The Daily Gwei Drive Thru with Anthony Sassano and Eric Conner | ETH staking, Layer 2's and more!

Transcript

hello everyone and welcome to a very special episode of The Daily gray today I have with me a long time ethereum Community member and a very good friend of mine and a lot of you will already know who this person is Eric Connor he uh was part of ether you know me and him we did ether but during the last bear Market uh and we were doing a podcast called into the ether as part of that initiative right up until May of last year so it's been over a year since we did our last podcast we actually kind of rugged we didn't give a farewell podcast or anything like that we kind of just stopped doing it um but we're back and with this new kind of series may become a regular thing we don't know the Cadence yet on it and we're not going to make any promises but

we definitely want to get back into the swing of things via the daily way just talking about all the things we used to talk about on the internet podcast obviously everything ethereum but I think it's it's awesome to have like for me personally to have someone to Just Bounce stuff back off uh back off of uh like I used to on on the podcast with area because these days I obviously do the refuel it's on my own a lot of the time but I'm excited to have a conversation with Eric today because he has a lot of unique insights he disagrees with me on things which is great because then we could just bounce off each other and and see where we land there um but Eric I'll let you give like a short intro of yourself people who aren't familiar with you may not have

listened to Into The Ether or paid attention to Ether maybe their first cyclers uh so yeah go go ahead yeah for sure first Anthony thanks for having me on I mean obviously we go way back I think four maybe five years at this point ago we started ethub and Into The Ether podcast but yeah for those that don't know me um Eric Connor I've been around ethereum since before the launch uh 2014 before you could even get Ethan your hands and trade it um so it's almost been 10 years now which is kind of crazy um I've been living and breathing it I guess what feels like my whole life over the last 10 years you probably see some gray hairs on the side of my head at this point because of uh Ethan ethereum but yeah I mean Anthony and I started

ethub four years ago did a podcast for a while and like you said um we did kind of rug our listeners and there's been a couple a couple angry people on Twitter about that but you know what I think in the you know it was on theme for crypto right the devs were cooking and the devs disappeared and now the devs are back creating something new so yeah um I I hit Anthony back up a few weeks ago and said hey what do you what do you think about doing something again and you know you've got this great thing going with daily guay so I I'd be honored to hop on here every once in a while and hopefully this becomes a thing but I guess let's see uh if we've got our mojo still going on you know on this first one back yeah yeah we might just do one episode

and then run people again so I said I don't want to make any promises on that front but man so much has happened since we did the last Into The Ether uh kind of podcast there I mean obviously the biggest thing being the merge and then we recently had staking withdrawals but it's funny because you mentioned kind of like the the market downturn there right how basically we had the craziness of 2021 where it was actually even crazier than previous bull markets I think because of that double top that we had where everyone thought that may was like it you know may 2021 it was over and then for some reason I think the reason became obvious after the fact um there was a lot of Leverage injected into the ecosystem which gave us that kind of second top into the FTX collapse and then from there everything Unwound

and it was just a crazy amount of Leverage unwinding and lots and lots of of money just got got burnt and and lots of people got blown up obviously um but but yeah I think you mentioned like the builders I think what I'm noticing within ethereum especially over the last six months is that the builders are so energized and they're so kind of focused on the mission we have this defined ethereum road map now and we're actually executing on it we actually delivered the merge and I think everyone is just really uh kind of excited to keep delivering on that especially with the l2s and things like that so I'm curious to get your perspective overall on I guess like the last 18 months because it is almost 18 months into this I guess bear market now and to see kind of where you stand with that and and

what you think about the whole kind of ecosystem today yeah I think where we left off on the last podcast I think you just mentioned it was just over like a year ago and so we were just what six eight months into this bear Market I think my stance at the time was like I didn't really believe it was a bear Market I thought we were going to kind of like go sideways for a little bit but not like have a depths of a bear but to be fair that was before the whole SPF and FTX thing right so like I think what we learned was there was a lot of illegitimate liquidity in the market a lot of pumping pumping happening that you know was fraud I guess we could say at this point um and we we paid for it he bought him

out at what like 850 or something like that um which you know wasn't as bad off the top as previous highs to lows for eth but we've talked a lot in the past and I I agree every cycle is going to get less and less as far as top to bottom so I think it was like 94 back in 2018 2019 I don't know the exact method but I want to say it was around like 80 something like that um this cycle um and I think just as liquidity enters the market and more entrance and you know now you consider like staking in one five five nine with feeburn like that that top to bottom is gonna get less and less so you know we've had to deal with you know our sins I guess as an overall crypto Market as we always do it gets frothy

um you know people right now on like crypto Twitter and stuff are pretty bearish but I don't know you like look at the graph like we're over double off the lows like the global economies are like a little weird still but like the S P 500 looks like it's about to like break up and doesn't look as bad as it did like at least a few weeks ago when we had Regional bank failures um yeah maybe some sideways chop and like who knows but like I look at the graph and I'm we're kind of like past that like we've always talked about these like long-term Cycles right we've dealt with this for 18 months now like I don't unless we have some like weird Black Swan like why would we go back and retest 850 for example right um I think we're kind of in this like

people got into the meme coins they got burnt on empties we're like in the ShakeOut period right and this always kind of happens like crypto Twitter gets dead um people get scared and bored by but the real Believers stick around but to your point like the building community's never been stronger I mean it's unbelievable like we've got like what five uh E2 clients just taking along and you know strong development teams on both on all five of those we've got like two maybe three um execution layer clients which in the past we only had like one and there's no fear of like the EF like not being able to fun people like we had back in 2018 2019 um you know there's money to go around for Grants and stuff like that so I mean

from from a fundamental side I mean gosh we can withdraw eth one five five Nines in it's hard to you know be bearish there I I do think there's a lot of like toxicity with like meme coins and stuff that needs to be shooking out um but I think we're past that like bear cycle and now we're kind of in that like no man's land yeah yeah definitely in the in the no man's land and I think something that a lot of people have taken notice of is the real story of I guess the bear market and the crab market as they call it is the strength in uh eath against Bitcoin because if people remember from the last bear Market Heath BTC the ratio nuked like 90 or something from from its high which was very demoralizing back then uh and it was very very bad for

ethereum because uh the sentiment was just was just terrible uh we came off the icos and then we obviously you know there was a narrative of the flipping in 2017 and that didn't materialize and then he just completely created against BTC and no one wanted to hold Heath right we had all these people just selling it and there really was only a few of us true believers who were just stacking and still you know held the faith and and made sure people were aware of why it was actually valuable and why it was going to become more valuable but in this bear Market it seems like there are not really any people doubting the value of each besides some Bitcoin Maxes who obviously are never going to change their mind on on it but I think that just generally if you look at the the chart

as you said especially for Heath BTC we've been pretty much flat against against BTC there's been pretty much fight against BTC since the start we had that massive dip I think in June of last year because uh 3ac was blowing up and all this eighth was just getting vomited onto the onto the market but uh once that cleared up we bounced back from there and we've been in this kind of like range for for a long time now so I think that overall speaks to the strength of ethereum as a network and if there's an asset now where the market basically says well in a bear Market we flee not only to BTC and obviously USD but we flee to eth as well eth is like a safe haven asset for people and obviously with the Advent of um of of staking uh which which happened quite a

while ago but a lot of people are only paying attention to it now because of uh the merge and withdrawals there's a lot more eth being staked it's it's increasing um the view of eth has like a store of value and that kind of monetary asset within the ecosystem so you have this very strong each BTC and that's what I try to tell people when they say oh we have the berm you know East deflation era we have this massive issuance reduction why isn't eth going up it's like what wait a second wait a second eighth USD value is still relatively strong and eighth against other assets is very very strong so really what that that's all done especially in a low demand environment that we're in right now it's basically set a I wouldn't say floor for each price but it's really kind of put a nice

nice uh kind of a foundation underneath ether's an asset that allows it to continue to accrue that value and basically take value that would have gone to BTC but instead of going to eat during this bear market and I think ultimately when demand comes back and and we see another bull market that's going to play out really really positively for eth as an asset which is just going to feed on itself yeah no that's actually a point I wanted to hit on too I I think you nailed on the head because I see a lot like I'll tweet about 1559 or staking like a lot of eat some steak and fever is working and people are like well why isn't the ratio held up well it actually has held up like amazingly well versus past bear Cycles right and so we we have this like

higher launching pad now and then both Cycles eth always leads right the excitement's around each the you know deep like let's say D5 summer nfts whatever's next like people kind of come in because of that and there's higher demand for ease people want to use ethereum they want to buy eth you know and so now you have this higher launching pad for the next bull market which who knows when the next bull market will be but once it's there like that ratio is way higher and you know the at this point I don't want to like try to predict the flipping or anything like that but if you look at that ratio chart in Bear market so it looks pretty good for eth right now and you know one of the things that I tweeted out the other day too like you and I used to

always talk about we were early in This and like I think we just take for granted how these things have already happened like the three pillars of each value or curl right that's going on so we always talked about like when D5 summer was happening the first was like trusses Chrono for D5 right like if you want to really use defy as your trustless bank you want to use eth right because if you or maybe die or iodized debatable these days maybe whatever but you know usdc maybe don't want to use because that could be C's like Eve is truly a trustless collateral you could put in D5 earn on it borrow against it whatever the second and the third we didn't have at the time when we were talking right and that was like staking returns like stake your eth for network security and

get a return um and feeburn based on network usage and like this is all happening right so these are things and I know like way throwback I always say like multi-decade play right and we're like almost a decade in it takes people a long time to like realize this and I think one of the catalysts that's happening is a lot at least here in America and I'm sure in Australia and I know the UK with inflation happening and people being forced to like understand this now and like how money printing works and like where money come from how it's backed people are now having to be forced to like understand these Concepts and when they understand like how [ __ ] fiat currency probably is in the long term

um they're gonna like look at crypto and now like this pitch is there for eth right and it's complicated even for like eat heads to like really understand like we we get we get it um so it's going to take people a long time to like truly realize this but I just is there really a better asset out there period when it comes to like being able to not only invest in something for upside but use it and earn on it and you know as it gets used and adopted you also gain value by people in the network so I think that narrative is really rounded out you know even just whenever we did our last podcast so over a year ago um we didn't have withdrawals we barely had fever and I think 1559 hadn't been in for whatever six 12 months if that

um and staking returns we were still like trying to figure out how much eth would be staked because we didn't know like what draws us really opened that up and I'm sure like one of the things we should talk about is this whole like narrative that was happening around oh once withdrawals get enabled we're going to see like a death spiral well it's completely gone the other way and as like a solo sticker I'm pissed because my yield keeps going down but in long term it probably is almost better for each value so it like offsets but you know if you're if you're an e-sticker right now you're earning like I'm probably earning about with Mev on six and a half ish percent something like that I haven't really done the calc in the last couple weeks with more validators coming online but that was a

funny narrative huh and it just I mean we knew it would blow up in people's face but isn't it crazy how these things just spiral and then people start believing them even though like the people in the know are saying look this isn't going to happen yeah yeah I I I do want to talk about that but just to round off what you were saying about I guess like the inflation point you made I think you made an interesting point there that I haven't really seen anyone articulate is that the fact that we have this High inflation has definitely forced people to learn about you know the economy the monetary systems uh how governments manage it how central banks manager fiat currency generally which yeah is definitely a driving force for crypto it drives people into to other assets and and I think for a lot of young people

they're going to be looking at assets that speak to them which are going to be ones that uh uh kind of uh forward-looking you know the ones that are based on technology rather than Old World stuff because young people are more much more in tune with technology and what's happening there obviously we have the AI boom now right now that's a that's a huge narrative and huge thing um but crypto is always there as well and I think crypto definitely fits into both the tech and monetary kind of topic that people would be talking about and thinking about today so yeah that was an interesting point and I I think that uh uh that's that's going to play out as time goes on especially as uh as when the next bull market happens but yeah on on the front around staking I think this is the next kind of thing we want to

talk about broadly is ethereum staking and I I've talked about this a lot on my show but there's always uh more interesting stuff to talk about when it comes to it but that withdrawal death spiral was the stupidest piece of fud that I think I've ever come across in about ethereum and we've had some dumb fud right like over the years but that one was so prevalent and so completely just doesn't didn't make any sense to me that uh besides people saying emerge wouldn't happen right that was dumb as well I mean you know what it's actually pretty pretty easy to find some of these dumb narratives but yeah the withdrawals kind of leading to a death spiral because one people just had no idea how ethereum stacking Works to begin with um and two they didn't realize that people actually want to stake their eat

they don't want to sell their eat just because the price is down a little bit from what it is they're staking to earn more eth because they think that the eighth price is going to go up so and and there's a lot of other things that fit into that but but yeah when I was saying that on crypto Twitter and elsewhere I I always thought you know this is so dumb uh this this makes absolutely no sense it's not going to play out like people think it is and yeah the deposit Q is what 77 000 pending validators right now which is like 40 days of a queue that's the longest the queue has ever been by far and it's just crazy to see just how wrong those people were right yeah it's just funny like it was so obvious like obviously a lot of people didn't

want to lock their ether without knowing for sure they could withdraw it right and like most of us had faith that it would happen but something could have went wrong and there was a non-zero chance that what draws would be messed up and that was locked away forever and that whatever it was at the time 15 million youth or something was gone or we would have to I doubt we would afford for that amount but um so like I do get it and people just kind of like Blindside ignore that um and you know the only what draws that really happened right were like cracking Force withdrawals because of like um the issues they had with SEC or whatever it was um but it just like opened the gates now for people to stake and I I do think we're seeing debates now and I think

this is a topic we we definitely should go into around you know so there's there's multiple ways to stake right there's like staking as a service which I think we can kind of like take that out the the two big ones right now are liquid staking derivatives or LSD and so of staking right so you know Soul staking is if you have 32 eth or more multiples of that you can run your own Hardware you can run your own clients you can stake it yourself you know there are benefits to that you're in custody of your funds you probably are getting a higher return depending on how many validates you run but if you're running like Mev and stuff you know you're you're probably getting equal to or better return than most liquid staking

derivatives can offer if you're patient sometimes it takes a while to get a block um so that's the benefit there right the downfalls are complication stuff we can dive into that a little bit on the flip side like what's taking derivatives within a second you can click a button you're staked you're earning um you don't have to do the queue so like personally I'm I'm trying to constantly compound my eth right into like more staking that's so like the second withdrawals enabled I put my zero X One address in I withdrew yes it's a tax hit but I I think compounding this and earning more use gonna pay off more for me in the long run create more validators you know put more youth in and I just want to keep doing that over time so

you know on liquid sticking derivatives you can kind of do that pretty easily too like because it's you know for like Lido they have this like thing where it's just constantly that you can wrap or you can stake and a rocket pool has the same thing I don't want to go too deeply into each one because I know people like I I like tweet about liquid signatures and there's so many like just chills right away like rock before light or whatever um but so there's pros and cons to each right and like the debate in the community right now there's two big ones there's if you are a solo Staker client diversity so like we don't want more than 33 of people using a certain client because if something goes wrong on the network there could be a mass slashing event um so we're getting there I think

Lighthouse and prism are both at like 36 37 so if you are running one of those and you're interested in helping you know switch out to like taku or something like that um the other one is now becoming a big issue which is like on liquid staking derivatives there's a lot of e-states for example with Lido right and there's a lot of issues there a it's still centralized they could just like pretty much run away with the eat I don't want to misspeak a little bit I know they've been putting some more governance controls in but that like just having a lot of Ethan one area is just not good because if if they mess up their you know their Hardware or their functionality like there could be Mass slashing there and all this stuff or you

know like you could be lost there could be a lot of things that could happen um so diversifying that on the liquid staking derivative side so I know I know you have opinions here and I think we can eventually get into solo staking stuff but I'd be curious to see what you think just on I guess my question would be do you think the client diversity on the solo staking side or the liquid staking diversity is more of a pressing issue for the community right now uh definitely the liquid staking issue I think client diversity is mostly a solved thing the critical threshold where it becomes like an actual issue is like 66 for like client diversity and that's on CL and El I think the Geth is still above that um from some measures

but there's there's work to get that that kind of fixed there but yeah I I would say the client diversity it's not like solved but it's not like a critical issue in my eyes whereas they LSD stuff it might not be like at the critical point yet right but it could get there and I I think you know you mentioned lighter obviously lighter is always a lot of people mention because they have the most stake the the thing with with Lido is that there is kind of I guess like a Saving Grace there that the stake is actually distributed to different operators all around the world but the main concern I think people have is that you have the SDA token right which is just it's it's it's their own token it's its own Universal token it doesn't matter if you're 80 stake one provider

over another with Lido the SDF is still connected and part of the the that Soul ecosystem and then people are worry about okay what kind of like governance influence can the Lido as an ecosystem have over ethereum itself because obviously there's the ldo token which governs the Lido ecosystem but can that actually translate into governance for the ethereum protocol because they have such a a large share I would argue not really because yes they have a large share of stake but it's more about what their voice is you know what what what what share of the voice do they have and I don't think it's that big I think that they obviously involved with conversations when it comes to core protocol stuff at some level obviously they follow along with the work being done because they need to make sure Lido can can keep up with it like withdrawals

for example Lido enabled their own withdrawals a month after withdrawals went live so I think that what people really are concerned about is as you said like you don't want too much stake with with one entity because it leads to all these Downstream issues particularly around governance and social issues and compromising on credible neutrality because it's also a bad narrative when people say oh look later controls over 30 of of the network and then if you take lighter and a few centralized exchanges they could collude to do some damage I'm like yeah okay yes theoretically they can always collude to do some damage but I think what people forget is that there are a lot of mechanisms in place to both prevent the collusion to begin with and then deal with it if it does actually happen yes some of them aren't clean like social

slashing is like a nuclear option and it's not something we ever actually want to do it wouldn't be clean but it is there but I think the community wants to focus on making sure that the risk of us ever using that nuclear option stays as close to to zero percent you know the chance I should say stays as close to zero percent as possible and the way we do that is by getting stake away from anyone provide too much takeaway from any one providers like like Lido for example and going going to some someone else and I think generally besides Lido the beaker chain actually looks quite healthy uh none of the other kind of providers have too much share but I guess that doesn't really mean much uh we definitely need to to make sure that that Lido I mean maybe maybe it doesn't

go down for me but at least stops growing I think that's what people are trying to do at this point trying to direct stake to other places and as you mentioned as well with solar staking you've been talking uh something you wanted to talk about and that's something that I want to talk about as well you've been talking a lot on Twitter about how solid stacking is still really hard from a technical perspective and it definitely is like there's no sugar coating that I think I I mean I run a lot of different staking setups but I come at it from a technical background I you know I've been I I've done it courses computer science courses things like that and I've I've taught myself a lot of this stuff but you come from a different background right you you weren't really um into that stuff

early on before you got into ethereum and started staking so my view of it might be different to yours because of that as well but I'm curious on your kind of experience with it like you you say on Twitter a lot that it's very difficult uh it's it it's scary at times because you think you did something wrong and yeah you're encouraging people to build better ux uis kind of stuff for solo staking so so yeah I'm curious on your thoughts on that one yeah for sure I mean it's a great topic first the last thing I'll say on Lido is the only thing that rubbed me the wrong way is they put like a governance over load up to ask if they wanted to like cap and like come on like it's way more centralized than that yeah yeah exactly yeah that that whole

thing I I've had like I've given my opinions about that a lot but I I don't think people like it when I say that I don't think they're going to self-limit because they're a full profit business and why would they self-limit right exactly yeah so that was kind of like a weird like I don't want to say farce but like a weird way to say oh look we don't want to self-limit because the token voters said like they could if they really wanted to but yeah so I I think solo staking is a great topic I actually think it's not talked about enough um the the user experience behind it so if there was one thing I would say right now as a community or maybe the EF could fund it I don't like falling back on the app but I actually think this would be a

good thing for them to do it would be to like do I I come from like a product management background um do like a user study on who are the people solo staking right like what is their background who are they what's the average amount of each people have like are so stickers do they have one validator on average or do they have 20 do they have a hundred like I I really don't know and it's hard to gauge on Twitter um so I've kind of slowly become it like people are kind of championing different things right like people are championing client diversity now we have like the LSD uh diversification I don't see a lot of talk to me personally um I think one of the bigger issues is the ux around soil staking and why I say that is because

I mean I'm pretty techy like I've been around this stuff for 10 years now crypto in general but like I use a Mac on a day-to-day basis and you just like and I've used you know GitHub terminal like Linux like when I have to but in reality to like become a solo sticker you have to have like an air gapped Linux machine you have to you know we talk about just private Key Management General you have to do that and some like your generate like the prompt will be like oh this is your index zero you start at zero so like your second one is like actually index one like it it gets complicated right and you have to like walk through and make sure you do it right and then you like generate this data offline you move it off an air gap machine you send

the deposit data then you have to like wait and understand the queue and then like why you're not activated then once you're activated you got to like load your key stores in and there's a password for your key stores and there's like you know there's your like withdrawal keys and there's just like your validating Keys it's just for those of us that have been around it for a long time it makes sense but if I'm someone that bought a thousand each five years ago which isn't crazy right you put five ten Grand into each something like that and you've just sat on it and you're like oh I would like to make five six percent on it what are the odds that these people really understand that if you're not like really in the game right and you're just like oh staking's enabled I want to

use it they're probably going to coinbase or light out because they don't want to do this [ __ ] dude once like the withdrawals happen I had to like remember what I did four years ago because it was like December uh 19. I think it had been like almost three years but 2020 December 2020 yeah yeah it's still a while ago I mean it feels yeah it feels very long yeah it feels forever ago um so yeah you're right so it was like 20 something months and I'm like I had to like I knew where my keys were of course I put them together and I like just had to like recreate everything okay wait I had to like know my validator indices like what numbers they were and I had to like understand this withdrawal credential change from Xerox

zero to Xerox one there's a lot and I've since switched to I used to run I think I used to talking about it on Into The Ether but I used to run a Mac Mini I run on dap node now on a on a uh Intel Nook like using their Linux distribution and it's a lot easier like huge shout out to downtown we've been fans of dab notes since literally like the day they launched I think but I mean they've made it a lot easier there's this like key manager they have you can plug and play into different things they have slashing protection so it has gotten easier but I think something like that node should be like funded a lot more I know gnosis has done a lot there Champion like that kind of and Tim baiko was in my replies yesterday and he's great and I'm sure

he's taking notes and I think things will happen here um but I do think we really underestimate the amount of people that might be sitting on a decent amount of eth that are saying you know what this is way too complicated for me like I'm just gonna throw it in and you know they're probably like oh what's the most popular SD oh I don't click like right like they're not if if people trust their money with them I'm gonna trust it too and that it's just like human nature right and you kind of I think rocketpool is doing great things if I use an LSD I would use them but they their site's a little more kind of like techy and like talking about decentralization it's just light on kind of has that like just enticing like a one-click feel I don't I

don't know how to explain it but they do and that I I think solving solo sticking would help a little bit a lot bit I think um but of course there's still people from I mean the two solutions that probably will never happen but could one of them I don't think technically is possible but you basically pay less rewards to uh liquid staking derivatives but that's almost impossible because you could split them among so many keys that you couldn't figure it out the second would be to lower the 32e threshold which I don't I don't know if there's been discussion around that or not but that could potentially be one too but yeah that's my rant on solo staking yeah yeah I mean there's there's a lot that goes into the this right I mean I think just to hit on your last point there the

the last time I heard people talking about lowering the 32 eth requirement was quite a while ago now and I I've spoken about this on on the on the refuel a lot where I basically say that in the long term I I don't know how much it actually makes an impact because I think that the number one barrier even if we were to solve the technical stuff right now the number one barrier to solo staking is that Capital requirement right that 32th requirement for for at least newer people to the ecosystem because most new people aren't going to drop enough money to buy 32 eighth and then go straight into solo staking or anything like that so I think that's the biggest thing but the thing is is that we all expect it to go up in price right so today 32 eighth is worth such and

such dollars but what if it goes to 10K that's that's 320 Grand okay let's lower it to 16 eighth well there's still a 160 Grand okay let's go to 80. it's still 80 grand right so you you can lower it right you can even lower it to one eighth but if eighth goes to like 10 20 grand that is still out of the I guess um Out Of Reach For A lot of people so I think that lowering it probably isn't the best idea I think creating lsds or just like liquid kind of pools that people can stake with that are decentralized and that can kind of be done in a smaller capacity so rocketball obviously exists but then there are things like stakewise V3 has their uh volts coming out which basically allows you to create a vault and then have people essentially delegate their stake

to you I guess um and then you run the validated software and manage it for for them like that so if we have thousands of those people doing that that would be much better than obviously um what we have today so there are different kind of solutions and then there's DVT technology from like opal Labs being able to do Squad staking and and basically split the keys up so you can all run a validator and you can all just throw in like eight eight each if there's four of you right so that kind of stuff is what I'm I'm paying most attention to but I I think the the thing that um uh uh people disagree with me on this but as an opinion I have I think that there's always going to be some level of technical competency needed to be a a solo stick or to run the software

to be a solid sticker to begin with because so like staking generally you can abstract away everything but there are still things that you're going to need to know how to to do especially if things go wrong like for example if you are not a testing for whatever reason you need to diagnose that you need to know why yes you can build software that tells you here's a list of reasons why but let's say for some reason you don't open your port and you're not attesting to such and such blocks because your peer connectivity is crappy then you've got to go learn what opening a port is because no one's going to do that for you right you have to actually do that yourself and I had a lot of experience with this with video games and a lot of people did and they learned it because

it was just a necessity so there's always going to be some level I think of technical competency needed even if we make it as simple as possible which is okay because if we make it so simple that people don't know how to fix their setups when something goes wrong then what ends up happening is that we have validators on the network that are duds and that brings overall Network Effectiveness down and actually harms ethereum more than it benefits from having more solo stakers on the network so that's that's where I kind of fundamentally think that we shouldn't dumb solos taking down to the point where people can't actually fix something if if it goes wrong we should obviously help people as I said have a list of things that people can can look at hey you know if you're not attesting to blocks it might be because your

internet's offline or such and such happened or this happened or uh you know in the worst case scenario you got slash and you can explain to them this is why you got slashed because you were trying to run the same software on two different machines those sorts of things right um and that that's kind of how I generally view it because I know having staked for a long time having multiple setups for different kind of reasons um and being technical as I am like there's a lot of issues that I that I've run into that I've had to diagnose and fix and I think a lot of people wouldn't wouldn't have done that they if it was so dumbed down where they were just like one click into the staking they wouldn't have known how to do that and they would have gotten frustrated and probably just

like said screw it and then got leaked out eventually when it happened and then they validated just exited but as I said that would bring down Network kind of Effectiveness and in my view not be too healthy for the network but I agree with all of your points around just making it's always thinking easier than it is today because today it is still shocking dap node is awesome but other than that note yeah most other Solutions are still pretty shocking yeah exactly and if you go to like the theorem.org site it just directs you to like the most complicated path like maybe we just need like hey if you don't really have a ton of technical expertise this is still pretty complicated but you should go down this pathway it's like death note or whatever other solution and we don't want to put all our eggs in

dab node right because they have the ability to like update and like you don't have to do the updates but you just kind of like trust them to do it like if that was to get compromised what happens there of course um but yeah I mean we and we talked a lot about this in the past like when Bitcoin Maxes were coming after staking they're like oh it's free money it's not free money right it shouldn't be free money it's definitely not like a couple weeks ago when we had the network hiccups um you know and people thought ethereum went down blah blah bankless thought ethereum went down um I had to throw that in there um like whenever you know we didn't have finality for a little bit of time people like didn't realize that if you were staking your funds were at risk right

especially if you're on like a majority client that was going down and stuff like there was a time where you're like okay if this network doesn't come back up I'm sorry you know the the leak was going to be bigger and bigger on my eat that I have steak and I do think there is a technical debt for sure to staking too that you do need to and I've learned a lot about things in my staking days um but I do think we run the risk of in general right now humans take like the easy lazy path and like if as a whole as a community as a network we fall into that I do worry that lsds could take over right and then it becomes and to your point I agree with you earlier like Lido having a certain

stake and I think it's a very good topic too like do they what is the problem that flight has a large stick right they they don't have a better say in governments and this is why we've always argued against token governance on ethereum itself right because we do have this kind of like loose governance we don't really know what to call it but you know just because lydo has 20 30 of each state doesn't mean they get more say in like how what happens on the network or like what Forks happen and all this our Network upgrades whatever you want to call them um and that's the beauty of ethereum right but I don't want us to get to a point where it's like eth goes to 10K we still haven't improve solo staking so the barrier to entry is huge the barrier the technical barrier

to entry is huge um and we just default to lsds um so that I think that's my biggest concern and I I would this is why I would love to see this like survey right of ethereum stakers and maybe like the e-staking communities done it I mean they're a great Community maybe I missed it kind of in some of my time off but this like overall and it's hard to do because like how do you prove like maybe you could have people's like sign and say hey this is my address and you can see this is the ethumb staking um but like are most stakers staking like one e through lsds or most people do they have a thousand Youth and they're solo staking like it would be cool to at least like kind of understand that and then be able to better attack the problem

mm-hmm I I think there was a survey done I can't remember who did it if it was like eight stake or the AF but it was done a while ago now so I don't have it handy to bring up to see um but there was also a recent report from raided.network I don't know if you saw that around stakers and they said that 6.5 of the ethereum network right now is is solo stakers now this includes rocker pool uh operators as well like the node operators which is fine I think because rockapool is like mini pool operators are as close to solo staking as you can get besides being a solo sticker um so yeah 6.5 which is actually like pretty pretty good I think given that Capital requirement as I said I I do still think that's the number one barrier um which as I said there are

solutions that can that can bring that down but yeah to your point if if we don't make it easier people yeah we'll just go to to these lsds in in droves but I think that can also be alleviated by making the lsds just better right making them more distributed like as I mentioned with statewise with their vaults and and doing stuff like opal like the lsds aren't necessarily bad it's just I'll be obviously bad when they have centralizing forces behind them and that that actually has a lot to do with liquidity I think where St as a token has pretty deep liquidity whales feel comfortable staking with Lido over something else um because they get that liquidity uh premium essentially but I think that over time that'll that'll definitely come down because there'll be more liquidity injecting to other other tokens there'll be things like

incentives for people to provide liquidity and all that sorts of stuff and that's what my tweet was actually about um my long rants on Twitter was about you know these other providers and these other people building these Solutions you need to be competitive like Lido honestly is as dominant as it is because it is a good product it they have done a lot of marketing a lot of Business Development they they're out there grinding right and that and then they're kind of like getting the fruits of their labor today so I think less maybe less coping about lato's dominance and more doing was my kind of message there and some people pushed back on it saying the social layer is important I'm like yes of course it's important I never said it wasn't important but the social layout without action is is rather useless right because if there's nothing being

done to to change things then you can scream into the void as much as you want it's still not going to change anything so yeah I think overall we're we're in it we're still in a decent place when it comes to ethereum staking but we can get a lot better and I think we will it's a long-term game too I mean just by virtue of the the staking queue and the execute limiting how many people can enter and exit per day you're not going to see massive changes in market share because of that it's not like you're going to see Lido drop 10 market share in a day that's that's impossible it can't actually happen because they can't exit 10 of their validators in a day so it's going to take years for this to play out but I think people want to start the

conversations now and start pushing now so that it it can actually play out because if we start them in like one to two years from now where the problem's gotten worse then yeah we're starting from like a shittier position than we could be starting from today yeah for sure and like it comes down to if if you are staking with an LSD and you are staked in a more centralized like larger allocity like you have to take that risk into account but at the end of the day like the market is the market people are saying I'm sticking with Lido I I don't know why I I they do have like slightly higher rewards I guess um but you know that just is what it is like if a competitor the competitors will come along right there's a lot of ones coming on line now and to your

point like we might not even see the full effect of withdrawals from someone like Lido for a while and like I don't want to just like [ __ ] on light up like you said they put a great product like they're they were one of the first to Market like they've they've done a great job at what they're doing um but as a community you know it's healthy to talk about this stuff so it's interesting on a solo staking too like that percentage is probably about where I would hold maybe a little higher than I thought um but you know hopefully that doesn't shrink towards one percent but I I 100 agree with you the capital requirement and will only get bigger I mean if if each goes to 10K you know yeah exactly you're talking 320k just to run one validator right so or 30 30 yeah 320k I

had it right it's a little late where I am just second guessing myself for a little bit there um but yeah I mean I guess just to switch a little bit one thing I we were kind of talking early on before we started recording and we've we've talked now about like this Narrative of inflation coming to across the world like one of the most fascinating things to me is like when we first started talking about ethereum you and I probably even before we started reporting podcasts and as we were recording them like what would East narrative be like why would Heath win and we always knew like in the back of our head just like as a strong money and like we've been talking about with now like February and staking and all that

it's even gotten stronger but we always kind of like focused on defy in the next cases like we had a lot of cases that maybe haven't worked out yet right like gaming and of course we had like a wild time with defy and that's cooled off but we'll come back I find it fascinating now I'm curious to hear your take like what will bounce back like what will be the next big narrative for eth like now that nfts have cooled off D5 it had cooled off maybe coming back but like Eva's just like a money might be like which is funny right because like that was like our initial like you know eat this money meme everything like is that what's gonna drive the next cycle yeah I I think that we actually said this on the podcast around D5 in

particular where D5 summer was kind of the thing that kicked it all off and kind of brought it into the mainstream view but was more of an anomaly and we I remember us saying that we thought defy was going to be big but it was going to be boring and it was going to be something that happened in the background it wasn't going to be something that most people would pay attention to but it would keep getting bigger and bigger and it has right it definitely has I mean I'm not just talking about tvl I'm talking about volumes uh like Unity swap trading volume stuff like that right it's it's very big and there are more and more uh D5 protocols going online all the time there are real world asset protocols now coming online that are growing so that's all happening but it's it's boring

people don't care about that over something like nfts they want to go trade some jpegs right so that kind of stuff is is more at the surface but the the D5 stuff is underneath the surface and it's where a lot of the action is happening but in terms of what the next kind of big Catalyst for I guess ethereum is going to be I actually think it's going to be l2s even though l2s have been alive for a while file now obviously arbitrum and optimism have a lot of activity on them I think that there is kind of a Confluence happening where at the end of this year 4844 should go live which will dramatically reduce the the costs for for these Roll-Ups right the end user costs for Roll-Ups and then we're going to have coinbase launch their base mainnet I think probably either before or after

that happens they're going to onboard a lot of new people into the on-chain world basically and then next year I'll like I feel like the Market's going to be better than it is this year just I mean it's a feeling it's not totally based on on fact it's more of a kind of an intuition right just based on on experience so I feel like there's a there's a Confluence of those things happening where you're essentially going to have Ultra cheap block space on these l2s for for new users to to use you're going to have like all these uh protocols going live like there for apps stuff like that you're gonna have bass you're gonna have uh the narrative shifting you're going to have just generally I think prices going up across the board which obviously always is good for a positive narrative and I I do

really think that those L2 who's are going to lead to an actual L2 summer where we get like a ton of activity on them everyone starts complaining because maybe we get so much activity that the fees actually start going up to to levels that people just don't want to pay them anymore um and then you know maybe there's some tokens go nuts right maybe whether it be L2 tokens or app tokens or whatever it is but I I do strongly believe that there is a pretty good chance and a pretty good Confluence you know probably beginning next year or even towards the end of this year that l2s are going to lead us into a new kind of um maybe not not total bull market but something similar to what we saw with with D5 summer yeah no that's a good point I definitely agree with you I mean it's funny because

Layer Two has always become in demand like during a bull market right like but it's a great time to build layer too is when no one's talking about them and they're there like usage on Arbitron for sure like during the whole mean coin Mania was like through the roof um and this will be you know it's funny now as like as like a Staker like it's a greedy Staker like for the network I don't want it to be the case but as a greedy Staker like I'm anxious for the bull market where like fees are really high because like the income will be crazy um but you know as a long-term youth believer I think it's better obviously to like onboard people to layer twos and keep these lower it's always that like where is that threshold right we kind of saw during like the whole like Pepe

thing and meme coins like you know I think we settled we were like at like 150 to 200 base fee for like a while um like a couple weeks and that stuff still is traded on Mainland like I'll see people like I'll look through blog box randomly and I people are trading like five dollars worth of Pepe and paying like fifty dollars I'm like like I don't know like is the IQ just that low of the general user in these things I think I think people who are gambling on Meme coins um I think they just throw their brain out I don't think they have an IQ list when they're doing that they just click oh wait oh my he's gone oh well yeah because you paid it all on fees I mean we're literally seeing people like just

send eat the influencer so it's a weird time like in the market but I think as like apps themselves defy like nft apps gaming apps eventually like things like magic we've talked about in the past like those are all living over on arbitrum eventually like optimism like as like people land there like you said like coinbase will directly Bridge people to these layer twos like I think that is gonna be when we see it and I think it's happening it will happen for sure in a bull market it's like the user doesn't really know that they got on Layer Two they're just like oh fees are cheap this is great right like oh it's a one cent fee like I'm just gonna use this um that that'll kind of be the

Breakthrough I think right into Layer Two mm-hmm and it's very similar I think to to why D5 summer happened in that in 2018 2019 all the groundwork for D5 summer was being laid right like all the D5 apps are going live we had stable coins coming to ethereum coming online all that sorts of stuff um and then we had there by someone because of that the same is true for what I believe is going to be an actual L2 summer because we're laying all the groundwork all the apps are deploying there there's activity there we have the big upgrade with 4844 coming which as I said will dramatically reduce costs or should dramatically reduce costs so that's why I'm saying there's just so many things that I feel like are going to kind of come together uh towards the end of this year and next

year that it could definitely lead to that not saying it's guaranteed but I don't know I get the same feeling and I I like to work off my feelings and intuition sometimes and not just look at the Hard facts because I think when it comes to crypto and especially markets generally a lot of the best kind of investors in the world from from what I've seen are the ones who really don't just look at the Hard facts but also go off their own experience and intuition and because at the end of the day there's that saying right history doesn't repeat but it often Rhymes and it's been meme to death but it's so true right there are so many things that play out in very very similar ways it may not be exactly the same but if you really just break it down and and watch and see

what happens they play out very similarly especially when it comes to markets because humans basically default to herd behavior in markets where they basically just all follow each other and it's kind of like a hive mind that goes on we saw that I mean play out with the meme coin like everyone just suddenly jumped on to Pepe and then like oh my God meme coins now right it's like a two to three week phenomenon but during an actual crypto bull market it becomes like a potentially year or like 12 to 18 month thing and um picking where I guess the herd is going to go is what makes you I guess a good investor and then also picking when the herd is going to leave is probably more important than picking where they're going to go yeah no doubt I mean honestly that's been my investment thesis for a long

time like the first stock I ever like kind of heavily went into was Apple back in to that I was in college 2007 2008 because I bought like the first iPhone I'm like this is unbelievable like and then I like bought a Macbook and I was like in right and I just like lived it and then I would I would buy stock just based on my experience like I love Chipotle at the time which is funny to talk about now because it's like so mainstream but like they're only like a couple Chipotles like I grew up on the west coast right and they were all like a computer I've done that my whole life so I totally agree that is the investment thesis and like believe in what you invest in like live it right and like we've always done that with ethereum and I think if you

can just like hold on and not Chase these things it it's not even about like making a bad trade it's just like just sit and eat and watch other people yeah you'll see on Twitter like oh yeah I'm up like five thousand percent Pepe whoa I guarantee that they either lost previously or after that or like you know aren't telling the truth right and I think just chasing these things is is not the way way to win but this is just kind of wrap up my thoughts here too like I I like what you said around the groundwork being laid so if you even if you look back to nfts right um punks like and crypto kitties 2017.

it was like oh what is this stuff like it's clogging the network this is stupid and then like two or three years later but the groundwork had been laid the standard was there um you know the nft standard with the seven 721 and you know people had talked about they had experienced it and then all of a sudden it blew up so I do agree with their thesis around Layer Two because of that like the groundwork's there people know about it you know you you can use it but it's always like early on people don't even going back to like the original iPhone people like okay this thing's cool but like is this really gonna be like it seems too expensive and like you know it's too rudimentary and too early well like the thing didn't even have an app store yet it took three or four years for it to

get apps on it and then like for high speed like cellular service to come to it and to me that's a good analogy for layer twos I mean they're there and they're improving every day um but you gotta like see these things early on um and kind of anticipate them to like really make big yeah yeah exactly and I think people just often forget that they are still quite early I know again that's been meme to death by crypto Twitter the you know your early meme but it's true because if you just actually look at who's used on-chain products I'm not talking about people holding crypto on a centralized exchange that that is just not crypto to me I am crypto enemies using the actual on-chain products maybe there's a few million at most that have done that um and if you're talking about

active users people who do that maybe even at least once a month right and I I don't know if once a month can be considered very active but still it would be very very low compared to what it can be one day right it could it could we want it to be in the billions of people and that's kind of the opportunity right that's the opportunity of getting in early to things getting on the ground floor but obviously there's a lot of risk involved too which I think a lot of people don't really like taking you know they'd rather stay safe and comfy which is fine too they're they're a safe assets or safe assets and then there are really risky ones you know there's meme coins you can gamble on or there is eight that you can hold there's a different risk profiles different

Rewards Falls and it's just what suits I guess your individual own bias and and what you're interested in doing but but yeah I think that's a great way to look at it for sure dope all right well I guess we can we can wrap it up there uh for today I I do definitely want to continue these uh regularly um I I don't want to rug people I don't want to rug out ourselves because these are these are always fun and as I said at the beginning Eric you always bring interesting perspectives and things that I haven't um thought of before and it's always great to bounce back and forth with someone rather than just me talking to to the camera so thank you for for coming on and yeah I really hope we can do this um regularly yeah for sure thanks for having me first

and foremost but yeah we can't just that was too much fun to do one and done so we'll have to come up with some kind of cadence here yeah yeah exactly cool man all right well uh till next time thanks everyone for listening and watching uh and I'll see you next time bye