Solana Challenges Ethereum's Decentralisation Crown, Stars Arena Fallout & More

Welcome back!

This is J264G and this week I’ve got these titbits for you:

• New Update: Solana introduces ZK capabilities at the base layer.

• Thwarting Drains: Backpack rolls out NFT collection locking.

• 360º Deep Dive: OurNetwork published an in-depth report on Solana.

In the last couple of days, Stars Arena spammed our timelines as the latest en vogue Ponzi to stir up a frenzy.

Contrary to its counterparts, however, the SocialFi app suffered an exploit in record time — $3 million gone with the wind.

If we’re honest, the rate of exploits in web3/crypto isn't normal, and we shouldn't try to normalise them either.

In this week's edition, we’ll explore the Stars Arena fallout, its implications, and what needs to change going forward.

Let’s get going!

Click on any underlined heading / hyperlink to learn more.

Spotlight

Shipping Speed ≠ Business Success

After completing my postgraduate degree, I received job offers from McKinsey Digital IT services and an independent German system integrator — among others.

System integrators are companies that specialise in bringing together components from OEMs such as Nvidia, Hewlett Packard Enterprise, Cisco, NetApp, Dell, and many more into one unified technological architecture.

As you might have guessed, I decided to join the German system integrator. Here, I worked in a team which developed and deployed hardware and software solutions for turnkey-ready data centres.

Why did I decide not to accept the job offer from McKinsey?

Simple: McKinsey looks at technology through a theoretical lens — which would have led to me spending countless hours pushing pixels on PowerPoint. Also, McKinsey partners with system integrators to implement the frameworks and concepts they develop anyway — so I figured I could skip a career step and start straight at the place where the sausage gets made.

Having said that, something irked me right from the get-go at the German system integrator: The speed at which projects were implemented was mind-bogglingly slow.

At best, it took 24 months from the initial customer inquiry to the actual solution implementation. That's if everything went smoothly. In most cases, however, project implementations took 30 months or more.

Once deployed, software and hardware in both large enterprises and SMEs rarely got upgraded or replaced.

Here’s why:

• Legacy Systems: In most cases, companies have invested heavily in legacy systems — software and hardware — over the years. These systems may still function adequately for their core business processes, even if they are outdated.

• Risk Aversion: Generally, companies tend to be risk-averse, especially when it comes to mission-critical systems. They may be hesitant to adopt new software and hardware that hasn't been proven in their specific environment.

• Stability & Reliability: Older software and hardware have often undergone extensive testing and refinement, making them stable and reliable. Companies rely on this stability to ensure their operations run smoothly.

Consequently, enterprise security measures for these legacy systems are tricky:

• Complexity: Enterprise environments are typically complex. Implementing security measures, therefore, requires careful consideration.

• Risk Mitigation: As a result, enterprise security prioritises meticulous planning, thorough testing, and careful implementation.

• Testing & Validation: Before deploying security measures, enterprises conduct rigorous testing and validation processes — which can be time-consuming.

While the emphasis on thoroughness and risk mitigation can make enterprise security measures seem slow, it’s essential for protecting sensitive data, maintaining business continuity, and reducing the likelihood of security breaches.

So, why am I harping on and on about solution implementations and enterprise security?

To illustrate that “moving fast and breaking things” is not necessarily the guarantor for business success.

Case in point?

Stars Arena.

A couple of days ago, the Avalanche upstart was drained of nearly all locked funds — $3 million worth of AVAX tokens.

Basically, Stars Arena seems to have been tossed together and hastily pushed to production after a Ramen and Celsius infused weekend session — with no consideration for the underlying hardware, software, or security.

To mitigate this disaster, Stars Arena announced that it had secured the funding to cover the $3 million hole and has vouched to conduct a full security audit.

Having said that, as soon as trust is lost, the days of a business tend to be numbered.

Regardless, we find ourselves between a rock and a hard place.

• Developers continue to deploy to Mainnet and roll out updates and features in record time — without taking time to put in proper guardrails.

• Security auditors generally only check the initial Mainnet code and mostly don't offer regular security checks when code updates or new features come out.

• Users don't seem to care about any of the above and continue to gamble away their money; while simultaneously wondering why the public and mainstream media are so bearish on our industry and simply won’t help to “onboard the next billion users”.

To be honest, I don't see any of these 3 stakeholders changing their modus operandi anytime soon.

The point is, the higher the rate of exploits, the stronger the unwillingness of normies to explore web3/crypto and learn about the necessity and benefits of self custody.

I mean, if it's our aim to play a decentralised version of Russian roulette in a casino powered by FOMO — we're doing a tremendous job.

However, in case we want that to change, we need to start prioritising (protocol) security over shipping speed.

Chart Of The Week

News Bites

New Update: Solana’s v1.16 update has reached a super-majority of validator adoption. One of the most exciting introductions: Confidential Transfers — basically a native privacy option for Solana-based assets, or “SPL tokens”, which further enhances the network's zero knowledge capabilities at the base layer.

Thwarting Drains: The Backpack team has rolled out NFT collection locking. As soon as the feature is activated, transaction signature requests for selected NFT collections in users' Backpack wallets are automatically rejected — thwarting wallet drains and keeping assets safe at all times (*BAYC holders rejoice!*).

Decentralisation Crown: The Solana Foundation published a new report on recent developments within the network's validator ecosystem. As such, the report mentions that Solana is now one of the most resilient networks by validator clients and one of the most distributed by Nakamoto Coefficient.

Nansen Analytics: Nansen has released a new Solana deep dive which discusses, among many things, consumer apps leveraging Solana’s tech, the growing interest in the Solana Virtual Machine (SVM), and network upgrades such as local fee markets.

Stablecoins & Payments: Reflexivity Research’s new stablecoin architecture report just came out as well. It highlights the stablecoin distribution on Solana, Shopify’s integration with SolanaPay, and Visa’s announcement to utilise USDC and the Solana blockchain for transaction settlements.

360º Deep Dive: It seems to be report season. Up Next: OurNetwork — a crypto analytics newsletter and community — has published its 360º coverage on the Solana ecosystem which dives into all things DeFi, NFTs, and more.

Caught In 4K

Weekly Take

Keks & Giggles

And that's a wrap!

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Talk soon!

J264G

_{DISCLAIMER
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. Lastly, please be advised that we discuss products and services from our partners from which our team members may hold tokens / equity.}