Ethereum encounters critical juncture as it contends with challenges in scaling, quantum computing, and artificial intelligence.

Plus: Solana developer platform, Balancer Labs to shut down and Bitcoin mining concentration triggers small reorg.

What to know:

Welcome to The Protocol, CoinDesk’s weekly summary of the most significant developments in cryptocurrency technology. I’m Margaux Nijkerk, a journalist at CoinDesk.

In this edition:

• Ethereum confronts a pivotal moment amid significant pressures from scaling, quantum computing, and AI
• Solana Foundation partners with Mastercard, Western Union, and Worldpay for an institutional developer platform
• Balancer Labs is set to close as the corporate entity became ‘a liability’ following a $110 million exploit
• Bitcoin’s mining concentration has resulted in a rare 2-block reorganization

Network News

ETHEREUM FACES CRUCIAL MOMENT WITH QUANTUM AND AI DEVELOPMENTS AHEAD: The initial months of 2026 have prompted the Ethereum community to engage in a period of reflection—one that transcends market prices and technical enhancements, delving into what the network aspires to be. Even prior to this year, there was a prevailing sentiment among developers and executives that Ethereum was on the brink of another expansion phase—this time fueled by not just crypto users but also institutions and technology. Neobanks, as some have suggested, would seamlessly onboard millions by simplifying the complexities of wallets and gas fees. In this view, Ethereum would not need to attract users directly; it would function behind the scenes, facilitating a new financial architecture that outwardly appeared unrelated to crypto. This aligns with a long-held belief: that Ethereum’s triumph would stem from its invisibility. This vision has been partly formulated through years of upgrades aimed at enhancing user experience and lowering costs. Innovations such as “proto-danksharding,” introduced in the Dencun upgrade, have considerably reduced fees for layer 2 networks by increasing data throughput for transactions, while ongoing enhancements to the base layer have improved transaction efficiency. Although the value of the network’s ether (ETH) token has been influenced by market dynamics, these upgrades collectively have brought Ethereum closer to a model in which users engage with applications without needing to grasp the underlying framework. However, that narrative began to shift a few weeks into the year when Vitalik Buterin delivered a stark reminder to the broader ecosystem: “You are not scaling Ethereum.” This remark interrupted what had, until that point, been a largely optimistic discussion surrounding rollups. These networks, also known as layer-2 (L2) networks, handle transactions externally from Ethereum and subsequently bundle them onto the primary chain to enhance speed and reduce costs. Layer-2 networks have surged in popularity over recent years, transaction fees have decreased, and activity has increased—but the fundamental question remained whether any of this constituted effective scaling. — Margaux Nijkerk Read more.

SOLANA FOUNDATION UNVEILS DEVELOPER PLATFORM FOR INSTITUTIONS: The Solana Foundation is introducing a new developer platform designed to facilitate the creation of blockchain-based products by financial institutions, with early adopters including Mastercard, Western Union, and Worldpay. The Solana Developer Platform (SDP), now available for developers to explore, is a toolkit that allows enterprises to develop and scale financial applications on Solana without extensive knowledge of crypto infrastructure. The SDP will also incorporate AI tools such as Anthropic’s Claude Code and OpenAI’s Codex. The platform consolidates services from over 20 infrastructure providers—covering custody, compliance, wallets, and payments—into a single interface, simplifying what has typically been a disjointed process for institutions entering the sector. At its launch, SDP features two operational modules. The issuance module enables businesses to generate tokenized deposits, stablecoins, and tokenized real-world assets, while the payments module facilitates fiat and stablecoin transactions, including on- and off-ramps and onchain activities. A trading module is anticipated later in 2026. The participation of established payment firms highlights the increasing interest from institutions in blockchain-based settlements. — Margaux Nijkerk Read more.

BALANCER LABS TO CEASE OPERATIONS: The organization behind the decentralized finance (DeFi) platform Balancer is shutting down. Balancer co-founder Fernando Martinelli announced that Balancer Labs, the corporate entity that nurtured and financed the decentralized exchange protocol, will close. This decision follows a v2 exploit in November 2025 that drained around $110 million in digital assets, as CoinDesk initially reported, including osETH, WETH, and wstETH, marking the third known security breach for the project and the one that created the legal risks Martinelli cited as justification for the closure of BLabs. “BLabs, as a corporate entity, has become more of a liability than an asset for the protocol’s future and is simply unsustainable in its current form without any revenue sources,” Martinelli noted in a governance forum post. He mentioned he “seriously considered” completely shutting down operations. However, he refrained from advocating for a total wind-down since the protocol continues to generate revenue. — Shaurya Malwa Read more.

BITCOIN MINING CONCENTRATION CAUSES SMALL ‘REORG’: Bitcoin’s mining concentration issue has manifested on the blockchain, resulting in a minor “reorg.” Central to this situation is Foundry USA, the largest bitcoin mining pool, which consists of a group of miners uniting their computational resources to verify transactions, mine blocks, and share the rewards in BTC. Within the blockchain, numerous miners exist, and occasionally, two or more may discover a block almost simultaneously. When this occurs, the network temporarily contains two competing versions of the blockchain. Eventually, the network reorganizes into a single chain, depending on which version expands more rapidly. This scenario unfolded earlier this week: Foundry and AntPool mined blocks at approximately the same time, leading to a chain split. Foundry subsequently produced several consecutive blocks, slightly outpacing its rivals and becoming the chain the network recognized. Consequently, the blockchain reorganized to Foundry’s version, while the blocks mined by AntPool and ViaBTC were orphaned or effectively removed from the ledger. Those miners received no compensation for their efforts. — Shaurya Malwa Read more.

In Other News

• The New York Stock Exchange (ICE) is collaborating with tokenization expert Securitize to assist in designing the infrastructure for tokenized securities trading. Securitize is planning to go public this year through a SPAC agreement with Cantor Equitize Partners (CEPT). CEPT shares have risen by 6% in premarket trading, while ICE shares remain unchanged. The two companies have signed a memorandum of understanding to create NYSE’s proposed Digital Trading Platform. Securitize will act as a design partner, concentrating on the operation of transfer agents—the entities responsible for tracking ownership and managing corporate actions—when securities are issued and settled on blockchain systems. Securitize, supported by major asset managers such as BlackRock and Ark Invest and registered with the SEC as a transfer agent, is anticipated to be among the initial firms authorized to mint tokenized versions of stocks and ETFs on the platform, pending regulatory approvals. The firm’s broker-dealer division may also participate in trading, providing it a presence in both issuance and market activities. This initiative coincides with traditional exchange giants like NYSE and Nasdaq intensifying their efforts in tokenization to incorporate blockchain frameworks into stock trading. — Kristzian Sandor Read more.
• BlackRock Chairman and CEO Larry Fink utilized his annual letter to shareholders to advocate that digital assets and tokenization could modernize the financial system, even as he cautioned that the U.S. economic model is neglecting significant portions of the population. In the letter, Fink stated that the current system has primarily benefited individuals who already possess assets, while many workers have been excluded from market growth. He associated this disparity with broader issues in the U.S., where escalating inequality, substantial government debt, and low participation in capital markets are stressing the traditional financial model. “Capitalism is functioning—just not for enough individuals,” Fink commented. His proposed solution focused on tokenization and digital distribution as means to enhance investment access and improve market efficiency. Tokenization, Fink noted, could “modernize the infrastructure of the financial system” by simplifying the processes for issuing, trading, and accessing investments. The concept is straightforward: If asset ownership is documented on digital ledgers, transferring a fund share, bond, or other security could become swifter and less costly. In practice, this would enable a regulated digital wallet to hold not only payments but also tokenized bonds, ETFs, and fractional ownership in assets like infrastructure or private credit. — Helene Braun Read more.

Regulatory and Policy

• Insiders in the crypto industry were given their first glimpse of the revised market structure bill in the Senate, and the initial feedback indicated that the language concerning permissible stablecoin yield was excessively narrow and ambiguous, according to a source familiar with the current draft. The new provisions, announced on Friday by Senators Angela Alsobrooks and Thom Tillis, would prohibit yield payments for merely holding a stablecoin. It would also limit any approach that renders the program equivalent to a bank deposit, imposing additional restrictions on potentially allowable activities, the source noted, adding that the mechanics for determining activity-based stablecoin rewards remain uncertain. The crypto industry had its first look at the updated section of the Digital Asset Market Clarity Act earlier this week during a closed-door review on Capitol Hill in Washington, an attempt to remove a barrier to securing a hearing in the Senate Banking Committee. Bankers had insisted that stablecoin rewards should not resemble interest-bearing bank deposits, arguing that a competing product could hinder the industry and restrict lending. Thus, the compromise will permit rewards programs for users’ stablecoin activities but not for their balances. — Jesse Hamilton Read more.
• Brazil’s newly appointed finance minister, Dario Durigan, is anticipated to postpone a public consultation regarding the application of a tax on financial operations, known locally as Imposto sobre Operações Financeiras (IOF), to select cryptocurrency transactions, as reported by Reuters, citing sources familiar with the situation. Durigan assumed office on March 20 following Fernando Haddad’s resignation to run for governor of São Paulo. Reuters stated that the new minister aims to prioritize microeconomic measures and avoid proposals that might provoke conflict with Congress during an election year. The delayed consultation was centered on a draft decree that could categorize certain crypto transactions as foreign exchange operations. — Francisco Rodrigues Read more.

Calendar

• Mar. 24-26, 2026: Digital Asset Summit, New York City
• Mar. 30-Apr. 2, 2026: EthCC, Cannes
• Apr.15-16, 2026: Paris Blockchain Week, Paris
• May 5-7, 2026: Consensus, Miami
• Sept. 29-Oct.1, 2026: Korea Blockchain Week, Seoul
• Oct. 7-8, 2026: Token2049, Singapore
• Nov. 3-6, 2026: Devcon, Mumbai
• Nov. 15-17, 2026: Solana Breakpoint, London