepBrain Chain (DBC)

DeepBrain Chain is an AI computing network: nodes across the globe provide their computer resources to AI developers. Training a neural network takes a lot of computing power and costs AI projects a lot of money. But with DeepBrain Chain, they can outsource this resource-intensive task to others in a decentralized way and save up to 30% (according to the website).

The platform serves as a matchmaker between AI developers and nodes running GPUs (graphic cards). These range from big GPU rigs to regular users with a single Nvidia card. GPU owners can thus consider DeepBrain Chain as an alternative to crypto mining.

DeepBrain Chain supports major machine learning software frameworks such as TensorFlow,

Caffe2, and PyTorch.

DeepBrain Chain is already powering AI applications in cancer detection, driverless cars, and speech and image recognition. Several cloud computing providers based in South Korea and Singapore provide GPU services to users, with over 2,400 GPUs in the network.

Oraichain (ORAI)

Oraichain is yet another Layer 1 blockchain built for decentralized AI, as well as Web3 in general. It uses Cosmos SDK and CosmWasm, but it also has a subnetwork for AI dApps that is EVM-compatible. There is also a special trustless oracle for AI, as well as a ZK rollup for scaling.

The native OWallet combines the features of the Kepler wallet for Cosmos and MetaMask. It supports Oraichain, Cosmos, Osmosis, and Juno, together with Ethereum, BNB Chain, and other networks. You can also add the Oraichain EVM subnetwork to MetaMask.

There are 10 dApps in Oraichain’s ecosystem, including DINO Hub, a marketplace for AI APIs and data. It supports royalties, so AI developers can earn regular, passive income. For example, you’ll find AI services for weather forecasting, detecting heart diseases, and even de-aging people in photos.

Matrix AI Network (MAN)

Matrix is a blockchain and an AI cloud computing platform. It uses a combined Proof of Work + Decentralized Proof of Stake consensus mechanism where nodes that aren’t directly involved in mining or validation can lease their computing power to others. This makes mining environmentally friendlier and allows the network to process up to 14,000 TPS.

Other features include:

• MANAS, a marketplace for AI services like logo recognition and plant identification;
• MANTA, an automated machine learning platform;
• MANIA, a tool for turning AI models into tradable NFTs;
• Airtist, an AI protocol that generates NFT artwork.

The name “Matrix AI” points to the team’s intention to bring the vision of the famous Matrix films to life, including intelligent avatars. Starting in 2023, the project will begin upgrading to Matrix 3.0, which would integrate neural data with AI and blockchain for the first time. Users will even be able to upload their brain wave patterns to the blockchain to power their personal avatars in the metaverse.

Raven Protocol (RAVEN)

Raven is a decentralized computing protocol for AI, metaverse, gaming, and Web3. It aims to connect millions of devices that have spare computing power with those who need them (requesters), such as machine learning engineers and game developers.

Developers can use the Ravenverse app with its various libraries to build and train AI models and even create games. Various parts of the Ravenverse allow users to assign computation tasks to free nodes as a requester, participate in current computations as a provider, etc. All this requires RAVEN tokens.

Crypto AI projects on Aptos

So far, the majority of AI projects have either built their own blockchains or issued ERC-20 tokens. However, as Aptos has the superior speed and scalability needed for machine learning platforms, we will likely see more AI projects launch in the Aptos ecosystem soon.

There are a couple more projects we can add to the list:

• AptosLauncher: a launchpad on Aptos that plans to use machine learning technology created by OpenAI.
• Aptos Robi: an NFT project run by artificial intelligence. The AI created designs of 444 robots that can develop and interact, and most of the texts for the project are also written by an algorithm.

We’ve already mentioned that Pontem Network is working on an AI product as well, so stay tuned!.

Decentralized AI is a very interesting trend that can turn out to be more than just a short-lived narrative. We will keep reporting on this space, so don’t forget to follow Pontem on Telegram, Twitter, and Discord so that you don’t miss the next article!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground, the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel — the first ever implementation of the Ethereum Virtual Machine for Aptos.

15 Crypto AI Projects You Should Know About was originally published in Pontem Network on Medium, where people are continuing the conversation by highlighting and responding to this story.