StarkWare Proposes to Deploy Aave on its ZK-Rollup L2 StarkNettw

StarkWare Proposes to Deploy Aave on its ZK-Rollup L2 StarkNet

A new proposal has been submitted to Aave’s governance forum that calls for deploying the DeFi lending protocol to StarkNet, StarkWare’s permissionless and decentralized ZK-Rollup.

Yael Doweck, product manager at StarkWare, submitted the proposal to onboard the protocol on behalf of StarkNet creator, much like MakerDAO has on its L2.

“With the success of the Polygon and Avalanche markets, deploying on StarkNet incurs additional value for Aave,” noted the proposal.

While Polygon was a sidechain that has its own security model, StarkNet is an L2 solution that brings Validity rollups added security on top of L1’s. As such, StarkNet aims to attract applications and users that would be hesitant to onboard to sidechains.

In addition to its security, StarkNet’s capital efficiency in terms of a shorter withdrawal period will allow this deployment to connect liquidity between networks efficiently, it said.

Currently, 14 DeFi and gaming applications have been built on StarkNet, and it also has a partnership with one of the leading centralized exchanges, OKEx.

StarkWare, the core StarkNet protocol developer, proposed co-funding this effort alongside the DAO on a 50/50 basis.

Aave is one of the leading decentralized finance protocols with $14.15 billion of assets locked in it, down from a $19.13 bln high from late October, making it the fourth-largest DeFi project. Meanwhile, its governance token AAVE is trading around $248, 62.5% off of its all-time high in May this year.

The DeFi project has also partnered with decentralized financing protocol Centrifuge to allow small and medium enterprises to access the liquidity available in the crypto market by tokenizing real-world assets. After tokenizing the likes of bridge loans, freight invoices, and trade receivables, among others, Aave will use those tokens as collateral.

“The RWA Market bridges the regulated world of TradFi to the trustless world of DeFi,” Centrifuge developer End Labs’ Co-founder Lucas Vogelsang said. “It’s a huge step for the Aave Protocol.”

The idea is to “allow Aave depositors to earn yield against stable, uncorrelated real-world collateral” by building a bridge between the DeFi capital and the real-world businesses. Meanwhile, Centrifuge issuers will be able to stake collateral and borrow from the market across a wide variety of asset classes.

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Author: AnTy

Ripple Strikes at the SEC’s Crypto “Monopoly” by Proposing Bigger Role to CFTC

In his Digital Commodities Exchange Act, Congressman Glenn Thomson also proposes establishing a new regulatory regime for crypto exchanges at the CFTC.

Ripple Labs is calling to limit the US Securities and Exchange Commission’s (SEC) role in policing cryptocurrencies.

“The SEC’s approach under the current administration has been hostile,” Stuart Alderoty, Ripple’s general counsel, said in an interview. He added that the agency is “doubling down on regulation by enforcement” rather than setting clear rules.

Ripple is currently in a court battle with the SEC regarding the sale of its token XRP, which the agency alleges to be an unregistered security offering.

The company has now released a paper that calls on regulators and lawmakers to create a framework to oversee the crypto market. The paper proposes guidelines that it says are “a real approach to cryptocurrency regulation” created following discussions with regulators and members of Congress.

These guidelines offer advantages to firms compared to SEC’s “regulation-by-enforcement approach,” said Ripple CEO Brad Garlinghouse.

Ripple proposes a three-pronged approach that creates digital asset innovation sandboxes, public-private collaboration and adapts existing regulatory frameworks.

It also includes endorsements of proposed bills in Congress, including the Digital Commodity Exchange Act, which would give the CFTC authority to regulate digital assets trading.

“This rational approach to crypto regulation that we’re proposing is to basically say, ‘Look, there are other leaders in the space. The SEC does not have a monopoly on this issue,’” Alderoty told Protocol.

In his interview, he further called for creating a federal regime and giving “that responsibility that oversight to the CFTC” in his interview.

With no uniform federal regulatory regime to monitor or regulate crypto exchanges where these crypto-assets trade, including CFTC, exchanges won’t be free from regulation, but there would be a rational approach to regulating crypto, said Alderoty.

This “can allow innovation to thrive, which can allow the assets to be traded, but also guard against things like fraud, guard against market manipulation, so consumers are protected,” he added.

Amidst this, Congressman Glenn Thomson released the Digital Commodities Exchange Act, which would establish a new regulatory regime for crypto exchanges at the CFTC.

The leading Republican on the House Agriculture Committee wants some initial coin offering (ICO) that would certainly be considered securities to be left with the SEC, unlike SEC Chair Gary Gensler, who urges Congress to give the agency more power over crypto exchanges and the overall market.

In his bill, Thomas argued for CFTC to have “exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of any digital commodity in interstate commerce which is offered, solicited, traded, executed, or otherwise dealt in on or subject to the rules of a registered entity, including the conduct of any such office or business.”

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Author: AnTy

Estonia‘s Head of AML Agency Proposes a 28x Increase in Minimum Capital Requirement for Crypto Firms

Estonia‘s Head of AML Agency Proposes a 28x Increase in Minimum Capital Requirement for Crypto Firms

Estonia’s head of anti-money laundering government agency wants to scrap its current crypto regulations and start afresh. Up until now, Estonia has been a crypto-friendly jurisdiction, but that could soon change.

Estonia should “turn the regulation to zero and start licensing all over again,” the Financial Intelligence Unit (FIU) chief Matis Mäeker, who was appointed in May this year, told a local news outlet.

Mäeker explained that crypto companies had made “tens of billions of euros per year,” but instead of helping the Estonian economy, it has moved to other countries “Their only goal is to get an Estonian license and use it to turn over very large sums, while Estonia gets nothing out of it,” Mäeker said.

The chief has proposed stricter rules for licensing crypto startups and raising the minimum capital requirements from €12,000 (US$13,900) to €350,000 ($405,000).

A bill proposing regulations for crypto licenses will also be introduced in the Estonian parliament, Mäeker said. In the meantime, he called for existing licenses to be revoked.

Last year, the FIU revoked 1,808 cryptocurrency licenses, and currently, there are 400 licenses in Estonia.

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Author: AnTy

Zcash Founder Proposes Moving to A ‘More Decentralized’ & Eco-Friendly PoS as PoW Has ‘Security Flaws’

Zcash Founder Proposes Moving to A ‘More Decentralized’ & Eco-Friendly PoS as PoW Has ‘Security Flaws’

This new narrative is also expected to “eliminate the downward pressure” on ZEC price, which is down a whopping 96.4% from its peak of $3,192 from almost 5 years back.

Zcash founder Zooko Wilcox is now proposing to move his privacy-focused cryptocurrency from having a very large carbon footprint to a more eco-friendly approach which is Proof-of-Stake (PoS) consensus mechanism.

“The benefits of PoS outweigh the drawbacks,” commented Electric Coin Company, the firm behind the Zcash.

The second-largest cryptocurrency Ethereum is already underway this transition, which some believe this will make Ether more attractive to institutional investors after the recent concerns around Bitcoins’ energy usage were raised by Tesla CEO Elon Musk.

Besides being energy-intensive, Wilcox believes PoW has “some security flaws” as well, as seen with the 51% attacks.

“I think proof-of-stake can provide a much more powerful kind of security and at lower cost,” he told Forbes.

According to him, under PoW setups, users don’t have much of an option if the network gets attacked while on a PoS network, bad actors can be identified and their tokens revoked.

He is also ready to move forward because Proof-of-stake is ”proven” and is no longer experimental, as can be seen with the successful launch of Tezos (XTZ), Algorand (ALGO), Cosmos (ATOM), and Cardano (ADA).

Additionally, we are entering an inflection point when it comes to protecting our privacy, he said.

“We’re both simultaneously seeing mega corporations and governments seizing more and more control over everyone, both in the east and the west…And we’re simultaneously seeing people worldwide becoming more aware and valuing their privacy more, their autonomy, their human relationships.”

The close cousin of Bitcoin, Zcash, is focused on privacy which was “the main value proposition” of “basically 100% of all the early bitcoiners, including Satoshi and Hal (Finey) and Nick (Szabo) and Adam (Back),” said Wilcox. He proposed integrating zk-snarks on top of Bitcoin in 2012 and founded Zcash in October 2016.

While Bitcoin is currently trading around $38,600, down 40.6% from its nearly $65,000 all-time high in mid-April, Zcash is at $113.35, down a whopping 96.4% from its peak of $3,192 from almost 5 years back, as per CoinGecko.

And this switching to a “more decentralized, attack- and capture-resistant, and egalitarian” network, is also expected to “eliminate the downward pressure” on ZEC price, wrote Zooko in a blog post. Also, to turn ZEC holders into users by passively earning income by staking their coins or by actively running validator nodes.

This new narrative just might help ZEC pump for the first time since 2016.

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Author: AnTy

Applying Travel Rule to Crypto, EU Proposes Prohibition of Anonymous Cryptocurrency Transactions and Wallets

Applying Travel Rule to Crypto, EU Proposes Prohibition of Anonymous Cryptocurrency Transactions and Wallets

The European Union says ensuring “full traceability of crypto-asset transfers” would help the crypto-asset industry develop in the region “as it will benefit from an updated, harmonised legal framework across the EU.”

The European Union is proposing to ban anonymous cryptocurrency transactions as well as wallets as part of its broader plan to combat money laundering and terrorist financing.

Companies that transfer Bitcoin and other crypto assets are required to collect details of senders and recipients to help authorities in cracking down on dirty money, EU policymakers proposed on Tuesday.

These latest efforts to tighten regulation of the crypto sector would apply travel rules to crypto transactions, making them traceable. It is already applicable to wire transfers.

The law proposed by the EU is one of the recommendations of the Financial Action Task Force (FATF), an inter-governmental watchdog. The Commission said in a statement,

“Today’s amendments will ensure full traceability of crypto-asset transfers, such as bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing.”

The information collected by the company handling the crypto assets for a customer will include name, address, date of birth and account number, and the name of the crypto asset receiver whose service provider must collect required information as well.

Besides anonymous transactions, anonymous crypto wallets will also be prohibited, much like anonymous bank accounts are already banned under EU anti-money laundering rules.

The European Parliament and the EU states will be deciding the fate of these proposals as such could take about two years to become law.

According to the EU, these proposals are designed to “find the right balance between addressing these threats and complying with international standards while not creating excessive regulatory burden on the industry,” helping the crypto-asset industry develop in the region “as it will benefit from an updated, harmonised legal framework across the EU.”

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Author: AnTy

“Tax Private Stablecoins Out Of Existence,” Proposes Latest Fed Paper Ahead Of Treasury Secretary Meeting

“Tax Private Stablecoins Out Of Existence,” Proposes Latest Fed Paper Ahead Of Treasury Secretary Meeting

Written by a Professor of Finance from Yale School of Management and an attorney at the Federal Reserve System, wants regulators to take a lesson from history, the Free Banking Era because the central bank must have a “monopoly on money issuance.”

Before the Treasury Secretary Janet Yellen met with SEC, OCC, and FDIC officials on Monday to discuss stablecoins, a paper called “Taming Wildcat Stablecoins” was released by the Federal Reserve and Yale over the weekend.

Written by Gary Gorton, Professor of Finance at the Yale School of Management, and Jeffery Zhang, an attorney at the Board of Governors of the Federal Reserve System, the paper laid out the regulatory options for US dollar stablecoins and footnote references to Yellen’s upcoming meeting.

According to these authors, while crypto is all the rage, there is “nothing new” about privately produced money, but the difference is its goal to be accepted at par with no questions asked.

They point to history, the Free Banking Era when private money made it hard to track due to fluctuating prices, which were then curtailed by the National Bank Act of 1863. “Subsequent legislation taxed the state-chartered banks’ paper currencies out of existence in favor of a single sovereign currency,” they noted.

Now, Gorton and Zhang propose regulating the issuers of stablecoins like Tether and Facebook’s Diem as banks and the central bank to issue its digital currency (CBDC).

With regulation outpaced by innovation, an uneven playing field has been created that needs to be corrected.

While stablecoins do not appear to be used as money currently, as they evolve further, “the stablecoin world will look increasingly like an unregulated version of the Free Banking Era—a world of wildcat banking,” it adds.

The paper proposed a couple of ways to address this development and wants regulators to “better get going.”

These options include transforming stablecoins into public money by passing new legislation requiring issuers to become FDIC-insured banks or require stablecoins to be backed one-for-one with Treasuries or reserves at the central bank.

CBDC is also proposed as a substitute to privately produced digital money like stablecoin, mainly because the central bank must have a “monopoly on money issuance,” and paper and metal coins won’t be used forever.

With the introduction of a central bank digital currency, the purpose is to have digital fiat and “tax private stablecoins out of existence.”

“Free banking in the US was a failure DUE to state regulation, not despite it,” argued Nic Carter of Castle Island Ventures and co-founder of CoinMetrics.

“The difference between now and then is that blockchain-based assets are more resistant to state capture, being natively digital (compare with gold specie), are more global in nature (compare binance with say, the royal bank of Scotland), and enable a more egalitarian relationship between depositors and depository institutions as the cost of verification is low, and thus the ease of taking ‘physical’ delivery is high. So easier to hold custodians accountable, and the threat of a ‘run’ is higher.”

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Author: AnTy

Candidate of NYC Comptroller Proposes Investing 1%-3% of Pension Funds in Crypto

Candidate of NYC Comptroller Proposes Investing 1%-3% of Pension Funds in Crypto

  • Reshma Patel, a candidate for the New York City Comptroller, launched her proposal to introduce policies around blockchain technology and cryptocurrencies to the Big Apple.

In a proposal shared on Monday, Patel highlighted new policies and investment strategies to get New York back on track following a COVID-ridden year. In her proposal, Patel unveiled blockchain-specific aspects to her recovery plan, including adopting blockchain in the procurement system, researching new investments to blockchain funds, and investing a portion of the pension funds in crypto.

The Big Apple has suffered financially in the past year as COVID-19 ravaged businesses across the city. The incoming Comptroller will have a major task of getting the city back on track and a look towards blockchain and crypto could be the trick. Reshma Patel said,

“New York City has always been a leader in embracing innovation and progress,”

“That’s why as Comptroller, I would make it a priority to explore all options that technology has made available to us as we try to build back after COVID-19. I believe that cryptocurrency and blockchain offer untapped opportunities for the City that we can’t just ignore.”

The Comptroller oversees how the city allocates its funds by managing the government contracts and retirement funds. Patel aims to create a long-term recovery plan for NYC if she becomes Comptroller crypto and blockchain-based businesses at the core of her plans.

Under Patel’s policies, NYC will “work with the Trustees of the five New York City Retirement Systems” to invest up to 3% of the funds in top cryptos such as Bitcoin and Ethereum. The investment in crypto aims to help the city fight inflation and provide a hedge if the S&P 500 falls. She said,

“With inflation expected to rise in the next few years, and bitcoin expected to continue its checkered but consistent upswing to “the moon,” a minimal allocation to the most dominant of all cryptocurrencies can help diversify and protect the City’s pension fund investments.”

“It will help guard against any potential downswings in the stock market while helping us capture the upswings of an emerging technology.”

Additionally, the proposal also plans to form a public-private task force to research a possible investment in “blockchain-specific funds.” The task force will research direct ways of investing in blockchain technology to “capture enhanced returns and support New York City-based fintech start-ups while learning more about how this cutting-edge technology can help New York City residents.”

She further proposes integrating blockchain technology systems and solutions in the procurement system across NYC. The procurement system in NYC faces a slow, convoluted process creating barriers for firms and businesses operating in the city. As a transparent and public network, implementing blockchains could treat these common problems related to tracking contracts, the statement reads. Patel said,

“A standardized system with fast-acting responses would make the contracts more accessible for smaller firms and require less bureaucracy to move projects forward.”

“A blockchain-based procurement system would provide better visibility and accountability by utilizing a fully transparent process that will also improve trust in our government.”

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Author: Lujan Odera

MakerDao Proposes D3M to Integrate with AAVE & Expand Stablecoin DAI Across DeFi

MakerDao Proposes D3M to Integrate with AAVE & Expand Stablecoin DAI Across DeFi

The proposal will help MakeDAO gain capital efficiency, make DAI the primary choice for borrowers on Aave, accumulate AAVE, and proliferate DAI across Aave markets on every L2.

MakerDao proposes a Direct Deposit Dai Module (D3M) to join Maker with another DeFi blue-chip lending protocol Aave more closely.

This will allow the Maker protocol to enforce a maximum variable borrow rate on the Aave DAI market.

MakerDAO is the protocol that mints the DAI stablecoin, which has a market cap of $3.19 billion and acts as a hedging tool and medium of exchange directly on-chain.

DAI, USDT, and USDC are the dominant stablecoins in the decentralized finance sector currently, with the lending rate going as high as 10-12% and borrowing rate up to 19%, as per DeFi Rate.

According to the proposal, over-collateralization is the basis of DeFi with more collateral present than the asset minted, providing room for incentivizing a third party to pay back the debt on behalf of borrowers.

And “MakerDAO protocol is heavily overcollateralized,” it states. The proposal further mentions that the protocol has also proved itself to be resilient during the March crash.

The D3M explores an alternative path to bring more liquidity in secondary DAI venues by minting DAI backed by aDAI and a potential new tool to stabilize DAI peg. aDai is an automatically-generated, native token to the Aave protocol issued to a user who supplies DAI into the Aave protocol. AAVE 5.71% Aave / USD AAVEUSD $ 377.85
Volume 261.74 m Change $21.58 Open $377.85 Circulating 12.48 m Market Cap 4.71 b
6 h MakerDao Proposes D3M to Integrate with AAVE & Expand Stablecoin DAI Across DeFi 1 d Bitcoin Takes A Dive & Altcoins’ Drop Hard, But People Are Still ‘HODLing and Not Selling’ 1 d Balancer Labs Has ‘Zero’ Involvement in Algorand; V2 Launch is the Sole Focus

According to Sam MacPherson, smart contracts facilitator at Maker (MKR), this will benefit both the protocol. For Aave leverage seekers, it means not getting stuck in a position with double digits interest rates, and for Maker, DAI supply expansion to reduce reliance on USDC.

This proposal will further help Maker attract borrowers, more revenue, expand DAI supply, and if Aave starts a Liquidity Mining program, then collecting AAVE and earning governance rights in it.

The Aave community is deploying new liquidity pools across various L2 solutions, which means more DAI can bridge into pools to transact affordably. Aave can essentially become the distributor for DAI on every L2.

All of this will be achieved by the D3M module mining and directly depositing freshly minted DAI into the Aave V2 protocol.

“The D3M has a target rate for limiting the size of the deposit and ensuring DAI to be the most competitive asset to be borrowed on Aave compared to other stablecoins,” states the proposal.

MakerDAO basically aims to expand its stablecoin across DeFi and ensure its market position amidst the rise of new stablecoins.

“Yet another example of how deeply integrated Maker is across DeFi,” commented Ryan Watkins, a researcher at Messari. “Now becoming a bank for banks.”

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Author: AnTy

Parity Technologies Proposes Common Goods Parachain on Polkadot Called Statemint

Parity Technologies Proposes Common Goods Parachain on Polkadot Called Statemint

Polkadot developer Parity Technologies is looking to address one of the key issues plaguing the Polkadot ecosystem by launching a new asset deployment platform.

Statemint To Address ‘Free Ride Problem’

Parity Technologies said in an announcement that it is looking to launch a generic asset parachain called Statemint. This solution will be the first common-good chain on the Polkadot network.

Statemint will allow developers to deploy assets- from tokenized artwork to stablecoins and central bank digital currencies (CBDCs) – in the Polkadot and Kusama networks. This will naturally engender a better user experience and lower fees than present solutions.

Currently, both the Polkadot and Kusama’s on-chain governance grants parachain slots through a public referendum rather than selecting slot winners through its auction mechanisms. The auction method is insufficient as it doesn’t efficiently distribute network resources on the platform.

Developers looking to ensure an even distribution of network resources will have to put up collateral in the form of Polkadot’s DOT or Kusama’s KSM network token. This collateral must have a minimum deposit, and if the asset falls below its “Existential Deposit,” the parachain will be removed to avoid a pile-up of low-value “dust” accounts.

But parachains may still be launched without an upfront collateral balance if the Relay Chain Council decides otherwise.

Parachains would also not be used as verification tools. The issuer must guarantee the authenticity of their asset value, not Polkadot (DOT)- but these chains will still be able to leverage Polkadot’s core functionality for continued interoperability.

Per the announcement, Statemint will enable developers to establish a maintenance team for their different parachains. This team will consist of an issuer, an administrator, and a freezer whose job will be to pause all token issuance and transfer.

The team, however, did not state when the project will commence.

Statemint Will Be Under DOT Token Holders’ Control

Relay Chain, which is the heart of the Polkadot ecosystem, will still retain control of the Statemint project. Relay Chain token holders will still be able to dictate the community’s direction by determining changing parameters for the Statemint project. They will be able to register new assets, adjust fee parameters, and upgrade the chain’s logic and functionality.

Polkadot has quickly established itself as a top Ethereum rival in less than five years. The blockchain platform, a fully scalable, heterogeneous network, is dubbed the next-generation of blockchain, and its layer-0 protocol brings together multiple blockchains into a unified ecosystem.

The ‘Ethereum killer,’ focused on creating an interoperable ecosystem, deployed a heterogeneous sharding technology that allows its parachains to connect and communicate with external networks. This implies that Polkadot developers will transfer and receive data from Bitcoin and Ethereum through its bridges protocol.

With developers flocking into the ecosystem, investors are eyeing the project, and industry experts are projecting a top-three finish for its cryptocurrency DOT. Polkadot (DOT) currently occupies the sixth position on the cryptocurrency chart and has a market cap of $35 billion.

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Author: Jimmy Aki

Vitalik Proposes Cross Rollups Solution to Help Layer 2 Protocols Communicate with Each Other

Vitalik Proposes Cross Rollups Solution to Help Layer 2 Protocols Communicate with Each Other

  • Ethereum co-founder Vitalik Buterin proposes cross-rollups scaling as a solution to the burgeoning Ethereum gas fees while creating a unified crypto ecosystem.

In a post on Ethereum developers’ GitHub channel, Vitalik wrote a proposal to allow platforms using rollups to communicate with each other. He proposes cross-rollup scaling solutions that will ease the rising Ethereum fees while maintaining interconnectivity and composability across the platforms.

Rollups are layer 2 scaling smart contract solutions on blockchains that store and process most of the information off-chain, which allows for faster and cheaper transactions on the blockchain. However, platforms that use different kinds of rollups, including zero-knowledge and optimistic rollups, cannot share this off-chain information with other rollups.

Vitalik’s proposal focuses on two projects that have integrated roll-up scaling but cannot communicate. One of the projects, “Rollup A,” has full smart contract support while another, “Rollup B,” can only perform simple transactions.

In an example of how the cross rollup solution will happen, Vitalik gives a hypothetical example of two platforms – an intermediary, named Ivan – who has funds on platforms on both Rollup A and Rollup B. Ivan fully controls his funds on Rollup A account, IVAN_A, and also has funds in his account on Rollup B, IVAN_B.

Vitalik proposes that the smart contract, IVAN_B, can be programmed to accept “memos” that hold data on anyone sending funds to it to connect the two accounts. This will keep a copy of any future transactions to the Rollup B.

The transactions history (memo) between the two rollups creates a layer that connects the two rollups allowing Rollup A and Rollup B to exchange information. Vitalik explained,

“The expected behavior is simple:

1. Alice sends a transaction to IVAN_A with N coins and a memo ALICE_B

2. Ivan sends a transaction sending TRADE_VALUE * (1 – fee) coins through IVAN_B to ALICE_B.”

Buterin further said the second step could also be executed immediately after the first, adding “contract can even have rules that allow the fee to be greater if Ivan shows proof that the timestamp difference between the second transaction and the first is very low.”

According to the post, the worst-case scenario happens when IVAN_A does not send the coins to ALICE_B. This can easily be solved by Alice waiting until the transaction on Rollup A to confirm, find a way to pay fees on Rollup B, and claim the funds owed to her directly.

The fees can be directly paid on Rollup B; Vitalik explained whether Alice would need to interact with L1 blockchains to reclaim her funds.

“All you need is for rollup B to have access to block hashes of the L1 chain before the previous batch (this can be done safely).”

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Author: Lujan Odera