Cryptocurrency
Security Matters: How’s Zircuit Planning to Mitigate Hacks in Web3 (Interview)
In the rapidly evolving landscape of Layer 2 networks, Zircuit aims to create a new approach to security and scalability. Co-founded by Martin Derka, a seasoned professional with a PhD in algorithms and complexity, sat with us for an interview during EthCC. Derka shared insights into his journey, the founding of Zircuit including the meaning of the whooping $3 billion staked ETH to the project, and above all – the expected launch date for Zircuit’s mainnet.
Multiple well-known investors have taken part in the protocol’s mainnet funding round, including Binance Labs, Nomad Capital, AMBER, and much more.
From Soccer to Crypto
Martin Derka’s journey into the world of crypto began after an unexpected turn in his career. “I have a PhD in algorithms and complexity,” Derka explained, detailing his academic background. “For many years, I was developing software for various companies while still a student.” His transition from academia to entrepreneurship was marked by a stint as CTO of a startup focused on car advertisement photography, which he co-founded in 2013. However, after internal disputes led to his departure in 2017, Derka sought new opportunities, eventually finding his way to the crypto sphere.
“After leaving the startup, I went to clear my head in Argentina and Chile,” Derka recounted. “Upon returning to Canada, I connected with Leo (Leonardo Passos, Ph.D), a former soccer buddy and one of the veteran employees of the crypto auditing giant Quantstamp.” This serendipitous meeting led to Derka joining Quantstamp as one of its earliest hires in 2018, where he delved deep into crypto security.
The Birth of Zircuit
Derka’s tenure at Quantstamp laid the groundwork for Zircuit. “At Quantstamp, we knew rollups would be key to scaling Ethereum,” Derka noted. This realization sparked intensive research into rollups, eventually leading to the inception of Zircuit. “We saw an amazing opportunity to enhance blockchain security proactively,” Derka said. “This is how the feature that now distinguishes Zircuit—sequencer level security—began.”
‘Many Uses of AI Seem Fabricated’
Zircuit’s most striking feature is its AI-driven security mechanism, sequencer-level security, a concept Derka elaborated on extensively.
“Our sequencer evaluates each transaction for malicious intent before inclusion in the block,” Derka explained. “We use AI to simulate transactions and assess their impact, determining if they’re hacks.” This proactive approach allows Zircuit to quarantine potentially harmful transactions, enhancing the overall security of the blockchain.
The sequencer is a privileged node designed to collect user transactions and order them based on predefined rules. In essence, once the transaction arrives at the sequencer, it is then routed to the “Malice Detection” module – something that the team refers to as the “oracle.” It’s designed to determine whether a transaction is benign or it can potentially be malicious. Those that are benign are queued for block inclusion, while those that are flagged are diverted to another module called “Quarantine-Release Criterion” module. It acts as a holding area for the time during which these transactions undergo a rigorous verification process.
The following can be seen in the overview presented by Zircuit:
When asked about the prevalent AI hype, Derka acknowledged the phenomenon but remained pragmatic. “There is a huge level of hype,” he admitted. “Many uses of AI seem fabricated, and AI can be highly inaccurate. But failure is part of innovation. If we don’t try applying AI in all possible areas, we might miss its true potential.”
L2’s: Do We Really Need That Many
Zircuit positions itself as a Layer 2 (L2) solution with a strong emphasis on security, amidst a crowded field of competitors. Derka was clear about the inevitability of multiple L2 solutions. “If we didn’t build another L2, someone else would,” he said. “The better question is why users should choose Zircuit over others, and that comes down to our unique security proposition.”
Despite the competitive market, Derka does not foresee a winner-takes-all scenario.
“Technologists love to build and compete,” he asserted. “There will always be new players challenging the status quo.”
Zircuit: When Mainnet Launch
Zircuit’s immediate focus is on launching its Mainnet, with significant milestones already achieved. “We launched our Testnet last year, which has been very stable,” Derka shared. “We are now in the process of deploying Mainnet, integrating partners, and ensuring security measures are in place.”
The Mainnet Phase 1 launch is scheduled for Augustmid-July in a gated mode, with a broader public launch expected soon afterin mid-August. “We are also working on optimizing zero-knowledge proof generation to reduce operating costs and improve efficiency,” Derka added. This technical enhancement is crucial for the blockchain’s functionality and user experience.
Over $3 Billion in Staked ETH
Derka is mindful of the challenges in sustaining Zircuit’s initial success: With over $3 billion in restaked Ether (at its peak) signaling strong interest, the true test will be retaining these funds post-launch. “It’s the best signal we currently have, but it’s not a guarantee of success,” Derka cautioned. “Our task is to support projects deploying on Zircuit, ensuring they attract and retain capital.”
Zircuit aims to create a robust ecosystem encompassing all essential blockchain functions. “We want a fully functional ecosystem comparable to other chains, with lending protocols, oracles, DEXs, and stablecoins,” Derka explained. The security aspect remains a key differentiator, offering users and developers a more secure environment for their projects.
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TL;DR
- Due to recent growth, Solana and its projects have gained popularity.
- Ecosystem meme coins like Dogewifhat (WIF) and Bonk Inu (BONK) have seen significant declines after a substantial surge earlier this year.
The Unsurprising Leader
Solana and numerous projects built on it have brimming in popularity in 2024. Some factors that could have contributed to this might be SOL’s bull run at the end of 2023 and the beginning of 2024, the growing community, and innovations in the ecosystem.
The crypto analytics platform Santiment recently outlined the top 10 Solana-based projects in terms of development activity in the past 30 days.
Somewhat expected, the first spot belongs to Solana itself, which collected a score of 186.33. It is worth noting that the protocol’s native token – SOL – has been experiencing a downfall since the end of July, plunging by approximately 30% and currently trading at around $127 (per Coingecko’s data).
Wormhole holds the second position with a ratio of 90.5. It acts as a bridge connecting various blockchain networks, such as Solana, Ethereum, BNB Smart Chain, and others. It enables users to transfer digital assets and data across these blockchains without a centralized intermediary.
Pyth Network is third, with a score of 68. It operates as a decentralized oracle network where multiple providers contribute to a collective data feed.
JITO and Neon round up the top 5 list. The other Solana-based projects down the line include Drift, Orca, Helium IOT, Helium Mobile, and Metaplex.
The Missing Ones
It is interesting to note that meme coins, which are part of Solana’s ecosystem, did not make the list. Such tokens, including dogwifhat (WIF), Bonk Inu (BONK), and many more, were among the top-trending topics in the crypto space at the start of the year due to their skyrocketing prices.
However, their progress has stalled as of late. WIF – the biggest Solana-based meme coin in terms of market capitalization – currently trades at around $1.52, representing more than a 70% decline from the ATH registered in April.
BONK (the second-largest) is worth approximately $0.00001666 as of the moment, or 60% less than the peak in May.
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Bitcoin’s nosedives continued in the past 24 hours as the asset slumped from an intraday high of $57,000 to under $53,000 within hours.
The altcoins are also in the red, and the total crypto market cap has dumped to $2 trillion for the first time in over a month.
BTC’s Troubles Keep Coming
The primary cryptocurrency lost the coveted $60,000 level last week, and the true downfall followed suit. Aside from a brief attempt to overcome that line on September 3, the bears have been predominantly in control, which culminated yesterday.
Before that, it was rejected a couple of times and marked lower daily highs. A relief rally came on Friday when the US released the job report for August, which showed that there was a slight decline in the unemployment rates.
BTC reacted quickly with a price increase from $55,500 to $57,000. However, that turned out to be a false breakout, and the cryptocurrency headed south immediately after. In a matter of minutes, it plummeted to $54,000 before the bears initiated another leg down that pushed it to a monthly low of $52,700 (on Bitstamp).
Despite recovering to just over $54,000 now, it is still 4% down on the day and more than 8% in the past seven days. Its market cap has plunged to $1.070 trillion, while its dominance over the alts is down to 53.5%.
Alts in Red Yet Again
The bearish scenario repeated once again, and the altcoins are back in red. Ethereum is among the leaders in this adverse trend, having lost over 4% of value. As a result, it now struggles at $2,250. BNB is down by 3%, XRP by 3%, and SOL by 2.5%.
DOGE has dumped the most from the larger-cap alts. The OG meme coin has seen 5% of its value evaporate over the past day and is below $0.1.
Further losses come from the likes of TON, BCH, SHIB, LTC, OKB, XMR, and many others.
The total crypto market cap has declined by another $50 billion and is down to $2 trillion on CG.
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Ethereum co-founder Vitalik Buterin has pledged to donate all Layer 2 (L2) tokens he holds to support public goods within the Ethereum ecosystem or broader charitable causes.
This announcement comes a few days after accusations that he had sold millions in Ether (ETH) for personal gain.
Vitalik Buterin Denies Profit Motive
Buterin was quick to respond to the allegations, emphasizing that he has not sold any ETH for personal profit since 2018. Instead, he clarified that any proceeds from his ETH sales have been directed toward projects that contribute to the Ethereum ecosystem or other charitable initiatives.
In a September 5 update, he expanded on his stance, pledging to donate all L2 tokens he holds, including not-yet-liquid assets, to support similar causes.
He wrote, “All proceeds will be donated, again either to support public goods within the Ethereum ecosystem or broader charity (e.g., biomedical R&D). I also do not intend to invest into L2s or other token projects in the foreseeable future.”
He explained that his aim in funding projects is to support initiatives he believes are important, particularly in situations where other parts of the ecosystem may not fully recognize their value.
The Allegations
On August 30, an X user accused him of selling over $2 million worth of ETH shortly after posting a positive update about Ethereum’s future.
Later on, Lookonchain also revealed that Vitalik had transferred 800 ETH, worth around $2 million, to a multi-signature wallet. Shortly after, the wallet swapped 190 ETH for 477,000 USDC.
Further analysis from Lookonchain indicated that on August 9, he had moved an additional 3,000 ETH, valued at over $8 million, to the same multi-sig wallet.
These transfers fueled speculation that the Ethereum co-founder was liquidating his Ether holdings to realize profits.
Buterin had previously disclosed that his entire Ether holdings came from the Ethereum pre-mining period, which allocated 11.9 million ETH (about 10% of the total supply) to early contributors. As one of them, he received 700,000 ETH for his role in the network’s creation.
According to blockchain tracker Arkham Intelligence, his current holdings amount to approximately 240,000 ETH. This is a reduction of around 460,000 ETH from his initial stash.
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