ARB staking, Kraken layer 2 and more - The Daily Gwei Refuel #685 - Ethereum Updates

Transcript

hello everyone welcome to another episode of the delway refuel where cup the latest news in ethereum ecosystem I'm your host Andy sday 7th of November 2023 all right everyone let's get into it so first off today we have a bit of I guess like General news not really ethereum related news but something that I just wanted to to speak about here so there was this tweet from Jeff Roberts uh where he tweeted out the SEC is having trouble hiring hiring crypto experts because of a rule that they must sell all of their crypto now this is obviously a really really dumb rule right I mean mean I I understand that it's a rule because of conflicts of interest and such but if you are a crypto expert like why would you sell all of your crypto to go work at the SEC to do what exactly right like you're

basically giving up all the upside in the industry that you're an expert of to work at the SEC to possibly go after some scammers because we all know the SEC doesn't just go after the Bad actors they very often go after the honest actors as well so this is goes back to something that I've said a while ago on the refill and I I think it's just a theme that I've been talking about for a while now is where these Regulatory Agencies generally have a very hard time getting experts in par particularly within crypto because not only do they have silly rules like this but generally the upside is just not there like just speaking personally for you know for for example here I wouldn't go and work for one of these Regulators or some government agency to be a crypto expert for them because there's just no upside

in it there is no career upside in it um it is just a basically a machine of bureaucracy and political crap uh and also if they have rules like I have to sell you know my crypto or have to only own a certain amount of it that's like a complete non-starter because who would want to do that like who in their right mind would want to do that if they actually are considered a quote unquote crypto expert or someone who's deep into crypto now of course the downstream effect of this is actually ironically enough negative for crypto because what ends up happening is that the people regulating our industry are not experts right they don't understand things and what ends up happening is that both they don't understand it and they're also potentially hostile towards it so they come up with all these weird and wacky

regulations and laws and things that are just unworkable and then it requires our kind of like um groups within crypto such as the VCS the lobbying firms the people with money to actually correct this and to go out there and uh and the exchanges like Queen base for example but it requires them to go out there and educate these Regulators because I if I'm being honest I think that or not not being honest if I'm being real here I would assume that there would be basically no crypto experts at the SEC if this is the rule that they have in place which it seems it is where they can't hold crypto um because as I said you're giving up all the upside in the industry to go work at the SEC to do what yeah I I just don't understand why anyone would want to do that now of

course if you were to remove this rule you would probably get some people doing it some people just want to go work at uh maybe maybe kind of like a change from within at the because obviously as we've seen from the SEC it's been uh it's been a mess right for for a while now um but I don't think that any person that actually knows their stuff when it comes to crypto would ever go work at the SEC if it required them to sell all of their crypto that's just a non-starter uh completely here and what I found particularly funny was I quote tweeted this tweet and I said you know Congress in the US can inside a trade but don't you dare own crypto if you want to work at the SEC so it's completely fine for Congress to legally inside a trade uh and and a million

conflicts of interests there um and and you know that's fine the SEC can't go after after them because it's completely legal but you know you're not allowed to own crypto because it's a conflict of interest if you want to work for the SEC which I just feel is utterly bizarre and just I guess like speaks to the fact that you guys know my views on generally on financial regulations I think most of them are crap I think that there are definitely there is definitely obviously a huge need for certain regulations and I guess like um accountability uh U law Wars I guess for centralized players like coinbase uh and other centralized exchanges where if you're custody assets then of course I would want Protections in place there for people and uh kind of like um guarantees from the government

that they will do something if something goes wrong or they take responsibility for it or they'll work through it but a lot of the financial regulations go beyond that they stifle Innovation they don't make sense like the one that like like this rule here where you can't work for the SEC if you hold crypto and they generally are quite hostile to the industries that they're trying to to regulate and as I said a bit of its nefaria being nefarious and and being hostile a bit of it is just I mean I think I actually think a lot of it and and this might might be wrong but my assumption is a lot of it is just like pure misunderstanding like they just do not understand our industry because if you look at the people that are actually uh kind of putting forward these things um not only have they not grown up with

computers for starters right because they're they're on the older side right they didn't grow up with computers because they just weren't around back when they were when when they were growing up um but they're also very kind of hostile towards technology generally because they've seen technology in one way or another obsolete them to an extent right or make them kind of uh uh feel infurious because they just don't understand how it works and you've got all that kind of generational baggage there and then you've got the fact that crypto from the outside looking in just looks like one giant scam uh because you have things blowing up all the time and you know to be fair if I wasn't paying any attention to crypto and I was just a casual Observer from the outside the only thing that the media is reporting on really is like SPF and Doan and 3ac

and all those people you know all those scammers and all those people who blew blew themselves up um and then when the market is hot or when the Market's like tanking they'll report on that but like generally the uh mainstream media is not going to pay much attention to the actual good happening within the industry right and even within the industry we have a really bad um track record of paying attention to to to things that are actually happening you know I put out a tweet today or yesterday where I said that I basically never hear about Tron um and you know on on Twitter or on you know Discord channels that I'm in or anyone that I talk to they never talk about Tron right and I get why because Tron started off as a very kind of like scammy grifty Fork of ethereum Justin sun is

definitely not uh someone that you want to be kind of like sing for someone that you uh that you kind of like want to be representing this industry um because of the the you know the scam and the griess there but if we look at the reality today Tron is the biggest payments Network in crypto it is bigger than ethereum it is bigger than uh Bitcoin obviously uh it is bigger than BSC uh which is is quite big in of itself but it's bigger than everything and it's bigger than the networks that claim to be the payments networks right so if you're looking at just the hard reality of of how things uh shake out uh even within crypto we don't give the credit where it's due where essentially Tron is offering real value to real people because they're using Tron as a payments

rail primarily for tether for usdt primarily in South America and I think parts of Africa as well I've talked to many people from these places and they have friends and family they all just use uh uh Tron because it has Integrations directly with exchanges like binance uh and it's just easy for them to on and off ram and send money to each other because they obviously want to send dollars because especially in places like Argentina in South America they've got hyperinflation stuff like that so they want access to US Dollars they're not doing this on ethereum they're not doing this on layer 2os yet uh they're not doing this on other networks they're doing it on Tron now it started out they were doing it on Tron because of cheap fees but these days tron's fees aren't aren't very cheap at all I think it's like a dollar for a

transaction so obviously still not as high as what ethereum sometimes is or I guess like depending on the market conditions a lot of the times is but when you kind of look at it holistically uh it's more it's about more than fees right it's about Network effect Integrations especially Network effect and like overall user experience that's why Tron is still dominating even though we have cheaper alternatives the network effect and the liquidity Network effect is just so great and to change that takes many many years if you'll be able to change it at all so yeah I mean that that's going back to my original point about thing you know things within crypto not being paid attention to with you know within crypto industry and also outside of it uh and when things that do get paid attention to just aren't the

the best out there but anyway I'm going to move on from that one for now just something that I wanted to talk a little bit about right got a bunch of Layer Two stuff to get through so Kraken the us-based crypto exchange is going to apparently be following in Quin base's lead with plans to launch their own layer 2 Network on ethereum now they haven't chosen which stack they're using yet but apparently they're in talks with polygon matter labs and the nil Foundation about a potential partnership um people were saying that why you know they may just use kind of like op stack and and basically copy what coinbase did I don't think so one because it's not a differentiation for them if they use the same thing that coinbase is using uh two I'm sure that these other teams uh you

know offering token incentives and stuff like that and and other kind of things and other kind of promises to Kraken to for Kraken to build their uh uh their kind of layer to using their technology um and and three uh yeah obviously Kraken wants to build this thing to support their own kind of products and services so they have to uh essentially pick the best solution for them but as I said they aren't they haven't picked the solution yet uh and from the the the ones that they're talking to right now polygon obviously has their polygon cdk or their chain development kit that I've talked a lot about matal Labs um is the are the builders behind ZK sync they have their own thing going on there and I believe the nil Foundation are the builders behind um uh what's the what's the uh kind of uh uh project called I'm

actually just going to quickly Google it because I've forgotten what the project is called I think it's just called nil the project but um I think this is separate to to mina yeah it is separate to mina so Neil are building ZK related things here but in terms of who would be furthest along here I think polygon because they have the cdk which is able to be used today and there are chains live on it already I'm not sure how how far along matal labs's Tech is and the nil Foundation I mean I haven't heard much about them so I doubt they're as far along as something like polygon is either but we'll have to see which solution they choose here but generally the kind of trend of these exchanges building their own layer twos is quite funny to me because obviously binance built their own layer one which was just

a direct Fork of ethereum in early 2021 binance smart chain after having their own chain for a while actually they had binance chain which was a cosmos based chain and then they kind of pivoted away from that and created BSC because BC is evm compatible was very easy for everything just to be redeployed there from ethereum and obviously there was cheaper fees and ethereum fees were were expensive at the time and had binance integration so everything just kind of worked because it was a bull market and they got a lot of adoption because of that um but now you know now we've seen coinbase Do It um not a layer one they're doing a layer two with Bas now kraken's doing it I wonder which other exchanges are going to jump into The Fray here and I wonder how many it actually makes sense for I think for

coinbase it makes a lot of sense because they are definitely that kind of like main front door for uh retail people in the US but I think it makes sense for Kraken as well because they are a big r front door in in the us too but if we're looking at this from like a regulatory perspective as well there are a lot of assets that I think that obviously Kraken and coinbase want to list but can't because those assets are just at a higher risk of being declared as security or high risk of the SEC going after the exchange for those assets so as I've said before I think what coinbase wants to do with base is basically say to people well we don't have this token trading on coinbase but hey you can go on base and the token is on unisoft for example or on a

decentralized exchange I think Kraken would probably do the same thing and the way they would make money from this is from running the sequences obviously right and getting fear revenue from from that uh from that there but yeah I'm going to keep tabs on this and let you guys know which uh project Kraken ends up going with to launch their new layer 2 Network all right so the arbitrum Dow has apparently approved a proposal to activate AB staking on the network now I was initially excited by this when I read the headline and then I read the uh the actual contents of it and I was just like oh okay this is not very exciting and I'll tell you why so you may think that this means that you'll be able to stake your AR and run a sequencer or run a validator or full Noe or whatever it

is and get a share of the sequence of fees right get a share of the fee Revenue that the network generates no that's not what this is what this is is basically very similar to apoin staking so if you remember the way apoin wanted to do it was essentially you can put your token up you know you stake your token and then you get paid out a yield directly from the treasury so in this case essentially you get paid out the yield um uh in in tokens that are taken directly out of the treasury for 12 months via a smart contract so essentially the staking does absolutely nothing it does not add any security to the network you're not getting any fear Revenue all you're getting is tokens being paid out from the Dow itself which to me is is is is very very

uninteresting now in terms of like numbers here I think someone in the deleg Discord Channel actually uh actually broke it down here I think uh who broke it down I'm just uh yeah Uncle iro here in the um in the daily way Discord Channel said they're Distributing 100 million AR which is 1% of the supply uh and there's a there was a $63 million unclaimed air AB air drop or uh terquin that were unclaimed in the ab air drop that went back to the treasury so really it's just redistributing the unclaimed AR tokens plus 37 million AR over 12 months pointless yes but that not that significant and I kind of agree with this right if you take it as as as looking at it like that it 30 you really it's 37 million straight from the

treasury 63 million that was put into the treasury from the unclaimed airdrop and 1% of the total Supply to essentially I guess get people excited about ARB staking you know kickoff the initial version of it I don't know I still think it's quite pointless to be honest um but I I do kind of see that it's like not a huge deal but at the same time I would rather it see obviously not the the pointless staking I'd rather see the real staking where you actually got a share of the fee revenue from the network but that's probably going to come later obviously because right now the sequence is still centralized um the validators are still centralized so once that gets decentralized out by you know by the arbitrum at a project we'll probably see that there but yeah so I mean if you

have AR tokens I don't know when this is going to start but you'll be able to stake them and get a share of these rewards so yeah I mean it's just really free money up for grabs right but still a little bit of a way of treasur assets I think but maybe it has positive externalities we'll have to see um but yeah I'll link this article in the YouTube description below for you to check out all right so retroactive public goods funding round three has kicked off today so there are 627 eligible projects as part of this voting period um and the voting period will last a month until December 7th 2023 there is a total of 30 million op tokens to be distributed here which I believe is around what $50 million or something like that that at

current op prices um which is a lot of money right if you were to do an even distribution um of to each of these projects which is not going to be an even distribution but if you were to evenly distribute it to all 627 projects uh each project I believe would get around $65,000 not a small chunk of change right um so yeah you can go vote on this um if you're a kind of uh a badge holder I believe so you can go to this link here I'll link it in the YouTube description below a friendly remind I am part of this round um as the daily gay you have to search sassle e not the daily gay which I found a little bit weird but yeah you can search sassle eth and all or pop up there don't know what I'm going to get if I do get a healthy

chunk I'm definitely going to donate a portion of it to the protocol Guild of course um I'll have to see how much I get I don't know how much I'm going to get from this I don't know what the you know what way the vote's going to go here I'm not going to be voting on myself or anything like that I I don't really feel like that's the the right thing to do there but it's not just me as I said there 62 total projects 626 other projects besides me that are eligible here obviously like not all of them are going to be quality um but I think that as I said last time there were thousands of projects that or tens of thousands potentially that were put forward and they were filtered out and this is what we're left with here 627 which I believe is the most amount of

projects in any round so far which makes sense I mean the same thing happened with gitcoin grants rounds where it started off really small but then as people notied like how much money could be potentially distributed through gitcoin grants more and more projects came on board and we ended up with with much more as as time went on which was good and bad good because it obviously spread the love bad because it spread the love too much and there was a lot of projects not really getting any any more money uh because it was just there wasn't that much money to match the amount of projects that were there and then you had people gaming the system with like projects offering airdrops to people who donated to them so yeah once you get to a certain size you just attract all the grifters right and it

just becomes like not great and I think the way the optimism does it with the badge holders and stuff like that is is pretty good for now but I do wonder what the distribution is going to look like yeah as I said if it was equally distributed which it's not going to be the the rewards is $60,000 each which is obviously a huge chunk of change right but at the same time because it's not evenly distributed there are going to be some projects and individuals that get hundreds of thousands if not millions of dollars worth of op here um and some projects that get less than that kind of minimum uh that I that I mentioned there but anyway you can go check this out for yourself I'll link it in the YouTube description below for you to do so all right I came across this great

tweet today that's very very long like this person is taking full advantage of the fact that you can tweet as long as you want on on Twitter these days so this tweet comes from defi Saint who worked closely with Arjun um from leafi here to explore cross chain Bridges to analyze them by strengths and trade-offs now you do not have to read the whole tweet to get the gist of what they're talking about here you can scroll down to the bottom and there's a nice little graphic looking at each of the most popular bridging protocols what type they are and how they're validated so you can see here the different types such as liquidity pools uh bridging protocols burn and mint request for cro systems the majority of them are liquidity pool systems you know the ones that we all use like hop and across and

connects and stuff like that and then there's other ones uh that are that are kind of like more unique maybe like th chain which is using an amm model uh jumper is like a liquidity aggregator that that was built by Lei and then you can see what they're actually validated by and I think this is the most important bit here because not all bridges are cre equal you know most like pretty much all of them are created differently as you can see in the validated by like for example hops liquidity pools are validated by optimistic verification with Native Bridges as fullback for Challengers so using the same kind of or similar thing to what optimistic rollups use whereas when it comes to something like thorchain there it's validated by Thor chain validators so inbound transactions are validated by a super major majority of the validator set and outbound

transactions by 20 validator so a very very different model there and then you have an even uh even more different model with cctp which is a burn and mint where it circles atation server so it's very centralized and then there are V you know various other models here which you can check out I'll link it in the YouTube description below but I think this is very important to be aware of when using these bridging protocols especially when you're using them for large amounts of money like for example I when I have funds in a rollup I tend to use one of these bridging protocols especially if it's an optimistic rollup to withdraw funds from the rollup because obviously there's that 7-Day delay but if it was a significant amount of funds I probably wouldn't use any of these Bridges if I'm being honest right I would only use the official Bridge

even though it's going to take 7 days to withdraw I would rather wait the seven days than risk it and I know the risk for some of these at least is really really low right but at the same time I don't want to take on risk for large amounts of money that I don't necessarily have to because the bridges are good for getting fast liquidity for getting like Fast bridging between l2s and from L2 to L1 and so on and so forth but if you have like okay let's just let's just put a number to it if you have a million dollars on an L2 right and you want to withdraw that to L1 like you'd be really dumb in my opinion to go through one of these Bridges unless you absolutely needed to right unless it's part of your day-to-day operations maybe you're a market maker or maybe uh you

you know you're a DJ and you want to ape into something really quickly or whatever fine but if you're just like withdrawing from the L2 to L1 because you want L you know you want your assets to be on L1 because you trust L1 security uh more than L2 then in my opinion you should not use one of these Bridges you should just use the official Bridge wait the seven days especially if you're just planning to hold it on L1 and and that's all well and good but if you have a million dollars right so and and but you only want to move small uh relatively small amounts around if you have a million dollars relatively small to you would probably be like 10K for example right 10 20 30k then okay you can you probably use one of these Bridges so that's the way I I view

Bridges generally is always buy the kind of dollar amount and the dollar amount is obviously going to be very different to to to to to to different people right let's say you have a million dollars on chain but net worth net worth is $100 million okay well that $1 million is 1% of your net worth you're not going to treat it the same as someone who has $1 million as their total net worth right so it's definitely relative here but that's why I say that depending on the kind of like money that you have depending what you're doing with it and depending on the the risk that you want to take um you need to basically bookmark this and and and see which bridges are the uh you know the most secure which ones have the lowest risk and which ones are validated by things

um you know by cryptography or bu optimistic relay or stuff like that rather than things like multi like you know there are some multi Bridges out there um I mean some of the most popular bridges are multisig right the bridges from l1s to other l1s like from ethereum L1 to other l1s are typically multi sigs um so yeah it's just good to keep that in mind when moving funds around but as I said like I've used plenty of these different Bridges before I mean I usually use jumper because it's a bridge aggregator um made by leafi which I should disclose I'm an investor in them but jumper is just great because what it does is it searches all the bridges and tells you um you know it shows you a list of ones to choose from based on cost and time to bridge uh and stuff

like that so I always use jumper and then usually I think like the ones that I use the most would be like hop or across um and connect of course uh but yeah you can choose from the list here and and and and uh and uh choose the one that suits you most there but anyway you can go check out this graphic for yourself I'll link it in the YouTube description below for you to do so all right llama has announced a $6 million seed round LED by Founders fund and Electric Capital with a participation from a bunch of angels some of them you might recognize such as stany from AR uh and sand deep from polygon here I should uh disclose that I am a precede investor in LL here uh you may have heard me talk about them sometimes on the refi before but uh

generally llama is not talked about too much on the refi because they're more developer facing than consumer facing here so um what they're building is basically a way for developers to streamline their development process essentially as you can see here the way they Define it is llama provides a full stack solution for Access Control and governance that lets teams focus on what they do best building their core product using llama teams can deploy fully independent instances that define granular roles and permissions for executing transactions known as actions and actions could include upgrading a protocol transferring funds changing protocol parameters or activating an emergency pause so goes back to what I was saying yesterday where how different teams have different ways of managing things like multisig of their project and if it's an early stage a project or a late stage project stuff like that

like how to upgrade the protocol well what llama wants to do is basically streamline that and that's I mean that's the reason I kind of like invested in them is because I was like you know I think this is a really cool idea I think this is something that is solely needed because projects typically suffer from two major things I think the first thing is this uh where essentially trying to streamline all these different things you have to do especially as an early stage project uh such as protocol upgrades and and transferring funds around stuff like that and then the second thing is governance and governance I think is a bigger issue uh but particularly bigger issue for later stage projects where they try to decentralize governance out they have a token they try to create a d that becomes very very difficult and there

are a couple of projects that I'm aware of that are tackling that um Metropolis is one of them that I I am an investor in but there are a bunch of others that have Dow tooling out there that that try to tackle this but I think that it's going to be a long time before we get anything that makes a a lot of sense and they can become a standard because governance is messy because it's it's it's totally on the social layer right it's totally a kind of subjective human thing and for us to work that out I mean it's always going for the least worst system right it's not going for the best system because governance in the real world Wes works the same way democra democracy is far from perfect it is the least worst system that we have uh at least one ones that we know of right to

basically govern a country or govern a society whereas within crypto Dows are still very much in their exper experimental phases but I think that as I mentioned before I've talked a lot about Dows on the REI before I think the ideal model for most Dows is is not to look like a government but to look like a business where they essentially have like a board of Executives or directors or whatever you want to call them and then they do have a longtale of community that can have input that can vote on things but generally uh the decision makers or the people that are kind of coming up with the the um the things to be voted on and coming up with the things that are CAU to the project should be the ones that are most involved with that aka the ones that could be considered like an executive

board right and that's my general view of things but anyway you can go check out llama if you haven't yet for yourself congrats to them on the race I'll link this in the YouTube description below for you to do so all right last up here I just wanted to shout out that Dev connect is happening very very soon so I think over the next kind of like a couple of weeks or so I mean it might may have already begun I I actually don't know the exact dates for Dev connect istanb because I'm not going yeah so it begins on the 13th of November so very soon actually within a week here and there are a lot of events I mean you can check out the schedule I'll link it in the YouTube description below if you are there enjoy yourself ethereum conferences are always

super super fun I know there's been a bit of drama around uh around kind of Def connect given that is it is in turkey and given that there is conflicts happening in the Middle East right now but I think generally it's pretty safe for for most people and the events that have been canceled have been few and far between from what I've seen so definitely enjoy it if you are there I will be keeping keeping an eye out for all the announcements that are coming out of Dev connect we'll be covering them on the refill of course because I'm sure there's going to be a bunch of projects announcing a bunch of exciting things and this will be the last I think major ethereum conference to end out the year here there definitely isn't one in December I don't think cuz I discussed yesterday about how obviously

december/january is the holiday period where things are going to be more hands off than they usually are so I'm just super excited to see all the announcements and all the the the juicy stuff that comes out of devc connect it is a week long event here there are so many different events I mean I'm particularly interested in events like censorship. WTF where there it's it's a whole day dedicated to um censorship uh and and and censorship generally on the ethereum network and and ways that we were actually looking at to uh alleviate censorship on the network to address it things like inclusion lists and PBS and mber and all that stuff there I think inclusion lists actually are much closer to going live in some capacity than than people would would think and that's because it doesn't require it doesn't

strictly require a hard Fork it can be done within the clients themselves so if there is a standard that the clients can Implement I would actually expect those to be implemented at some point uh in maybe q1 or Q2 next year in terms of it going into a network upgrade it's probably not going to happen till the end of next year because if it does happen by then because if we don't get denu till March there's a minimum six months from there until the next upgrade goes live which puts us into the end of next year right so yeah I wouldn't expect that to to go live as part of a hard Fork but if we can do it outside of a hard if we can do it just in the clients themselves then yeah I'm expecting to see that done there but anyway I hope to see uh all all of your

kind of like pictures on Twitter and all of the um this the stuff in the daily grade Discord channel that you guys share if you are at Dev connect have on there but yeah the schedule will be linked in the YouTube description below you can check it out for yourself but I think on that note that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give a thumbs up subscribe to the newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone