ETF bonanza, OP Stack fraud proofs on testnet - The Daily Gwei Refuel #666 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The Daily refuel where we cup the latest news in ethereum maker system I'm your host Anthony 4th of October 2023. all right everyone let's get into it so apologies for me seeing yesterday's episode everyone it's funny because I didn't miss an episode last week but of course I had to miss one this week but that means there's more news to cover so let's get right into it so first off we have some positive news the SEC has lost in court again so a judge has rejected the sec's motion to appeal in the Ripple case here now I don't know if this was an expected outcome of the appeal but uh it's a pretty strong signal from the courts yet again that they're kind of fed up with the SEC right they've only gotten to this point where they're like the SSC is

acting in a way that is not consistent with the law and they're not giving the SSC anything really and so them denying this kind of like appeal is a pretty big deal from from that uh that angle and uh Paul guerrill here the chief legal officer at coinbase put together a a thread on their case where where the SEC actually filed its opposition to coinbase's a motion to dismiss uh the um the ssc's case against coinbase and he wrote a little thread here but I've seen some kind of Talking Heads uh I guess like talking about this on Twitter some lawyers talking about this on Twitter and some of them are putting the odds of coinbase's uh sorry SEC the sec's case against coinbase being dismissed at like 50 now now I don't really have any special Insight here but from what I've

read that seems to be kind of like the general Vibe and the reason is because as I said like the SSC has lost in court again and that's like the fourth loss I think major loss I mean I don't know if losing an appeal was like a major loss but the three previous ones I've gone over uh plenty of times on the refuel but this is just another loss and if the SSC wants to stop losing these kind of things then they shouldn't be I guess like bringing cases against companies where they are pretty much like uh are trying to win based not on the law but based on what they think the law should be and obviously Gary Gensler being the the head of the SEC is dictating all lot of this and I was thinking about this today and it kind of occurred to me that

the SEC you know even just 18 months ago had much more credibility than it does today like Gary Gensler single-handedly has completely discredited at the SEC as uh as a respected agency of the US and I feel like in the near future there's going to be a major shake up there I mean as obviously there will be a shake up if the um uh the the presidency changes next year you know if the Republicans win the presidency there'll be a major shake-up but I can't imagine the Democrats like really are that happy with yes the way the SEC has been run I know what they say in public is that they're happy with it they think that the SEC is doing a good job but the SSA keeps losing in court and as I said before the American legal system works on precedent and losing in court is is

you know sets precedent and that is not a good thing that is not a good thing for the SEC so if if the if the SEC doesn't want to lose in court again against coinbase for example where as I said before I feel like there's a really high chance coinbase would win in court against the SEC it would take a quite a a while but I feel like there's a high chance that they would win if the SEC doesn't want to run that risk and doesn't want to lose to uh to coinbase yard they have the option obviously of dismissing the case against coinbase now in my mind this is like the best uh possible path for the SEC they get to save face a little bit I guess by not losing in court they're still going to have egg on their face from the fact

that they brought this case to begin with and obviously it's really good for coinbase and it's really good for crypto generally because as I said a bunch of times on the refill in the eye I feel like the regulatory kind of stuff from the SEC uh the the I guess like fud or actions has kind of bottomed out and bottomed out a few months ago because they kept losing right because they kept losing in court uh and it feels like the pressure has been mounting on on the SSC and going against in particular politically and the language has been changing as well and obviously we had the Futures ETFs go live which I'm going to talk about in a second how that changes things so the SSC is definitely softened up I I think against crypto over the last few months even though it may not feel like they have they

definitely have if you look closely and really between the lines here but I'm curious to see what they do with their coinbase case to be honest I don't know if they will dismiss the case against binance obviously binance is not a us-based company it's a very different company and entity compared to coinbase but coinbase is a publicly traded company in the US right the SSC approved coinbase's IPO right and let them go public and it's also a darling of um of of the the US startup culture because coinbase obviously was a startup that that became very successful and it is a darling among crypto enthusiasts in the US because there is I think over 50 million registered users registered us users of coinbase so yeah we're not playing with small fish yet and I think

the SEC realizes that so I'm I'm gonna be curious to see if they actually dismissed the case outright or decide they're going to go you know all the way in court and then eventually probably end up losing against coinbase so let's at least that's my view there now sticking on this topic of the SEC um is the 8th Futures ETF stuff now before I get into into the 8th Futures ETFs there was some there was some other news actually that grayscale filed a 19b-4 form to convert their 5 billion ethereum private trust ethi into an ETF now this was not unexpected um they've obviously I obviously had done this for their uh Bitcoin trust quite a while ago and they won that court case against the SEC uh where the SEC denied the conversion and the judges basically like

you have no good reason to deny this conversion take another look at it so greyscale's taking this opportunity to be like well you know if there's a high chance that our Bitcoin conversion is going to go through then we may as well convert our eth trust as well because obviously there is a large amount of money in that trust and converting that to an ETF would be a big deal there now in saying that obviously as you know as I was talking about when it comes to the SEC they've been rather hostile towards eth for quite a while now Gary Gensler has said that he thinks either is a security but he's I feel like he's been walking that back lately and not not in so many words like he hasn't literally said I don't think ether's a security but I feel like he's kind of gone on

gone off the attacker he's not attacking anymore and I mentioned the other day how the work his wording has kind of changed from all all crypto assets of Securities except Bitcoin to the vast majority of asset of crypto assets as Securities right he's still wrong on that but the fact that he's changed his wording there to me is a bit of signal um but you know you know and it might not just be his words it might be the SEC in General's words as well but people will kind of bring up the question of like okay well what are the chances of uh this this conversion going through for eth like what's the chances of eth getting a spot ETF it has the Futures ETFs which as I said went live and there is some data here from Eric balkones um basically showing the trading value

trading volumes the trading volumes for these ETFs was not High um I'm sure you all saw that on Twitter but I feel like that was missing the forest for the trees which I'm going to go which I'm going to go over uh but there was a great tweet here from Brian quintes who was a former cftc commissioner where he said by approving eth ETFs based on each commodity Futures contracts the SSC has officially provided Clarity on each status as a non-security with so much Innovation being built on the ethereum blockchain this creates a clearer path for Builders it's ridiculous and insulting that it took so long to get here but it's a big win for the crypto space and more importantly for the future of the internet and this is the real story guys and I tweeted about this uh this year where I basically said you

know crypto Twitter is a peanut gallery of bad takes and I was referring to the bad takes on the 8th Futures ETFs volume the reason to be bullish about the eth Futures ETFs is not the Futures products themselves it's the fact that each chance of getting a spot ETF in the next one to two years just went up dramatically stopped missing the forest for the trees that is the real story guys that is the real signal as I've said before the Futures ETFs they're not like products that any crypto native is probably going to buy they're not great products because you know you don't own the underlying right it's not it's not a spot product so really the low volumes doesn't uh doesn't produce any signal for me about demand for Ethan in an ETF and uh Eric balkanus also had another twin where he said that the uh the

Bitcoin futures or ATF Futures that launched were launched at the height of the bull market pretty much like the Pico top of the bull market and people were saying well those you know those products did like I think it was what uh 500 million dollars of volume in in one day or something like that uh whereas these ETFs did like seven to eight million dollars well that just shows you the at the top of the the bull market what the insanity was like for uh for these products right because I I bet you that if the Futures ETF went live at the top of a bull market it would seem similar inflows there but that's not as I said that's not signal that's just Market kind of like Dynamics playing out there the real signal is that uh historically you know the SEC has been

hostile towards each saying that it thinks it's a security but it can't really say that anymore as Brian quintes says here like you can't approve the eith Futures ETFs after losing the case to to um to grayscale right in court about converting their Bitcoin trust to an ETF and not convert and not basically accept an eth spot ATF eventually which I believe that they 100 will I you know I said here maybe in the next one to two years timing I don't know exactly on the timing here I still think that a Bitcoin spot ETF is getting approved you know within the next few months as I said towards the end of the year or q1 uh definitely like I mean not 100 but like I feel like the chances of it happening are over 90 at this stage it's just obvious to me and there was actually a

tweet here from net garage which is a another ETF analyst who who said that the issuers are clearly feeling more confident in the SEC approval for of spot Bitcoin ETFs uh because of comments on CNBC uh bitwise's CEO Matt said I expect we'll see a spot because ETF this calendar yeah and Van X CEO I said it looks like in early um 2024 we will probably see a spot product so as I said towards the end of the year or 2024 and apparently I saw another tweet from one of these ETF analysts that said that uh the uh people or I guess like the companies that have applied for a Bitcoin spot ETF have actually been invited in to the SSC officers to discuss these things in more detail and that has never happened before right so

I mean really if you read between the lines and you you kind of see the obviousness going on here of what's going on here you can have relative certainty as I said 90 plus percent certainty that a Bitcoin spot ETF is coming towards the end of the year or early next year but then in terms of like an each spot ETF the question remains when does that launch you know could it launch in 2024 sure what are the chances of that happening don't know right I haven't really seen many much signaled around this but as I said the biggest signal here of the SEC approving the Futures ETFs especially faster than they otherwise would have is the fact that eath now has a very clear path to getting a spot ETF which is the real story which is the the thing to be most excited about and I think that that's

what obviously all of us are excited about especially people in the US who want to put this in their 401k or their retirement accounts they don't want to put Futures products in there they want to put a spot ETFs in there you know spot ETFs in there and they're going to get the opportunity to do that sooner rather than later at least that's my take on things but I'll keep you guys updated on all of that but I think that covers uh that covers the ATF stuff but I did say in the daily grade Discord that I wanted to give a bit more of a bullish rant here uh today and I'll add a bit more context to to my tweet here where I said that the real story was the spot ETF stuff I think when you look at the ETFs and you look at like the

trading volumes they have and the inflows that they have what you need to remember is that like the day-to-day inflows in trading volumes is kind of meaningless right um just like how it's meaningless when you look at the spot crypto markets for example the non-etf spot crypto markets day to day week tweak it doesn't really have any signal there it's more about the month to month and year to year movements of these things right so if you have like constant inflows into these spot ETFs products even if they're not exactly High inflows each day that's cumulative right and obviously if you don't have much outflows as well you kind of look at the inflows versus outflows and you see the net increase um there and then you see what that number looks like you know in six months in 12 months in 18 months from when they

go live that's signal the signal is not day-to-day movements I don't know why people get so hung up on day-to-day movements all the time a week to week movements and I actually had um something that I that I wrote up to some friends recently on how I actually think about the markets generally from that lens and I'm just going to bring it up here I've just got to scroll up yeah yeah so I basically said you know this is the way I see see the market I don't know if I've if I've articulated this on the refill before but I figured it was worth worth articulating um just because this is how I think about things but basically when it comes to the markets the day-to-day movements movements is literally just Traders playing technical analysis lines and narratives right it's very short-term stuff it is not anything based on

fundamentals it's literally based on some lines drawn on a chart week to week is pretty much more of the same except Traders may keep positions open longer if there's some kind of narrative like for example with the Futures ETF narrative you know there was a couple of weeks there where uh where e started going up and then obviously we saw a bit of a sell-off recently because it was a sell the news event this is more of that week to week Trader uh uh kind of like um uh uh action happening but based on a narrative rather than just some kind of lines right and then you get into the longer term stuff like so month to month is is where investors who are playing kind of the medium term Trend sit so for example let's just say there's a new trend happening in uh in the in the um

the fundamental side of things let's just say there's a trend like layer twos kind of getting more usage or something like that or maybe some of the layer twos have a major narrative happening and it's happening in like one to two months like for example eip4844 Traders may attempt or Traders and investors alike may attempt to play this and basically uh uh buy you know the L2 tokens for example to play that narrative and then once that narrative is over you'll see like a bleed in those tokens so it's a month to month move there because these things don't just happen week to week they're known months ahead in advance then you get to the year to year timeline and now this is where all the long-term investors say this is where probably the majority of you guys sit this is where I sit and

these long-term investors typically like to play the actual four-year crypto cycle that has played out right where essentially you buy during the crab years like right for example you would buy during this year and then you would start taking profits when the Market's heating up again maybe approaching all-time highs or after all-time Highs are hit on b2c and eth you start taking uh profits that way and those are year-to-year Trends because they do not change overnight they do not change week tweak or month to month they change based on year to year you have typically with the four year cycle you have two years of a bull market and two years of a bear market and in within that you have different markets you have the first year of the bull market is the what what I like to call the wall of

worry bull market where essentially we're we're kind of going up uh that wall of worry we're climbing it and eventually we get to all-time high then the actual real bull market starts and that can last a year as well then you have a year-long bear Market where everything just completely nukes and goes down only for like a whole year and then you have the crab market right so that's the typical four-year crypto cycle right now we're at the tail end of that four year cycle guys like we're about to begin Anew essentially a new four-year cycle which which should happen the early next year or or into next year where essentially we've been in the crab market all year crab Market's coming to an end towards the end of the year and then next year as I've explained before it is poised to be really really

um really exciting now I know some people will say well what about the macro environment what about this what about that I've given my thoughts on the macro environment before I don't have enough insight there to give any good analysis on it all I know is that if something breaks in the macro environment and uh and and you know the FED needs to step in what do you think they're going to do wait what do you think they're going to step in and and do they're not going to keep raising rates right if something breaks and from what I've seen from all the analysis that I've seen from people that I follow and I respect um all the analysis that I've seen points to the FED pivoting reducing rates and starting the money printer again now what do you think that does for for assets that that that's going to

be really good for assets in my view so even if you want to take the the macro view of things which as I said I traditionally don't but even if you want them macro bull case for crypto that's that's really the bookcase because from what I can see you know things are probably going to start breaking in the macro environment and people like to like to be doomerism about this and basically say oh it's all going to break it's all going to um it's all gonna go to but the thing is is that there are always tools at the disposal of of nation states of governments around the world especially when it comes to monetary policy and if you think that they wouldn't start printing again just to Stave off inflation you've got it all wrong there from what I've seen the it's much better to have high inflation than

it is to have the alternative which is a death a debt spiral which is what I mean a lot of the the macro pundits think the US is in right now where essentially the debt just keeps ballooning and the higher the rates are the worse it is so they've got a lower rates and obviously start quantitative easing again which is money printing essentially so we'll see how that plays out but as I said like I'm not an expert on the macro I don't really pay attention to it that much and it doesn't inform my investing decisions I am playing the four-year crypto cycle until it's proven otherwise that the four-year cycle is not intact and that's why I said you know those year-to-year Trends is where the long-term investors sit and that's why I've always said you know my strategy for these markets not that you should copy this strategy but

my strategy has always been buying the crab selling the you know sell after all-time highs that's always been my strategy with it within crypto I played it nicely last cycle and I'm hoping to play it nicely this cycle but that's what I've been doing oh yeah I've just been buying stuff oh yeah I've been buying eth of course and a few other things here and there doing some Angel Investments uh and then I hope to take profits uh past all-time highs after that you know it's not a guarantee that it's going to play out like that but that's my strategy I don't play on the day-to-day week tweak or month-to-month time frames I haven't played on those time frames in years I'm all about the longer term here and you guys know with my eth I don't plan to sell it I just want to keep stacking it and staking it

but other things obviously um you know depending on how heated they get I decided to take profits here and there stuff like that but yeah that's my general strategy but hopefully that's uh the bullish rant that was promised uh and hopefully that's bullish enough for you guys moving on from all the markets and ETF to talk there is a bunch of fundamental stuff to talk about so apparently UBS is going to Pilot a tokenized money market fund on ethereum now UBS is an asset management company I believe um and they said yeah uba oh I think they're a bank but like they've got an asset management arm and it says yeah UBS Asset Management has launched a pilot of a tokenized money market fund on ethereum the fund part of something called project guardian is the first of several live Pilots UBS plans to launch

so it says the block continues in the article saying the pilot allows UBS Asset Management to test various fund activities on chain including subscriptions and redemptions The Firm said Monday UBS has utilized its in-house tokenization services such as UBS tokenize to launch the pilot of the fund so pretty cool to see them just building this on ethereum here I think that like the the discussion around kind of banks building things within crypto has heated up a lot recently and not because of Ripple I think it's heated up because of chain link to be honest because chain link has this whole ccip thing Sergey I recently went on Bank list to actually give the thesis on this you should actually go listen to that episode um it's pretty good uh but there is this kind of thesis where all these banks are

going to want to be connected to blockchains they're going to want to do all of their normal banking stuff you know on blockchains in a digital native World an on-chain world so how do we connect them all and that's the whole kind of idea of ccip it goes beyond that but that's like the general very high level gist I know some link Marines are going to say no it's more than that I mean I know it's more than that but I'm just giving the high level gist here um but you know when it comes to I guess like uh interacting with different protocols on chain they're obviously going to start with the biggest ones like like ethereum they can't really do anything with Bitcoin so it's ethereum first maybe it's a layer two second I doubt many of these other layer ones are going to be of interest to them to be

honest because when it comes to Banks and moving large amounts of money around they're not fee sensitives so they're not going to give a if they're going to have to pay like a few hundred dollars in fees a day to move stuff around on the ethereum chain or even more than that like it's it's probably going to be even cheaper than the way they do it now and it's not just cheaper from like a pure cost perspective perspective but it's also from an efficiency perspective imagine being able to cut down the time that it takes you to do things by like 90 plus percent which is what blockchains allow you to do by the way especially when it's widely adopted if ethereum is the global settlement layer um it's why they adopt it everywhere and it has the network effect spread out everywhere the communication between uh banks will be

vastly improved and and obviously tools like chain links ccip will sit in the middle of that and kind of facilitate that but they're still going to be passing through ethereum to maybe you know maybe there's a there's a private blockchain that these banks have that they're using as part of like an intranet sort of thing um and then uh essentially from there they all just interconnect and and I guess like ccip becomes like the internet for uh for for connecting all of these things and ethereum sits in the middle as like a settlement layer so it remains to be seen how exactly this is going to play out but that's kind of the vision right now uh but it's going to take a while guys like it's not going to happen overnight this is a long term play probably still decades out before we reach you know full maturity here but

it's going to be interesting to to to view to to um uh to to see play out and as I said if you want to learn more about that sort of sort of those sorts of things definitely go listen to the podcast Bank list deal with Sergey from chain link it's really great and it really um I taught me a lot about what channel link is trying to do there all right so some big news out of the optimism ecosystem so the op Stack's first fault proof or fraud proof system is live as an alpha on the op girly test net this system leverages the power of the op Stacks modular design to lay the foundation to build out a multi-proof dispute system that can include ZK proofs as well where my haters at where my optimism doesn't have fraud proofs haters at right I mean you're still

technically right optimism does not have fraud proofs uh the op stack I should say does not have fraud proofs in a main capacity right now but it is on testnet that is obviously one of the final sets before it goes to mainnet and sooner rather than later on the op stack will have their fault proof system in place that will be able to work with both fraud proofs and ZK or validity proof CR and that will be a huge Boon to the ecosystem because as you guys know currently op mainnet bass all these other op stack chains that are all these other chains that are built using the op stack are completely centralized uh because of the the lack of forward proof CR they're pretty much the same thing as a centralizing change if I'm being honest I don't want a sugar coated here and you guys know I've talked about this

a lot in the past and l2b actually lists out all these risks as well but once these fraud proofs are live uh that's a huge huge step in the right direction uh for the op stack here and then from there they can uh they can build upon that and then obviously there are other kind of uh spokes to descend to decentralizing out these l2s into making sure they don't have centralized points of failure but that right there is a big one now of course arbitrim already has this arbitrine one already has four proofs in in place but but even with arbitrine one it's still a permission system right there's it's not a permissionless fraudproof system and I think that that the uh the op Stacks fraudproof system will probably be permissioned for for a little while as well but that's okay being permissioned is better than not having them at all

right and obviously the optimism has come under a lot of I guess criticism for not having these but to their credit they've been working on them for quite a while now and they finally got it released on testnet here so if you want to learn more about this release you can go check out this blog post which I'll link in the YouTube description below but in terms of when they grow live on mainnet I'm not exactly sure I don't know if they've actually said anything in the blog post but I think they're trying to Target mainnet probably towards the end of this year early next year so not too far away here but if you want to play around with it on testnet or get involved with it as I said I'll link this in the YouTube description below for you to do so all right something I came across on

Twitter today was something called Dawn AI which has been integrated within the dawn wallet here so apparently it is uh they're calling it your intelligent gateway to access ethereum and if you play the video here you can actually see what this looks like so apparently you can simply talk to your wallet and have a trusted teammate by your side the teammate being AI so you can see what they've done in this video they're basically typing out send ten dollars worth of eth to coid.eth and then sends the message and then you obviously confirm the transaction here you sign a transaction and then you've successfully sent that to coid.eth and there's another example buy 100 or buy Ave for 100 usdc then it does it all in the background and you confirm it and that then it's all well and good this is what I was talking about the other day about

the levels of abstraction that can happen at the wallet UI level here where essentially you're just talking like to anyone else you would talk to and the AI runs all this in the background and extrapolates everything away from you you can see here when you do the swap it's not telling you what it's using to do this swap all it's telling you is that you are selling usdc for other or you're buying either with usdc from your address here's the estimated gas fee and here's your total that's it right that's all you're doing that is a huge amount of abstraction already and that this can be abstracted away even further but you can ask even more complex questions like how much does it cost to borrow usdc and it gives you the rate this is actually a pretty big step forward in in terms of

like wallet UI ux guys and I highly recommend you guys go check out check out this wallet it's at dawn wallet.xyz or I'll link it in the YouTube description below for you for you to check out here but this is the future of of wallets the food the the current state of wallets in the ecosystem as I've said many of times before especially when it comes to wallets like metamask that is not the future guys the future is a complete abstraction 99.9 of people are never going to dive into the weeds of these things unless they have like a really good reason for doing so and those good reasons usually come from like a bull market where people will get fomo and they're like oh my God I can only you know buy some asset on channel buy some some kind of like Ponzi on

chain I'm gonna I'm gonna learn how this works that's not what the end state looks like the end state where this technology is actually providing a lot of value to people and not being inherently speculative requires while you use while the user experience and a user interface that actually is very very easy to use and is abstracted away which is exactly what uh Dawn wallet does here so highly recommend checking it out for yourself I'll link it in the YouTube description below for you to do so all right a couple of forecasts to update so Dan Romero shared on Twitter something called pass keys on firecaster so what pass Keys allow you to do is automatically back up your fire Caster recovery phrase to the ICL Cloud keychain you remain in control of this phrase and it's secured by face ID so no password to remember so I've talked

about this in the past about how a lot of different crypto applications are going to be taking advantage of the Apple secure Enclave which is obviously uh integrated with face ID here and about and with iCloud keychain of course and allows you to back up your your different kind of like recovery phrases or seed phrases and things like that and and in this world you don't even have to show the seed phrasal recovery phrase to the user you just basically tell them would you like to back up to iCloud a keychain they click yes and then it's just all obstructed away um from them here and Dan Romero actually articulated here why it's important he says to date we've always had to ask new users to back up their forecaster recovery phrase during onboarding as I was just alluding to it's a bad first impression for

non-crypto Natives and we received consistent feedback about this talking to users and even crypto natives revealed preferences was a 10 loss rate of the mnemonic so 10 loss rate of the recovery phrase is pretty big is a pretty big deal with pass keys and the protocols on chain recovery system there are multiple user-friendly layers to prevent account loss this helps compound protocol daily active users more importantly users can onboard to forecaster without knowing anything about the underlying crypto no seed phrase or crypto are required yet every user has the power of a user-controlled bit 39 mnemonic and ethereum wallet under the hood again abstraction guys this is the abstraction age that we're in right now the next few years everything that you no one love in crypto or maybe not loving crypto um user experience is going to be

extracted away there's not going to be fiddling around with Steve phrases or private Keys anymore there's not going to be fiddling around with bridging stuff like that it's just going to all be abstracted away and we're going to have such a seamless experience where you just do what you want to do without having to worry about anything else and that is where we get Mass adoption we don't get Mass adoption with the current state but it's always improving and it's getting much better at a much faster rate than it ever has because the infrastructure is there it's just on apps to take advantage of it which is what forecaster has done here so yeah you can go check this out for yourself we'll link it in the YouTube description below and the other update on firecast is that there is a new Doon analytics dashboard that tracks file Caster

related metrics yeah so I'll link this in the YouTube description below but this is a pretty comprehensive dashboard if you're interested at all all in farcasta analytics and metrics and what their kind of growth looks like and everything in between so you can go check this out I'll link it in the YouTube description below but I think that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone