Bitcoin’s long-running debate over “anti-spam” changes took another sharp turn this week as support for the BIP-110 soft fork proposal failed to clear the threshold needed to move forward. After a contentious process, the branch effectively stalled within hours—an outcome observers had largely expected given the economic realities of running parallel mining on a minority chain.
Meanwhile, U.S. lawmakers again pushed the timing of the CLARITY Act vote, and the market digested fresh signals across regulation, custody security, and institutional demand. Separately, Ethereum researchers advanced a proposal to curb staking rewards as more ETH is locked, while critics warned it could undermine incentives for validators and the broader ecosystem.
Key takeaways
- BIP-110’s anti-spam approach failed to attract enough miner signaling support and quickly stalled on a minority chain.
- U.S. Senate procedural steps for the CLARITY Act have been scheduled for September rather than being forced through before the August recess.
- Bitcoin’s hardware wallet security concerns have spurred new AI-assisted vulnerability scanning efforts by a volunteer “red team.”
- Ethereum’s proposed EIP-8363 would taper validator rewards more aggressively as staking participation rises, drawing strong pushback from parts of the DeFi sector.
- Spot Bitcoin ETFs recorded their strongest weekly inflows in roughly four months, underscoring renewed institutional appetite.
Bitcoin’s BIP-110 anti-spam branch stalls
Supporters of BIP-110, a proposed soft fork designed to reduce “non financial transactions” on Bitcoin—explicitly targeting activity associated with Ordinals—had hoped the change could move from debate to implementation. However, after a lengthy and heated discussion, the proposal was declared effectively “dead on arrival” following weak uptake by miners.
According to reporting from Cointelegraph, BIP-110 secured only about 2.5% support ahead of entering mandatory signaling on Saturday. As a result, it forked into a minority chain that produced just two blocks over an eight-hour period before stalling.
From an economic standpoint, critics argued the same constraints that apply to mining a parallel chain would remain: difficulty is unlikely to meaningfully improve, yet miners would still bear the cost of operating on the new branch. The difficulty adjustment mechanism requires successfully mining additional full difficulty periods (another 2,014 blocks) to change the economics—something the minority branch failed to achieve.
The governance and “neutrality” fight continues
The technical collapse of the branch does not end the broader argument over what Bitcoin should optimize for. Opponents framed BIP-110 as censorship by design—an approach that they argued conflicts with the network’s established norms around neutrality and consensus. The proposal also drew objections from prominent Bitcoin advocates.
Cointelegraph previously noted that Strategy executive chairman Michael Saylor said he understood the goal of reducing spam-like activity, but argued the method could threaten Bitcoin’s neutrality and the underlying consensus rules. Blockstream CEO Adam Back similarly warned that a consensus-level change could damage Bitcoin’s credibility and introduce risks such as making certain unspent transaction outputs unspendable.
There were also institutional ripples within the Bitcoin ecosystem. After the debate, a Bitcoin Core developer proposed removing BIP-110 backer Luke Dashjr from his role as a BIP Editor, underscoring how politically charged the “anti-spam” question has become inside governance-adjacent circles.
CLARITY Act momentum stalls until September
In the U.S. policy arena, the path toward the CLARITY Act has again shifted. Senator Tim Scott, chair of the Senate Banking Committee, said a procedural vote on the bill should occur before the August recess “without any question,” according to Cointelegraph’s reporting. Senator Cynthia Lummis also suggested there could be a last-minute push.
However, Senate Majority Leader John Thune declined to force immediate action and scheduled the cloture vote for September 15, delaying any realistic chance of passage before senators leave for the August break. Thune told Cointelegraph he “worked with sponsors of the bill,” praised Lummis’s role, and indicated the bill would be queued when lawmakers returned.
For stakeholders trying to influence the final shape of the legislation, the near-term window narrows to what can be negotiated before the cloture vote—particularly around ethics rules, stablecoin yield issues, and protections for developers mentioned in the reported coverage.
Bitcoiners escalate AI-assisted security review
Security concerns have remained a central theme for Bitcoin users, especially after prominent hardware wallet incidents. Cointelegraph reports that a volunteer Bitcoin security initiative called “Bitcoin Red Team” began an AI-assisted review of open-source Bitcoin-related repositories and quickly expanded its findings.
The group—composed of 16 volunteers—initially identified nearly 5,000 potential issues during a rapid scan mid-week. By the weekend, the number reportedly grew to 7,958 issues, including 168 critical flaws and 1,120 high-severity items.
According to Cointelegraph, the initiative includes Rob Hamilton, CEO of AnchorWatch and a Bitcoin developer known as Calle. The team used AI tools alongside human review to search for vulnerabilities, aiming to reduce the risk that weaknesses go unnoticed in widely used codebases.
Cointelegraph also tied the effort’s urgency to earlier wallet compromise claims. Developer Coinkite suggested that the Coldcard hardware wallet hacks were related to AI analysis of its source code. The article reiterates that more than $100 million was stolen by 7,300 wallets due to flaws linked to randomness used for seed phrase generation, framing the incident as a major breach that eroded confidence across cold storage practices.
In response to that trust shock, many Bitcoiners reportedly re-evaluated how they generate self-custody seed phrases. Cointelegraph notes a trend toward manual methods such as dice-based seed generation—an attempt to reduce reliance on any single entropy source.
Ethereum proposal to taper staking rewards meets strong resistance
On Ethereum, a separate but equally ecosystem-sensitive debate is unfolding around issuance and validator incentives. Cointelegraph reports that Ethereum researchers and developers proposed changes under an initiative called Tapered Issuance Burn, also known as EIP-8363.
As described in the coverage, the proposal would adjust issuance so that validator rewards decline more sharply as the percentage of staked ETH increases. Specifically, it would cut rewards entirely once the share of supply staked passes the 50% threshold. Current staking participation is cited as about 34%, with a queue of validators waiting to enter.
Supporters argue the approach could help prevent staking from becoming overly concentrated and that it aligns network incentives with usage of proof-of-stake security. But critics—especially in DeFi—fear the change could backfire by making staking less attractive as more ETH moves onto the beacon chain, potentially snowballing into reduced security benefits.
Cointelegraph also highlights backlash from parts of the ecosystem. Ether.fi founder Mike Silagadze said Ether.fi could exit staking entirely if the proposal passes, arguing it would be harmful to decentralization, Ethereum adoption, and the network’s credibility.
Bitcoin ETFs post strongest week in four months
While Bitcoin’s protocol-level governance fights continued, institutional positioning offered a more optimistic signal. Cointelegraph reports that spot Bitcoin ETFs posted their third-strongest showing since October, reflecting renewed momentum in institutional demand.
According to the article’s cited data from SoSoValue, ETFs recorded $853.54 million in inflows—five times the net amount seen across all of July—and the week was described as the best since April. Ether ETFs reportedly added another $243.7 million.
Some market participants tied the improved ETF flow picture to the ongoing hardware wallet scrutiny sparked by the Coldcard incident. Cointelegraph cites Bloomberg ETF analyst Eric Balchunas as suggesting an institutional custody connection, and also includes a direct statement attributed to Binance co-founder Changpeng “CZ” Zhao: that storing coins on exchanges is “statistically safer” than self custody.
What to watch next
BIP-110 is unlikely to return to the spotlight in the near term given its stalled minority-branch reality, but the underlying disagreement about transaction neutrality on Bitcoin remains unresolved. In the U.S., the September cloture date for CLARITY sets the next measurable checkpoint, while Ethereum’s EIP-8363 debate will hinge on whether critics can persuade stakeholders that staking incentives can be maintained without eroding DeFi participation and validator economics.
Be the first to comment