Ethereum just made one of its most consequential cryptographic decisions in years, and it happened almost quietly on social media. Ethereum Foundation researcher Justin Drake announced that the network is walking away from Poseidon, the hash function built specifically for zero-knowledge proofs, in favor of a more conventional Ethereum hash upgrade built around SHA or BLAKE. It’s a shift with implications far beyond a technical footnote, arriving alongside a cluster of other ecosystem moves — from Robinhood Chain‘s NFT surge to ENS DAO’s new governance body — that together paint a picture of a crypto industry rapidly rewiring its infrastructure.
Key takeaways
- The Ethereum Foundation is abandoning Poseidon for Ethereum L1 and pivoting to SHA or BLAKE, targeting a production-grade leanVM in 2027 and layer deployments in 2028.
- Robinhood Chain became the largest network by daily NFT trading volume at $3.13 million, even as its total value locked jumped 32% weekly to $473 million while active accounts grew just 3.3%.
- Hyperliquid will auto-deploy idle USDC into its native lending pool for yield, while Uniswap is redirecting test-token creator fees into an auto-buy-and-burn ETH contract.
- ENS DAO approved the creation of the ENS Foundation as a formal operating body, and Solana-based Jupiter launched Lend v2 with roughly $1.9 billion in deposits.
- A security study found 15 x402 payment providers, including Coinbase, each violated at least one security rule, while MegaETH’s USDm stablecoin supply collapsed more than 95% from its peak.
Ethereum Foundation Shifts Hash Function Strategy for Layer 1
The core answer to why this matters is simple: Ethereum’s move away from Poseidon signals that its long-term security architecture is being rebuilt around cryptography that has already survived decades of outside scrutiny. Drake described the decision as the end of an “8-year, 8-figure rabbit hole” in post-quantum research, and it changes how Ethereum plans to defend itself against future quantum computers.
Abandoning Poseidon in Favor of SHA or BLAKE
Poseidon was introduced in 2019 specifically because it was cheaper to process inside SNARKs — the succinct proofs Ethereum relies on for scaling and privacy — than traditional hash functions built on binary operations. The Ethereum Foundation invested heavily in that specialized approach starting in 2018, and Poseidon eventually spread across zk-rollups and zkVMs securing billions of dollars in assets. Those existing systems are not required to change; this decision only affects Ethereum’s own Layer 1 roadmap going forward.
What flipped the calculation, according to Drake, is progress in binary-field SNARK design through projects like Binius and Flock, which let proof systems handle the Boolean logic of standard hashes far more efficiently than before. The result: SHA-2 and BLAKE2s can now match Poseidon’s SNARK performance, reportedly proving around 1 million traditional hash calls per second on ordinary hardware. As Drake put it, “the key was not SNARK-friendly hashes, but hash-friendly SNARKs.”
Post-Quantum Cryptography Roadmap and Timeline
This Ethereum hash upgrade is tied directly to the network’s post-quantum defenses. Hash-based signatures are simple, extensively studied, and considered quantum-resistant — but individual signatures are too bulky for Ethereum’s current scale. SNARK aggregation offers a workaround, compressing many signatures into a single compact proof rather than posting each one on-chain separately.
The roadmap calls for a production-grade leanVM in 2027, with deployments across the consensus, data and execution layers following in 2028. Those dates sit inside Ethereum’s broader Strawmap coordination document, which stretches through 2029, meaning each step still requires implementation, testing and agreement among independent development teams before it becomes final.
Robinhood Chain Leads NFT Trading Volume Amid Mixed User Growth
Robinhood Chain’s daily NFT trading volume hit $3.13 million, enough to overtake Ethereum and claim the top spot among all networks by that metric. The momentum traces back largely to StonkBrokers, a project blending NFTs, meme coins and real-world-asset gameplay, whose market cap has reportedly topped that of BAYC at points. Robinhood Chain also logged an average of 11.6 million daily transactions last week — a fresh all-time high, up roughly 30% week-on-week.
TVL Growth Outpaces Active Account Expansion
Robinhood Chain’s on-chain total value locked climbed to $473 million, a 32% jump in just one week. Yet daily active accounts rose only 3.3% and remained 11% below the peak set on July 16 — a gap worth watching closely. Why does this matter? Because it suggests trading volume and locked capital are expanding faster than the actual user base, a pattern that can flag concentrated activity rather than broad adoption. Part of the TVL surge traces to USDe supply on the chain, which grew from $17 million a month earlier to $253 million, now representing about 43% of the chain’s total stablecoin supply.
Lending and Wallet Innovations Enhance DeFi Ecosystems
Several protocols are quietly rewriting how idle capital and fees get put to work. Hyperliquid founder Jeff announced that after the platform’s next upgrade, its HLP vault will automatically deploy USDC not needed for market-making into the HyperCore native lending pool to earn interest. On-chain figures show HLP currently holds about $188.7 million in TVL, with roughly $148.7 million sitting idle — nearly 79% of total capital. Hyperliquid’s native lending pool already has about $176 million in USDC supplied and $112 million borrowed, a 63.7% utilization rate generating close to a 2.87% annualized supply yield. The change effectively turns HLP from a market-making and liquidation buffer into a multi-strategy vault with automated capital allocation.
Uniswap Redirects Fees to Buy-and-Burn Contract
Separately, Uniswap founder Hayden Adams confirmed that test tokens created internally during Pools trade testing were never meant to surface publicly — but once the market found them, the team pivoted quickly. All creator fees tied to those Uniswap buy-and-burn fees experiments are now waived, with both past and future proceeds routed into an auto-buy-and-burn contract paid out in ETH. Anyone can claim that ETH by burning the corresponding tokens, and Adams said he’s considering extending the mechanism to other token deployers.
UniSat Boosts Wallet Security
UniSat’s August 2026 security update, wallet version v1.7.19, raises the default mnemonic length for newly created wallets from 12 words to 24. Existing 12-word wallets remain BIP-39-compliant, so UniSat says there’s no urgent need to migrate purely because of the new default. The update also addressed several community-reported security issues through fixes or hardening measures, depending on their severity.
Governance and Protocol Updates in ENS DAO and Solana Lending
Two separate protocols pushed forward structural changes this week that reshape how they’re run and how capital moves through them. Ethereum Name Service token holders passed and executed the “Next Era of ENS DAO” proposal, formally establishing the ENS Foundation as an operating body with a full-time executive director, dedicated staff and a five-member board. This ENS DAO governance overhaul hands the foundation responsibility for engaging bodies like ICANN, IETF and W3C, advancing the .ens top-level domain, handling regulatory outreach and managing brand protection — while ENS Labs keeps control of protocol and product development.
Crucially, the DAO retains control: ENS tokens held by the organization account for 54.6% of total supply and remain under token-holder authority, with only a one-time allocation of 1 million ENS transferred to the foundation for staff compensation. Endowment transactions now carry an added 9-day timelock, and the ENS Security Council can block operations that exceed the foundation’s authorized scope. The inaugural board includes Executive Director Alexander Urbelis, ENS founder Nick Johnson, Kartik Talwar, Brett Sun and Anthony Leutenegger.
On Solana, lending protocol Jupiter rolled out Lend v2, letting deposited and borrowed assets act as trading liquidity at the same time — meaning the same capital can earn lending yield and swap fees simultaneously. Optional features called Smart Collateral and Smart Debt automatically deploy assets like USDC, USDT, SOL or JupSOL into correlated liquidity pools, or let borrowed funds accrue trading fees that offset borrowing costs. Jupiter Lend now holds roughly $1.9 billion in deposits and around $823 million in active loans.
Security Vulnerabilities and Token Supply Shifts in Blockchain Ecosystem
A study presented at the 35th USENIX Security Symposium tested 15 major x402 payment service providers — including Coinbase, Thirdweb, PayAI and Mogami — and found that every single one violated at least one security rule, adding up to 49 rule violations across 31 distinct vulnerabilities. Those providers together handled 99% of x402 transaction volume and 98% of payment value during the study period, though that doesn’t mean vulnerabilities scale to the same share of activity. Researchers grouped the risks into categories like free-of-charge service acquisition, asset theft, service disruption and gas-fee abuse, and validated six attack paths under controlled conditions without actually moving provider-held funds. Coinbase, PayAI and Mogami acknowledged six vulnerabilities between them, with some fixes already deployed and others still in progress.
Meanwhile, MegaETH’s native stablecoin USDm has seen its supply fall from a roughly $600-million peak in May to around $18 million now — a drop of more than 95%. Built jointly by MegaETH and Ethena, USDm parks its reserves in BlackRock’s BUIDL fund and uses the yield for MegaETH token buy-and-burn operations. Castle Labs estimates that at the current $18-million supply and a 3.6% SOFR rate, USDm could still generate about $650,000 in annual yield, but attributes the steep contraction to declining on-chain activity across MegaETH.
Elsewhere, World Liberty Financial and its partners have delayed the token issuance tied to a Trump-branded resort development in the Maldives, developed with UK-listed firm DAR Global. Originally planned for launch this spring, the token would have given investors a share of proceeds from the resort’s financing loans. The rollout was pushed back amid regional travel disruptions linked to the Iran conflict, and no new launch date has been announced. World Liberty had positioned the project as a flagship real-world-asset tokenization effort, alongside earlier discussions about tokenizing real estate, investment funds, oil and gold.
FAQ
Why is the Ethereum Foundation abandoning the Poseidon hash function for Layer 1?
Advances in binary-field-based SNARK design allow traditional hash functions like SHA2 and BLAKE2s to match Poseidon’s SNARK performance, enabling a more secure post-quantum cryptography path.
What explains the growth in Robinhood Chain’s NFT volume despite limited active user growth?
The surge is driven by popular NFT, meme-coin, and real-world asset gameplay combos like StonkBrokers, but daily active accounts have only grown modestly, indicating volume growth without equivalent user base expansion.
What changes did Uniswap implement regarding creator fees for test tokens?
All creator fees from team-led test tokens have been redirected to an auto-buy-and-burn ETH contract to waive past and future fees, enhancing tokenomics and community trust.
What security risks were identified among x402 payment service providers including Coinbase?
A study found each of the 15 major providers violated at least one security rule, with a total of 49 violations across 31 vulnerabilities, highlighting risks related to asset theft, service disruption, and fee abuse.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
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