Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency technology development. I’m Margaux Nijkerk, a reporter at CoinDesk.
In this issue:
- Ethereum developers prepare for Fusaka, second upgrade in 2025
- Anthropic research shows that AI agents are approaching true DeFi attack capabilities
- Ethereum developers push ZK ‘Secret Santa’ system towards implementation
- Bitnomial is preparing to debut the first CFTC-regulated spot crypto market
Network news
FUSAKA WILL GO LIVE ON ETHEREUM: Ethereum developers are preparing for the network’s second upgrade of 2025 to go live later today. Fusaka – a mix of the names Fulu + Osaka – consists of two upgrades that happen on Ethereum’s consensus and execution layers at the same time. The goal of the upgrade is to enable Ethereum to handle the large transaction throughput from the layer-2 chains that use blockchain as their base layer. Fusaka consists of 12 code changes, also known as “Ethereum Improvement Proposals” (EIPs), that will make the layer-2 experience faster and cheaper. The biggest change in Fusaka is known as PeerDAS, which allows validators to check only segments of data instead of full “blobs”, easing bandwidth requirements and lowering costs for both validators and layer-2 networks. Layer 2s currently send thousands of transactions to Ethereum via “blobs” where validators currently on the Ethereum blockchain must download all transaction data from the block to verify that it is accurate, creating bottlenecks. With this improvement, these validators only need to verify a fraction of a blob, speeding up the process and lowering the transaction fees involved. — Margaux Nijkerk Read more.
ANTHROPIC STUDY ON DEFI AI AGENTS: AI agents are getting good enough at finding attack vectors in smart contracts that they can already be weaponized by bad actors, according to new research published by the Anthropic Fellows Program. A study by the ML Alignment & Theory Scholars Program (MATS) and the Anthropic Fellows program tested frontier models against the SCONE bench, a dataset of 405 leveraged contracts. GPT-5, Claude Opus 4.5, and Sonnet 4.5 combined produced $4.6 million in simulated exploits on contracts hacked after their knowledge cutoffs, providing a lower bound on what this generation of AI could have stolen in the wild. The team found that frontier models didn’t just identify bugs. They were able to synthesize full exploit scripts, sequence transactions, and drain simulated liquidity in ways that closely mirror real attacks on the Ethereum and BNB Chain blockchains. The paper also tested whether current models could find vulnerabilities that had not yet been exploited. GPT-5 and Sonnet 4.5 scanned 2,849 recently implemented BNB Chain contracts that showed no signs of prior compromise. Both models revealed two zero-day errors worth $3,694 in simulated profit. One stemmed from a missing display modifier in a public function that allowed the agent to inflate its token balance. Another allowed a caller to redirect fee withdrawals by specifying an arbitrary recipient address. In both cases, the agents generated executable scripts that converted the error into profit. Although the dollar amounts were small, the discovery is significant because it shows that profitable autonomous exploitation is technically possible. — Sam Reynolds Read more.
ETHEREUM DEVELOPERS PUSH ZK PROTOCOL FOR PRIVACY: Ethereum developers are refining a zero-knowledge protocol designed to bring stronger privacy guarantees to on-chain interactions, starting with a “Secret Santa”-style matching system that could evolve into a broader toolset for private coordination. Solidity engineer Artem Chystiakov resumed the research on Monday in a post on an Ethereum community forum, pointing to work he first published in January on arXiv. The idea aims to recreate the anonymous gift exchange game on Ethereum, where participants are randomly matched without anyone knowing who is sending to whom. However, doing so on a transparent blockchain requires solving several long-standing issues around randomness, privacy, and Sybil resistance. Chystiakov said the core issues are straightforward: “Everything on Ethereum is visible to everyone,” blockchains don’t provide true randomness, and the system must prevent users from registering multiple times or awarding gifts to themselves. The proposed protocol uses zero-knowledge proofs to verify sender-receiver relationships without revealing identities, and a transaction relay to submit moves so that individual wallets cannot be linked to actions. In the proof-of-concept, participants register their Ethereum addresses in a smart contract and commit to a unique digital signature that blocks duplicate entries. Each participant then sends a random number to a shared list through the relay. Because the relay broadcasts the transactions, no one can see which address contributed which number. Recipients encrypt their delivery details using these shared numbers, ensuring that only their assigned counterparty can decrypt them. — Shaurya Malwa Read more.
BITNOMIAL ROLLS OUT SPOT TRADING IN THE US: Bitnomial, a Chicago-based derivatives exchange, is preparing to roll out the first spot cryptocurrency trading platform overseen by the US Commodity Futures Trading Commission (CFTC). The Chicago-based derivatives exchange’s self-certified rules went into effect last week, authorizing it to list both leveraged and non-leveraged spot crypto products. The approval opens the door for clients to buy, sell and finance digital assets directly on a federally regulated commodity exchange – a first in the US market.Caroline Pham, the acting head of the CFTC, said in November that it was in talks with regulated exchanges about the potential launch of spot crypto products. Bitnomial’s approval comes as the CFTC accelerates its efforts to bring retail-facing crypto markets under federal commodity oversight. Pham has argued that the agency already has sufficient authority to oversee spot crypto-commodities. The CFTC and the Securities and Exchange Commission recently revealed that nothing in current law prevents exchanges registered with either regulator from listing certain crypto-commodity products, including those with leverage, as long as they coordinate with agency staff. The approval could pave the way for other exchanges that have Designated Contract Market (DCM) status, including Coinbase and prediction marketplaces such as Kalshi and Polymarket. – Oliver Knight Read more.
In other news
- Kalshi, a US-based prediction marketplace, has closed its $1 billion funding round, pushing its valuation to around $11 billion, according to a press release. The latest round was led by Paradigm, with participation from veteran venture capital firms including Sequoia Capital and CapitalG, Alphabet’s growth equity arm. News of the increase broke last month when TechCrunch reported a $1 billion increase. dollar. Kalshi, which offers binary event contracts that allow users to trade the outcomes of future real-world events such as political races and legislation, overtook rival Polymarket in Q3, adding $4.47 billion in trading volume compared to Polymarket’s total of $3.5 billion. — Oliver Knight Read more.
- Antithesis, a Northern Virginia startup pitching itself as infrastructure for never-down software, raised a $105 million Series A led by Jane Street, a bet that stress testing distributed systems means as much to blockchains as it does to high-speed trading. The company’s platform uses deterministic simulation testing and runs production-like simulations at scale to show the kinds of edge cases that can be blown up in live networks, Antithesis said in a press release. When a bug hits, Antithesis said it can replay the bug exactly, helping engineers isolate problems without the usual can’t-reproduce limbo, a well-known pain point for crypto protocols where small errors can spill over into chain instability. — Will Canny Read more.
Legislation and policy
- The UK now formally recognizes cryptocurrency as property after passing a new law this week. The Property (Digital Assets etc) Act received Royal Assent, the final step in a bill becoming law after being passed by Parliament. The law, approved by King Charles on Tuesday, was designed to modernize property law to account for digital assets. In the past, property fell into one of two categories: things in possession, such as physical objects, and things in action, such as a debt. The law establishes a third category that includes digital assets such as cryptocurrencies and non-fungible tokens (NFTs). Crypto industry associations welcomed the law, hailing it as an important step in the legal recognition of digital assets, thus instilling greater confidence in users.— Jamie Crawley Read more.
- President Karol Nawrocki of Poland has refused to sign a bill that he believed would have imposed overly strict regulations on the cryptocurrency market. The president vetoed the provisions of the bill on the grounds that they “pose a real threat to the freedom of Poles, their property and the stability of the state,” according to an update on his website. The Cryptoasset Market Act was Poland’s legislation to bring it into line with the European Union’s (EU) Markets in Crypto-Assets (MiCA) regulation, which is the bloc’s framework for establishing a common rulebook for overseeing the crypto industry. President Narwocki was concerned that the law would allow the government to disable crypto companies’ websites “with a single click” and that the domain blocking regulation lacked transparency and was open to abuse. — Jamie Crawley Read more.
Calendar
- 11-13 Dec: Solana Breakpoint, Abu Dhabi
- 10.-12. February 2026: Consensus, Hong Kong
- 17.-21. February 2026: EthDenver, Denver
- March 30-Apr. 2, 2026: EthCC, Cannes
- 15-16 Apr. 2026: Paris Blockchain Week, Paris
- 5.-7. May 2026: Consensus, Miami
