Welcome to The Protocol, CoinDesk's weekly wrap-up of the most important stories in cryptocurrency tech development. I'm Ben Schiller.

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In this installment of The Protocol, we take a look at the final Pectra upgrade test, Hyperliquid’s update for easier DeFi and Celo completes its migration to Optimism’s layer-2.

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Last Pectra upgrade test occurs ahead of mainnet launch

The final dress rehearsal for Ethereum’s upcoming Pectra upgrade occurred Wednesday, as the blockchain’s biggest changes in over a year were tested an additional time following a series of mishaps.

The upgrade on the new Hoodi testnet was closely watched given that two previous tests, on the Holesky and Sepolia test networks, failed to finalize properly. Following those tests, developers created one more testing opportunity for ecosystem players, particularly staking providers, in the form of the Hoodi testnet.

Hoodi testnet is used to test major code changes in a low-stakes environment before they reach mainnet. Any bugs or issues can be quickly identified and patched during this testing phase.

The test involved passing Hoodi a series of code changes meant to make Ethereum more user-friendly for both end-users as well as developers. One of those changes adds smart contract functionality to wallets, allowing wallet software developers to build new convenience-oriented features, like the ability to pay transaction fees in cryptocurrencies other than ether (ETH).

Testnets are like copies of a main blockchain, used by developers to run through any major code changes in a low-stakes environment and give them a place to patch out any bugs before they reach mainnet. Hoodi was the last of three testnets to run through a simulation of Pectra.

Developers previously agreed that if all went well on Wednesday, Pectra would be monitored for around 30 more days and then, finally, activated on Ethereum’s mainnet.

Hyperliquid eases tokens for DeFi use

Decentralized finance (DeFi) is among the biggest drivers of value accrual and revenue creation for crypto projects, but its complexity often leaves users tangled in a web of blockchains, bridges, wallets and tokens.

A technical update by Hyperliquid is making that process easier for both developers and users, with the direct linking of tokens on HyperCore and HyperEVM platforms now being possible.

HyperCore is its native platform for spot assets (think tokens you can trade directly), and HyperEVM, an Ethereum Virtual Machine (EVM) network that executes smart contracts on Ethereum. Tokens on HyperCore, dubbed “Core spot,” can be linked to their counterparts on HyperEVM and are called “EVM spot.”

Once linked, users can transfer them using simple actions — like a “spotSend” on HyperCore or a standard ERC-20 transfer on HyperEVM.

By letting tokens move directly between them — without a third-party intermediary — developers can create products that cut out the technical chops required to move assets, which is easy for heavy crypto users, but may be challenging for beginners.

Celo completes migration to Optimism’s layer-2

The Celo blockchain's long-awaited plan of becoming an Ethereum layer-2 chain has been completed, ending an almost two-year process, the main organizations behind the network said Wednesday.

The transition ends a long journey beginning back in July 2023 for the layer-1 blockchain that included a community vote in July 2024 and a fierce competition, won by Optimism, among layer-2 networks out to convince the Celo ecosystem to build with their technology.

The improved network — like other layer 2s — offers faster and cheaper transactions on top of Ethereum's mainnet. The blockchain is powered by Optimism’s OP Stack, a customizable framework that lets developers build layer-2 networks based off of Optimism’s technology.

According to Rene Reisberg, the CEO of the Celo Foundation, the migration is the first of its kind in the Ethereum ecosystem, and will probably be used as a blueprint for other EVM-compatible blockchains that are looking to become a layer-2 network.

"This is a significant moment not just for Celo but for the broader blockchain industry," said Vijay Ajina, the CEO of Optimism. "We are excited to welcome Celo to the Optimism ecosystem and to continue working together to build a decentralized future."

Bitcoin defi faces fork dilemma as major implementation occurs

Bitcoin developers looking to expand the blockchain's decentralized finance (DeFi) capabilities are likely to be considering zero-knowledge (ZK) proofs, functionality that's not currently available and which require a so-called soft fork, or new version of the software, to introduce them.

That's a problem, according to Edan Yago, a Bitcoin veteran of over a decade and core contributor to smart contract operating system BitcoinOS (BOS).

"Forking a blockchain, especially one with $2 trillion worth of value on it, is like open-heart surgery," Yago told CoinDesk in an