Corporate layer 2's, Polygon PoS on AggLayer & more - The Daily Gwei Refuel #781 - Ethereum Updates

Transcript

hello everyone welcome to another episode of delway refu right cup latest news and E system I'm your host d s and to the 13th of June 2024 right everyone let's get into it so kicking off today we have a little bit of I don't know if I'd call it drama but something funny that was uh that came out of the last 24 hours so basically we all know that I think a few weeks ago Trump said that he was going to start accepting crypto donations and he has since done that and now Biden apparently is looking to accept crypto donations as well now of course we know they do this because hey it's an easy kind of uh I guess like big money market to Target if they wanted to get donations and I think that I don't know how much money people have sent

Trump so far but I'm sure he's being donated a bunch of money there and Biden Biden also wants a piece of that pie obviously which is hilarious because I put this tweet out where I basically said Biden wants to accept crypto donations yet his SEC buddies are suing the biggest us-based crypto companies uh such as coinbase Kraken and unisoft Labs uh so it's a clown world and then quit here in my replies said that even better he wants to use one of the companies being sued coinbase as a means to do it so it's just very hypocritical and this is like one of the main reasons I I hate politics because there's just so much crap in politics you guys know I love my kind of uh reality over narratives but politics is like 99% narrative it's all about how much you can talk really

and it's all about how many people you can fall into believing your promises and when you actually get into Power you don't tend to fulfill most of those promises uh and you pivot and someone and so forth for various different reasons obviously politics is quite complicated but this is my number one reason for hating it is because it just falls into the realm of narrative far too much and it's just really hypocritical for Biden to basically or the Biden campaign to basically say they want to accept the crypto donations when they you know the SEC with with garyan Gensler as the chair which was appoint who is a Democrat and Who was appointed by Biden going after the biggest US companies with baseless lawsuits you know I wouldn't wouldn't have an issue with it if there were law suits that actually made any kind of sense uh but

they're completely baseless right they don't really have any base in reality uh they come after coinbase especially has tried to play ball with The Regulators for years now uh and they also come uh in a time where trafi is actually adopting crypto as well so there's this I guess push and pull going on right now within the crypto regulatory landscape we've seen a lot of stuff change over the last few weeks especially um but this is just another thing that I actually would consider to be a positive mood uh move I should say because of the fact that if the Biden campaign is being I guess like even a little bit more open to crypto it's better than what they've been in the past even if they're only just doing it to get donations even if they're only like laughing about it and only just doing it as a talking point

it's still better than what we've had in in the past I believe and as I said before I think that there are there's no anti- crypto vote but there is a big Pro crypto vote and I don't know if people are going to change their vote materially based on it like enough people are going to change their vote materially based on whether a party is pro crypto or not but there is in I guess like a crowd that will change it based on how anti- crypto uh a party is so as I said there's no vote where people will basically well at least I believe there's no vote where there's enough people that would move the needle that you know that hate crypto that would vote for the anti- crypto party but I believe that a party being so far to one side uh and being anti- crypto

will cause people to not vote for them and vote for the you know the other candidate I mean it doesn't even matter if the other candidate wasn't Pro crypto like Trump could say nothing about crypto and would still probably get the votes uh from people who were fed up with the Democrats being anti- crypto right so there's that there's that kind of thing at play there and the elections drawing closer and closer guys not too far away now it's in November so we're getting closer and closer here but I think that maybe the Biden campaign wants to do a a calculated move here where they're like okay well how many people are you know stor Democrats that are being forced to vote for uh for the Republicans in this election because they've been so crypto all right let's pretend even if they're pretending or not you know let's let's say that we're

we're pro crypto and let's see if that moves the needle so as I said a lot of political games going on here but just something that I figured I'd point out because the hypocrisy is is just crazy to me and the fact that the SEC is still getting away with everything pretty much and Gary Geno is still at the helm is insane to me like in any other industry if someone at as in a leadership position in like an executive position at a at a private company if if they were doing the that Gary gensa has been doing they would have been fired a long time ago the board would have gotten rid of them but because it's all politics when it comes to these Regulatory Agencies gendler is still in power he has completely failed in his duty to protect investors I don't think

he's protected anyone from anything honestly him and the SEC at large I think they've done irreparable damage to much of not just the crypto industry but also um outside of that as well uh and only protected themselves I mean there was another thing that came out today that apparently terraform Labs the um the main company behind the terror ecosystem has agreed to pay the SEC $4.4 billion worth of fines okay for starters why do they have $4.4 billion to begin with like that's insane they still have that much money secondly why are they paying the SEC that shouldn't the SEC be mandating that a lot of that money or or if not all of it go towards the victims of the terror Ponzi of of what happened with Terror but no they they basically act like a a mafia that goes around um you know suing or I guess going after

different players and forcing them to pay protection money uh or I guess like a a fine right in order to be left alone and this has happened plenty of times in the past within crypto I mean famously the um block one the people or I guess like the company that created EOS and ran the year-long EOS Ico where they raised over $4 billion only had to pay a $24 million fine to the SEC for conducting an unregistered security sale uh and then they didn't have to admit the EOS was a security and they just settled and that was it that the whole case was settled for $24 million when you raised over $4 billion it's just insane right like there he got it it's cut and then was like okay you know whatever uh go on and do your go go and do your Merry business and as we all

know EOS went nowhere block completely abandoned it and rote off into the sunset traded all that eth that they raised in the Ico for BTC and now they're one of the largest holders of BTC essentially um you know enjoying their ill gotten gains and being billionaires in the process it's just insane to me it really really is um but yeah anyway enough enough ranting about that one moving on to some tech related news here so I saw this eth research post from paraos that I thought was quite interesting so as you guys know a current road map item for ethereum is to expire the state of ethereum and then have it served via third-party means uh kind of like what we have right now with the expiration of blobs how blobs expire every 18 days and if you want to access them past that then someone has to store

them I'm storing blobs on my home servers as you guys know but there are a lot of third parties storing these and because it's it's based on a oneof UST assumption you essentially only need one copy of that data uh and and you match the kind of hash with what's on on chain the the commitment hash with what's on chain and you know that it hasn't been changed you know that it's true and then you can propagate it out from there so it's a really cool little primitive that we've got going there now of course we want to expand that to the rest of the network we want to expand that to the rest of the state and that's exactly what things like EIP krle 4 try to do um and essentially that is on the road map and has been on the road map for quite a

while here and something called the portal network has been on the road map as well I've talked about that in the past but para's tweet uh uh not tweet sorry his a research post basically talks about serving the state over torrent uh and over torrenting software so for those of you who may not be aware torrent are not just exclusive to uh you know to to piracy to uh you know media to downloading um you know movies and TV shows and music and all that torrenting is just a protocol right bit torrent is a protocol it bit there is a bit torrent client that Justin Sun now owns I believe um but bit tant is is a protocol for sharing data across the P top sharing across the internet now um because of that we could use and beback

off of bit tent here in order to serve state in order to serve serve expired state to anyone who would want to download it here instead of having it kept on you know online on the network and an easy way to I guess like imagine this is that the ethereum network is like bit T in that it is a peer-to-peer Network where data is you know is kept in sync and is shared um and you have to come to consensus on that but the problem with that is that the more the change grows and the more the state grows the harder it is for the network to to keep up the harder it is on the nodes uh and the overall more kind of like I guess I wouldn't call it like waste data or anything like that but you know the harder it is to basically sync

all of that data because the change just grows and grows and grows from there um and then no one can sync uh you know full nodes and archive nodes at in The Logical conclusion here and you lose the I guess like the top PR uh the top um feature of a blockchain which is the ability to verify it on consumer Hardware or at least a layer one one blockchain here so you can go give this post a read for yourself I'll link it in the YouTube description below but really it's a really cool way to I guess um fix the issue of data availability when it comes to State expiry um outside of kind of uh the portal Network um and I think that if we were to implement this at scale and we were to even incentivize it in some way I don't know how you would

incentivize it but in some way it would work really really well but you can go give this a read for yourself I'll link it in the YouTube description um uh below um but also there may be no someone notes Here in the comments that there may may be no way to incentivize or ensure that the data is served by peers because incentives are weird here like you probably couldn't incentivize it from like an in protocol perspective you wouldn't be able to pay eth out to people for doing to to do this because it could be gamed there's no objective way to to see this uh but there are like extra protocol incentives you could use I don't know what form that would come in maybe there's like a state expiry Guild or like a data Guild which essentially is similar to a protocol Guild where it's a public goods thing

that essentially pays out uh is stewarded by some group of of trusted people and then pays out some money to people to keep this data alive I don't think we're going to need that I think the incentive um the incentive of just like uh having it there uh and being able to serve it and monetize that data is the same as it is for blobs because with blobs right now as I mentioned like I'm storing it as a hobby thing and there's a lot of people who would store this as a hobby thing as well but there are the companies storing blobs uh for long-term retri Ral of these blobs in order to to I guess like do data analytics on it and monetize those products to allow people to look up things for tax related purposes and monetize that so there are very diff

various different reasons as to why people would store this without direct incentives and I think that's fine to rely on those sorts of things um and also expiring the the the state would be done as from the latest kind of things that I've seen it would be done on state that hasn't been access for a certain period of time I think it's a year the last time I looked at that so if the state hasn't been touched on CH in a year the safe assumption is that it is something that no one cares about anymore so let's expire it and if people do care about it they would be storing this date for themselves you know on their own full nodes just like with blobs if you did care about retrieving blob data past 18 days or retrieving the blobs past 18-day expiry window then you

would just store it yourself if it really mattered that much to you right so I think that's a happy middle ground uh in order to tackle the issue of State growth over time because for ethereum it definitely is a big issue and something that we need to uh keep focused on in order to rectify I got over the next few years all right so van Spencer put out an interesting tweet today which I think really encapsulates one of ethereum superpowers over pretty much every other network so because of ethereum's rollup Centric road map uh Vance says here you know we're going to see a lot more corporate l2s La Base on ethereum Fortune 500 companies are taking note of the $ to $40 million of Revenue per month Bas is doing the new business model that they've pioneered and how they've cut out the payments middleman

there will be many more ethereum so as I said like this is unique to ethereum because ethereum is the only layer one that I know of uh that has any any usage like there are maybe other layer ones out there but they they probably got like no usage or rather irrelevant I should say the only relevant layer one the only one that's that that that's that has a lot of activity on it that is pursuing the rollup Centric road map and that is getting people to build their rollups on ethereum instead of building them elsewhere now because of this and because of this uniqueness to ethereum it basically means that as an asset uh essentially benefits from all of this so anytime a new L2 is spun up even if they're not using eth as like the default gas fee on the L2 they're still

tapping into the eth liquidity into the eth the asset because they're living on top of ethereum it's very easy to bridge in from ethereum and they get access to a massive you know 400 plus billion dollar asset pull of capital and there is a culture of people using their eth on chain whereas if for something like you know Bitcoin if you were to do I don't know if it's possible someday to do rollups on bitcoin there is a very small percentage of I guess like uh onchain BTC users most BTC users are happy just holding it offchain and never touching it right uh but you know there's a very small percentage that would use it onchain whereas on ethereum it's the other way around where there's a huge percentage of eth that wants to be put to work that wants to be used um even outside of staking right because

the staking has a lot of eth locked up and then there's a lot of eth on chain doing other things whether it's defi whether it's uh using ether's money for nfts or doing payments stuff like that you know minting stable coins all those sorts of things right so there's a lot of stuff to do with your eth here uh which is and and because of these other corporate l2s that are probably going to come online as I've speculated on before I think that there's going to be a new Stock Exchange built on top of ethereum a fully tokenized Stock Exchange that is fully regulated in the real world but everything is a token first and it's all on chain like what better way to build that than as an L2 on top of ethereum instead of building a new L1 which is just I mean infinitely harder than

building an L2 um and and just like more way more expensive or and then also you would just be building it as an evm L1 anyway because you'd want to tap into all the existing token standards all the existing infrastructure you know whether that be wallets um or otherwise all all the all the existing developers right so the path of least resistance and the path of greatest success chances for something like an onchain tokenized Stock Exchange would be as an L2 and could you imagine Black Rock and and Friends banding together to build this thing as an two on ethereum imagine how bullish that would be not just for you know ether's an asset but for the ethereum ecosystem as a whole that would basically uh be I guess probably the

most bullish thing to happen to ethereum ever really because it fulfills a bunch of different goals here the first goal that it would fulfill is the goal of making a better alternative Financial system that integrates with the existing Financial system that's that's the the biggest goal there secondly would be uh basically completely proving out the L2 thesis and completely proving out what Vance is saying here that this is a new new business model that's been unlocked that people whether they're small companies or big companies want to tap into and thirdly it basically cements eth as the in is the inet native money and nothing else would really come close in in that Arena I think uh because it it's now blending in from The Real World taking all of this capital in from The Real World on chain and ultimately it settles down to eth because as I said

even if the L2 is not using eth as a gas fee it would still be using eth as a as a kind of collateral asset there as a money on there and then ultimately that L2 would be settling down to ethereum so ultimately it would be paying eth fees to to the base layer uh and then that would be being burned so it just creates a very very nice little not even just like a narrative but like a reality for ether and ethereum um as as an asset as as a network there which would be yeah as I said like incredibly bullish there so just something to think about I'm curious to see what happens because not all of these will be successful as I've said before but I think that if it's Black Rock and other trafi firms doing this and doing it well you know excuting

on it well it would it would have great success because what would be better that so what would be better than the current stock market the way it exist today would be a global onchain 24/7 tokenized stock market that can be plugged into the existing onchain economy that is hyper efficient you no longer need to wait long times for settlement you can do settlement pretty much like as fast as you want right um it would be much much cheaper than what they have today and what they're doing today it would be interoperable between different countries it would be it would be a huge Boom for stable coins not just ether ethereum for US dollar stable coins it would be a huge Boom for the US dollar generally which some people speculate lately that he going to lose its strength because it may lose its status as a reserve currency due to um

uh basically uh people abandoning the Petro dollar which I think is happening right now so it would be a way for the US to combat that and then essentially you would have an explosion in in stable coins both US dollar and other F currencies on chain as well uh and it would just be so much better than the existing system we have today that's the end game that's one well that's one of the end games for ethereum which would be really cool now would this L2 be decentralized probably not right doesn't need to be probably not because it's not trying to do something decentralized right it's trying to do something in a much more efficient and effective way than is already being done um but that something is a centralized use Case by Nature like it's not a you know a stock exchange is centralized by Nature

something that is typing into real world assets has to be centralized by Nature because if you're trading for example a Tok representation of gold on chain you don't trade the gold as a digitally native asset the gold is in a vault somewhere and all you're trading on chain is an IOU and you rely on a centralized intermediary there or a centralized counterparty to make sure that that gold is in the vault it's the same as what happens today when you're trading gold on on a on on you know on the stock market generally you're trading IUS you're not trading the actual gold right the physically physical gold is not moving whereas with uh um with digital assets they're digital first like eth is issued by the ethereum network there's no no physical eth so the all of the the stuff happens on chain it's settled on chain and and

all the guarantees are on chain whereas the ultimate settlement for these other things will be still done offchain but the tokenized representations of them is what unlocks the you know the new use cases the 24/7 trading the better efficiency and so on and so forth there so yeah anyway thanks to Vance for putting this tweet out got me thinking today you know got the juices flowing there and I'm super excited to see how this uh plays out over the long term all right so polygon has announced today that the polygon Community began discussing a proposal that would see the polygon POS chain connected to the AG layer this is ZK posos Phase 1 and if accepted the pool of unified liquidity for chains connected to the AG layer would grow by $2 billion now as you guys know polygon 2.0 is this huge effort

from polygon that was announced probably a year ago now I think that essentially has the goal of moving polygon towards being uh a fully kind of like ZK endgame ecosystem now there are I think there were three main parts of this there was the governance part of it which they've been doing a lot of work on there was the uh mic to pole token migration which I believe is coming soon uh and then using and upgrading the the token all together to be basically a native um reaking token within the ecosystem uh and then thirdly was transitioning the existing proof of stake chain into a ZK validium on top of ethereum here now this is being done in phases phase one is essentially to connect the POS chain to the agay which is this other piece of infrastructure that they're building as

a public public good to unify liquidity on ethereum now the reason why I think this is really cool is because the POS chain already has a large user base and already has has a large set of liquidity and what that means is that it because the POS chain has $2 billion um uh of of liquidity on there and immediately plugging into the AG layer it incentivizes the other l2s and the other l1s to plug into the AG layer so it starts that flyable effect you don't have a chicken and egg issue here they don't need to use token incentives to do this all they need to do is plug in their existing liquidity into this new a layer and all of a sudden there is $2 billion there for everyone else to tap into if they want to and they're incentivized to do that so I think that

that's going to be a really nice way to get the AG flywheel started because as I've said before the AG is not a polygon thing it is a public good but it that polygon is building um and it's supposed to it's trying to be a credibly neutral uh unified liquidity layer but the issue is not the issue but like I guess the main barrier is is that it's opt in no one you know no one's forced to use it but the more chains that use it the better it is overall for everyone and the more um I guess like Network effect it has and the more the users will demand that their favorite chain plugs into it and then it it basically becomes uh a fly will effect from there and eventually you'll see you know a lot of liquidity on the AGG layer which will be

really really great for for users so I'm not sure when the next phase of um of the zkp transition will be like when it's going to be a full ZK validium I would say at this stage is probably going to be maybe maybe next year because it is a pretty big big ask it basically is like a merge for for polygon we're essentially transitioning the POS chain on the fly to a ZK validium without interrupting anything for users without losing any funds or anything like that without anything going wrong is a pretty big ass here and they want to do it in phases of course so I believe that that will probably happen sometime early next year like that's kind of my estimation on that there but you can go check out this thread about what they announced today I'll link it in the YouTube description

below for you to do so all right so here's a project that I probably don't know if I've talked about on the refu before but this is a very old project in the ethereum space and the project is called foam fo so this is an old project from all the way back in 2017 and a fun story about this is that this is one of the projects that I uh was pretty bullish on back in 2017 I invested in the Ico in 2017 um and I also went to a local Meetup in Melbourne here in 2017 about foam now what foam is trying to build is essentially well initially they were trying to build this kind of offgrid network of of like I guess like real world physical infrastructure node infrastructure kind of what's known as

like deepin today right this and F was doing it before it was cool uh they pivoted a bunch of times but now they're basically settled on being uh radio kind of network off-grid radio network um built on ethereum built on the op stack here and what they've announced today is basically the ability to do ethereum transactions over over radio frequencies here which is really cool I mean I think that I've said before that I'm generally quite bearish on deepin because a lot of these things tend to centralize over time in that because of economies of scale when you put economic incentives into it it'll just centralize and um and and everything will become basically what we have today with centralized infrastructure and decentralizing out infrastructure is incredibly hard to begin with because it's physical right

you have to physically go out there and install these things and it is a long-term thing but as I said fo's been at this for seven years now um and essentially it's it's more of a kind of like hobbyist thing I think for people set up these things it happens outside of crypto as well there's a whole community that does Laura which is a hobest thing where they set up these nodes and they communicate with each other it's like the ham radio enthusiasts right like it's the same thing where it's basically a very nerdy Enthusiast thing um but that's the way to do it in my opinion adding you know strong economic incentives on top of it can work to kind of get things going but then you have to prevent it from turning into a centralization game which is very very difficult to do so I just wanted to

highlight this for you guys something different something that I haven't really talked about before but this is the kind of stuff that I guess like makes ethereum even more World War III resistant where essentially you have these um these ways to send transactions on the network over uh over radio frequencies instead of over the internet right so if the internet was to go down for some reason or you know I mean the internet going down what does that even look like right but if there if you weren't able to kind of get access to the internet here but you could still Access Radio and people were running full nodes on this network then you could essentially get transactions included now uh I I I guess like this is a huge thing right this is not something that's going to happen like overnight this is not something that's going to

happen anytime soon it and physical infrastructure rolling it out takes a while but still it's something different something cool something that an old ethereum project is still working on which I thought was worth highlighting here but you can go check this out for yourself I'll I'll link it in the YouTube description below for you to do so all right last upop here I just wanted to show this chart that was shared by Mario on Twitter today so he said what an unbelievable startat according to a recent report by Chain anal analysis 4% of turkey's GDP is going to stable coin purchases turkey is among among the top 20 economies globally by GDP so the reason why I wanted to highlight this was not because I thought that this was like cool or thought this was a good thing because

obviously people in Turkey are fleeing to us doll stable coins because their currency is being devalued due to inflation or hyperinflation but the reason why I think it is a I guess like a valuable thing to highlight is because without stable coins in the past what would have to happen is that people would be going into US dollars in a very centralized way whether that's through like some offshore bank account or or more likely through cash and as we know cash is very very insecure because you got to carry the cash around you got to secure it yourself you can't be putting it into a bank because they you know there's a high risk of seizure in these countries so what I guess crypto has done has enabled these people to essentially go into US dollar stable coins like usdt like usdc where yes they

are centralized but there's probably way less of a risk holding those things than there is holding USD cash or holding USD in a bank account in their local country here or even in an offshore account where it can get seized if they do an order and say okay well this account is is being um it was opened by like someone in Turkey it's not open by someone that we want to do business with and so on and so forth right so this just speaks to I guess like The Wider trend of stable coin adoption as well people don't really like to talk about stable coins too much because you can't speculate on them right you could buy a stable coin for a dollar but you can't be like oh I can't for to go to $2 and I'll double my money no and stable coins

generally are considered quite boring but stable coins and payments are the biggest use case of crypto today stable coins is the biggest use case of crypto today uh and it really does speak to the fact that they've reached product Market fit even if they're centralized and that's because of the original goal of crypto of basically to give people a way to escape fear currencies to escape hyperinflation and this is not just been happening in Turkey it's been happening in Argentina a lot as well there's a lot of argentinians in crypto but in other places around the world as well so you can go into US doll stable coins or you can go into Ethan BTC to to get out of um the inflation here like I personally if I was I don't know what I'd be like in these countries obviously you need US Dollars and need a relatively stable

currency for for everyday purchases but as a store of value I would definitely be purchasing uh you know eth uh in these countries as a story of value here or even BTC uh I do I mean I do that in Australia and AUD isn't hyperin lating at all right um and I I do that here that that's what I want to store my value in so I'm sure that they're doing that as well but in terms of having something that is relatively stable compared to what you are used to right the in your own native currency here on your own native fear currency and something that you want to use for payments stable coins specifically US dollar stable coins are very very important here and very very important for helping these people to escape hyperinflation so you can go check out this chart for yourself I'll link it in

the YouTube description below but yeah just always keep in mind that stable coins are the number one use case of crypto and number one product Market fit of crypto today probably going to be that into the future what do stable coins look like in 10 20 years you know are we just stuck on the US dollar or can we create better stable coins that aren't pegged to Fat remains to be seen I think we can but there's a lot of experimentation that needs to take place there's a lot of adoption that still needs to take place in order to provide enough liquidity for these things to work and so on and so forth but anyway I think that's going to be it for today so thank you 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 this go Channel and I'll catch you all tomorrow thanks everyone