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:
- Stripe-backed blockchain tempo starts Testnet; Kalshi, Mastercard and UBS added as partners
- ZKsync Lite to shut down in 2026 as Matter Labs moves forward
- Blockstream connects Lightning and Liquid for faster private Bitcoin payments
- Axelar unveils AgentFlux to integrate AI agents on-chain, without risks for the cloud
Network News
STRIPE’S TEMPO TESTNET IS LIVE: Tempo, a payments-focused blockchain backed by Stripe and crypto investment firm Paradigm, has launched its public testnet, a key step in its efforts to make stablecoin payments for mainstream use. Tempo also revealed a list of additions to the network’s group of partners, including buy-now company Klarna, forecasting marketplace Kalshi, payments giant Mastercard and Swiss global bank UBS. They join a group of previous design partners such as Deutsche Bank, Visa, Shopify, OpenAI and Nubank. Initially introduced in September, Tempo is designed to handle large financial transactions with low fees, instant finality, and native stablecoin support. Now that the testnet is live, developers and partner companies can begin experimenting with real-world on-chain payments. The move is part of the latest trend of creating blockchains for stable payments as the adoption of digital dollars skyrockets globally. Currently a $300 billion asset class, stablecoins are expected to become an integral part of cross-border payment pathways, with business-to-business (B2B), peer-to-peer (P2P) and card payments fueling growth, according to a recent report from Keyrock and Bitso. Tempo aims to solve common problems in blockchain-based finance, such as network congestion and volatile transaction fees. The network charges about a tenth of a cent per transaction, payable in US dollar-denominated stablecoins and eliminating the need for a volatile gas token. — Krisztian Sandor Learn more.
ZKSYNC LITE AT SUNSET IN 2026: Matter Labs plans to deprecate ZKsync Lite, the first iteration of its layer 2 Ethereum network, the team said in a post on X over the weekend. The company presented this move, which took place in early 2026, as a planned sunset for an early proof of concept that helped validate its zero-knowledge rollup design choices before fielding new systems. ZKsync Lite, which debuted in 2020, was designed for basic token transfers and took a back seat after developers released ZKsync Era in March 2023, a more advanced zkEVM rollup, which now anchors the project’s broader ZK Stack roadmap. The Lite network will continue to operate for the time being, with funds remaining secure and withdrawals to the Ethereum mainnet still available, the team said. A detailed migration plan and closure schedule will be published next year. — Margaux Nijkerk Learn more.
BLOCKSTREAM APP PRESENTS LIGHTNING ATOMIC EXCHANGES: Blockstream has rolled out an update to its mobile app that allows users to switch between Bitcoin’s Lightning and Liquid networks, aiming to lower the barrier of entry for private, fast Bitcoin payments. A new version of the Blockstream Green app introduces support for trustless atomic swaps between Lightning and Liquid. The change allows users to pay Lightning bills directly from their Liquid Bitcoin (LBTC) balances, avoiding the need to manage Lightning channels or maintain incoming liquidity, a process that can be technically difficult for many. Lightning is designed for instant, low-cost Bitcoin payments. Liquid, on the other hand, is a sidechain that offers confidential transactions and easier management of unspent Bitcoin outputs (UTXO). By connecting the two networks via atomic swaps, Blockstream attempts to give users the benefits of both without requiring extensive technical involvement. The exchange process occurs autonomously and relies on cryptographic hash locks, ensuring that both sides of the transaction are complete or neither is. In case of failure, the funds automatically return to the original wallet. — Helene Braun Learn more.
AXELAR UNVEILS NEW PRIVACY AI FRAMEWORK: Axelar unveiled AgentFlux, an open source framework designed to run AI agents locally while keeping private keys, trading strategies and client data out of the cloud – a pitch aimed squarely at institutions exploring on-chain finance and wary of privacy risks. Developed by Interop Labs, the team behind the Axelar Network, AgentFlux allows financial firms to deploy “agentic” automation without sending sensitive information to external infrastructure, the company announced. The framework addresses one of the biggest frictions in AI-driven crypto operations: tool invocation. Today, most agents rely on cloud-based models to decide which blockchain tools to use and how to structure transactions, which can unintentionally expose the information that institutions seek to protect. AgentFlux divides these tasks into two smaller, specialized models: one for choosing the right tool and another for generating the arguments to execute. According to the team behind Axelar, this configuration improves the accuracy of tool calls by 46% in benchmark tests, bringing local models closer to the performance of larger cloud systems. – Margaux Nijkerk Learn more.
In Other news
- Superstate, a blockchain-focused fintech company, has rolled out a new platform that allows public companies registered with the U.S. Securities and Exchange Commission (SEC) to issue shares directly on-chain to investors on Ethereum. Called the Direct Issuance Program, Superstate’s new initiative allows companies to raise capital by selling newly issued tokenized shares in exchange for stablecoins. Investors receive tokenized shares immediately and the company’s shareholder records are updated in real time through Superstate’s SEC-registered transfer agent infrastructure. The first transmitters are expected to go into service next year, the company said. The move comes as tokenization gains traction with financial institutions and other businesses exploring blockchain rails for efficiencies. In an interview last week, SEC Chairman Paul Atkins said tokenization could “reshape the financial system” in the coming years, highlighting how regulators are opening the door to blockchain as part of the next generation of market infrastructure. — Krisztian Sandor Learn more.
- BitMine Immersion Technologies (BMNR), the Ethereum-focused digital asset treasury company, acquired 138,452 ether last week, accelerating an accumulation strategy that brought its total holdings to 3.86 million tokens, the company reported. At current ETH prices, last week’s acquisition is worth approximately $435 million. This is a 156% increase from four weeks ago, when it added around 54,000 ETH, the company pointed out, and it’s also higher than the previous two weeks of 97,000 and 70,000 tokens. The company also increased its liquidity to $1 billion, up from $882 million the previous week. Including a small bitcoin stash and a stake in Eightco Holdings (ORBS), the company’s total crypto and currency assets stand at $13.2 billion. The latest purchase increases BitMine’s share of the circulating supply of the second-largest cryptocurrency to over 3.2%, solidifying its position as the largest known ETH hoard. — Krisztian Sandor Learn more.
Regulation and policy
- A Republican US senator at the center of discussions on the crypto market structure bill that is the industry’s top policy priority, Senator Cynthia Lummis, said the White House had resisted ethics language she clashed with Democrats. That leaves the Wyoming lawmaker as a middleman trying to satisfy fellow Democrats in bipartisan talks while convincing the White House to come on board, she said at the Blockchain Association policy summit in Washington. She nevertheless thinks that the negotiators should unveil their working plan by the end of the week and officially annotate it next week. Lummis said she and Democratic Sen. Ruben Gallego proposed language on ethics. While she hasn’t been explicit about the details, one of the sticking points for Democrats has been their demand that top government officials should not be allowed to profit from the industry over which they hold political authority — primarily aimed at President Donald Trump and his family’s crypto businesses. — Jesse Hamilton Learn more.
- The second-largest teachers union in the United States has urged the Senate to reconsider a crypto bill that it says puts the pensions of 1.8 million members at risk, while doing little to combat fraud and corruption in the digital assets sector. In a Dec. 8 letter obtained by CNBC, Randi Weingarten, president of the American Federation of Teachers (AFT), addressed the U.S. Senate Banking Committee about the Responsible Financial Innovation Act, saying, “it poses profound risks to working families’ retirements and the overall stability of the economy.” The proposal, which builds on a measure passed by the House earlier this year, is co-sponsored by crypto allies Sen. Cynthia Lummis and Sen. Bernie Moreno, as well as Senate Banking Committee Chairman Tim Scott. While the bill establishes a framework for oversight of digital assets, it also raises new questions about how tokenized securities, instruments that are not strictly cryptocurrencies, would be treated by regulators. “The crypto legislation we have seen considered by committee over the past few months deeply concerns us,” Weingarten wrote. “This is as irresponsible as it is reckless. We believe that if passed, this bill could potentially lay the groundwork for the next financial crisis… Beyond threatening the retirement security of working families, the legislation considered by the committee does little to curb the illegal activities, fraud, and corruption that continue to be prevalent in anonymous crypto markets,” he wrote. — Olivier Acuna 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
