Welcome to The Protocol, CoinDesk’s weekly roundup of the most important stories in cryptocurrency technology development. My name is Margaux Nijkerk, journalist at CoinDesk.
In this issue:
- Ethereum Developer Preparation for Fusaka, Second Upgrade of 2025
- Anthropogenic Research Shows AI Agents Getting Closer to True DeFi Attack Capability
- Ethereum Developers Push ZK ‘Secret Santa’ System Towards Deployment
- Bitnomial Prepares to Launch First CFTC-Regulated Crypto Spot Market
Network News
FUSAKA WILL BE LIVE ON ETHEREUM: Ethereum developers are preparing for the second network upgrade of 2025 which will go live later today. Fusaka – a mix of the names Fulu + Osaka – consists of two upgrades performed simultaneously on the consensus and execution layers of Ethereum. The goal of the upgrade is to enable Ethereum to handle the large transaction throughput of layer 2 chains that use blockchain as a base layer. Fusaka includes 12 code changes, also known as “Ethereum Improvement Proposals” (EIPs) that will make the Layer 2 experience faster and cheaper. The most significant change to Fusaka is known as PeerDAS, which allows validators to verify only segments of data instead of entire “blobs”, easing the bandwidth demand and reducing the expense of validators and Layer 2 networks. Layer 2s currently submit thousands of transactions to Ethereum via “blobs”, where validators currently on the Ethereum blockchain must download all transaction data from the blob to verify its correctness, creating bottlenecks. With this improvement, these validators will only need to verify a fraction of a blob, thereby speeding up the process and reducing the transaction fees that accompany it. — Margaux Nijkerk Learn more.
ANTHROPIC STUDY ON DEFI AI AGENTS: AI agents are finding attack vectors in smart contracts that can already be weaponized by bad actors, according to a new study published by the Anthropic Fellows program. A study from the ML Alignment & Theory Scholars Program (MATS) and the Anthropic Fellows Program tested frontier models against the SCONE-bench, a dataset of 405 mined contracts. GPT-5, Claude Opus 4.5, and Sonnet 4.5 collectively produced $4.6 million in simulated exploits on hacked contracts after their knowledge was cut, providing a lower bound on what this generation of AI could have stolen in the wild. The team found that boundary models didn’t just identify bugs. They were able to synthesize complete exploit scripts, sequence transactions, and drain simulated liquidity in a way that closely mirrors real-world attacks on the Ethereum and BNB Chain blockchains. The paper also tested whether current models could detect vulnerabilities that had not yet been exploited. GPT-5 and Sonnet 4.5 analyzed 2,849 recently deployed BNB chain contracts that showed no signs of prior compromise. Both models discovered two zero-day flaws worth $3,694 in simulated profit. One of them came from a missing view modifier in a public function that allowed the agent to inflate their token balance. Another allowed a caller to redirect fee withdrawals by providing an arbitrary payee address. In both cases, agents generated executable scripts that turned the vulnerability into profit. Although the dollar amounts are small, the discovery is important because it shows that profitable self-sustaining operation is technically feasible. — Sam Reynolds Learn more.
ETHEREUM DEVELOPERS PUSH ZK PROTOCOL FOR PRIVACY: Ethereum developers are tweaking 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 toolkit for private coordination. Solidity engineer Artem Chystiakov resurfaced in an Ethereum community forum post on Monday, highlighting 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. Doing this on a transparent blockchain, however, requires resolving several long-standing issues regarding randomness, privacy, and Sybil resistance. Chystiakov said the fundamental problems are simple: “Everything on Ethereum is visible to everyone,” blockchains don’t provide true randomness, and the system needs to prevent users from registering multiple times or awarding themselves gifts. The proposed protocol uses zero-knowledge proofs to verify sender-receiver relationships without revealing identity, and a transaction relay to submit movements so that individual wallets cannot be linked to stocks. In the proof of concept, participants register their Ethereum addresses in a smart contract and commit to using a unique digital signature, which blocks duplicate entries. Each participant then submits a random number to a list shared via the relay. Since the relay broadcasts transactions, no one can know which address provided which number. Recipients encrypt their delivery details using these shared numbers, ensuring that only their assigned peer can decrypt them. — Shaurya Malwa Learn more.
BITNOMIAL DEPLOYS SPOT TRADING IN THE UNITED STATES: Bitnomial, a Chicago-based derivatives exchange, is preparing to roll out the first cryptocurrency spot trading platform overseen by the U.S. Commodity Futures Trading Commission (CFTC). The Chicago-based derivatives exchange’s self-certified rules took effect last week, allowing it to list both leveraged and unleveraged spot crypto products. The approval opens the door for customers to buy, sell and finance digital assets directly on a federally regulated commodities exchange – a first for the US market. Caroline Pham, acting director of the CFTC, said in November that she was in talks with regulated exchanges about potentially launching spot crypto products. Bitnomial’s approval comes as the CFTC accelerates its efforts to bring retail crypto markets under federal commodity oversight. Pham argued that the agency already has sufficient authority to oversee crypto spot products. The CFTC and Securities and Exchange Commission recently revealed that nothing in current law prevents exchanges registered with either regulator from listing certain cryptocurrency products, including those with leverage, as long as they coordinate with agency staff. The approval could pave the way for other exchanges holding Designated Contract Market (DCM) status, including Coinbase and prediction market platforms like Kalshi and Polymarket. – Olivier Chevalier Learn more.
In Other news
- Kalshi, a US-based prediction marketplace, 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 seasoned venture capital firms including Sequoia Capital and CapitalG, the growth equity arm of Alphabet. News of the raise broke last month, when TechCrunch reported a billion-dollar raise. Kalshi, which offers binary event contracts that allow users to trade on the outcomes of future real-world events such as political elections and legislation, surpassed rival Polymarket in the third quarter, accumulating $4.47 billion in trading volume, compared to Polymarket’s $3.5 billion, according to TokenTerminal data. — Olivier Chevalier Learn more.
- Antithesis, a Northern Virginia startup billing itself as infrastructure for seamless software, raised a $105 million Series A round led by Jane Street, a bet that stress testing of distributed systems is as important to blockchains as it is to high-speed trading. The company’s platform uses deterministic simulation testing, running production-style simulations at scale to surface the types of edge cases that can explode in live networks, Antithesis said in a press release. When a failure occurs, Antithesis said it can replay the bug exactly, helping engineers isolate problems without the usual limbo being able to be reproduced, a familiar problem for crypto protocols where small glitches can spiral into chain instability. — Will Canny Learn more.
Regulation and policy
- The UK now officially recognizes cryptocurrency as property following the passing of a new law this week. The Property (Digital Assets etc.) Act has received Royal Assent, the final stage of an Act which becomes law after being passed by Parliament. The law, approved on Tuesday by King Charles, aimed to modernize property law to take into account digital assets. Previously, property fell into one of two categories: things in possession, like physical objects, and things in action, like debt. The law establishes a third category which includes digital assets such as cryptocurrencies and non-fungible tokens (NFTs). Crypto industry associations have welcomed the law, hailing it as an important step in the legal recognition of digital assets and thus instilling greater trust among users. Jamie Crawley Learn more.
- Polish President Karol Nawrocki has refused to sign a bill that he said would have imposed too strict regulations on the cryptocurrency market. The president vetoed certain 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 posted on his website. The Crypto-Asset Market Act is Poland’s legislation aimed at bringing it into line with the European Union’s (EU) Crypto-Asset Markets Regulation (MiCA), which is the bloc’s framework for establishing a single regulation for oversight of the crypto industry. Chairman Narwocki was concerned that the law would allow the government to disable crypto company websites “with a single click”, and that the domain blocking regulations lacked transparency and were open to abuse. — Jamie Crawley Learn more.
Calendar
- December 11-13: Solana Breakpoint, Abu Dhabi
- February 10-12, 2026: Consensus, Hong Kong
- February 17-21, 2026: EthDenver, Denver
- March 30-April. 2, 2026: EthCC, Cannes
- April 15-16, 2026: Paris Blockchain Week, Paris
- May 5-7, 2026: Consensus, Miami
