Client diversity chat, Voting Vaults introduced - The Daily Gwei Refuel #314 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily great review where recap the latest news in the ethereum ecosystem i'm your host anthony susana and there's the 14th of february 2022 all right everyone let's get into it so just a quick heads up here uh you've probably been hearing about dank sharding lately a lot of the smartest folks in ethereum are talking about it i've spoken about it on the refuel before and you're probably confused as to exactly what it is there doesn't seem to be an explain like i'm five about it yet i know polly now wrote a blog post about it but that is definitely not an explain like i'm five nor did they intend it to be but if you are still confused about dank sharing why people are excited about it and you want to learn more then definitely go to uh

this kind of like um events or if it's already happened you can probably watch a recording of it uh the ef research team is hosting at this educational seminar with researchers and core devs on on dance sharding on feb 14th at 14 30 utc which is in the future from when i'm recording but not by too much by the time you watch this it's more than likely already over but the thing is you can view the agenda here this link will be linked in youtube description and i'm sure there'll be a recording for you to kind of like have a look at after so i am sure this is going to eliminate a lot about dank sharding uh it's gonna maybe not give you an explain like on fire but at least kind of like give you more information to go off of and i guess just on at the highest level

here dank sharding is just the name for a new kind of like shouting uh design that dan craig feist the researcher at the ethereum foundation came up with uh and a lot of people are very very excited about this it's a simplified uh shouting proposal it allows for much better i think interoperability from what i understand a much better scalability for layer twos uh and you know as i said like the the smartest people i know are excited about it so i'm excited about it but i just wanted to kind of give a shout here because i know people are wondering and want to want to learn more about this and as i understand it more i will try and relay that to you guys like i am still in the dark about it to be honest i'm still trying to wrap my head around

it as well it is definitely very technical but uh you know it's also very very new it's it's basically only a few weeks old at this point so uh yeah we're just gonna have to let it simmer let it kind of like digest a bit and we'll get there we'll get there i'm sure we'll all be able to to kind of like understand it sooner rather than later and this is a good step this uh this seminar here so i'm definitely going to be probably asleep when this happens so i'll be uh re-watching it or at least watching the recording once that's done uh and one other thing about i guess like core development was this merged community call that happened so this is the third merged community call that happened you can see the agenda here of what was spoken about and there's a

recording available as well on the ethereum cad herders youtube channel which is linked in the github kind of like issue here and i'll link this in the youtube description uh yes as i said this is this was the third community call about the merge these the goal of these things is to obviously keep the community updated with what's happening on the with merge especially uh the community i guess that is part of running infrastructure doing kind of like anything like developing and things like that because the merge impacts not just i guess like obviously um you know end users in terms of kind of uh the the the fact that like the network will be prepared for staying in a proof of work but it you know it impacts like a wide set of stakeholders i would actually argue the end users who are just using

the network are at least impacted by this um developers are impacted by it in some ways like for example the block time being 12 seconds um flat like it's it's always going to be 12 seconds whereas with the proof of work it's it's um it's kind of like a probabilistic so it the there's like a target block time but it's on average about 13.2 seconds but it can vary whereas with proof of stake it's always going to be 12 seconds um and you know there's a few other kind of like idiosyncratic synchrony things there i mean you know one of them which that block time thing was mentioned here in the agenda but yeah anyway go watch the recording i haven't watched it yet or planned too soon but uh these community calls are always very good and gives you more context around the merge

all right so client diversity this is a topic that i have been speaking about a lot on the refuel lately and this has got to do with client diversity on the consensus layer aka the beacon chain not so much the execution layer which is i guess like what we all enjoy with ethereum today now there's a new website uh called pools.invis.cloud here which basically tracks uh the i guess like validator account and usage type of a popular staking service providers so you can see here that there's an overall kind of like statistics that's saying the estimated validated account is 274 628 with an estimated prism usage of 66.9 percent now obviously that's too high that's over the two-thirds threshold which is pretty

much in critical territory there this is definitely not what we want to see um and you know i've discussed kind of like why this is a bad thing before there's also an in-depth discussion on this website as well like written down here that you can go you can go give a read and there's a bunch of links to different kind of resources as well so definitely check that out i'm not going to rehash it here because i've talked about it too much lately i think um but yeah you can see who the biggest offenders are here now obviously coinbase has a very large presence on the beacon chain they have almost 50 000 validators which is almost one-fifth of the network which which obviously is about 20 there so it's it's quite a large stake in the beacon chain and you can see actually it's 24 24.2 3 exactly

now their prison usage is 92 now let me put this into context for you guys if the worst case scenario was to happen like i told like um like i've said to you guys before is basically two-thirds of the chain which is you know prism finalizing on uh a kind of like fine uh sorry finalizing on uh a bug kind of like uh uh client because it was a bugging prism or something like that um you know and then it kind of reverts later the prism users stand to lose a lot here right um now it's funny because like would the community go with the minority chain in this case instead of the majority even if it was the prism client's fault of the bug the social consensus around this gets very murky but you know if if they

did coinbase would stand to lose a lot here and this isn't their e this is their users eth so they're at very high risk by using so many so many kind of like prism clients here and they definitely need to change and i just think that they're not aware of how uh how how much risk they're taking on by doing this i think because you know if you're improving stake is very unique with its client diversity and with having multiple clients whereas pretty much all other proof-of-stake implementations aren't multi-client friendly i think coinbase kind of like just defaulted to being like okay well we know what prism is we're just going to use prism and to get them to change because there's such a large organization is going to be difficult which i mean i get that uh and then you know the same is true for

kraken here which has about fifteen point six percent of the overall validators they're also at uh you know ninety uh four percent of prism usage so more than coinbase at 92 percent and you can scroll down and list here lido is a lot better they've only got 42 percent uh prism usage and they account for 11 of the network binance is a bit better than kraken and coinbase at 76 percent with a 10 uh usage and you know you can just scroll down the list here but you can see you know this red bar that pretty much most of these providers are just way overweight on on prism here and they've just kind of like completely ignored using other i guess clients and i spoke about rocker pool the other day how they're doing really well in the client diversity department but uh unfortunately they're

not a big part of the network yet right they're only 0.1 percent because they're only launched recently but their prism usage is at only about 10 which is which is awesome to see right like i highlighted this the other day doesn't matter how small they are it's very awesome to see that and there's a bunch of other you know much smaller operators here but on you know net the for the most part obviously because we have this kind of like overall percentage here the prism usage is too high now the whole point of this website these resources you know these kind of like uh educational drives and me bringing this up all the time is that we're trying to get that prison usage down as much as we can and every effort that we do matters i believe you know i've spoken about how in the background i'm aware of a few

people reaching out to these providers um you know filling them in on these risks getting them to kind of like uh change from prism to another client or at least all the kind of like validators that they spin up going forward aren't prison validators and there's been some progress there but obviously these organizations being very large they have processes they have to go through they move very slow and you have to basically convince them like why this is a bad thing or why they stand to lose money uh because you know if you don't do that then they're just not gonna care so there's a lot of that going on in the background i think you know i remain optimistic that we can get the prism usage down to at least under 60 that's you know that's at what 6.9 percent from here i remain optimistic that we can get

to that but it's going to be like realistically a very very heavy lift to get prism under 50 percent right uh let alone to what we'd love prism to be out or at least any client to be at which is under 30 now is it impossible no it's just you got to look at what's practical what's you know what fits in with reality and where to focus your efforts so i think right now the efforts are just focused on getting prism as low as we possibly can right even if that's only to 60 in you know in the next six months or something like that then that's that's fine maybe in 12 months when we you know 12 or so months when we have um withdrawals enabled on the beacon chain maybe people will feel a lot more comfortable changing clients because right now people don't want to take the

risk because you can't re-enter staking if you if something happens like if you accidentally exit yourself from from sorry if you want to exit yourself from the validator set you can you can exit but you can't uh you know you you can't withdraw that 8th you can't restake you can't activate your validator again whereas when withdrawals are enabled you can do this so a lot of people what they want to do is they want to exit then change clients and then re-enter with that kind of like a new client because they don't want to run the risk of getting slashed or losing any eath and i totally understand that so maybe we see the needle really move on this once withdrawals are enabled on the beacon chain but i'm hoping that we can get to at least 60 or less our prism usage here before that happens and it really

depends you know the funny thing is if coinbase and kraken just kind of like uh reduced their prism usage by 10 15 or something like that i think it should actually get us down to you know pretty close they haven't run the numbers here but they've got such a large presence on the chain that anything that they do even if it's 5 10 percent less prism usage is going to have a massive impact on the network and you know this brings up another kind of discussion around centralization of stake i mean i didn't realize coinbase was so high 24 is is pretty high let's be honest right that's you know almost 10 percent higher than the next highest which is kraken which has 15 which is which is too high as well but i've written about this in the newsletter before where i basically argued that i don't think

centralized exchanges having a large stake is necessarily a existential risk or like a really bad thing i think they have a bunch of incentives not to kind of screw with the chain of course you know if coinbase was to purposely try and attack the ethereum chain not only would they most likely get slashed and lose their customers eth they would suffer some an incredible amount of kind of like um bad press and their business would directly suffer because of this their stock price would tank you know because they're a public company now there's not many you know they have to be very very careful so obviously we shouldn't rely on altruism but there are a lot of kind of like crypto economic incentives in place both at the protocol layout and both at you know and the social layer because i think that the social layers obviously plays a big

part here and is incredibly important and anyone who says that the social layout or humans don't have any say in this is wrong humans are the last line of defense the layer zero is humans they're the last line of defense against any kind of attack so you know even though they have a large stake it's large stake here i think that it's relatively okay now is it okay in the facial face of nation states if a nation state ordered coinbase to attack the ethereum network or or just you know coinbase kraken and uh both being us based i mean even like um a few other here a u.s base if they were if they kind of like ordered them to do that would that uh would that happen i mean probably like an attack would go through but again the social area of ethereum is global

the the the protocol itself has ways to kind of punish bad actors and this attack would fail they could only attack once uh it's not like on proof of work where you can keep attacking because your asics you know keep existing with uh with people of stake on ethereum the attackers get slashed their their all their validators get ejected and you know most of their stake is gone so they can't repeat the same attack again so that's that's a really nice property of ethereum's pivot mistake but it shouldn't ever get to that it shouldn't ever get to a point where we need the social layer um and that's why there's all these kind of like protections in place and that's a big reason why let's get prism down below you know 60 let's make sure that no our client has such a huge market share because there are five really

really awesome uh beacon chain or consensus layer clients that you can use there's no reason or no reason in particular to use prism over another client and not to say that prism is a bad client but it's not like the prism client is like 10 times better than the next client no there are small improvements that can be made over time there are small efficiencies there's there are small differences between the clients in terms of kind of like performance but they're pretty much all like for like in terms of in terms of performance and really unless you're trying to get the absolute maximum amount of reward that you can at about staking with your validator and i'm talking like the tiniest differences like a one percent different sort of thing unless you're you're going for that there's no reason to pick uh the majority client at

this stage so if you're spitting up a new validator you go for something other than prism right now i mean i every time i spin up a new validator i go over something other than prism straight away like it doesn't matter which other client it is just as long as it's not prism even though i started with prism by the way like i was i started with prism because there was such a such a big name everyone knew about them they were so trusted and that's why we're in the position we're at now because it's just you know it can be very hard to keep track of four or five clients i i understand that and kind of like people's uh bandwidth in this space is very low so you know you just hear prism or a lot of the guides are focused around prism and lighthouse especially

not so much to other clients uh and you know prism uh got got to this state because of that now we can reverse this it's not like this is how it has to be forever we can reverse this and that's what all the efforts going on are going to do so i recommend checking out this website it gives you a lot more information about this than i just did and encourage your staking service provider i encourage you the exchange you're sticking with if you're sticking with them i encourage anyone you know to get off prism for now and to use one of the other clients and not be as i said not because prism is bad the the client but because them having 66.9 of the network is bad for the network for every participant of the beacon chain so yeah definitely go do that uh uh that's

kind of like my only ask a view from from here but i'll link this in the youtube description you can go check it out for yourself all right so david mihal has updated his l2 fees.info website with a really really cool a bunch of metrics here uh which basically shows that the amount of uh i guess like dollars that each of these l2 is paying ethereum l1 for its security so you can see here the one day security costs of different l2s arbitrary is currently paying 53 000 a day to secure itself on ethereum l1 and i guess like the this links to more details on l2 beat as well if you click through here which is really cool uh then you can see dydx paying about 30k optimism 25k and then you have a long

tail here of others and how much they're paying each day now obviously uh these security costs are going to go up or down based on layer one gas fees this is dollar terms this is not in eth terms uh so if the gas fees are high i mean right now they're actually quite low they're hanging around 30 to 40 grain which is what three times lower than they were a couple months ago so this would be three times larger and it's also influenced by how much the l2 is being used as well right how you know how and how often these um these proofs and these chordates call data is being posted to l1 but you can see you know this may be negligible right now like i don't even think i mean i think the top three add up to about 100k and then the other ones maybe

120 130k a day right now and if you actually go to uh just l2 fees dot info if i click through here um sorry not l2 fees i mean for crypto fees.info you can see ethereum's one day fees uh 16.6 million dollars now uh right now which is actually on the low side i mean well it's gotten quiet out there guys like not just on chain but just everywhere the crypto ecosystem seems quote unquote dead right now which i mean makes sense because the markets have been quote unquote dead uh i don't think it's going to last for for long i i i do think that we're going gonna um we're gonna keep going here but it's just funny how like uh how volatile not just the crypto markets are but kind of like the the crypto system is in

general but anyway back to what i was saying so 16.6 million dollars uh on layer one right now with on ethereum layer one in terms of fees being paid and on l2 fees uh i guess the total sorry the um the total that the l2s are paying to l1 to secure themselves is about 111 000. so that is a very small part of the total fees being paid on ethereum l1 but that's okay i said to you guys it would start off slow and small with l2s and then it would ramp up over time and over the long term i'm talking a few years at this point most of the l1 transaction fees will be replaced with l2 securing themselves but right now l1 has what 70 80 last time i checked 90 billion dollars locked in in d5 billions of dollars of dex dex

volume happens every day and that leads to a lot of mev leads to a lot of arbitrage which is which is a form of mav and as i've explained to you guys before the people doing mav are happy to pay whatever in fees as long as they can inch out a bit of a profit and obviously a lot of people still do stuff on l1 as well so until we get like more adoption at l2 until we get more and more people migrating there until we get a lot more i guess like mev at l2 uh or at least maybe opportunities at l2 which there really isn't any right now because they've got centralized sequences i think l1 will still be you know still be kind of like uh the majority sorry l1 native transactions will still be the majority of the fees being paid which is

totally fine i mean at the end of the day it's still being burned no matter what but i think it's going to take like a few years for l2s to take over but they will take over eventually and you know just like it took a few years to get to the l1 fees that they are today i mean it took more than a few years it took from mid-2015 when eighth launched to i guess like the high fee started persisting around mid-2020 so it took like five years probably not gonna take five years for the l2s to really ramp up and you know be responsible for millions of dollars a day in transaction fees on l1 but it's going to take a little bit of time here it's not going to happen overnight it's definitely going to take the market heating up again because that's when all

the activity heats up and things like that uh but yeah still cool to see this website i'm gonna keep track of it i wanna see one of these l2s break the one million dollar one day security costs one day that'd be really cool i'm i'm sure it'll happen on a volatile day when we have like you know retail froth and mania back in uh but for now we're just plotting along uh you know while we wait for that to happen again all right so pratik here put together a really great thread on starkwear so this is a mega thread you can go and check this out a link to the youtube description but there is so much happening in the starkware starknet ecosystem right now it's actually quite crazy there's also a newsletter that i've highlighted before from swagdemour's prime it has a weekly newsletter on on the stock net ecosystem

and i'm actually subscribed to that and wow there's a lot happening on there you may not hear about it too much on twitter but there's so much happening in the background there are so many people building on there and it's actually just really amazing to see how how quickly adoption is happening there because as i've said to you guys before i want to see stark net succeed for for lots of reasons obviously but the number one reason is because it can prove out the non-evm l2 thesis because evm l2s are cool i love them like they work really well they're obviously in super high demand um but like we shouldn't just stop there we have this amazing technology with layered twos with optimistic roll-ups with zk roll-ups and all that and everything in between let's take advantage of it and that's exactly what stark net is doing they're

basically saying well no we don't have to use the evm we don't have to use solidity we can use our own language called cairo we can use our own um our own kind of computing uh system uh with stock net and we can create a non-evm generalized platform using zk rollups which is which is obviously awesome not to say that the evm generalized platforms aren't equally as awesome but i you know particularly like to see adoption of this stuff happening because the evm stuff we already know is going to get adoption there's no doubt there with the avm stuff i mean the evm is the biggest kind of like thing in crypto right now all the our ones are using it all the side chains everything's using it so we don't have to say oh is this going to get adoption it is but we do want to kind of like see

if if the non-evm chains whether they be l2s or other l1s do get adoption and it seems that they will uh it's just going to obviously take longer but we will get there but if you want to learn more about all of that check out this thread from pratik it was a really great one i really enjoyed reading it and checking out all the resources i'll link it in the youtube description for you to do so all right so faina here had a really great thread on everything happening in ethereum l2 generally so not just starknet but like everything happening on all the l2s that we all know and love you know optimism arbitram the polygon zk sync startware mutable there's so many right right now which is pretty crazy but in this thread there's a there's a bunch of links to things that have happened i guess in the last week

or so week and a half or so um you know covering all the kind of like l2s that i just mentioned so if you want to dive even deeper into the l2 stuff get more involved with it definitely check out this thread after you've checked out boutique's thread this will keep you busy guys for a while i mean it's funny like i sometimes i'm like to myself okay like what am i going to do today like i wake up and i go to my computer i've finished checking twitter and i'm like what am i going to do today then i look at my chrome tabs and holy guys there's like hundreds of chrome tabs because what i end up doing is i dive into these things i open up what interests me and i say okay i'm going to add this to the read later list like once i'm done

what i need to do today i'll read that later and obviously builds up over time because you never get to it i try to get to it on weekends when i have a little bit more time but it doesn't happen but all this stuff happens um and i actually have a very very short attention span um like extremely sure it kind of like sucks a lot of the time because i'll be reading something then i'm like oh shiny and i'll go over there but it you know i mean it works for me i guess like to some extent but uh don't feel bad the point of what i'm saying is like don't feel bad if you have like all these tabs up and you haven't gotten to them yet just keep them there because like eventually you'll get to them like eventually i do get to them and i

actually got to a point where i closed most of them um you know i read through them i was like okay that's cool that's cool i'll say that for later blah blah and you know i'll go back to that later and then i clock you know and some of them i actually just killed because i'm like i'm never going to read this because they were really long i'm like nah i don't need i don't need to read this i need a tldr and sometimes it's a tldr which which which helps a lot but yeah don't feel bad if you don't get to everything like today or tomorrow like there's going to be you know sometimes the tabs sit in my in chrome for months for me and then i go back and i read it and i'm like oh is this even still relevant anymore and the thing is a lot

of it still is especially the l2 stuff because the ultimaker system is moving really quickly but there's a lot of fundamental knowledge there that is being built on slowly in the background and learning about this and kind of like taking it all in is really really positive so yeah as i said don't feel bad about it i'll link this in the youtube description for you to check out uh and just kind of like do it when you have time don't force yourself don't try to be don't get anxious about it don't be like oh my god i need to do this i need to do this now uh you know just take it easy let it kind of like sit in because if you rush through it you're not even going to absorb the knowledge so just let it sit in let you know take it all in do it one

at a time and don't try to like overwhelm yourself because that never works all right so etherscan put out an update over the weekend that they've got like a long overdue addition to the gas tracker which now estimates the cost of transaction action so you'll have seen this on other gas trackers out there before but you can see here that uh aether scan shows you uh low average and high gas prices for various actions on ethereum such as an open c sail a unisop v3 swap and a usdt transfer so there's a few other screenshots here notice safe multi-six arbitrary deposits which is really cool knowing how much is going to cost you to deposit to l2 which is quite cheap right now at about at 40 grades it's less than 10 so if you're thinking about depositing into l2 now would be the best time to do it probably i mean i

don't see gas prices getting much lower than this maybe we go into the 20s again maybe if the market really gets quiet and like literally nothing is happening maybe we go to the single digits again but i'm not counting on it so now it's probably the best time to do that uh but yeah i love these kind of things because you know sending eighth on on on um on ethereum is the cheapest thing you can do but like it's the most boring thing you can do and most of the actions on the ethereum network aren't really kind of like sending ether around most of them are smart contract interactions so knowing the cost of popular smart contract interactions is much better than knowing the cost of just a simple eat transfer so yeah i love these kinds of tools and that's just available in the ethereum gas tracker section of the

etherscan website which you can go check out for yourself right an update out of element finance over the weekend they introduced something called voting vaults which is a new governance primitive from the council protocol so what you can do with voting volts is stake governance tokens in compound are there uniswap l1s and l2s and still participate in governance and they're calling these governance lego pieces now this is really cool because i've spoken about this before about how there needs to be a way for people to be able to use their assets but also participate in governance without having to withdraw those assets so for example if you put up your assets as collateral on rv and you're borrowing against it and then you want to use those assets in governance a lot of the time you can't

because they're in ave right you can't sign uh that you have them because you've deposited them into the uh are they smart contract and they're technically no longer in you know i mean they are yours because you have the iou for it but uh they're in the smart contract they're not in your own wallet so with voting vaults you can now do both you can have your assets in rv or wherever or whatever support whatever protocol is supported and still participate in the governance for these uh various things here which should lead to better kind of like governance participation uh you know less voter apathy all those sorts of things there um but yeah i just think this is a really cool primitive and something that i've wanted to see for a very long time now uh because obviously voter apathy is wrought within crypto

like it's it's pretty if if i had to pick one bear case for for governance it would be the voter apathy and i'm not even just talking about crypto governance i talk about i'm talking about in general like in australia we actually have a law that you have to vote like by law you have to vote or you get fined for it i know in the u.s no such thing exists it's it's not a law to vote you can just like not vote at all um and and australia people that don't want to actually vote do what's called a donkey vote which i mean i think i think it originated from people literally drawing donkeys on their ballot and putting it into the not on their on their piece of paper and putting it into like the ballot box um but like that it refers to like not actually you know

we have ranked choice voting in australia but it refers to not actually filling out the form at all with any of the numbers and just drawing something on it sometimes people will drop you know the stupidest things on it but that's what it is like you register when you go there to say okay you voted it doesn't matter after that now um that leads to a high voter turnout obviously and there's a culture of like high voter turnout and but then in other places the voter turnout can be low i mean you know and you if you're living in a democracy like it kind of like defeats the purpose right like you want to have high voter turnout you want everyone's voice to be heard um whereas within crypto protocols with governance it's it's much much worse because most people aren't holding these tokens to

participate in governance they're holding the tokens to speculate on and obviously you know in in governance systems in real life there's no kind of like token that you hold technically the token that you hold is like an nft which is your citizenship or we you know if you're a citizen of a country then you can vote in the elections uh or even a resident um in some countries i believe um but that's kind of like your nft to vote it's not like you have to go buy some some shares or some tokens or something you don't have to buy you have to buy shares in the government that you you know of the country that you're in to be able to vote whereas it's very very different within kind of like d5 i guess like in dallas in general is where you can't actually vote unless you have

the governance token now you know am i bearish on that long term i don't i'm undecided am i bearish on it right now yes because of the fact that there's so much voter apathy like i could talk about this for a long time there's plutocracy there's voter apathy there's literally like it's it's so bad that like 90 plus easily percent of the tokens just do not ever participate in governance which means you have basically a a dictatorship of just like a few small parties and they could just be whales that hold a lot of tokens influencing the whole protocol so anything we can do to kind of like remedy that or at least help that a little bit which you know these voting voting vaults is one way of doing it is is good in my books but i'm still

undecided if like i'm bearish on governance the way we're doing it right now long term i would actually like to see like nfts be used more within governance where you if you're kind of like um if you're kind of like done something for a protocol if you've participated in a protocol maybe you've actually got funds in other but you don't hold any other tokens well maybe you should be able to participate in governance as well like you still have skin in the game you still kind of like want you know ava to be i guess like a protocol that functions correctly that that is governed correctly but maybe you just don't want to hold the token there's plenty of people who do that right i mean i do it with maker i have my funds in make i don't own any mkr tokens so i

guess like from that perspective i'd like to see more experimentation here uh but voting vault is also a good step there but anyway i think that's it for today so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give the video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone