ETF updates, DumbSwap introduced and more - The Daily Gwei Refuel #662 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the dailyway refuel where we cut the latest news in ethereum ecosystem I'm your host Danza Simon and it's the 27th of September 2023. all right everyone let's get into it so today we have some updates around uh the ETF so the Bitcoin ETFs now the first update uh comes that I don't have the tab actually open here but it comes out of the SEC of course they have I believe it's been denied oh yeah yeah so here's the Tweet here so they haven't denied ETFs sorry they have delayed a couple of ETFs so the delayed The Arc invest in 21 shares Bitcoin ETF filing and the this uh these uh ETFs weren't due for a decision until November 11th so they've done an early delay here uh and James speculates here that you know will the

other ETFs be delayed in the same way and then I think that there was um a bit more speculation that the reason why the SSC is doing this is because there could be a possible US Government shutdown on October 1st so they want to get ahead of that but as I said this is a delay not a denial so it's not really anything unexpected uh but I think that the early delay is unexpected but as I said it could be because of that looming government shutdown there now another thing that uh that is related to this was a letter that a group of Democratic and Republican lawmakers sent to Gary Gensler uh to basically tell him to approve a spot Bitcoin ETF and you can see the letter here it's quite short it's basically just saying hey hey Gary you know approve the ETF there's no

reason not to approve it and they cited the recent loss that the SEC suffered in the grayscale case uh but this was put forward by as I said both Republican and Democratic lawmakers yeah so some familiar names here like Tom Emma on the Republican side and Richie Torres on the Democratic side uh they've been outspoken um uh uh people in Congress for you know pro-crypto people which has been nice to see but yeah those are the two kind of like biggest updates today and James also speculated that maybe these delays were because of this letter but I don't think so I think maybe the more likely thing is that it's because of the the potential government shutdown but also today happening in I guess like about an hour from when I'm recording this and you'll probably already have seen any

any news that came out of this uh before you watch the refuel Gary gensley is going before the house Financial Services committee to basically have a chat I guess is how you can put it his testimony is already out it's more of the same from him there's literally I've read it there's literally nothing in there that's surprising uh around crypto it's not just around crypto of course it's around basically everything the SEC does but with a focus on crypto and AI as well AI has become a big thing for them obviously because that's the I guess new narrative right uh right now has been over the last few months at least uh but when it came to comes to crypto I think the one thing that kind of stood out to me and I may be reading this wrong but the the one thing that

stood out to me was that in the actual testimony uh there is a sentence where he's um genzla says the vast majority of crypto tokens likely meet the investment contract test AKA he thinks that the vast majority of crypto tokens are likely Securities now this is at least from what I can tell different wording to some of the wording he's used in the past where he's basically said that he thinks everything except Bitcoin is a security so for him to say the vast majority of crypto tokens likely you know likely Arrow security that is a shift in language to me now as I said I'm not 100 confident on if this is an actual shift or maybe I've just missed it in the past but reading through the testimony that's what caught my eye the most and this shift in language may be

due to the fact that the SEC has been losing in court they're not going to win a lot of a lot of cases especially against bigger players you know if they for example if they went after another big market cap player directly like they did with ripple it's highly likely that they would lose if that player decided to take them to court right so for them to say the vast majority um of crypto tokens off against us to say the vast majority of crypto tokens he considers to be Securities I mean that's an open-ended thing right because when you say everything you said Bitcoin point is a security that's a defined thing you can literally say that okay well everything you set Bitcoin to security but when he says the vast majority of crypto tokens I mean there are literally millions of tokens guys and most of them are completely

worthless so by saying this it leaves a lot to it it presents a lot of ambiguity and basically leaves genza with a lot of wiggle room in in the way he um basically approaches this whole thing so yeah that's that's just a shift in language that I noticed there but we'll have to see if that actually uh amounts to anything we'll have to see on the on the live stream today um when when games La France the uh the committee whether they press him hard on certain things like you know does he still think either is a security when is he going to approve the Bitcoin ETFs he's probably going to dodge these questions to be fair but I think his body language is is definitely something that's very telling you know I remember when he uh I think it was I don't know if it was before the house Financial

Services committee or another committee a few months ago they they pressed him and they asked him you know does he think he is a security and he would just dodged the question he wouldn't answer it but his body language did all the Talking he basically was shaking he was uh taken aback by how hard they were pressing him on this and the fact that he didn't give a straight answer means that he even if he believes personally that it's a security he knows that the SEC would not be successful in uh trying to classify eath as a security and they probably wouldn't even be successful in trying to classify the Ico as a as a as a Securities offering right so when you take it holistically like that it does seem that the there's a bit of a shift here there's a bit of a softening here

uh we'll have to see how that kind of shakes out there but those are the latest updates haven't got any more updates around the ETFs so far but obviously we'll keep you guys updated on anything new that comes across right interesting tweet that I came across today from eat wave was I believe he's using data from from etherscan here to to make this Sankey diagram but it's basically a breakdown of who owns what eth whether they be entities or individuals and as you can see here the total Eve Supply is pretty distributed you can see that a lot of it is staked right now and that's in the in the blue here I think we're over 20 uh I don't know if we're at 20 of all Eve staked I uh we might be we might be pretty close to 20 of all eat staked and then that is

actually split up into obviously many different entities Lido being the biggest but Lotto is what 33 or almost 33 so still another 77 percent oh sorry 67 belong to other entities which which are listed here and you can see that broken down uh but also outside of staking you have uh contracts like wet or wrapped eth obviously holding a lot of eighth you got all the centralized exchanges and and and the thing is about this is that the wrapped eth that's not uh owned by just one person right it's owned by many different individuals who have wrapped their eighth and then that are holding wrapped teeth and then the same goes for centralized exchange addresses that is not the centralized exchanges eat right that is that belongs to their users now of course they control the keys and there's that old adage of not your keys not your coins

but for all intents and purposes the queen legally belong to the users right so it's not like the the um the exchangers own those coins and have a legal kind of um uh legal ownership of them and then you can see here some Ico wallets and I I spotted the polka dot multi-sig here which is a Frozen fun so all of the eth in that contract uh it's about 300 000 eighth is actually Frozen and if you want to know why you should look it up uh you should look up just on polka dot uh multi-sig or sorry I should say parody multisig bug there were two bugs that happened in 2017 I think both of them happened in uh uh and you should just Google that if you want to learn more about that uh and then yeah you could see more of a breakdown here but

this is not exhaustive of course and eighth wave mentions that that uh they didn't include wrapped eth in L2 and separate and obviously there are a lot of different entities that aren't included here but given this is just like an incomplete snapshot you can still see just how distributed eth is um and that's thanks in large part to the fact that there is so much to do with your eighth right like I I often talk about this when it comes to other layer one proof of stake chains where a lot of the supply is staked and it's not staked in lsts it's actually just staked right and it's a different kind of staking compared to ethereum proof of stake but some of them have like 70 to 80 percent of their total Supply staked that's because there's literally nothing else to do with those tokens there is no

defy ecosystem there is no nft ecosystem it's not used as money it's not really used as a store of value or anything like that you're literally just buying it in and delegating it uh uh delegates delegating the stake to to a validator in order not to be diluted by the the quite High relatively High issuance rate that these networks have and also because they advertise things like you know we have five six percent yield on your on your token never mind the fact that the token's down 90 plus percent right um but yeah when it comes to eighth it's completely different as I said we're not even at 20 of the total eighth Supply staked right now um but it is being used in so many other places and this is just vanilla e this is not counting the lsts from what I know so when you look at it like that

very very bullish distribution overall but I'll link this in the YouTube description below and you can go check it out for yourself all right we have an update out of the EF ecosystem support program today so they've announced the uh data collection grants for 2023 so I think I covered this when they uh kind of first announced it um but essentially the applications are now open so you have four weeks from September 25th to October 23rd to apply uh and this is for Grants given to people that are working on anything data related within the ethereum ecosystem so you can see here the eligibility criteria is that individuals teams organizations can apply obviously newcomers to ethereum or anyone any area

of expertise can apply but really the projects should be censored around uh essentially data collection right and and things like that and making making the most impact you can actually see uh some of the ideas that have been have been put here by the EF they say data collection or plugins and visuals for existing data pipelines updating home pages Fork monitors DVT testing and more so if that sounds like something that you're interested in applying for a grand for you should definitely go check this out I'll link it in the YouTube description below all right so block native have announced that they are going to be shutting down their Mev boost relay and their block Builder so I've talked about block natives uh relayer before in the context

of which relay sensor and which relays uh don't sensor so block natives was a censoring one because they are a us-based company of course and you can actually see here on Mev watch what their market share kind of looks like on the relayer front of things so it was around four to five percent and I think I mean that's over the last day if I go the last 30 days you can probably get a better picture of what it kind of looked like over over the longer term if it wants to actually load on the website but I think it never went above 10 or something like that you can see here it's about nine percent over the last 30 days on that block native had here and as I said they are a sensoring relayer but they have decided to shut that down as well as their Builder their Builder

had a very small market share actually you can actually see here in the um over the last seven days in the in the Builder leaderboard I believe if I actually search for it here I'm just quickly looking here yeah yeah so they are the seventh top Builder but that still means that everyone's got like I think one percent yeah one percent market share yeah so uh I'm sorry that's blocks route this is block native yeah it's the same thing um about one percent market share on the Builder front which in my experience isn't enough to be profitable and that isn't actually worth it because you can see here the top five Builders account for the majority of the market share as I discussed yesterday so I believe that the reason they're shutting down their relayer and their Builder is because it just doesn't make economic sense for them to continue to

run it and especially that's especially true when it comes to relayers relayers don't make any money they are just a a money sync to be honest to run them uh and really it's just run out of out of altruism here a lot of the time and this is another reason why relays are something that we're trying to get rid of in the ethereum ecosystem with PBS but yeah block native is shutting theirs down so if you are running it be sure to remove it from your list and just obviously leave the other ones that you have in there if you're a solo sticker in rocket pool in the smart note stack you can remove it there uh and then obviously all the big providers will probably remove it as well from there and when it comes to the Builder that they've been that they've been um doing

as I said it's probably unprofitable as well so they just I guess this is a business decision decision for them where they're basically saying well you know it doesn't make economic sense for us to run these things we're going to shut them down and let other people do it here and it's funny because when it comes to the Builder Market I really do wonder what this ends up looking like over the long term like do we just get extreme concentration or centralization of Builders where it's already pretty extreme right now but does it end up with like the top two Builders having the majority of the market share having like you know 80 of the market share or something like that or does it does it continue being like five as we see today or does it get even more distributed um when we Implement things like

inclusion lists I don't know what that's going to look like and but as I've mentioned before Builders being centralized isn't that big of a deal once we have um kind of things like inclusion lists in place to ensure sensitive resistance and stuff like that and for those of you who don't know I I think I linked the inclusion list thing in yesterday's episode but just to tell Dr and how that works it's basically Shifting the power away from Builders uh and and relayers to the validator again because as I showed yesterday on the censorship.pics website if you actually look at um who's actually doing the censoring as part of the transaction building uh pipeline uh once I load up the web I'm just loading up the censorship.pics website here you can actually see that validators are not right 94 of

validators are non-censoring whereas you can see here almost 70 of Builders are centering so with inclusion lists we basically make it so that validators have the power again and that and and because 94 almost 94 of validators aren't censoring we basically get to 94 non-censoring on the network regardless of what the relay is and and Builders are preferencing here which obviously incredibly bullish but people will obviously argue against that and say well you know what if the validators just start censoring on their own what can we do about that well the point is is that the validators are actually much more distributed and much more decentralized than both the relays and Builders as I just showed you we've only got five builders that have the majority of the market share right and then when it comes to relays with block natives

shutting down what we have like nine relayers or something like that with half of them or almost half of them censoring uh I think yeah actually there'll be three out of the out of the eight here so yeah it'll be like almost half of them censoring whereas when it comes to validators even though you know if you go to raider.network even though you see here on on um on on raider.network you know obviously lighter is almost 33 you have to actually look at the node operators themselves so the ones actually running the validators for Lido it's currently 31 entities running the the knowledge right running the actual valides I should say as nerd operators then you have coinbase obviously one entity binance crack and rockable and then the long tail from there so it's much more distributed than um than relays and

Builders even if you just look at the top kind of like five here you know rocket pools in the top five of staking entities and they that has over I believe three thousand nerd operators and like that or something crazy so it has a lot of individuals and then you have later at 31 that's going to increase over time hopefully as well and then you go down and you can just uh you just go down to the long tail and you see kind of what that looks like there so that's why things like inclusion lists are so bullish for censorship resistance on the network is because of the fact that we give power back to the validators rather than concentrating it in these relays and Builders and of course through the longer term roadmap we have things like Mev burn and PBS to deal with uh now PBS deals with the

relays from from my knowledge and Mev burn also deals with the builders and makes it even more illogical and non-profitable for Builders to to sensor and it just takes power away from them so really the whole kind of road map there and the sensitive resistant roadmap of ethereum is to increase the censorship resistance and to eliminate the negative externalities of Mev is to just take power away from these centralized points of failure such as relays and Builders and that's why I as I said before it's actually not a big deal if the Builder Market stays Central lies because as long as they've got no power over what gets included in the network and all they're doing is just building the block and extracting a little bit of profit from that um uh because you know that's the what

they're specialized to do then it's it's a-okay basically right so yeah anyway I talked a lot about that about this yesterday so I'm not going to rehash it here but one other thing on censorship that I wanted to talk about was this nice little visualization that data always put out where they said inclusion delays for all transactions versus Tornado cash transactions in the first three weeks of September there's probably some gas price noise but there certainly are transactions being delayed by a minute or more due to censorship so this is what I've said before about how you can still get your tornado cash transaction in but it's going to take you more than one block to do it because of the fact that what is it like almost 70 percent of the builders are censoring right now um and then of the relays it's like 35

percent of censoring so you can see here the top shows public mempool transaction inclusion time so this is all transactions that are included except tornado cash related transactions right and those are mostly included within one or two blocks you can see that the vast majority is included in one block which is 12 seconds and then the um you know there's like a bit of a long tail in the second block which is another 12 seconds so within 24 seconds everything is included whereas if you look at the bottom chart here you can actually see the tornado cash withdrawal inclusion times much much different uh much different picture here uh sorry a very different picture here I should say you can see that some of them can take up to 144 seconds uh to be confirmed here which is obviously

um uh uh multiple blocks you can see here it's about I believe 12 blocks for it to be uh confirmed here still obviously not that long but it's about two it's just over over two minutes right in order to get to get your transaction included included in the worst case scenario but if you look at the bulk of it really it's within the first minute most of them will be will be confirmed here so yes there is a negative kind of like consequence here of uh delayed inclusion but the thing is and I think the important point is is that your transaction is still included right the ethereum is still censorship resistant it's not citizenship censorship proof and has never claimed to be censorship proof no blockchain I believe out there is censorship proof today but it is still censorship resistant and you can see even that at

least I believe what half of the transactions get confirmed within the the first two blocks which is obviously uh uh not you know as as that always says um they actually said another tweet that they put out where it's like it's not bad but not ideal sort of thing so so yeah I mean that's that's the best way to put it right it's not necessarily you know bad but it's not ideal and we're gonna obviously um move the needle more and more to the fact of a non-censoring and what that's what we want to see on on the network there and just one last thing on the censorship stuff this GitHub repository I may have mentioned it on the refill before but this repository was created by Justin Drake and it actually um tracks all of the ofak sanctioned ethereum addresses and you maybe it's

surprising for you guys to know this but tornado cash is just one uh entity in a long list of entities that have been sanctioned by the by ofak and you can actually see all the energy that have been um that have been sanctioned here and they're listed out along with the addresses that have been sanctioned themselves so it's not just Toyota cash obviously tornado cash is the um I believe the only entity that was code that was sanctioned the rest of these are actual individuals or organizations that were sanctioned uh but yeah you can go check this out for yourself it's got links to all the relevant stuff that you need there and I should say this is also maintained by Tony the person who maintains the MAV boost.picks website and the censorship.pics website that I've talked about a lot on the refill before uh but yeah I'll link this in the

YouTube description below for you to go check out Right Moving On Brendan Malone here from Paradigm shared a tweet thread uh that Paradigm has launched a policy lab to double down and broaden their policy push at a critical point in the National discourse in crypto policy the reason I bring this up is because I've long said and I think I've mentioned this on the refuel that we need to be much more active in policy circles around the world in government circles around the world and Regulatory circles around the world and the best position plays to do this are the people with money because at the end of the day the the the the the way you get access to these politicians to these Regulators is through they call them donations but we

all know that they're not you know you know they're the other word that that um that they actually are but that's how you get access okay so if that's how you get access who has the money in this industry well it's the VCS right the VCS have so much money so why don't they put themselves front and center and be uh the ones that educates these Regulators because the VCS also have a lot of domain expertise because they actively invest with in this ecosystem and they know exactly what this ecosystem is about so their best position to do this as well as things like centralized exchanges like coinbase for example those two entities are lower all those two categories digitalized exchanges and or legitimate centralized exchanges I should say and legitimate VCS because there are a lot of illegitimate VCS are best positioned to not only have the

money but also the expertise to educate the uh the policy makers the lawmakers The Regulators the politicians all about crypto and to make sure that we get favorable crypto legislation regulation pushed through whether it be in the US or Europe or Asia or or you know uh or or India or the Middle East wherever it is in the world we obviously want favorable regulation pushed through but the Battleground definitely right now is the us because crypto is so us Centric Europe seems to be a lot more Progressive here even Hong Kong and China more broadly are very Progressive and other places in Asia such as Singapore as well have become a bit of a crypto Hub other places in the Middle East and as well like Dubai for example India is kind of back and forth it seems like they they are progressive in some

areas but regressive in others but generally it's a worldwide thing so as I said the best positions are groups in the crypto industry for for kind of doing this sorts of stuff are the legitimate VCS and legitimate centralized exchanges so if you want to learn more about paradigm's policy lab you can check out this tweet thread I'll link it in the YouTube description below for you to do so all right Stephen goldfed are one of the co-founders of off-chain labs put out a big tweet today that I'm not going to read through discussing uh licensing when it comes to layer twos now the Crux of this thread or the tldi is basically him comparing the licensing of arbitrim and optimism and how in the optimism ecosystem the licensing is more around something called The Law of chains where essentially you implicitly agree to some

kind of social licensing uh when you join the optimism ecosystem and become part of the super chain whereas with arbitrim the licensing is a bit different we're essentially what they want you to do is that if you're building an L2 using Albertsons technology uh then essentially you need to give back to the arbitrum ecosystem and you need to be given a license by like the Dow for example uh in order to use arbitrary technology in a commercial kind of environment as an L2 but if you're an L3 in in arbitrary and you're building an L3 Island arbitrine one for example there's no licensing needed there and he used the analogy of amusement parks here and there's how there's two different models of amusement parks where essentially in the first part you pay a large entrance free but all rides are included and in the

second Park the admission is free but once inside you'll have to pay if you want to go on a ride right so there's just two different kind of ways of looking at this so you can go check out his full tweet for for a full breakdown of this it's really great I recommend reading it but generally uh Licensing in the crypto ecosystem has been a point of contention I think ever since unisoft V3 had the business license on it but I've said this on the refill before and I'll say it again the spirit of Open Source to me is not taking someone's code and and and basically redeploying it and then monetizing it and not giving anything back that is not the spirit of Open Source the spirit of Open Source is that hey you develop something you've put the source out there because you

want people to actually build it with you and you want people to to contribute uh to it with you and you want people to improve it with you all from all around the world um and but you don't want people just to take your code and go monetize it elsewhere and then leave and leave you with nothing basically so the the kind of arbitrim approach as I I said is basically that if you want to use arbitrim's code their um layer 2 code here you basically have to give back to the ecosystem before you can openly use it and then with the the UNICEF V3 license for example uh it's a business license that has an expiry date where the source is available but they don't want someone coming along and saying oh I can just like take unusoft v3s code redeploy it as something else and

essentially um monetize it and make a bunch of money off of it and cause all this all this drama so as well because I mean this was in direct uh reaction to the fact that with universal V2 there are plenty of forks of it most famously Sushi swap where essentially suji drop was the direct Fork of Unison V2 they just did liquidity mining with the new sushi token they gave nothing back to the unisop ecosystem and they just used the code and profited off of it and they didn't build any of it right so that's the kind of example that I like to give and that's where my stance is is where I believe everything should have its source available but I have no problem with restrictive licenses that essentially mean that hey you know you should not be just using this and and profiting off of this if you haven't

done done any work for it right you should if you want to profit off of this you should give back give back that is the spirit of Open Source to me the spirit isn't just like taking the current profiting off of it at least that's my opinion on these things some people may have different opinions on it but as I said I'm strictly also in the camp of things being Source available where you can actually still see the source code to obviously audit it yourself for bugs or to audit it to know what the kind of if there's a multi-sig or what the time delay on upgrades are things like that that should be available but it's the code should not be available just for people to come along take it monetize it profit off of it without doing anything to give back and and I think that that's the right

approach but anyway you can go read Steven's full tweet for yourself I'll link it in the YouTube description below for you to do so all right so Middle March here on Twitter the creator of the eth scriptions protocol has introduced something called a dumb swap today so dumb swap is a decentralized exchange built on the ethscriptions VM using dumb contracts dumb swap lets you swap tokens provide liquidity and earn yield all without using a single smart contract uh which makes dumb swap much cheaper than normal decentralized exchanges now this caught my eye because I'm like you know that's pretty cool I don't think this has been done before and I was wondering how this kind of uh is is achieved and and middlemarch actually uh explains this in in the Tweet thread here he goes

how does dumb swap work without Smart contracts when you send an e-scriptions VM transaction you send a Json inscriptions address to address xero these payloads provide enough info for any Observer to reconstruct the entire VM State using only on-chain data and deterministic rules and these rules of course are open sourced in this repo and you can use it to run your own indexer and verify that everything on dumb swap is correct so that's a pretty cool uh and ingenious way of doing doing it and dumb and and and and doing it that way means that all dumb contracts by Nature are decentralized because all their data is stored on ethereum and the state is inferred using deterministic open source software everyone has the same knowledge and power um and uh you you can see here a bit of

an explanation about more how this works and uh and how to get involved with it so I'll link this in the YouTube description below but this is the kind of stuff and the kind of innovation that I want to be seeing out of the D5 space as I've said before the default Innovation is a bit few and far between these days there is some some stuff going on but but a lot of stuff is really just um uh more of the same and that's not a bad thing mind you more of the same is actually good for growth uh but if we want to get another like kind of zero to one Innovation within the D5 space we obviously need to keep experimenting with different things and that's exactly what middlematch has done here with dumb Swap and with inscriptions more generally as well so

you can go check out this tweet thread for yourself that goes into more detail about this but I think on that note that's going to be it for two day 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 Disco Channel and I'll catch you all tomorrow thanks everyone