ETH ETF launch date, Restaking dashboard and more - The Daily Gwei Refuel #795 - Ethereum Updates

Transcript

hello everyone welcome to another episode of daway refuel w c latest news thether system I'm your host D and the 18th of July 2024 right everyone let's get into it so before we jump into the news from the last couple of days just wanted to clarify something for people I I think a few people got confused the other day thinking that I was going on a holiday is starting the other day I did mention I was going on the trip to Europe that's actually starting on August 10th so still a little while away but as I mentioned on the last episode there will probably only be a refu once a week for about 2 and 1 half months from August 10th so yeah not on holidays just yet not traveling just yet uh but uh yeah just wanted to clarify that for people out there now moving on to the

news so we finally have a launch date for the E ETFs as you all have seen by now they are going to be launching on Tuesday the 23rd of July which is pretty much 2 months to the day from when they got approved when the 19 b4s got approved on May 23rd so it's felt like a lot longer than 2 months hasn't it but we're finally almost here almost ready for these things to start trading and there are so many questions going to be answered I guess like obviously the number two I should say the top two questions that I've been talking about for months now uh what are the eth E outflows going to look like and what are the overall inflows going to look like and and really I mean you can take the middle ground of both of those things and basically say what are the net

inflows going to look like for the E ETFs we've honestly got no idea you can do estimations based on a bunch of different things you obviously everyone estimates Things based on well lot of people are estimating Things based on market cap waiting and stuff like that but yeah it just it really isn't unknown but we're going to have our answers soon enough now of course the I think the day after or a couple days after this news broke that the eth ETFs were launching on Tuesday uh there were a bunch of fee updates as well from pretty much every ETF uh kind of sponsor here so yeah all the fees are in basically the fees are pretty much the same they range between 0.19% all the way up to 0.25% with a notable exception from grayscale now of course this was the one

that everon was kind of wanting to know you know is grayscale going to lower their fee is it going to be higher is it going to stay the same well we now know that it's going to stay the same which seems insane on the surface because for those of you who don't know the current fee for the grayscale ethereum trust is 2.5% per year that is an insanely massive fee this product in general has just been such a bad product for investors uh because of the fact that it can trade at both a discount and a premium and also the fee is just enormous so gry scale has opted to keep that fee for this ethereum trust but what when when it converts from obviously e or from its existing structure to an ETF but of course grecale also has their mini trust

product which I believe the fee for that is at 0.2% so essentially I guess they're betting that anyone who outflows from the gray scale ethereum trust will either go into the mini trust or go somewhere else and as I've discussed before I don't know how many like net sellers of eth there are and what I mean by net sellers here I essentially mean that anyone who is waiting until e converts into an ETF then sells their e to cash and goes somewhere else with that maybe they keep it as cash maybe they invest in another asset maybe they buy another crypto asset or otherwise that's what I mean by a net sell I'm not looking at this and and thinking okay well if someone goes from E to another ETF because of the fact that they don't want to be paying 2.5% fees when they

could instead be paying 02 or 25% fees that is not a net outflow right like besides the taxes that are owed on that obviously you could consider that a net outflow because of the fact that it's unavoidable right if the taxes are it doesn't matter if it's short or long-term capital gains taxes there's still going to be some kind of outflow because of the tax portion of it there but other than that like if someone is just going out of gry scale's ethereum trust into another ETF I don't consider that a net outflow and that's why I said before the middle ground here is just looking at the net flows it doesn't matter how much has come out of gray scale of eth I should say versus how much goes in what really matters is just that net number at the end of the day

like okay let's just say a billion dollars outflows from grayscale but then you have $2 billion into the other ETFs over the first couple days well you would net say that there's a billion dollars of of net inflows right so that's a that's a positive thing and this is what happened with the BTC uh ETFs obviously when there was a lot of outflows from gbtc but then there was a lot of inflows into the other ETFs and I do think there was a pretty big conversion rate from gbtc into the other ETFs but it's basically impossible to map this out so that's why you just look at the net flows Al together so I'm curious to see what that's going to look like I'm actually very curious to see how many people leave grayscale's ethereum trust here because that is a that is a massive fee guys like the gbtc

fee is only 1.5% so essentially grayscale teams to be seems to be taking the gamble here that a lot of the AUM they have in this trust uh will essentially stay there with this fee and just be like very very passive uh AUM that essentially will pay it will keep paying grayscale an enormous amount of money to have this in there like just think about that for a second guys like how much money that actually is 2.5% on I believe the AUM is $10 billion so that's $250 million uh if I'm doing my math correctly yeah $250 million a year uh basically for for doing nothing really I mean at the end of the day these products are very simple overall so yeah when when you look at it like that and you look at it from that perspective yeah you can really kind of see how just

how insane that is but as I said we're going to be looking at the net flows and the rest of the ETFs look quite normal I'm pretty sure all of these fees are the same as they are for the BTC ETFs and also there's a few waivers in so 6 to 12 month waivers based on a waiver amount so Franklin it uh templon is waving their fee up to $10 billion or until the 31st of January 2025 so that's a that's a pretty big deal and they've also got the lowest fee here at 0.19% so they've been very very aggressive here uh whereas vanck and bitwise are at 2% fee w a length of 1 and 6 months respectively and 1.5 billion versus 0.5 billion so essentially if you get into these ETFs early enough you won't be won't be paying a fee for quite a while

unless there's massive inflows into these things I think with the Franklin one I wouldn't expect 10 billion just to go into Franklin uh templeton's e ETF off the bat right maybe it happens over the course of the rest of this year but I don't expect that to happen anytime soon because that's just a single ETF right maybe if it was Black Rock it'd be different here but when it comes to Black Rock they have a waiver amount of unlimited so this is just a Time based one so it doesn't matter how much AUM they get in uh this is going to last until the end of the year basically until the um 31st of December 2024 here so essenti but their fees slightly higher at 0.25% so uh but as I said like that fee is going to be waved until the end of the year but then you're paying 0.25%

that's pretty aggressive as well so overall just looks really great here I think uh besides grayscale which I just think is really insane but as I've said before I don't think there's anyone really left to net sell at this point considering the fact that you've had um uh you've essentially had two months now of less than I believe 2% discount to sell if you really really wanted to sell you could get out uh for a small haircut not very much there now of course there are different types of investors here there could be people that sell out of grayscale and then think to themselves well this grayscale narrative or this eth narrative is is shitty maybe the price of eth goes down in the short term I'm going to wait to buy I still wouldn't consider that a net sell right because they're going to buy anyway

maybe it's maybe it's in a couple of weeks maybe it's in a month they're still going to buy back into eth so I I I I wouldn't consider that a net sale at all to me a net sale is someone who literally just exits eth altogether and doesn't come back into eth for a long period of time maybe 6 to 12 months or something like that right so that's what I would consider a net sale but overall what we're going to be focusing on is the net inflows which I will be of course reporting on next week as we see them uh but yeah it's exciting times guys we're finally here after so long of waiting feels like forever but we're going to be seeing these things go live on Tuesday all right moving on to some very positive news here so I woke up to this

actually today one of the first things I saw so Alexander here on Twitter tweeted out massive news friends Virgil Griffith is coming home moments ago the court granted our motion to reduce Virgil sentence and judge castelle shaped 7 months off the sentence so you'll remember that uh originally Virgil Griffith was sentenced to 63 months or around I think 5 years in prison for essentially I don't remember the exact charge he was found guilty of but he was the uh the guy that went to North Korea and basically educated them on how to use ethereum um I can't remember the exact charge he was sent to jail for off the top of my head right now but essentially his sentence has has been reduced here and I believe that

he'll be getting out of jail shortly I I believe this is effective from August 2nd the order I'm not sure exactly when he'll be getting out of prison though I don't think it's mentioned here but yeah apparently it is going to be quite soon which is yeah that's that's quite crazy that that was reduced uh and it's quite I guess like good luck for um for Virgil here that this this happened because Virgil I met him all the way back in 2019 at my first ever ethereum conference actually and I don't think he's a guy who belongs in prison that's for sure he is definitely not a hardened criminal or anything like that I don't like um I'm not kind of privy to all of the VR details of the case or anything like that but from the outside looking in he didn't really do anything at least

from my point of view that was aiding and embedding the North Korean regime I think that really he was naive in going there he was flaunting a bunch of things going there and I think he's learned his lesson but I don't think he was trying to do anything overtly kind of malicious or trying to Aid uh North Korea or trying to make you know trying to to empower them to do continue to do bad things so on and so forth I think that he just believes so strongly in Freedom that he really wanted to make sure that the North Korean people were aware of of of ethereum and what it can do and and what it can enable but that's where his naivity came into it where essentially when you go to North Korea you're not interacting with the North Korean people you are literally shepherded through the

entire I guess like country by a bunch of gods who are controlling what you see controlling what you you say for the most part controlling what you do so you're not reaching the people right so there is obviously as I said there is naativ there we all have that from time to time with different things so I can understand essentially why maybe Virgil had this but I think he's learned his lesson at this point that's for sure uh and it's good to see that he'll be coming home uh sooner than expected here all right some big news on the censorship resistance front for ethereum so Justin Drake tweeted out that ethereum's top Builder has stopped censoring so remember I think this was uh this has been a while now maybe a couple of years worth of me discussing

this how originally we were concerned that me boost relays were censoring and I think it was at like 80 or 90% censorship on the network and what they were censoring was essentially tornado cash related transactions because of the fact that the tornado cash contracts were sanctioned by the US government now of course we fixed that or at least we alleviated a lot of that and I think on the relayer front it's like 40% censorship or something like that but then when it came to the builders uh there was I think up to 90% sensor censorship on that side because the builders are so uh heav concentrated as you can see here two of the top Builders Beaver build and Titan Builder they're both they both account for the majority of block building that happens on ethereum but as Justin Drake said here

Beaver build stopped censoring today which is ethereum top top ethereum's top block Builder um which basically means that only out of all the block Builders only around 133% are currently censoring so that's that's a huge win right that's a huge win right there but as Justin Drake Julie notes Here inclusion lists remain a priority because of the fact that this is not real censorship resistance in my eyes maybe just will disagree with this or agree with this I don't know but in my eyes this isn't real censorship resistance This Is Us relying on these centralized players who at you know any point in time can start censoring or stop censoring or do whatever they want I mean for example Beaver build has 40% of the dominance of of block building they could flip tomorrow and say okay well we're back to

censoring and then all of a sudden we go from 133% to 53% of censorship on the network so essentially the whole idea of inclusion lists and other work around censorship resistance on ethereum is to make it so that we don't rely on the altruism of these actors we essentially Force the actors to include transactions that otherwise would have been censored for whatever reason like that's essentially what we're trying to do here and we're also trying to give I think plausible deniability to these actors because at the end of the day you can understand why these actors want uh censor these things especially when it comes to a sanctioned entity on ethereum so a lot of the relays were doing it because the layers were run by people that were US citizens and they're like well I'm not going to process these

transactions using infrastructure that I control because I could be held responsible for this even though it wasn't part of the sanctions that were put by ofac on the tornado cash contracts um that it was people taking precautions here and also there were certain validators uh entities or certain uh certain entities um running validators that were taking precautions as well Kraken I believe I don't know if it's still true today but they were censoring at the validator level they were censoring tornado cash Rel transactions and I have a few good friends who were doing it as solo stakers because they did because they're US citizens and they didn't want to run a foul of ofac and didn't want to get in trouble which that's that's just the situation that we found ourselves in so essentially with the work around hardening ethereum sensorship resistance

with inclusion list and other other work around that we want to make it so I mean I guess like the two main goals are that we we essentially Force the various entities block Builders validators relay whoever they are to make sure that transactions get into the network and aren't censored but also give them plausible deniability and what I mean by this is essentially if for for some reason the government wants to come to and say hey why did you do this why did you include this transaction you know that these contracts are sanctioned you can basically say well I don't control what happens here it's part of the core protocol and essentially I um I'm just blind to this and whatever gets included gets included so that plausible deniability exists there for for the people for those people and essentially I mean in in a a rational insane world

makes it so these people don't get punished for these things and obviously this is a very shitty situation overall because the fact that they were even able to sanction a set of smart contracts on ethereum was ridiculous but hey Tado cach still works still runs even at 90% censorship there is a one in 10 chance or every one in 10 blocks roughly are going to include your transactions and for something like tornado cash that was totally fine so really I don't think these sanctions uh they happened a while ago now almost two years ago now I really don't don't think that they did anything negative to ethereum I think they have been a huge positive for ethereum actually because we've been able to harden the overall Sensi resistance of ethereum uh but we've also been able to learn a lot more about it as well and see how different

actors on the network behave when faced with nation state actors because the entire point of what we're building within ethereum the reason why we make sacrifices like essentially constraining the L1 the reason why we keep it so that you can run your own nodes um on your own consumer Hardware is for really this reason decentralization which gives us censorship resistance that's that's it guys like without that you may as well not have a blockchain as I've discussed at length before it's just there's no point because you can do everything else so much better on a centralized database if you don't need censorship resistance there's no point having a blockchain and censorship resistance is one property of of decentralization they go hand inand but I strongly believe that if you don't need it then you should not be building a blockchain just build a centralized

database and a away you go but obviously there's a lot of money to be made building things that you can say are decentralized but aren't but really testing decentralization is something that doesn't happen very often really I mean if you look at a lot of the chains out there only a few of them has been tested over time I think the most famous one maybe is steemit uh where essentially steam uh the steam chain I should say got overtaken by Justin sun and binance because they colluded together to take over the chain but even in that world people were able to Fork off of steam and create another version I think it was called Hive or something like that but the steam chain was essentially for all intensive purposes taken over by these entities so you could say that wasn't decentralized right so anyway I digress on that point

but great to see that uh we have better sensorship resistance on the network as it exists today all right so there is a new dashboard here that's been built by Henry stats. e so this is the ultimate dashboard for ethereum reaking covering uh IG layer symbiotic and kak so essentially you can explore the dashboard on dun analytics here I'll link this in the YouTube description below for you to go check it out of course but you can see stats around tvl for each of these services so I layout symbiotic and and kakia you can see that tvl in dollars and eth terms you can see what that looks like over time you know it's pretty funny because you can see that uh essentially igen layer had you know that big spike up in this kind of

plateaued there in both US dollar terms and and eth terms I think the eth terms would be better to look at because US dollar terms obviously going to be affected by the market more so than the inflows and outflows into into these things but you can see I layer in Blue uh and then you can see kaken symbiotic have just started but like they went up a bit and then they've kind of plateaued there there is a uh I think I've mentioned this before there is a kind of point where you hit and there's diminishing returns where essentially you you um saturate all the available eth or at that point in time that wants to restake and I think we've done that like at this point I mean for a while now I think if you look here essentially Igan layer's East denominated tvl has

remained the same since the 22nd of April so almost what 3 months now it's remained the same it's basically flat here so it seems that that I guess like how much eth is that like 5 million e almost 5 million eth seems to be the the overall appetite there now of course this is influenced by token incentives both IG layer and other services like E5 for example that do reaking um points programs and stuff like that but it's interesting to see this all laid out on a dashboard because we can get a clear picture of what this looks like overall now of course uh the it's not just tracking the the tvl it's also tracking a bunch of other metrics such as de liquidity reserves um uh tvl grouped by tokens so not just uh vanilla eth but also being able to see all the different

lrts as I mentioned there is ether e e but there is also you know coinbase CB Rocka pool's r e and so on and so forth uh and then you can just keep SC going down the list here and seeing all of the different metrics there is so much here guys like you can see as I'm scrolling down there is just so much information here to go through and digest but I think this is going to be a dashboard that I definitely use going forward to look uh to have a look at what's happening in the e reaking ecosystem across not just IG lay but also the other projects here you know I am definitely partial to ig lay overall not just because I'm an investor in IG as you guys know but because I think IG ler is doing it right where essentially the

only asset that I think is really worth having like a reaking platform for is eth I don't think you like I I don't think Bitcoin reaking is a thing because Bitcoin staking isn't a thing staking other tokens like usdc or other lc20 tokens doesn't make any sense to me because essentially you're not staking anything you're just adding it as collateral at the end of the day like I know technically staking at layer one like in on ethereum layer one you're technically adding it as collateral you know you're putting collateral up in order to stake on the network but that's only one part of it the other part of it is that you're running a validator against that eth against that steak whereas uh or against that collateral whereas with other tokens you're not doing that like with usdc for example

you're not staking usdc to secure the usdc network or whatever you're essentially just adding it as collateral so you're missing that second part there which is the whole point of reaking to begin with is that shared security right uh and that's essentially what igen layer is most focus on with their abs Marketplace but I think when it comes to I guess competing probably symbiotic and crack are like well we can't compete on the eth front because everyone that has uh eth is just in Igan layer right now so let's add other tokens so that we can compete there and get tvl up that way uh I just don't think it makes much sense honestly uh but that's my you know that's just my opinion on things but anyway you can go check out this dashboard for yourself I'll link it in the YouTube description below for you to

do so all right so L2 beat has a new feature on their website called badges so essentially this highlights the unique aspects of every L2 and as you can see from the screenshot here the badges are come in all shapes and sizes so if you look at Bass for example you can see the ba badges that they have so they're an evm they're using blobs for data availability they are built on the op stack they are part of the super chain and they also are hosting L3 so you get a basically a quick overview of essentially what each of these l2s are doing and what they're made up of like basically looking into their um into their guts essentially so the way you can look at this is basically just clicking into the project page and up the top here you'll have the badges so

for example arbitrum 1 you can see that they've got the built-on Nitro badge they've got the governance badge they also host l3s if we go to something like a ZK roll up instead so let's go to scroll uh because you can see here that uh it's a it's evm and it's using Bloods for data availability I'm trying to just go through here and see which ones are different I like looking at the different badges here yeah so each um stack has its own badge as well uh there's actually other things that aren't evm if we actually uh look at the other the other nonm chains here if I scroll down I think they're they're in the smaller um kind of parts of this here so they're not very big just yet because everything seems to be evm I think a lot of them aren't actually

alive yet like movement and um and fluent and a bunch of those others aren't exactly live yet so it seems like a lot of these will just have the evm badge uh to to begin with here so yeah anyway you can go check out the badges for yourself I'll link it in the yoube description below but just another feature that L2 beat has added to make it easier for us to digest what all these l2s are about because obviously there are a lot of l2s now guys like I'm scrolling down this list and there are 62 l2s and l3s if I just click rollups only so this is just uh chains that are actually posting their data and proofs to ethereum there is 29 roll UPS now and obviously there is that kind of power LW effect that I've talked about a lot where essentially most of the tvl exists

in the top five or even like the top three really if you look at arbitrum 1 Bas and op mainnet they account for around 70% of the total tvl of all of the projects including the l3s on ethereum right now and if you look at the top five that is I'm just doing the math yeah that is almost 80% so it really is that kind of power distribution there uh essentially with the top five versus the rest of the l2s and there are a lot of things that aren't even live yet as well um but yeah anyway as I said you can go check this out for yourself I'll link it in the YouTube description below for you to do so right speaking of l2s basa gas target has been raised again so it is now 8.75 megag per second obviously you guys know B's Northstar is 1 gigas per second so

they're still quite far away from that but I'm liking these gradual uh increases over time because that's the way to do it re really like you don't want to increase it suddenly to like 1 gz per second because of the fact that there's probably not the demand there for that just yet you want to increase it as demand saturates the available space and if you actually go to gas fees. you can see what the fees are like right now on Bas in particular there's still Dirt Cheap a swap is basically 1 cent on base right now like that's that's extremely cheap right and a usdc uh transfer is even less than that and E transfer is even less than it's like a tenth of a cent so there is no like rush to scale this up massively yet but at the same time these things are going to

keep getting more demand they're going to keep getting more usage as we onboard more people so we need to basically keep up with that and that's essentially what Bas of strategy seems to be is keeping up with that demand not going to you know one end of the spectrum and saying okay we're one gig per second right now and dealing with all the the the stuff that comes with that when the demand isn't there for that right now and that's is that essentially what's happened with a lot of the L1 chains over the years they say oh we can do 50,000 or 100,000 TPS and it's like okay well you're doing like nothing right now and then maybe in a couple of years they grow a little bit and they start doing like 1,000 TPS it's like okay well you said you could do 50,000 TPS a couple of

years ago and now you're only doing 1,000 TPS you know and and you still got 49,000 TPS that's not being used what was the point of scaling up this system to that amount paying out for that system paying for that infrastructure dealing with the negative externalities of having like a beefy chain if no one's using it right like and no one's filling up that capacity so I've always like the approach of essentially waiting for things to fill up and then scaling up because there's no point having ghost towns everywhere there's no point having more capacity than there is demand to fill it uh unless you're expecting huge spikes in demand and then those spikes to last for long periods of time which yeah just never made much sense to me there but anyway I I'm sure you guys are experiencing this for yourself these

cheap fees on base for yourself and having fun with it I know I am I use bass quite a lot when the top two l2s that I use they both I use arbitrum and bass because I mean they're the two biggest I can do everything I want on there they have the liquidity and everything so I'm enjoying using uh those l2s in my day-to-day life all right moving on to some big news that I don't know if I've covered on the refill before so there's another stable coin in town on eth mayet so this stable coin is called ausd it's being built by Agora and in their first week live they were able to Mint $35 million of this stable coin on on the eth main net now of course this is a centralized stable coin it is not a DEC centralized one I saw

some I guess chatter about like van EK being involved with this but I don't think that's accurate because I think that it's just because this guy's surname is Nick Vanek and he doesn't seem to work at Vanek so I think there was a bit of confusion there between that um but essentially I like that there's more competition here in stable coins in I know it's a centralized stable coin but still like really today there's only what usdc and usdt for the most part and then we had B USD but that got shut down uh and then the other day actually the case against um binance for B USD or the case against POF I should say for bu bu USD was withdrawn but not until after they killed bu USD and really I don't think there's many other stable coins out there today at least

not ones that are used very heavily it's really just usdt and usdc and of course there's D which is a decentralized stable coin but yeah I think there was also true USD but I'm not sure how much that's used these days I'm just looking it up here yeah it's a $500 million market cap so you know very very small usdc is market cap is 33 billion for context here and usdt or tether is 113 billion so obviously a far cry from a USD here but I think that I'm liking seeing more and more competition in this space here in the centralized stable coin space because I think with when it comes to centralized stable coins the biggest risk is having you know one one dominate everything because that is a huge centralization Vector but if there

are many of these things it becomes less risky that way obvious ly I would love to have a truly decentralized Us doll stable coin on ethereum but as I've talked about at length before I don't think it's possible to have a truly decentralized stable coin that's pegged to the US dollar uh with with basically just using eth as collateral and being able to scale that up to the scale it needs to be in order to service the world now of course it doesn't mean that there isn't value in having a decentralized stable Co coin that only serves as a small part of the crypto economy there certainly is and it also doesn't mean that you can't make a stable coin that isn't Peg to the US dollar Rye is famous famous for this they're pegging it basically to a basket of assets or trying to I don't know what

the latest is on that I haven't looked into it recently but the term stable coin doesn't have to imply that it's pegged to the US dollar essentially what it tries to do is keep a a stable value of of the um the asset relative to some kind of basket of goods or some other asset that you can look at here and I've talked about this before on the refuel about this concept of stability and how people I think think about stability wrong because at the end of the day 1 USD equals 1 USD but USD is not stable relative to everything else right USD against eth for example eth has outperformed USD massively over the last 10 years so you would say that USD wasn't a stable coin when it comes to measuring it against eth but then we can take that analogy further and more and

relate it more to your everyday expenses for example over the last 5 years I'm sure all of your everyday expenses have gone up massively in USD terms which means that holding USD you've lost a lot of purchasing power that's what they call it purchasing power you've lost a lot of that over the last 5 years especially because of the massive inflation that we've seen so you weren't basically safe in US dollars right and yes it's relatively stable over the short term especially compared to assets that people are essentially trying to trade to earn more of this but if you're looking at something as a store of value and something as like a long-term um stable asset then increases your purchasing power over time then the assets like BTC assets like eth assets like gold for example these are the things that people like to hold assets

like I guess like stock market indexes the SPX for example the S&P 500 like these are things that increase your purchasing power over time whereas uh yeah the term stable coin when it's applied to like something that follows the US dollar or saying the US dollar stable it's like yeah it's stable to itself but it really isn't stable relative to everything else and that's what you should really be looking at especially over the longer ter of horizon zero at least that's how I I I tend to look at these things um but yeah anyway you can go check out these Thread about a USD from Nick here I'll link it in the YouTube description below for you to do so but I think that's going to be it for today so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't

yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone