Dencun is coming, Layer 2 growth and more - The Daily Gwei Refuel #724 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of delway refu where cup latest news in eum ecosystem I'm your host Anthony s the 3rd of February 2024 all right everyone let's get into it so apologies for missing yesterday's episode everyone but as you'll notice I'm doing a special Saturday episode to make up for it so I guess like without further Ado let's get into the news from yesterday mostly uh or the day before I guess you should say the last 24 uh 36 hours there so the first bit of news was a kind of recap thread here from Tim boo now I don't think I covered this yet no I wouldn't have covered this yet because this happened uh yesterday so this was basically an allore devs call uh kind of recap again but the most interesting part of uh the recap was that uh Tim

mentioned in his thread that they're going to be setting a main net date for or main it Fork date for denune next week after or next week on Thursday's all core Dev call now the reason obviously that this is interesting is because like that will be the date that denk gets activated on mayet and will be decided just like less than a week from now right next Thursday is less than a week from now uh and I think that the fact that they're going to be deciding on that call right which is Feb 8th and Holi is foring on Feb 7th uh means that we're not going to have to wait that extra week like I said uh we would which means that we may see this uh see Denon go live in basically early to mid-march instead of late uh sorry mid to late

March which is great I mean it's probably like a week earlier than otherwise anticipated here which is great to see but we'll know the exact date obviously next week uh this has been a long time coming guys I mean it's been almost a year now since chapella went live on the network and denune was delayed uh I mean delayed I guess like using that term loosely from the expected November date to to now March but it's finally here and it's finally only you know 5 weeks away or whatever it is whenever it gets scheduled there so uh and then you know I think most of the l2s are actually ready for EIP 4844 at this stage as well they've got all of their kind of ducks in a row it's going to be curious to see which one start using 4844 start using blobs straight

away and which ones maybe wait a day or so uh and it's going to be curious to see what that fee Market looks like CU as I've described before that fee Market The Blob uh fee Market could get spammed with things like inscriptions because it's it's this new thing for people to speculate on right uh and I'm just curious to see like if that happens straight away if it if you know if it happens like a week or two after what's that you know what effect is that going to have on what the rollups do like are they going to store their data on blobs still or will they just kind of change between blobs and C on the Fly I don't even know if they if if the um the ls L2 teams or the rollup teams have put that ability in or put that functionality in

to their code to allow them to do that I'm sure it's it's not very hard to do that but it might just add extra overhead it might be hard to balance between the two because you know you basically have to start speculating on when you should you know when you should kind of post your data as core data versus posting it as blobs uh and it gets messy right so we're not going to know until it goes live I think that's the main concern right now for me at least is that I really hope that it's not just Spam with inscription stuff out of some kind of speculative activity or something because what that means is that the rollups won't be able to use it or they'll use it and it'll just be more expensive and those kind of I guess like fee um fee reductions that we expect on

the rollups wouldn't flow down to users as quickly as we would like them to but that really is just the nature of kind of a limited resource right where you can optimize it for certain use cases uh and there are you know Concepts like uh local kind of fee markets and things like that but at the end of the day they can still get spammed I use that term spammed kind of loosely here but they can get spammed like speculative activity which drives out the thing that it was actually made for so for an example of blobs it could get spamm with inscriptions even though blobs are made for Roll-Ups to store their data there not for inscriptions and it's kind of funny with the inscription stuff because they expire the blobs expire after 18 days right um I think it's 18 days um which means they're temporary and I I I

at least think I thought that the whole point of inscriptions was that they don't expire that they that they're actually permanent that's why people get really excited about them with Bitcoin when it came to like nfts where it was actually fully on chain it didn't expire there or didn't get kind of like lost in the Lost in the noise there but we're going to have to see what people kind of do with it there but yeah that's the latest update on on denune uh the thread uh as usual will be found in the YouTube description below for you to give it a read it's got a bunch of information about other things such as veral trees uh and so on and so forth and kind of specking out what the Petra upgrades going to look like it's seems like all the veral tree stuff is going to be

pushed to 2025 so the next upgrade is called Osaka I believe in 2025 uh so that will be the uh where the verle stuff gets pushed to in terms of what's going to go into Petra I mean it's still in flux right but there is a there is a bunch of things that will go in such as eof which has been a long time coming actually this eof has been punted two times now it I think it was supposed to go live as part of Chapala uh but it didn't and then it was supposed to go live as part of denune and it didn't so I think eof should be ready for Petra at by the end of the year here but yeah the vericle stuff seems to be uh kind of uh getting pushed out to 2025 because it probably won't be ready in time for Petra which means that

it would delay Petra from being able to be delivered by the end of this year into next year anyway and it would just be a messy thing from there but anyway you can go give this a read I'll link it in the YouTube description below now of course speaking about verle trees we have another update here from Josh Rudolph who tweeted today that there's a new vericle test net up uh stateless clients are not too far behind so you can go visit this link uh I'll link it in the YouTube description below to see the progress of sorry to to see where all the links are to kind of check on the progress of this test net all the relevant links you can actually be part of this as well I think uh if you kind of go through these links here you can look at the Explorer if you just want to

kind of see what's going on here uh but really I mean for most of us this is probably rather meaningless to to kind of look at this because we're not doing any of the deving and the testing but the reason why I bring this up is because it's really great to see that this stuff is continuing to make a lot of of progress here and honestly if you want to follow someone that is basically on top of all the the verle tree stuff you should definitely follow joshia I'll link his tweet in the YouTube description below you can go follow him but also juliam and and I think barnab here these three guys I think they're working on vericle trees I know juli arm has been working on it for quite a while now um as part of like the GU team here and Josh just works on it as part of uh

he's in the research and development department at the etherum foundation but yeah Josh definitely the best when it comes to veral trees and also as I've discussed before there's that kind of information site called veral doino which I'll link in the YouTube description below for you guys again which has basically all the information that you would you could need about verle trees and statelessness and as I said before this is going to get probably pushed out to 2025 but as we go go towards the end of the year as the as as kind of like Petra starts aify then the devs and all a lot of the Chad will move on to veral trees and that will be the main theme of 2025 and veral trees give us so much guys it unlocks so much as I've discussed before it unlocks you know potential L1 scalability benefits

it unlocks things like uh light clients the groundwork for light CLI um know statelessness and state expiry and basically allows us to make a much more scalable chain while keeping the chain uh you know easily runnable on consumer Hardware like that's the goal of ethereum obviously and that's always been the goal of ethereum uh and we're basically getting towards that very soon like I mean 2025 is not that far away now this is something that has been in the works for quite a while uh like I think I mean I don't know exactly how many years but it's been a long time I I think vitalic has blog posts about this going back like as probably 2018 I would say maybe maybe it could be earlier than that um I just don't remember exactly right now but it has been a long time coming this is not anything new it's

just that it is a big undertaking it is a big task and it is something that needed to be worked on and and needed to be worked on properly for us to be able to kind of put this in because it is a pretty major change to the network or at least to the execution layer side of things things from my knowledge here of how this all works but it does give us a lot of benefits so that's why we've been pursuing it but anyway you can go check out uh this all these stuff for yourself I'll link it in the YouTube description below for you to do so all right so Buddha has shared a new uh update here on Twitter today uh saying due to demand uh Sonic has updated the E client diversity website the latest version allows you to simulate client distribution for each

node operator and its effects on the total client distribution this is really cool because as I've said before guys like if you actually just look at who the biggest node operators are uh like Queen base and Lio if they switched off of the super majority client which is G they would move the needle a lot here now you can actually put hard numbers on this and actually simulate this Yourself by playing around with this kind of website here so if I go here and I kind of like say okay well I want to add NE mine to this and I want to slide it so that gu is 50% sorry coinbase is 50% G and 50% nethermind now you can see what the total looks like so okay let's start from the start again actually 100% gu what does the total look like well gu is

at 72.8% uh here so that's coinbase at 100% gu so what would they have to switch off to get gu below 66% not much you can see here at six to get GE to down to 65% on the overall network uh coinbase would only have to uh get rid of I think 28% of their of their gu usage and basically use nethermind or another client to do that so really I mean if coinbase switches off with basic solve this issue that's how relatively easy this issue is to solve uh and it also shows like just how bit much of a market share coinbase has here they are the second largest Staker obviously Lio is uh is larger at 32% but Comas is at 15% and they are the the single largest entity by far I think the the the next single largest entity

behind them uh you know obviously cuz Lio has uh you know 36 node operators I think I it said 38 the other day it's actually 36 36 they have 36 node operators um but yeah coinbase as a single entity that's a single note operator they are the biggest they have 15% almost 15% market share the second uh sorry the the third largest um is binance at 4% so coinbase is just way ahead here in terms of uh market share for a single note operator and that's why you know them switching off of this has such a large impact here uh but you can kind of play around with this to your heart's content really with all the different note operators here but if you're talking about moving the needle in a really big way coinbase and Lio are definitely the top two to to watch out

but yeah definitely go check out this I'll link in the YouTube description below I don't think Lio is actually listed here I think they're probably in the unlisted entities section and and this is basically saying like kind of unknown um which yeah I mean as I've discussed before it's really hard to kind of get the actual coverage here like okay let me take a step back here for a second I've discussed this before on the refill but basically the reason why it's so hard to know which client is being used is because there's not really any in protocol way to know this and as far as I know n none of the clients have uh Flags inbuilt or at least not all of them have Flags inbuilt in order to Signal which client that you're using here on so really a lot of them are B A

lot of the data is based on network crawling which is not notoriously unreliable and the second uh data set which CL the client diversity website uses is basically just asking the node operators what they're using now there is an element of trust here you know you're trusting that they're actually not using the client that they say they're not using so for example if they're saying that they're not using gu you're trusting them them but I mean I don't really see any reason for them to lie like unless they like I don't know wanted to how to hurt ethereum in some way but the the the problem with that logic is that they're actually hurting themselves by doing that so it just doesn't seem like uh the incentives don't line up there so you know there is a little bit of trust involved in that but I I don't think that it's not it's a

big deal there and obviously the ultimate test of this would be if there was a bug in gu and we you know we would see the network go absolutely Haywire there uh but we have we have seen kind of similar things recently with nethermind having their bug and Basu having their bug and then you can see what percentage of the network basically goes offline and then that gives you a really really good estimate or basically the best you're going to get of what the makeup of the network looks like there but we can't rely on that right we can't just say okay well let's wait till the next bug and then we can kind of see what the network looks like no cuz what happens if that bug isn't gu like not a good thing right as as as I've discussed before so yeah anyway uh as as I said

it's an imperfect thing but it's the only data we have to work with so that's the data we have to go off of and we know for a fact that the bigger players out there use gu like coinbase we not for a fact uses 100% gu right now that's not something that's debatable I I think uh and with the lighter note operators they're all very transparent they tell us what they're using majority gu still I think for most of them uh and some of these other providers are also using uh gu as well but really that's coming down I think in the next month or so this this is just basically going to be a solved issue and then we're just got to be V Vigilant about it not creeping up again and I don't think it will because you know unless there's like I I don't

know like let's just say you know you go to a different client and then what's the reason to switch back to gu maybe the reason is that you you s better performance under gu and it materially kind of moves the needle here maybe it's not just like a 0.1% difference in your staking returns um you know it's it's you know 0.5% or something like that which isn't actually the case from what I've seen all the metrics that I've seen here so other than that uh I don't really see a reason to switch back other than maybe uh bugs happening but then again bugs happening is like the whole reason why we want to make sure the client diversity uh is as diverse as possible so that even if a bug happens it's not really a big deal there and as I've said before you can always have

fallback clients right you can always have fallback nodes uh that either trigger automatically or require manual triggering and and really at the end of the day if it requires manual triggering you could trigger it within like 10 minutes or less like that you you have a like as a as a large note operator through your your devops pipeline you basically have a standard operating procedure for this stuff already where the right people are notified at you know no matter what time it is doesn't matter if they're sleeping and they're able to get online under 10 minutes and they're able to affect change that way so yeah but that's on I guess like coinbase and the LI ligh node operators and other node operators to sort out but they definitely have the tools at the disposal at the at their disposable to do this all right moving on so igen DA

has announced that it now works with arbitrum orbit so thanks to alt layers Fork of arbitrum n Nitro rollup teams can now use Igan da to scale orbit chains far beyond the ethereum block size limit without sacrificing decentralization now of course as you guys know arbitrum orbit is basically arbitrum answer to validium where um essentially people can build arbitrum orbit chains and store their data elsewhere traditionally it has been storing it as part of a data availability committee like arbitrum NOA NOA for example but once aan Da goes live you will be able to essentially store your data as an arbitrum orbit chain on igen da which as I talked about not yesterday the day before uh I I said that it's basically the gold standard of Da in my opinion uh you know obviously

not sorry the gold standard is ethereum L1 but it's like the closest you'll get to the ethereum L1 in terms of Da layers out there but yes it's not live yet so obviously you know I'm saying that kind of based on when it is live uh but yeah it's just great to see that orbit chains are working with it here and you know I know I talked about this a lot the other day but I do want to reiterate here that I I do strongly believe that the da stuff is a Ras to zero like it's all going to come down to which da chain offers the cheapest cost because the entire purpose of using a DA chain is to lower your costs right so if you can get them as low as possible then you're going to go with with that chain so it's

going to be very very curious to see like how cheap IA is compared to Celestia is compared to ail is compared to other da layers and then also as compared to ethereum L1 because there are certain chains out there that I would expect to never actually use offchain da so for example arbitrum 1 if they started using offchain da I'd be very concerned because arbitrum 1 uh and and I guess like op mainnet and B uh and and and and a few others out there they're supposed to be proper rollups right they're not supposed to use offchain da they're supposed to use ethereum L1 da and and L1 da is actually becoming more abundant obviously with blobs going live in with EIP 4844 and then working towards increasing the

sizes of blobs and increasing the number of blobs and then working towards full dank sharding so in my opinion if you are a big chain if you're a if you have a lot of defi activity you should not be using these offchain da Solutions it's just strictly less secure and you can afford to be using ethereum L1 for da but at the same time I kind of I mean I I I I Ponder this question a lot of okay well what happens when you know there's a community governance uh kind of module Behind These Roll-Ups and they decentralized they're in stage two and then the token holders are like well why are we spending so much on ethereum L1 da when we could use offchain da and then keep a lot of these fees for ourselves sort of thing you know let's just say there's something like AR

staking and then if you stake your up you get like a share of the fear Revenue um and then obviously the fear Revenue would go up if you weren't spending a lot on uh securing yourself with ethereum L1 da so I wonder what the community would do in that respect because at the end of the day you're giving up a lot of security for a little bit of profit and that to me is not a long-term sustainable or secure or reliable way of doing things and that to me is not the right path for certain change I feel like the biggest l2s should never use offchain da the biggest l2s that and biggest TI I mean to so if I'm talking about like biggest in terms of like value uh settled and value kind of on the L2 I feel like they should never use offchain de they should always

use ethereum l1d and they can afford to because they are the biggest right they are the ones that generating the most Fair Revenue they can afford to uh to to use ethereum L1 da instead of going offchain but as I said there are certain circumstances where that kind of goes out the window because then it just depends on how selfish are the token holders like how much do they want to get for themselves so and if they're able to get that that extra Fe revenue for themselves maybe they'll do it even if it's like a short-term thing so again it comes back to like what the community actually is aligned on uh in terms in terms of sustainability and what they actually see as valuable like to me I see the obvious kind of value in a rollup especially one that has a lot of

defi activity not storing its data offchain and when it you know if it's storing its data off chain it technically isn't a rollup anymore well it literally isn't a roll up anymore as as well as technically uh but yeah there's economics involved here it's not just a technical thing it's the economics of it there are different parties involved there are DS involved so it can get a little bit messy but then you can kind of say okay well then ultimately the goal would be to have the uh enshrined ZK evm when we eventually have that on ethereum L1 be like the the ultra secure it's not it's not technically an L2 but like be the ultra secure L2 I mean I I should would to call it an L2 because in my for my understanding an enshrined zkm is tightly coupled with the protocol with

the with the layer 1 protocol which means that it technically is not a layer two because it can't actually operate independently of the L1 protocol it is at the mercy of the L1 protocols governance and it can't from my understanding store its data off chain either because it won't work with the protoc you know the protocol rules won't allow it to do that but there are different designs here remains to be seen how this is all going to shake out but still I think that offchain da has a purpose for a lot of use cases such as low value use cases um such as things like payments for example like just uh settling low value payments and then you can kind of bundle that up and you can still put that on ethereum L1 you know maybe maybe for example you settle to ethereum L1 once a day you know you do

your payments thing and then once every 24 hours you put a you know you roll up those transactions right uh and you settle that onto ethereum L1 uh and that's just one transaction and that's just one fee you have to pay rather than doing it like every minute or something or every block even right but for other use cases it makes a lot more sense to just use a ethereum L1 da because you're settling high value transactions there but anyway that's enough talk about da I know I talked a lot about the other day I've got 10 minutes left here and there are a few things I wanted to go through with regards to l2s in particular so you guys know two of my favorite websites for tracking L2 growth a grow thexyz and l2b so I just wanted to remind you guys about these websites if you wanted to go

view them but the reason why I'm bringing them up as well today is because basically the L2 growth is still going very very strong so if we go through each of the kind of metrics here which I'm going to asteris this and and add some Nuance here that all of these metrics are flawed all of these metrics are imperfect they should not be taken as in a vacuum they should not be taken as any kind of signal without diving deeper into why these things are happening but at the same time if you take them all together it does begin to paint a nice picture here and if you take them over longer periods of time as well at least a year like I wouldn't actually be looking at anything shorter than a year then you get to see uh better better metrics here but like

let's look at active addesses for example you can see over the last year things have been growing really really nicely if you see it stacked it's basically been up only uh ZK syn era has a lot here but then as I said there is Nuance you can keep in mind that ZK sync uh hasn't done their token yet so there's probably a lot of airdrop farming going on here that's not a necessarily a bad thing like I actually don't actually think that's a bad thing at all because people said that there was a lot of airdrop farming going on with arbitrum and then arbitrum continued to grow after they did their token so I don't think it's necessarily a bad thing but it's good to keep it in mind that there is you know a lot of definitely a lot of air drop farming on

chains that haven't done done tokens here yet but regardless the other chains are continuing to grow on this metric as well uh transaction count as well I mean transaction count is imperfect for other reasons such as the fact that not every L2 does transactions the same way and there gas is meted differently so comparing the l2s to each other is probably not the best thing to do but as a trajectory they seem to be know you know going nicely going up nicely over time but what's really been interesting is to see stable coins uh going up only basically on these l2s and why this is interesting is because stable coins are basically the money of the crypto ecosystem so the more stable coins you have on your chain I think the more real users are on that chain right because no

one's speculating on stable coins right like by by the very nature they're non-speculative vehicles but people are using stable coins to speculate on other things right people are using stable coins to do things like payments on l2s because it's cheaper so to see this continue to go up only across the board basically I think is really really great you can see here that arbitrum leads with $2.1 billion I think op main net at $600 million Bas at 300 million and then you got the you know the kind of longtail there as well and some of them aren't even highlighted here but you can see that there um but yeah there are so many other metrics here on grow the. XYZ you can go check out for yourself I'll link it in the YouTube description uh below for you to do so here um L2 beit I

think as I've said before most of the value of L2 be comes from uh a lot of the other stuff outside of the metrics they do have various metrics here but I think for L2 beat what I like to look at is the stuff like you know the risk analysis that they have so if you go here you can actually as I've described before see all the l2s compare to each other and see all the risks associated with with each of them I I I'm a really big fan of the liveness page and also tracking like the 30-day anomalies of the of the liveness and seeing kind of uh the l2s compare to each other really big fan of the finality page as well because you get to actually see what the time to find looks like for each of these l2s um and and and they've

got like notes here around there and they're going to be adding more l2s over time and also the activity tab is pretty cool too because it goes back pretty far like it goes back I think to yeah 2019 even um and then L2 start coming onto the scene you know in about like 2021 obviously with arbitr and op main net launching back then and then it's just continued to kind of grow up here and you can actually see this big red spike in activity this is when inscriptions were were kind of taking off on the l2s very briefly and I remember saying at the time that it was a very brief thing and that's why I like that um with grow the P they average out the um the metrics here so if you actually look at kind of uh maybe transaction counts you can see inscriptions this is what this

this was inscriptions here around here but this is 7-Day uh rolling average so it kind of looks less pronounced than it does on on uh on L2 beat here I think I don't think they average out to to 7 Days um I think that they just kind of uh uh uh uh look at the last seven days and kind of measure it against each other here but yeah I mean there are different ways to measure these metrics and then obviously you can see metrics such as like the max Deli TPS of each of these networks and so on and so forth um so yeah those two sites definitely go check them out I'll link them in the YouTube description below uh and then last up here was the ultrasound money website you know I know the ultrasound money meme has fallen out of favor in

recent times a lot of people are saying that it is a meme that we shouldn't be kind of perpetuating anymore it's immature it's something that is rather meaningless blah blah blah so on and so forth as I've said to you guys before I think the ultrasound money meme is a really good Insider ethereum meme it's not something that we should perpetuate outside of ethereum and I don't think we have been doing that really but but definitely I still think it's it describes exactly what kind of ethereum is right it is ultr sound money because of the fact that we are net deflationary since the merge and it seems like we're always going to be net deflationary I mean I know I say that now but if you look at this we need to basically go like I mean if you look here since I guess like we've been net deflation not

since the merge I should be technically correct here since Jan 2023 so over a year now and it has really just been down only yes there's been periods where it starts to creep up again when the gas feas are relatively low but we burn as I've described it before we burn eth much easier than we issue it right it's much easier to burn eth than it is to issue it because of the fact that even when gas fees are low we're still burning eth right like even at 17 guay which is below the ultrasound barrier which is the current gas price we're still burning eth and what what do you think is going to happen in the bull market like the the full-blown retail bull market what's going to happen is that we're going to burn a lot of eth in a short period of time and then even if

for like 2 years we don't uh we aren't net deflation areas and we're not above the ultrasound barrier it won't matter because we have burnt so much during the really active period that it makes up for the fact that we're not going to be burning as much during that time so as I said it's much easier to burn eth than it is to issue it but the reason I bring up the ultrasound money website is not for the deflationary stuff but it's for the fact that it by far still has the best information about the use of the ethereum L1 and and in that information doesn't just include the burn across different intervals it also includes like which uh I guess like um uh which uh apps and kind of like which contracts are causing the most eth to be burned and the reason why I like

looking at this is because if you look at over the last 30 days remember when I used to show this and you could see that the top burners were not l2s like the top 10 there weren't l2s really in there now in the top five five there are two l2s both arbitrum and linear are in the top five for eth burned only behind Unis swop eth transfers and tether which are the obvious ones because unisoft is the most used decks eth transfers it's I mean you know eth transfers the thing that happens most on the ethereum network and tether is the most popular stable coin right U but then you can see that there's arbitrum linear ZK sync era uh and and and and a few others down here like optimism down here as well so

this has evolved over time but why I like looking at this is because it basically fits in with the thesis that a lot of us have been talking about where we said that L1 block space is just going to be used by L2 now I know of course that this is going to change post 4844 because obviously the fees are going to be lower and then that means they're going to be burning less eth and they're going to not be in the leaderboard as much but the whole point of scaling out and the whole point of giving more space for these l2s is that we believe that it's going to increase the scalability increase the activity which is going to uh on net uh if you kind of like um what's the word I'm looking for if you kind of uh take it as uh as uh all all together basically uh

it it adds up to this again and it basically leads to a stronger burn here so yeah it's another reason why I like the ultrasound money website they also track the uh total value secured by the ethereum network um and things like nft leaderboard uh and also the monetary premium of ethereum such as you know how much is being staked how much is in defi how much is being burned uh validator rewards as well like issuance an meev estimate and so on and so forth there's a lot of really great information on this website besides the burn stuff so yeah if you haven't checked it out recently you should definitely go check it out there but I think that's going to be it for today because I'm at time now so I hope you enjoy today's special Saturday episode I know you guys have been asking for another episode with

Eric so another daily grade drive-through episode with Eric Connor just scheduling stuff uh I I can I'm going to ask him if he wants to come on and like when he's free so that we can do another episode I know it's been a while it's been months and I know we used to say that we wouldn't rug again but seems like we have at this point but I mean yeah we definitely still have a lot to talk about so I'm going to ask him and see if he's free for uh for an episode anytime soon so no promises but hopefully uh we can do one soon there but I think on that note that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to

newsletter join the Discord Channel and I'll catch you all on Monday thanks everyone