Welcome to The Protocol, CoinDesk’s weekly round-up of the most important stories in cryptocurrency technology development. I’m Margaux Nijkerk, a reporter for CoinDesk.
In this issue:
- Stripe-Backed Blockchain Tempo launches testnet. Kalshi, Mastercard and UBS added as partners
- ZKsync Lite to end in 2026 as Matter Labs moves forward
- Blockstream connects Lightning and Liquid for faster private Bitcoin payments
- Axelar introduces AgentFlux to avoid cloud risks and bring AI agents on-chain
network news
STRIPE’s TEMPO testnet is now live: Tempo, a payments-focused blockchain backed by Stripe and crypto investment firm Paradigm, has launched a public testnet, a key step in its efforts to mainstream stablecoin payments. Tempo also announced a roster of additions to the network’s partner group, including buy now, pay later company Klarna, prediction market Kalshi, payments giant Mastercard, and Swiss global bank UBS. They join a group of early design partners including Deutsche Bank, Visa, Shopify, OpenAI, and Nubank. First introduced in September, Tempo is designed to process high-volume financial transactions with low fees, instant finality, and native support for stablecoins. The testnet is now live, allowing developers and corporate partners to start experimenting with real-world on-chain payments. The move fits into the latest trend of building blockchains for stablecoin payments as digital dollar adoption surges globally. Stablecoins, currently a $300 billion asset class, are projected to drive growth by becoming an integral part of cross-border payment rails such as business-to-business (B2B), peer-to-peer (P2P), and card payments, said a recent report from Keyrock and Bitso. Tempo aims to solve common pain points in blockchain-based finance, such as network congestion and volatile transaction fees. The network charges approximately 1/10th of a cent per transaction and is paid in USD-denominated stablecoins, eliminating the need for volatile gas tokens. — christian sander read more.
ZKSYNC LITE until sunset in 2026: Matter Labs plans to deprecate ZKsync Lite, the first iteration of the Ethereum Layer 2 network, the team said in a post on X over the weekend. The company framed the move, which will take place in early 2026, as the planned conclusion of an initial proof of concept that will help validate zero-knowledge rollup design choices before the new system goes live. ZKsync Lite, which debuted in 2020, was built for basic token transfers, but took a backseat after the developer released ZKsync Era, a more advanced zkEVM rollup, in March 2023, and is now the anchor of the project’s broader ZK stack roadmap. The Lite network will continue to operate for the time being, funds will remain safe and withdrawals to the Ethereum mainnet will continue to be available, the team said. A detailed migration plan and shutdown schedule will be published next year. — Margaux Nykerk read more.
Blockstream App Introduces Lightning Atomic Swaps: Blockstream has rolled out an update to its mobile app that allows users to exchange between Bitcoin’s Lightning and Liquid networks, aiming to lower the barrier to entry for private, fast Bitcoin payments. The latest version of the Blockstream Green app introduces support for trustless atomic swaps between Lightning and Liquid. This change allows users to pay their Lightning bills directly from their Liquid bitcoin (LBTC) balances, bypassing the need to manage Lightning channels and maintain incoming liquidity, a technically difficult process for many. Lightning is designed for instant, low-fee Bitcoin payments. In contrast, Liquid is a sidechain that facilitates the management of sensitive transactions and unused Bitcoin outputs (UTXOs). By linking two networks through atomic swaps, Blockstream seeks to give users the best of both worlds without the need for deep technical involvement. The swap process is self-custodial and relies on cryptographic hash locks to ensure that both sides of the transaction complete or that neither completes. If something fails, the funds will automatically return to their original wallet. — helen brown read more.
AXELAR Announces New Privacy AI Framework: Axelar announced AgentFlux, an open source framework designed to run AI agents locally while keeping private keys, trading strategies, and customer data out of the cloud. This is a pitch aimed at institutions considering on-chain finance and wary of privacy risks. Developed by Interop Labs, the team behind the Axelar network, AgentFlux allows financial firms to deploy “agent” automation without sending sensitive information to external infrastructure, the company announced. This framework tackles one of the biggest frictions in AI-driven crypto operations: tool invocation. Currently, most agents rely on cloud-based models to decide which blockchain tools to call and how to structure transactions. This can inadvertently expose the very information that institutions are trying to protect. AgentFlux splits these tasks into two small specialized models. one for selecting the appropriate tool and the other for generating the arguments to execute. According to the team behind Axelar, this setup improves tool call accuracy by 46% in benchmark tests, bringing local models closer to the performance of large cloud systems. – Margaux Nykerk read more.
In other news
- Superstate, a blockchain-focused financial technology company, has rolled out a new platform that allows public companies registered with the U.S. Securities and Exchange Commission (SEC) to issue equity directly on-chain to investors on Ethereum. Superstate’s new initiative, called the Direct Issuance Program, will allow companies to raise capital by selling newly issued tokenized shares in exchange for stablecoins. Investors receive tokenized shares instantly, and the company’s shareholder records are updated in real-time via Superstate’s SEC-registered transfer agent infrastructure. The first issuer is expected to go live next year, the company said. The move comes as tokenization gains momentum as financial institutions and other businesses explore blockchain rails to improve efficiency. SEC Chairman Paul Atkins said in an interview last week that tokenization has the potential to “reshape the financial system” in the coming years, highlighting how regulators are opening the door to blockchain as part of the next generation of market infrastructure. — christian sander read more.
- Bitmine Immersion Technologies (BMNR), an Ethereum-focused digital asset treasury company, acquired 138,452 Ether last week, accelerating its accumulation strategy and raising its total holdings to 3.86 million tokens, the company reported. At current ETH prices, last week’s acquisition is worth approximately $435 million. The company noted that this is a 156% increase compared to four weeks ago, when it added approximately 54,000 ETH, and is higher than the previous two weeks of 97,000 and 70,000 tokens. The company also increased its cash holdings to $1 billion from $882 million the previous week. Including a small stash of Bitcoin and shares in Eightco Holdings (ORBS), the company’s total crypto and cash assets are worth $13.2 billion. The acquisition increases BitMine’s share of the second-largest cryptocurrency’s circulating supply to more than 3.2%, strengthening its position as the largest known ETH vault. — christian sander read more.
regulation and policy
- Republican Sen. Cynthia Lummis, a key figure in talks over the industry’s top policy priority, the Cryptocurrency Market Structure Act, said the White House balked at the ethics language it discussed with Democrats. That left the Wyoming lawmaker to serve as an intermediary to persuade the White House to cooperate while satisfying his Democratic colleagues in bipartisan talks, he said at the Blockchain Association’s policy summit in Washington. Still, she believes negotiators should reveal a working draft by the end of this week and formally mark it up next week. Lummis said he worked with Democratic Sen. Ruben Gallego to come up with some ethics language. She did not provide specifics, but one sticking point for Democrats is the demand that government officials should not be allowed to profit from the industries over which they hold policy power, a demand that is clearly directed primarily at President Donald Trump and his family’s crypto business. — jesse hamilton read more.
- The nation’s second-largest teachers union has called on the Senate to reconsider the virtual currency bill, saying it puts the pensions of 1.8 million members at risk while doing little to combat fraud and corruption in the digital asset sector. In a Dec. 8 letter obtained by CNBC, American Federation of Teachers (AFT) President Randi Weingarten addressed the U.S. Senate Banking Committee over the Responsible Finance Innovation Act, saying it “poses significant risks to working families’ pensions and the stability of the broader economy.” The proposal is based on a bill passed by the House of Representatives earlier this year and is co-sponsored by Cryptocurrency Alliance Sens. Cynthia Lummis and Bernie Moreno, and Senate Banking Committee Chairman Tim Scott. The bill establishes a framework for overseeing digital assets, but also raises new questions about how tokenized securities, which are not technically cryptocurrencies, will be treated by regulators. “The virtual currency laws considered by the Committee over the past several months cause us deep concern,” Weingarten wrote. “This is both reckless and irresponsible. We believe that if passed, this bill could lay the groundwork for the next financial crisis…Besides the threat to the retirement security of working families, the bills the committee is considering will do little to curb the illegal activity, fraud, and corruption that continue to flourish in anonymous virtual currency markets,” he wrote. — Olivier Acuña read more.
calendar
- December 11-13: Solana Breakpoint, Abu Dhabi
- February 10-12, 2026: Consensus, Hong Kong
- February 17-21, 2026: East Denver, Denver
- March 30-April 2, 2026: EthCC, Cannes
- April 15-16, 2026: Paris Blockchain Week, Paris
- May 5-7, 2026: Consensus, Miami
