[Daily] Ethereum is unblocking web3

Good morning! Welcome to The Daily Moon. It’s a brand new week. Silicon Valley Bank continues to have no new owner and other banks seem to be feeling the contagion too. But let’s break the monotony with Microsoft trying to power up its almost-dead products. It was OpenAI and Bing now it is Edge and web3 wallet integration. Are you going to be switching to Edge soon?

Moving on, today we talk about the new era of uncensored URLs and the two-year protection demand by banks.

As of Sunday, 1:30PM IST

The crypto markets saw increased demand even as the rally slowed down. Bitcoin saw a dip in buying as investors were on a wait-and-watch mode. Ethereum saw exits and profit booking post Shapella. S&P 500 and Nasdaq declined amidst bank contagion fears. Back home, Sensex and Nifty ended higher on a renewed buying interest.

ETH Will Unblock URLs

Remember Tornado Cash’s ban in 2022 for too much anonymity? So if you had funds stuck with Tornado, there’s a lengthy process for withdrawals. Ethereum is trying to change that along with keeping investors happy.

Called ERC-4804, this is a protocol developed on Ethereum to directly access web3 content on-chain. To simplify, the HTTP that forms the core of the internet networks of today will be replaced by the Ethereum Virtual Machine (EVM).

It’ll be useful for dApps and NFT platforms that run the risk of shutdown.

What is ERC-4804?Before we get to the specific ETH standard, let’s look at what ERC means. Ethereum Request for Comments is a document with a list of rules for ETH developers. ERC-20 for instance contains the standards to be followed for an ICO including the token supply and transfers. Each ERC needs community approval to become official.

ERC-4804 is another such standard that has been designed to transform HTTP-based web3 URLs into EVM compatible addresses.

Rather than a “http://” prefix before a web3 URL, users can type “web3://” to directly access their digital assets on the blockchain.

What’s it good for?Do you recall the time when NFTs stored on FTX vanished? It happened because FTX used centralised servers to store these assets. So when the crypto entity went bankrupt, the NFTs went blank.

The investor is the only one with the power to control their assets. If there’s a third-party block on particular URLs, you can take a detour via EVM.

Qi Zhou, ETHStorage founder and one of the authors of ERC-4804 said that the protocol has been approved by the community.

So far, the number of web3 URLs that can be accessed include:

• Dynamic NFTs or digital assets that change based on certain conditions.

• Music NFTs stored on the blockchain.

• Personal websites on web3, such as ETH founder Vitalik Buterin’s blog.

• Hostless wallets such as Hexlink

• Decentralised dropbox such as BlockEden

• Decentalised version of GitHub such as Git3 Protocol

Technically, any website built on the Ethereum blockchain or any compatible Layer-2 can be accessed through ERC-4804.

FYI Layer 2 or L2s are protocols or projects built with ETH as the base layer.

Any caveats?

We know that building on the mainnet has cost constraints and space issues. Storage costs on ETH are very high. Zhou said in a recent ETH community conference that 1 GB of on-chain data will cost ~$10 million.

This isn’t affordable for applications modelled on web2. The alternative is to go on L2 to mitigate the expenses.

Solutions such as InterPlanetary File System or IPFS allow decentralised web hosting, but it’s restricted to static content. It has teething UX issues, something that even Buterin pointed out earlier. On the flipside, not many alternatives exist.

For now, the original minds behind ERC-4804, suggest that if things aren’t too bad on web2, it is best to stick around. When enough L2s are ready to host web3 URLs, we’ll see more action.

Bank Run Protection For Two Years?

Mid-sized banks in the US, tethering on the edge, have asked regulators to protect their deposits for two years. The collapse of Silicon Valley Bank and Signature Bank have destabilised a large number of regional banks in the US. The fear of a bank run triggered by panic is percolating through the system.

What does this mean?When SVB and Signature Bank collapsed, a large number of people shifted their deposits to some of the largest banks in the world — JP Morgan and Bank of America. If American depositors lose all faith in smaller banks, the banking system is liable to collapse. By insuring the deposits, the customers have an additional layer of security to persuade them against a bank run.

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