opBNB Explained: What is opBNB – The New Layer-2 By Binance And Why Does It Matter?

https://blockmanity.com/guide/wiki/opbnb-explained-what-is-opbnb-the-new-layer-2-by-binance-and-why-does-it-matter/

OpBNB is a new layer-2 solution for the BNB Chain (BSC chain) based on Optimism Rollups. It was announced on June 19, to solve the growing network congestion problem on the main BNB Chain .

What is opBNB?

opBNB is a solution for the growing congestion issues on the BNB Chain. It is an Ethereum Virtual Machine (EVM) compatible layer-2 solution based on Optimism Rollups Stack and optimized to enhance the scalability on the BNB Chain while maintaining security and preserving low transaction fees.

Optimism-based Rollups had been proposed to go live on the BNB Chain as a way to reduce the computational load on the chain via the execution of transactions off-chain and only posting the transaction data on-chain as call data. This solution would drastically improve the scalability of the network by bundling multiple transactions together before their submission to the main chain, which reduces the memory space used.

The introduction of opBNB to BNB Chain will bring new features, thus making the chain more efficient. These features and new abilities include making data access easier, improving the cache system of the network, and adjusting the submission process algorithm to allow simultaneous operations (also known as batcher).

Adjusting the submission process algorithm to support simultaneous operations allows OpBNB to push the gas limit to 100M, higher than Optimism’s supported 30M. As such, OpBNB will be able to handle over 4000 transactions per second while maintaining an average transaction cost of below $0.005. This integration will improve the existing 2000 transactions per second, making the network double as fast.

 

What are Optimistic rollups?

An optimistic rollup is an layer-2 scaling solution designed for Ethereum ( or EVM ). It works by moving computation, state storage and  execute transactions outside Ethereum but post the data to the mainnet as calldata.

Optimistic rollups also use compression techniques to reduce the data size posted on the layer-1. They are named “optimistic” because they assume off-chain transactions are valid and thus do not need to publish proofs of validity for transaction batches posted on-chain. As such, they are set apart from zero knowledge rollups that publish cryptographic proofs of validity for off-chain transactions. They instead have a time window where anyone can challenge the results of a rollup transaction via computing a fraud-proof. If the fraud-proof succeeds, the roll-up protocol re-executes the transacts and updates the rollup’s state accordingly.

If the rollup batch stays unchallenged after challenge time ellipses, it is deemed valid and expected. Others are allowed to continue building on an unconfirmed rollup block but with a caveat: transaction results will be reversed if based on an incorrectly executed transaction that has been published previously.

How will optimistic rollups interact with BNB Chain?

Transaction and aggregation

Users will submit transactions to “operators”, nodes responsible for processing transactions. They are also known as validators or aggregators. They aggregate transactions, compress underlying data and publish it on opBNB.

Unlike BNB Chain, where anyone can be a validator, optimistic rollup validators for opBNB will have to provide a bond before producing a block, similar to what is in a proof of stake system. In case of bad acting, the bond can be slashed to prevent dishonest acts from validators.

Submitting roll-up blocks on opBNB

The operator of an optimistic rollup bundle off-chain transactions into a batch and then send it to opBNB for notarization. This process involves compression of the data and publishing it as calldata.

Calldata is a non-modifiable, non-persistent area in a smart contract that behaves like a memory. Calldata sends compressed transaction data to the on-chain contract, where the rollup operator adds a new batch by calling the required function in the contract and passing compressed data as function arguments. This process reduces user fees as most of the fees spent come from storing data on-chain.

State commitments

The optimistic rollup’s state (accounts, balances, contract code, etc.) is organized as a Merkle tree called a “state tree”. The root of this Merkle tree (state route), which references the rollup’s latest state, is then hashed and stored in the contract. Every state transition on the chain produces a new roll-up state that an operator commits to by computing a new state root.

When posting batches, the operator must submit old and new state roots. If they match, the new state root is used. The operator must also commit a Merkle root for the transaction batch to allow anyone to prove the inclusion of a transaction in the batch by presenting Merkle proof.

Fraud Proving

Optimistic rollups allow anyone to publish blocks without providing proof of validity. However, ensuring the chains are safe allows for a specific time window where anyone can dispute a state transaction (assertion). If someone disputes an assertion, the roll-up protocol initiates the fraud-proof computation, an interactive process requiring someone to post an assertion before another person challenges it.

Single-round interactive fraud-proof schemes replay disputed transactions on L1 to detect invalid assertions. The roll-up protocol then emulates the re-execution of the disputed transaction on opBNB via a verifier contract with the computed state root showing who won the challenge. The operator is penalized by slashing their bond if the challenger is correct about mistakes.

Multi-round interactive proving

Multi-round interactive proving involves a back-and-forth protocol between the asserter and the challenger overseen by an L1 verifier contract that ultimately decides who lies. After an L2 node challenges an assertion, the asserter divides the disputed assertion into two halves(bisection protocol). Each assertion will contain as many steps as the other.

The challenger then chooses the assertion that they want to challenge. It continues till both parties are disputing an assertion about a single step of execution. This is when L1 contracts resolve the dispute by evaluating the instruction and its result to catch the fraudulent party.

The asserter must then provide a “one-step proof” verifying the validity of the disputed single-step computation. If the asserter fails to provide the on-step proof or the L1 verifier contract deems the proof invalid, they lose the challenge.

Features of opBNB

Enhanced scalability

opBNB supports over 4000 transactions per second, double the available transaction speed on BNB Chain. This capability gives it a boost clear of BNB Chain current abilities making it ideal for applications that have large daily active users.

EVM compatibility

opBNB presents an accessible platform for developers familiar with Ethereum’s tooling and dApps as it is Ethereum Virtual Machine compatible. That means it will be easier for developers seeking to migrate or introduce extensions of their Ethereum applications to the BNB Chain. That also creates a chance for the developers to take advantage of both Ethereum and BNB Chain ecosystems.

Improved security and trust

When it comes to blockchain technology, security and trust are very crucial. opBNB provides a fraud-proving scheme that can be pursued by anyone who notices discrepancies. As such, the transaction(s) in question will be redone, which adds a layer of trust in developers and users alike.

The improved transparency and verifiability of transactions on opBNB will also encourage a healthier and safer environment for building blockchain ecosystems.

Rich ecosystem integration

opBNB was built to make it a part of a broader ecosystem. It is optimized as an integration to the broader BNB Chain ecosystem to provide developers and projects the chance to interact with various other projects and tokens, including but not limited to ERC-20 and its derivative standards.

As such, opBNB has the potential to foster the growth of a diverse array of blockchain applications ranging from gaming dApps to social networks and Decentralized Finance.

Future-proof development

Blockchain technology is growing rapidly, necessitating long-lasting solutions to stay competitive. opBNB does just this. It comes with improved security, better efficiency, and compatibility with other projects, making it robust and flexible. As a result, developers can adapt to changes more easily, introduce new features and experiment with new ideas making it a solution that will push BNB Chain forward for many years.

Conclusion

Blockchain technology is a revolutionary innovation of our time. It has introduced easier and trustless data communication ways. As a result, it has found a place in sensitive industries like finance and data management. While all is said and done, some problems remain, like the scalability and affordability of networks.

Existing layer 1 networks that allow the building of applications face congestion issues arising from lacking scalability. BNB Chain is easily one such network working to evade the problem by introducing scaling solutions like opBNB. This solution will help the network remain resilient for a longer time.

However, nothing is promised regarding the future demands that the network may face. Therefore, do your research on opBNB and use it wisely. Keep watching Blockmanity for updates on the crypto and blockchain industries.

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Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity’s role is to inform the cryptocurrency and blockchain community about what’s going on in this space. Please do your own due diligence before making any investment. Blockmanity won’t be responsible for any loss of funds.

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Rumor: Fidelity to File For Bitcoin Spot ETF

https://blockmanity.com/news/rumor-fidelity-to-file-for-bitcoin-spot-etf/

According to rumors, Fidelity Investments have reportedly expressed interest in filing for a similar iShares Spot Bitcoin ETF days after BlackRock did. The company is also reportedly planning on submitting a bid to acquire Grayscale Investments.

Blackrock Creates A Domino Effect

Fidelity, the world’s third-largest asset management firm bragging a total of $4.2T assets under management, is planning on filing for a similar iShares bitcoin ETF as BlackRock did on June 15. It is interested in spreading its wingspan and even buying the largest digital asset management firm, Grayscale Investments.

The news of Fidelity following in the footsteps of BlackRock to join the crypto space did not come as unexpected. The crypto community had anticipated a similar move, given those top TradFi institutions like BlackRock, Fidelity, and Vanguard are known to have stiff competition. As such, it was expected that other competitors would follow BlackRock into the digital assets market sooner than later.

The story remains unconfirmed as Fidelity has not yet issued any public announcement or made a publicly known filing for the ETF. It all began with a tweet from Arch Public co-founder Andrew Parish who said that close sources gave him the scoop. It has gone on to be spread on Twitter by other famous influencers like Ash Crypto and Scott Melker.

In the tweet, Parish wrote:

“UPDATE: Fidelity Digital Assets and Fidelity are about to make a seismic move in crypto via both BTC and ETH. Sources expect Fidelity to either make a bid for Grayscale or quickly launch their own spot Bitcoin ETF. One or both are coming, soon. **Blackrock and Fidelity will own the crypto space in the US.”

If this news comes true, then a race into the crypto space via trading digital assets, offering digital assets products, and or launching original digital assets will be most probable. However, only time will tell how the turn of events will go.

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What are the chances of BlackRock Bitcoin ETF being approved?

https://blockmanity.com/news/feature/what-are-the-chances-of-blackrock-bitcoin-etf-being-approved/

BlackRock, the world’s largest investment company, has shaken the world by applying for a Bitcoin spot ETF with the US SEC. The $10T asset manager believes that the crypto industry is worthwhile; thus, it has decided to join in a move that has sparked controversy among the crypto community.

While the move looks bullish for Bitcoin, the crypto community wonders if it is good or bad; also, what are the chances for the SEC to approve the filing?

BlackRock files for a Bitcoin ETF

According to a Nasdaq Stock Exchange and the U.S. SEC filing, BlackRock seeks to issue a Bitcoin ETF with Coinbase Custody Trust Company as its Bitcoin holdings custodian. On the other hand, it wants the Bank of New York Mellon (BNY Mellon) to serve as its custodian for fiat reserves.

The asset manager applied with the U.S. SEC on June 15, 2023, to allow it to offer a Bitcoin spot exchange-traded fund. This asset will have an index that tracks the live value of Bitcoin, which will then update its prices every five minutes. The filing notes that the previously approved spot exchange-traded products in the commodities and currency markets stand as generally unregulated, and the SEC relied on the underlying futures market as the basis of approval.

As such, the trust claims that:

“The regulated market of significant size test does not require that the spot bitcoin market be regulated in order for the Commission to approve this proposal.”

SEC has turned down Bitcoin Spot ETFs before; can BlackRock prevail?

BlackRock Bitcoin ETF is not the first Bitcoin or crypto spot ETF application that has landed on the SEC’s desk. The regulator has previously turned down similar crypto ETFs citing that the market is unregulated and highly speculative, making them not a great fit for American ETF investors.

BlackRock has come to try its luck where similar companies like GrayScale failed before. It claims the crypto market does not need to be regulated for the SEC to approve their Bitcoin Spot ETF. But is that it? Grayscale first applied to convert its Bitcoin Trust GBTC into an ETF in 2021. Its ruling faced multiple delays, and the SEC ended up rejecting it on claims that the ETF would be tied too directly to Bitcoin, which is an unregulated and volatile asset.

Soon after, Grayscale filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit. This ongoing litigation is led by Grayscale’s senior legal strategist Donald B. Verrilli Jr., a former U.S. solicitor general, alongside a team of attorneys from Davis Polk & Wardwell law firm.

Regarding the action of the SEC, Verilli said:

“Failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.”

Now, BlackRock believes in a similar construct as Grayscale. It says that the SEC should be fair about accepting and passing such assets and is positive that theirs will prevail.

BlackRock’s filing says that its iShares Bitcoin Trust will be traded as Commodity-Based Trust Shares if the SEC approves. An excerpt from the filling reads:

“The Shares have been designed to remove the obstacles represented by the complexities and operational burdens involved in a direct investment in bitcoin.”

Not to forget, BlackRock has already applied for 575 ETFs before with only one getting rejected. As such, the odds tip heavily towards an approval but it’s up to the regulators to decide.

What to expect if BlackRock Bitcoin ETF gets approved

If BlackRock can prove that their Bitcoin ETF will bear lesser risks than direct investment into crypto assets, they will most likely have a chance to get it approved by the SEC. If that happens, what can you expect?

Institutional Bitcoin adoption has been increasing in the past several years. It shows that the asset is one of the most promising investment vehicles. We have seen companies like ARK, Microstrategy, Tether, and Tesla invest in Bitcoin. An interest from BlackRock, the world’s largest investment company, will only stir the pot more and attract new institutional investors.

It will not be a wonder to see investment companies like Vanguard offering their customers crypto ETFs and other services to stay competitive. Such a move is likely as banking companies like JP Morgan also begun their crypto journey by being crypto skeptics, and now it is offering several crypto assets to its customers.

Hong Kong is pressuring banking companies like Standard Chartered and the Bank of China to offer their services to crypto clients in Asia. This development shows that the crypto adoption tide is turning, making it more feasible for new institutional investors to enter the crypto industry.

More crypto derivative assets like ETFs will enter the market if institutional investors join the industry. At the same time, some companies may also choose to invest directly in the cryptos, increasing the prices of major cryptos. However, this doesn’t mean that retail investors will be the key beneficiaries of the mainstream adoption of these assets. The biggest holders of crypto assets will most likely be institutional investors.

Steven Lubka, a Director at Swan Bitcoin, has shared a similar view saying that Bitcoin will attract institutional investors and likely hit the $1M per coin market. However, only a few retail investors might enjoy the price move.

 

Crypto community reacts to BlackRock’s Bitcoin ETF news

The crypto community has received the news of BlackRock filing for a Bitcoin ETF with mixed reactions. Some, like Galaxy Digital CEO Mike Novogratz, are happy with it, while others are skeptical.

In a June 16 interview, Mike Novogratz said that the BlackRock Bitcoin ETF is “the best thing that could happen to Bitcoin.” He added, “I say a Hail Mary every night that Larry Fink and BlackRock can pull off a Bitcoin ETF.”

Investor Scott Melker, on the other hand, is against the introduction of the Black Rock Bitcoin ETF. He explains that the approval of that particular ETF would be a disservice to crypto-native innovators who have built the industry up since its infancy.

“As good as this may be for institutional adoption of the space, it kind of violates the ethos, it is a bit of a dishonest push away from the people who built the industry in the United States.”

Cardano and Ethereum co-founder Charles Hoskinson hit back at the bitcoin maximalists who are welcoming the BlackRock Bitcoin ETF saying that they are led by greed.

 

Charles Hoskinson was replying to a series of tweets that were pointing to BlackRock being a potential bad player in the crypto industry. The original quoted tweet was from a user who calls themselves Bitpaine. Bit Paine claims that the sheer political power held by BlackRock may help its ETF to go through.

Bit Paine also called out the SEC for their bad regulatory policies that have sent the market crashing washing out retail traders only for institutional investors to buy in with ‘discounted prices’.

Conclusion

BlackRock is the world’s largest investing firm holding over $10T worth of assets. It has amassed political power in a similar fashion which makes it hard to shut the door on them. As such, it can be expected that their new Bitcoin ETF will get approved by the SEC. In that case, it will usher in a new era of crypto adoptions where the institutions that had left will come swarming back in.

Why is that you may ask? Its because most of the present TradFi institutions do not want to veer off too much from the less risky investment vehicles. However, they wouldn’t want to be left behind in the case of an emergence of a new ‘goldmine’. The goldmine here is crypto and in particular Bitcoin.

More crypto products will flood the market as well as the number of whales will rise. What does this mean to the retail investor or trader you may ask? Retail investors and traders will earn high returns if they hodl their assets for a long time. However, if the market starts rising too fast, weaker hands will be shaken off as they try to “take profit” not knowing the market has changed and it’s no longer business as usual.

However, all these peeks into the future are dependent on the BlackRock ETF going through and becoming a success to attract other TradFi institutions to the crypto industry. Now, since the ETF is yet to be approved, only time will tell if it will be and what its impacts will be. Keep watching Blockmanity for updates on this and other crypto-related developments.

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