CFTC crypto subcommittee, 4844 Devnet 7 and more - The Daily Gwei Refuel #615 - Ethereum Updates

Transcript

hello everyone welcome to another episode of the dailyway refuel where he kept the latest news in ethereum ecosystem I'm your host Ian this designer and has the third of July 2023. all right everyone let's get into it so something you may have missed over the weekend I know I did I only came across this just before uh was a tweet here from Ryan Berkman who said that uh yesterday yesterday being July 2nd the cftc or Commodities Futures Trading Commission in the US announced their new digital asset markets subcommittee advisors to the subcommittee include BlackRock Goldman Sachs JPMorgan Fidelity Moody's NASDAQ HSBC which are the obviously giant Trad fire companies but also a polygon and uni swap so it seems that members from polygon labs and

uniswap Labs have joined this subcommittee in order to try and I guess like have a voice uh within obviously the US regulatory bodies here and make sure that uh cftc regulation as well as anything that extends beyond that is regulated in a way that is not I guess harmful to cryptar and now the safety sales generally been friendlier to crypto than the SEC they are in a little bit of a turf war with them as well because the cftc um obviously regularly calls eth a commodity whereas the sac has stated before that they believe that the eighth is a security and I mean it's just kind of this back and forth which is just weird I mean obviously I believe that eighth is a commodity I think it should be uh should be labeled as such and then regulated in the Trad fire um

institutions as such but until there's actual Clarity from Congress it's still going to be these kind of back and forth between this aftc and SEC but that shouldn't stop us from trying to inform policy uh you know at the cftc level here with as I said people from polygon labs and unisop labs are joining this new subcommittee now there are a lot of members as part of this subcommittee you can actually see them um on this list which I'll link in the YouTube description below uh and usually these things can take a while to play out obviously and governments are slow moving especially regulatory bodies I wouldn't expect anything tangible from this to happen anytime soon but it's still awesome that we have a voice at the table right we have a seat at the table here in order to to kind of inform these things and you know it was it was

funny there was some rumors over the weekend that uh well not rumors it was blatant fake news and it was pretty obviously fake news but but some Twitter accounts were tweeting that Gary ganza had had resigned from the SEC now of course that's fake news I mean if that was real you wouldn't be seeing it from random uh unknown Publications you would be seeing it from you know some of the biggest uh Publications out there because they would get that scoop if it was you know if something like that was to happen because that's obviously a big deal but what I wanted to focus on was the reaction to that News the people who actually believed that news the reaction was obviously very positive everyone's like yeah okay awesome go against the stepping down that's great you know it's gonna be awesome for crypto if it

actually were to happen I was like well not necessarily because I think obviously Gary Gensler has a bone to pick with crypto he's using it for his own kind of like political ambition stuff like that but at the same time if he resigns and then someone else replaces him there's no guarantee that that person who replaces him is going to be friendly to crypto and nothing has changed either the SEC still doesn't have um you know a guideline for or guidance for crypto so it doesn't have a framework in place for crypto and there's no telling that a for someone who replaces gensla would actually put that in place um we could end up with someone worse so I think that while him resigning you know could be a positive Catalyst if there was something better someone

better that came in I think that really we shouldn't be cheering on that sorts of stuff but we should be cheering on Congress actually passing positive legislation for crypto so that these regulatory bodies can't do this overreach because the SEC is definitely overreaching right but they're doing it that because there is a void there is a an opportunity there for them to do that because there is no legislation for these sorts of things right so and that goes for like basically most of the regulatory bodies in in the US um when it comes to financial markets so I think from that lens there's no point cheering or hoping that gensla resigns because it's not going to rectify the actual core issue which is that we need uh well at least the US needs to put forward actual Frameworks and Regulatory

guidance and legislation in order for the crypto ecosystem to be able to thrive without how you know different um teams within the US not doing air drops to us people or not letting them uh kind of access their app because they don't want to get in trouble for doing that right so it's just it's crazy that happens but that's the way it kind of is but uh yeah anyway as I said you can check out the full list of members as part of this subcommittee and read more about it I'll link it in the YouTube description below all right Christine Kim is out again with a breakdown of the ethereum all core devs consensus Slayer call number 112 so she starts off the thread by saying this week ethereum developers discussed the inclusion of a builder override flag in the engine API and

increase to the Target and maximum blob limit to three slash six from two slash four and ongoing research around changing the maximum effective balance of validators now these are all things that I've talked about on the refill before but you can read Christine's thread for a breakdown here of this now in terms of kind of like timelines around this I mean the engine API thing is something something separate I wanted to maybe focus on 4844 and the effective balance of validators so 4845 still think it's on track for you know for later this year as I've described before I'm not going to rehash that there the effective balance of validators this is kind of up in the air because there was all that noise about it when it happened I think last week or the week before when people finally clued into it obviously the post had been around for a

little while since then but there was a lot of noise is about a lot of people getting confused thinking that it was the minimum eat steak going up when in reality no it was just going to be the maximum eat steak going up and had a lot of interesting conversations with people about you know my views on this stuff and and my view on how I think that it is you know neutral like the upgrade itself would be neutral for the ethereum network with a slight positive lean and I got agreement from many people on that that I talked to about this uh but in saying that you know it's all about a priority thing for core developers so or prioritizing which upgrade should go into the network so if all we're getting from increasing the maximum effective balance of validators is a neutral to

positive kind of I guess like change for the network um that means it wouldn't be prioritized over other upgrades that may be more positive than than this would be so in terms of timelines around that if it were to happen obviously we do you know there's no not even an EIP for this yet but if it were to happen I wouldn't expect to see it on the network till late next year to be honest I mean I don't expect to see it in the upgrade after dencoon um so if it was to happen probably be late next year but honestly I don't know I I don't think it's something that should be prioritized um because I don't think it's something that's going to uh I mean I've said before how I do believe there are a lot of positives especially for solo stakers but I don't think it's more important

than a lot of the other stuff on the ethereum roadmap right now so in saying that if it's able to go in if it's able to be quickly coded up and doesn't require a lot of um Court of alpha effort and core research effort sure but yeah that's my kind of General view on that whereas something like 4844 definitely a critical upgrade that requires you know all of the core devs and researchers to work together in order to get it onto the network and make sure that it's done right and that has been happening right they've been hard at work doing that and that's why we're going to be seeing that towards the end of the year uh now related to 4844 devnet 7 went live over the weekend so you can see uh here flcl who is at core Dev at nevermind put out this

screenshot saying eip4844 devnet version 7 over 9 000 blocks and Counting much stable very diverse you can actually see all the clients that are participating as part of devnet7 you have a lot of diversity here you know never mind prism Lighthouse lodestar taku and Nimbus which is which is great to see here so and Geth of course and Basu and you know the El uh clients here so yeah it seems that devnet 7 has gone well I remember I mentioned to you guys devnet6 had a bit of a rough start and didn't actually start from from my um my understanding so devnet7 was just a devnet 6 but working essentially so it seems that things are stable I haven't really seen any updates since uh since yesterday on

this but great to see that it was stable for over 9 000 blocks which obviously is a positive sign there and uh yeah this is 48 44 running live on a devnet now as I've said before there'll be maybe I don't know how many devnets they're going to be but maybe there's one more after this maybe two I I don't know if there's gonna be one or two here but then they'll start doing the test Nets I did mention the other week how there's a new test net being spun up on September 15th called whole whole Sky apparently there are different ways to say that by the way I'm saying it's whole sky but apparently some other people say it's holeshki or something I think holeski is the right pronunciate or the correct pronunciation of it but I'm just saying whole Sky um I think holeschi is maybe a German

word or something uh I'm not sure but I'm just saying whole Sky because I'm an English speaker so that's how I read it right uh but anyway enough about the naming um but yeah that's that's scheduled for September 15th um I don't know if that's a hard deadline or a hard date I think that might be a soft date right now but that's what they're aiming for and then once it goes live maybe they want to let it bake for two to four weeks and then we get you know the 4844 go live on there as the last test net to fork and then uh we we Fork uh basically mainnet after that so that's how I got to the November date the other day when I talked about this but anyway you can check out both of those tweets from Christine and flcl I'll link them in the

YouTube description below all right a couple of tweets here from Tony who I've spoken about a lot on the reef before you know him from the Mev boo stop picks website so he says yeah the share of Mev booster blocks is on the rise recently uh now over 95 of the blocks go through Mev boost so this was at 90 for a while but it has been going up as you can see on the chart here towards the right hand side and that only makes sense because obviously if you're a you know running a validator on the network if you're not running Mev boost alongside it you are missing out on potentially a lot of money from the Mev rewards so it only makes sense for people to be running mbv boost and this is why I've said a lot of times on the refill about how MV boost is great but

the fact that it is uh outside of the core protocol leads to issues for core devs and researchers when trying to reason about the the core protocol because this isn't uh integrated in directly it is sidecar software and that's why we have efforts like PBS so the fact that 95 or over 95 of the network is now running this uh means that I mean it's effectively the whole network right I mean it was effectively the whole network once it got over about 60 that's kind of the that kind of threshold the consensus threshold but I mean it's kind of weird though because block building and and block proposing and attesting they're all different things but uh when looking at the network you have to consider Mev boost now when you record Deb you have to think okay well how is the change to this client going to affect Mev boost

because um you know 99.5 times out of 10 the people running your clients are going to be running Mev boost as well so it basically becomes a core uh thing to think about for the core depths and that's why we want to integrate it directly into the protocol so that we can have a better reasoning about it and so that that the core devs can have it as part of the the spec and and the uh the the core protocol itself uh for an easier way of developing things and leading to a reduction in bugs and a safer and healthier Beacon chain so yeah just uh this this chart's available on the mevboost.pixel website for you to check out but I mean it can only go up a little bit more from here right it's just gonna go up like what four or five percent more from here to get to 100 I

don't think we're going to get to 100 I think there's always going to be those stragglers who don't run Mev boost but yeah I mean it doesn't surprise me that we are at uh this level which is over 95 now uh and the second tweet from uh Tony is talking about latency in the Mev game so latency plays a huge part in Mev uh relayers and and we which relayers get blocks and which ones are potentially the most most profitable and Tony has a big tweet here breaking this down and and kind of explaining how ultrasound monies relay is using something called optimistic relaying where essentially they optimistically or they basically assume that every block that is that is kind of sent to the validators from the the centroids relay is a valid block so

then the relay sends it to um the the validator to be proposed without running a simulation to make sure that it's a valid block and what the things that would make it invalid is if the transactions included weren't following the rules of the protocol and stuff like that and the way they they mitigate any kind of issues around that in terms of uh uh these uh kind of Builders submitting blocks on purpose that uh that aren't you know that aren't um that aren't uh proper blocks that aren't going to be proposed and aren't going to be accepted by the network is that they require a bond from the builders to do this and by using optimistic relaying this is catapulted ultrasound money to a huge part of the Mev uh kind of like boost market share or mov boost relay market share I believe they're over 40 percent uh which

is obviously huge and bigger than the biggest at this point uh but Tony does a great job of explaining this here uh with a chart as well that you can check out so I'll link that in the YouTube description below all right eigenlayer is increasing its restaking capacity for lsts and Native restaking I believe this is going live on July 10th yeah they're weak uh sorry and they they say here we expect the Caps to be raised sometime during the week of July 10th at that time the Caps of lsts including R8 St and CBE will be increased to 15 000 tokens per LSD with no individual deposit limit once the sum of all total of all LSD deposits reaches 30 000 tokens a global pause on LST restarting will be initiating initiated

the significant increase in restarting capacity empowers more users to actively participate in future restaking opportunities so you can read obviously the um the full blog post here for a detail on that then they go into detail about the rest of their roadmap here so in Q3 there is going to be an operator test net this phase will allow operators to familiarize themselves with eigenlay infrastructure and prepare for seamless service of ABS validation tasks uh it serves as a crucial step towards the operator mainnet launch which is scheduled for the end of Q4 and eigen Labs is currently in active development of eigen data availability which is the first AVS or scheduled for launch on the eigenlayer platform and they're collaborating closely with a variety of

roll-up teams to leverage this offering and our eigenlayer team is also engaged in Partnerships with multiple projects to develop and introduce a wide range of actively validated services or abs's on eigenlayer so yeah exciting times for eigenlayer they are moving very quickly here with a expectation of mainnet going live by the end of this year and their test net going live in Q3 uh yeah you know I know the eigenlayer stuff is divisive within the ethereum community I think that there are a lot of different opinions on what the end state of eigenlayer is going to look like for the ethereum network there was recently that restaking podcast on Bank list with a bunch of different panelists and SRI Ram from eigenlayer um and you know it's funny whenever

those kind of podcasts come out where you basically have some of the smartest researchers in ethereum meet some of the smartest people building infrastructure structure like eigenlayer and they all just talk openly about concerns about the benefits of things and it was it was quite a I wouldn't say drama-filled episode but it was very spicy that's what I was looking for it was a very spicy episode because essentially there were a few specific takes given that I think um are worth focusing on one of the takes was that uh if I I mean I think the researchers generally agreed that if eigenlayer was to pose an actual existential risk to ethereum or restaking generally I should say not just eigenlayer that the core devs and

researchers would move to basically make restaking not uh not possible or not economically feasible on the uh the ethereum network which I think is the right approach because just generally anything that poses an existential risk to ethereum should be treated in that way and it doesn't matter if it's restaking or something else I think that the bar should be set that basically says hey or the expectation should be set that basically says hey if you develop something that presents an existing risk for the ethereum network then the ethereum social layer is going to kick in and basically say well we need to fix this right we need to make sure that this cannot pose this kind of risk to ethereum and then work together with the research and developers to develop a solution to this which I think is what the researchers were saying on

the podcast and the other main takeaway as well uh was that I think that there are a lot of unknowns within uh restaking there are a lot of things that people think might go wrong or think might you know be positive or or think might be a risk that we don't we just don't have enough information to to have a measured take on that because race taking has never been done before especially not in ethereum on on or at the scale that ethereum operates at we need to stay we need to see restaking live in different market conditions obviously it's going to be very different in a bull market as it is to a bear Market we need to see what where people put their lsts um if they want to put that in restating or if they want to put it in money markets we need to see potentially what

happens when a mass slashing event happens on an eigenlayer AVS right so let's just say there is a big data availability Network that's leveraging restaked eth via eigenlayer and let's say it has 10 of all uh eth on there right 10 of all uh sorry um 10 of all staked eth on there now that would be at current I guess like each stake amount what like 2 million 2.5 million or something like that probably not not that high but 2 2.5 let's just say so let's just say that gets Mass slashed and let's just say that a healthy chunk of that needs to be withdrawn from the beacon chain to to make everyone whole so that's the thing that we need to see play out in the wild to see how the

market would react how the secondary Market reacts because there are lsts at play Let's see if anyone's if anyone jumps in and says here I'll I'll take that off your hands for this discount uh and then I'll go arbit against the beacon chain um and then you know I'll I'll eat the kind of like time risk here I'll wait the volatility risk there is a lot that goes on because of the secondary markets here so I don't think we're going to have answers to exactly what's going to happen we can have hypothesis we can have theories about this but we're not going to get any Hard Answers until we actually see this play out in real time and play out uh on you know on on a main net instead of like on a test net or in theory land so that's what I'm looking

forward to seeing I mean I hope there is never a mass slashing event that ends up being like that but the existential risks and the things that the researchers generally talk about is is that kind of mass slashing event right what happens in that in that scenario and I've discussed that before on the refill where I've said that I don't think it's a huge concern because of the fact that we have validated cues in place um and I I think that just generally when you when you look at that and when you look at the existing measures in place to make sure that the ethereum beacon chain would be okay even in that scenario uh then you have to reason about okay well what does the secondary Market do what does the uh exit queue look like is there going to be a mass exiting of validators is there going to

be uh Mass uh you know uh uh exiting of stake oh sorry exiting of lsts at the secondary Market which puts LST uh at non-fair Value there's so many open questions and we're not going to get answers to those like definitive answers to those until we see it play out in the world so that's why I'm excited for eigenlayer I mean I'm also an investor in eigen there I should disclose that but I've been talking about them for ages and I think that given the the unknowns here there's no point speaking in definitives there's no point taking a binary thinking approach to this we need to take a nuanced approach to a nuanced thinking and see where it goes from there now speaking of that there was another uh research post here that you can read called restaking and eigen aggregate security which talks all about

how eigenlayer leverages Eve staking to aggregate security and and obviously offer better security guarantees than you otherwise would by issuing your own token because you're leveraging staked eth and you can read this process from yq here I'll link it in the YouTube description uh below for you to do so but anyway enough on eigenlayer there as I said excited to see it all play out as time goes on all right speaking of staking Jasper has another thread around our rocker pool today and this one's all about the P Dow and how it is set to get millions in additional funding um and what you know what they're going to be doing with it so this funding is coming from rewards being redirected from the Odell to the P Dow and I've discussed this this before about how the

O Dow is getting a pretty substantial reduction in rewards and that reward those rewards instead those rpr rewards are going to be going to the pedial which is used to do things like incentivized liquidity in the rocketpool ecosystem for things like RPL um and you know and grow The Rocker pool uh protocol so the main two things that Jasper talks about in this thread uh deep RPL liquidity plus Oracle and cross chain are eth incentives so you can read this full thread it's only 12 tweets uh long for a uh for a um a breakdown of what just was talking about here but I'm curious to see what kind of impact this has on rockapool's growth because I think that there is always valuable insights to be had even if something

fails so for example Jasper says here you know the P Dow is getting millions of in funding to to um to to grow rocket pool by incentivizing more liquidity or doing things with um cross-chain R8 incentives well okay but what if that actually doesn't lead to the outcome that you know the rocketbook community wants what if these rpr rewards get used and then it doesn't actually lead to growth for Rocket pool well that's in my mind it's still not a failure I I still think that's very positive because what it does is it shows other LSD protocols what didn't work and then you can work around that and you don't have to waste money and you don't have to use additional money or additional token incentives on things that that didn't work in saying that different protocols offer different things and different

incentives and there are different stages of growth in their lifetime so it's going to be difficult to kind of translate that data one to one but it's still valuable um and again and in saying all of that I think that generally uh these rewards are actually going to lead to growth for rocker pool I think that as I've said before economic incentives and economic rewards within crypto have shown time and time again that they do work when done properly and what by properly I mean when it's done for a protocol that has a long-term growth vision and um just long-term mindset generally which obviously rockapole has but also that it's done in a sustainable way because a lot of protocols what they do with the liquidity mining incentives is that it's not sustainable at all they basically

give away a lot of their token which just puts a ton of pressure on the token and if the token isn't valuable then no one wants to farm it right it doesn't become worth it to farm it you go farm something else you go and get token incentives from somewhere else that's paying you so the RPL price is actually pretty resilient and the rpr token is actually uh just pretty resilient generally they're both against both USD and um and eth so for these token rewards to work continue working that price just needs to basically remain stable if not Trend up over time in order to be attractive for people but it's going to be interesting to see if that happens or if it doesn't have happen with this RPL um with these RPL incentives going to different parties because it's not going to the Odell anymore it's going to

various different parties within the rocketpool ecosystem and you know in saying that the Odell dependent I mean the Odell consists of around 20 members I think I actually I I remember I said the other day I wasn't sure I went and checked it's like 18 members um and each of those members were getting uh you know 600 and something RPL right now per month uh some of them were selling at uh I I I think some of them were selling it all some of them were selling a portion of it for taxes I'm obviously donating mine to the protocol Guild who maybe one day will sell it so yeah it kind of depends on what the different audio members were doing and what the uh the new recipients of this RPL are going to do with it and that will that will obviously play into

the price but at the same time I think that it can act as a really nice flywheel effect because if there are incentives to become nerd operators and then stake RPL and you know and and kind of like driving demand towards RPL it kind of balances itself out where the rewards are being paid but people still bought RPL in order to stay can become nerd operators to service the um to service the demand for our eth and stuff like that so yeah I think it can work and I'm curious to see it play out uh but yeah we'll have to see how that goes and that'll play out over the next few months all right so you guys remember that optimism mainnet or op mainnet recently upgraded to bedrock while op Labs is sharing some metrics highlighting the impact of this upgrade now you'll

remember that the gas fees dropped by over 50 uh since Bedrock went live and I remember showing you guys that and here's a nice a nice chart showing it going from the Legacy system to the Bedrock system and the massive drop in transaction fees and then they explain you know how savings like this uh are kind of possible here uh and secondly the Bedrock system has achieved more predictable core data compression performance so far as you can see here uh and then there's a bunch of other charts uh describing things like how is uh you know this all playing out on op mainnet and users have noticed and responded users transactions per day are up by 66 and layer 2 gas used per day is up by 50 so open mainnet has been growing because of this but yeah you can

check out this thread here it's not too long of a thread with all of these different metrics I'll link it in the YouTube description below all right last few minutes here to talk about something um firstly uh you're gonna see my face again on the bankless weekly roll up for the next two weeks because David is off climbing mountains this time so I'll be doing it with Ryan not David so be sure to keep in uh to keep an eye on that one there um and then another thing uh that it's probably gonna take me a few minutes to talk about is the general kind of um sentiment right now around uh around nfts and I don't talk about nfts very often on the refuel I have said many times before and I've been saying this for a very long time that I am bearish

on 99.9 nine percent of the nfts especially their profile picture projects uh generally but I don't want to focus on that what I want to focus on is when you kind of have people who make bets on things and then those bets don't play out what ends up happening is that things turn very toxic and this can be very detrimental to a community because it it can begin a death spiral for communities where essentially what happens is that if if the majority of your community was only around because they wanted to make money from buying the nfts and this goes for for tokens as well but just talking NFA specifically if the majority of the community was only around to speculate and to make money then those people are going to computer late they're going to

sell what they've got because they think it's going to zero and then what you're going to have left is just bag holders who are being toxic to each other the community turns in and of itself they start asking questions like can Debs do something to pump the price they start thinking or feeling like they're being rugged with a lot of a lot of times they actually have been rugged in nft land unfortunately in token land as well don't get me wrong it's the same thing but that is why it leads to a death spiral and that's why I always go on about this difference between mercenaries and missionaries where the missionaries are going to stick around uh you know most of the time uh even if the price is going down that's what happened with ethereum in 2018 2019 there was a core missionary group that

kind of saw ethereum through that but if it's just mercenaries then what ends up happening is that you have a community that's left over that is as I said just very very toxic it is not a missionary driven Community it's a community that's only sticking around because they think that what they're holding can pump again and they can just exit and be on their merry way and the longer it doesn't pump the longer it keeps going down or just stays flat the more toxic the community becomes it means no new members are coming in because they don't want to be part of that community and it doesn't lend itself to to performing any kind of like missionary Vision behind the actual project I think that's happening with a lot of nft projects I think that's happened with a lot of token Pro token a

lot of projects generally that had tokens over time um and it's just the way it works so I guess my point here is that when you invest in something and you plan on holding it for the long term you best be sure that the people behind in the project are missionaries and not mercenaries and you best be sure that that project is actually going to be around for the long term for the duration that you think you're going to be able to hold the thing for in order to profit from it because if not you're going to be in for a world of hurt I have held things down I know what it feels like I have held things down over 90 and sold them there I know what it feels like it doesn't feel good but at the end of the day you need to just cut

your losses if you fall yourself into that position and don't just and don't get involved with all the toxicity because it just makes it worse and it doesn't make you a better investor it ironically makes you a worse investor because you just keep repeating the same mistakes over and over again but 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 it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone