ETH ETF update, Alexey Pertsev's trial begins & more - The Daily Gwei Refuel #753 - Ethereum Updates

Transcript

hello everyone welcome to another episode of Del refuel where up latest news in E system I'm your host dday 26th of March 2024 all right everyone let's get into it so some positive eth ETF news today uh maybe not direct news but I guess like positive nonetheless so Craig salm here who is the chief legal officer at grayscale put together a really interesting tweet Thread about the eth ETFs today and I think this is the first bit of I guess movement we've seen here in a in a few days here uh it's obviously not like back and forth between the SEC and the issuers or anything like that and there's no comments from the SEC but Craig was I I guess like addressing a very specific thing that people have been talking about and that's the lack of Engagement between the SEC and the issuers now of

course I've talked about this for a long time I mean I even think I talked about this before the BTC ETFs were approved where I said that essentially the eth ETFs are a copy paste of the BTC ETFs so we don't or we won't necessarily see as much engagement between the SEC and the issuers that we did for the BTC ones because of this fact now of course I'd I'd been one of the lone wolves saying this I don't think this was kind of a consensus view I know that the Bloomberg ETF analysts were saying you know that that they didn't really see this as any kind of signal but then Craig comes out today with his own tweet Thread about this where he starts off by saying recently there's been a lot of chatter about spot eat ETFs I personally am not deterred by it and believe the ETFs

should be approved but right now I want to talk about how I think perceived quote unquote lack of SEC engagement should be viewed at this point and then he continues in his thread but essentially the tweet that I wanted to focus on was uh just these two here where he continues and he says in the final months leading up to the BTC ETF approval gry scale and others received positive and constructive engagement from the SEC we had thoughtful conversations and discussed the finer details of the creation Redemption procedures cash versus inclined APS LPS custody Etc all of these issues were figured out and are identical When comparing spot BTC to spot eth ETFs the only difference is rather than the ETF holding Bitcoin it holds ether so in many ways the SEC already has engaged with and issuers simply have less to

engage on this time this is as you guys know something I've been saying for a long time now for many many months now and it is very very uh great to see that I'm no longer like the tinf fall hat wearing dude saying this uh this is actually being repeated by you know the chief legal officer at grayscale which is high signal to me given that grayscale is at the Forefront of these ETFs obviously they won their court case against the ACC in October and Craig being the chief legal officer at grecale had a lot to do with that obviously um and then of course him kind of repeating or I guess like uh emphasizing what I've been saying for months around the fact that it is basically a copypaste job between the BTC and eth ETFs just further reinforces my belief that the

eth ETFs are not out of the game just yet as I've said before you know if we don't really hear anything at all by mid April just based on the kind of logistics of it then I'll start to basically think that okay May 23rd is just not going to happen not because Thea was going to deny it anyway but because of the fact that there's just not enough time to get these things over the line as I've discussed before but when it comes to the actual kind of reasoning behind the SEC not really engaging with the issuers uh I think that the fact that Craig has said this now and I think that there's a bunch of other people that have also said this uh you know in recent days I think it really does uh cement the fact that it's not a negative signal that there's not

much communication going on given how similar these products are and people will bring up well you know they're not that similar because right now of few of the issuers have a Stak portion as part of their e ETF application as I've said before I fully expect that Stak part of it to be removed you know if the spot ETFs get approved by May 23rd I am pretty much 100% confident that they're not going to be staked ETFs that staking portion is just going to get removed and as I've mentioned before the issuers are adding that staking portion in order to force the SEC to basically kind of talk to them because the ACC I think has been radio silence um and people read that as basically okay well the SC is just going to deny these things that's why they been radio silent but the radio silence

could also be read more positively as the fact that they don't really feel the need to engage much on this because they understand that it really is just a copy paste of the BTC one besides the staking portion now of course the staking portion can be removed within like it's literally just like one portion of it that can just be taken out there's no more back and forth after that the ACC asks these issues and says hey you need to remove this or we're not going to approve this ETFs because we don't want to approve a Stak ETF and what do you think the issuers are going to do right they're going to essentially remove that immediately and then hopefully obviously the ETFs will get approved in a normal spot Fashion on May 23rd here so to me this is just positive news I know that

people are still relatively bearish yeah people still have their own reasons for thinking these things are going to be denied on May 23rd I'm still sticking with my belief that I think they're going to be approved by May 23rd of course but at the same time you guys know that I've tried to temper expectations as well by saying that if we don't really see any chatter by mid April between the SEC and the issuers and like I mean anything like the thing is is that I I think it would be a really bullish sign if the SEC asks the issuers to remove the staking portion and then they do because that to me would signal that the SEC is going to approve the ETFs like just that would signal that and I think the issuers know this as well so I think that they've done that on purpose in order to force

the sec's hand here without kind of running out the clock until May 23rd now I and as I've mentioned before as as I said just before I still want to temper expectations in saying that if we don't see anything by mid April I would drop my odds of the May 23rd approval down to a pretty pretty low amount I mean right now I'm at like almost 100% but that can change and I and you guys know me I like to stick to the facts and circumstances and the logic I don't and I don't want to just bury my head in the sand just because it's eth like I'm not trying to say that it's going to get approved just because it's eth I'm trying really hard to be unbiased here but I'm in the same camp as Craig like I I believe the same things Craig does you know you guys know

I've been saying this for months that there is no reason for the SEC to be uh kind of um going back and forth with the uh issuers of with the eth ETF like they did with the BTC one because it is really a copypaste job and as I said if we see the SEC basically ask the issuers to remove the staking portion then I think that's a lock for May 23rd like I really do believe that that would basically be a complete lock and I would say that you would even see those Bloomberg ETF analysts um James and Eric change their odds cuz their odds I think is at 25% right now so it's not zero but it's at 25% right now but I do think you'd see even them whove been like ardently in I guess sticking to their to their percentage takes sticking to their

odds I would say you would even see them flip because it really just sends a signal that okay well if the SEC is asking for this to be removed rather than asking the issuers to just withdraw their application all together they're doing one of two things they're going to approve the ETF or they're being total you know pieces of and basically saying that to try and I guess like um uh to try and signal to the market that it is going to get approved to try and get everyone excited and then rug pull them at the last second the reason why I think that that second thing isn't going to play out is because the S would get sued over that because that is basically Market population right so I really don't think that that second thing is going to happen um as as bad as the SEC

has been that would be like next level I think uh that would be even Beyond scorched Earth that would be going against you know their very Mandate of protecting investors and it would be just a world of hurt I think for the SEC on that front there but I don't think that's going to happen so we'll have to see we've still got a couple more weeks here I guess like you know we got three weeks still so 3 weeks is is is a lot of time here but I do think as the market becomes more confident in the E ETF being a approved I do think you're going to see eth Trend up as well and I do think that if the market is still kind of saying that they're not going to be approved as we get closer and closer to it and then they do get approved we're

going to see some crazy stuff happening because right now I believe that or at least maybe until today until Craig put out this tweet thread I believe that the market generally is convinced that these things are getting denied the EFS are getting denied but then you know Craig puts this tweet thread out and now suddenly the market becomes a little bit more confident that they're going to get approved here and people start doubting their thesis around deny and then if we start seeing more and more engagement between the SEC and the issuers then that tide starts to shift and we saw this play out with the BTC ETF this is going to be the exact same thing that plays out here so we're going to have to wait wait and see how that plays out there but anyway you can go give Craigs a tweet thread a read I'll link it in

the YouTube description below for you to do so and one last thing with regards to I guess the ETF topic and this isn't the US ETFs but the London Stock Exchange that announced recently that they're going to be launching or or I guess like hosting uh etn saw the um London uh the ETFs etn are basically ETFs just called something different in uh in England here uh they have announced that they're going to be doing BTC and ETF uh etns uh on May 28th so they're going to launch this on May 28th which is peculiar timing given that May 23rd is uh when the E ETFs would go live uh or I guess like get approved and then I for I actually don't know which day May 23rd is because as we saw they started trading within like a day or two but it has to be business days of course so if

I go to my calendar here May 23rd is a Thursday so we could probably see them trading on the Monday I guess so uh maybe not on the Friday but like the Monday and the Monday is May 27th so I don't know the timing kind of is is suspicious to me like tinf hat on again timing is a little bit suspicious here um but regardless you know it's great to see that it's not a circus to get these things trading in in London whereas in the US unfortunately it is a circus to get these things approved because we have a really crappy regulator in the SEC uh there but anyway enough on that topic we'll keep you guys updated as usual moving on to a bunch of other things so first off uh with regards to um a tornado cach we have a tweet thread

here from aan who's been following the tornado cash uh case very very closely in the Netherlands as you guys know alexe perv was arrested in the Netherlands he was held for I believe nine months without bail which really really sucks because like he was held I think without charge for a while as well and I think in the Netherlands you can be held for up to 3 months without charge just crazy to me um but he was charged I believe with money laundering so you can say see here am me says he stands accused of laundering $1.2 billion via tornado cash and am me continues and says I believe he should be free open source devs should not be held criminally liable for the crimes of foreign terrorists uh and the reason why am is bringing this up is because Alexa's uh um trial actually starts

today on March 26th so you can give a mean's Twitter thread a read for background on this and why he believes uh as he does this is going to be quite the fight I believe because I think that the US wants to make alexe a kind of like example essentially very similar to what they did with Ross alri with with silk road I think that when it comes to big things like moneya laundering and and and terrorism financing and drugs and stuff like that it's more about making an example out of an individual in order to scare off everyone else and I think that you know there's a long history of this happening you know inside and outside of crypto but it feels like that's what they're trying to do here because unless they can prove that alexe actually had a direct hand and he helped money laundering happen

within tornado cach I don't know how you could basically uh say that he was responsible for what was what was done through tornado cach given that tornado cach is a decentralized protocol on ethereum that Alexa had no control over so really it's going to fall to the prosecution to prove that Alexa had material control over this and also aided embedded in this money laundering now I don't know the facts and circumstances of this case here maybe the prosecution is able to is able to prove that I mean I don't know but uh from what I've seen and everything that I've seen it doesn't seem like they're going to be able to prove that but we're going to have to see that play out in court and hopefully alexe gets a fair and just trial here and it's not just kind of a Witch Hunt which it feels like

it is but we'll have to see how it all shakes out there but if you want to follow along with this I highly recommend following aan it seems like he'll be following along with this trial as it happens and you'll be able to get like up to the minute updates from him because I actually believe that he is in the Netherlands right now uh he said JM from the Netherlands so I believe that he's there right now so it seems like he's going to be sitting in on the trial there so if you want to keep up to date with all of that you should go follow a mean um and you can read his Twitter thre here as I said for all the relevant context regarding this but I really hope that Alexa wins this um you know if if you know not just for like his own sake

but for the sake I think of like everyone developing especially privacy preserving kind of protocols and code within the crypto ecosystem because if like the thing is about using people as an example is that it works like for example if Alexa is found guilty and then is sentenced to like 20 years or something in prison for this like why would anyone build privacy protocols if they're going to if that's like what's going to happen to them in the end so they won't even risk it so we would actually lose a lot of the the builders that we have building privacy and we would all be a lot worse off so I'm really rooting for Alexa here um you know I hope all of you are as well uh but I as I said like I hope he has a fair and just trial because at the end

of the day if he is guilty of what he's accused of based on overwhelming evidence then sure I'll respect that but at the same time I haven't like I'm not privy to that evidence that the prosecution has right now because they've been Gathering it and now they're going to be kind of I guess like outlining it in the trial but at the same time like there are ways in which you can present evidence that you know you try to paint your own story try to paint your own narrative and picture here that doesn't necessarily fit in with with reality so that's why I want there to be like a fair and just trial here uh so that we can actually get all the facts and circumstances out there and then it can set a precedent that if all you do is write the code and deploy

it and you don't actually Aid and Ed in this directly then you shouldn't be held responsible for the actions of people who use it because it goes back to the age-old kind of thing of you know if you uh sell guns in your store and you sell a gun to someone who kills someone well then you're not going to be charged with murder right like you're not responsible for that what that person did with the gun just like if you buy knives at the at the at the supermarket the person who sold you the knives isn't responsible for you stabbing someone with it so that's that age-old question here so it's the same or the age-old kind of uh uh the debate that people have had but for to me it's it's it's rather black and white like you shouldn't hold the person who sold a tool to someone

accountable for what that person did with uh that tool like that just is insane to me but that seems to be what they're trying to do here they're trying to hold alexe and the other tornado cach developers uh you know as as kind of responsible for what people did with the code that they deployed which is insane because you can take this argument to its logical conclusion and say that the people who maintain the backend infrastructure of the internet uh and deploy to the internet are responsible for what people use the internet for so they're responsible for uh you know um uh uh human trafficking they're resp responsible for all the terrorist terrorist Communications that happen they're responsible for all the um the other you know really really bad stuff that happens through the internet that would just be insane to hold those people responsible but that's exactly

what they're trying to do here um so yeah anyway enough ranting about that as I said go follow Aman he's going to be following this closely and I'll keep you guys updated on this stuff as I see it uh as well all right so speaking of the SEC a little bit earlier I wanted wanted to kind of highlight this lawsuit that has been brought forward by the def defi education fund and this project called be so essentially this project is doing a token um and they're going to basically argue in court against the SEC that uh because Bea did a free airdrop of tokens uh they're seeking a court order declaring that it is a free airdrop and it is not a Securities transaction which means that beber tokens are not investment contracts and

this lawsuit is being brought against the SEC by the defi education fun and and be just to be clear here and the reason why they're doing this is because they essentially want to get the SEC or Force the SEC into a position where they basically say are airdrops a Securities transaction uh or not because obviously logically they are not because there is no investment of money here there is really no expectations there is really just hey here's free money and there you go like that's it right that's literally the whole kind of I guess you could even I mean if you want to call it a transaction that's the whole transaction people giving free money to people for various different reasons right um and I think that uh like the fact that this has been not clarified by the SEC has resulted in a lot of money being lost by

us people right there's a lot of a lot of air drops now that are being done it's pretty much the norm not to air drop to us users because the SEC hasn't been clear here and to be to be clear as well the SEC hasn't actually said anything from what I can see about air drops they haven't actually said that the air drops are securities transactions but it's just the teams and the lawyers of these teams playing extremely conservative a l so due to that the DFA education fund and be basically said you know let's bring this case against against the SEC let's sue them and let's force them to give an answer here and I think that from what we've seen in the US the court system seems to be pretty good still when it comes to this sorts of stuff so I think

that's why they they're doing this is because they actually trust the courts you know no one trusts the SEC uh these days I think that like you'd be very hard pressed to find anyone who trusts or respects the SEC as a regulator even within like the US government even within the Democrat Party I think think that you would be very hard pressed to find people that actually trust and respect the SEC um and what they're doing that there obviously are the kind of like um The Usual Suspects like Elizabeth Warren and Maxine Waters who have have uh basically praised the SEC but the thing is when you break down all the facts and you look at all the court cases and you look at you know all of the kind of like uh people that are unbiased in their commentary there is a very clear pattern of the SEC being a

shitty regulator like a very shitty regulator to the point where they're actively harming the US markets harming investors and they're not fulfilling their mandate here so I'm going to be follow following along with this very closely I hope that the defa education fund and beber win this because it will give Clarity to teams in the US that hey airdrops are you know are securities transactions or are not based on from what I've seen and based on the existing laws airdrops are not Securities transactions at all and if a court can can interpret the law as I have and as others others have which they should then it will be ruled that the airdrops are not security transactions which means that we can go back to where us people actually get the air drops now instead of having to miss out or use vpns or try to get around any blockages

that are put in place uh which is a win for everyone uh uh you know not just in the US but for everyone because it means that the ecosystem continues to grow and we don't get like you know all this happening all the time with people missing out on things so yeah but anyway you can go give a r of the full details of this I'll link it in the YouTube description below for you to do so all right so ethery has been killing it lately actually and I don't know if you guys have noticed this but I looked at Hill Dobby's dashboard just before and this isn't I guess directly related to Ether ether player plays a big part here Loo's dominance is really coming down at the moment so I actually saw this just before and I actually had to do a double take if you go to The Who

The Who if you go to which entities ether's been staked with over the last month where the stake is more than kind of like 3,000 ethia you can see that uh over the last month eifi number one Renzo number two ever stake number three and you keep going down this list and you'll notice that Lio is missing from this list like Lio isn't here at all then you go to the next page you can actually see that Lio is rank 55 not because they've had inflows but Al but because they've had net outflows so they've had a net outflow of 113,000 eth in lier over the last month and if you look at the last six months ler doesn't actually look that good either because you can see eifi and mantel put together are like pretty much uh I guess like

150% of what went into Lio then add Kil into it and you're at Double or more than double what Lio took in and then at everyone else Li doesn't look too good here so Lio has actually been losing market share very uh you know uh based on a real basis and a relative basis here and it really is due to the fact that there is some real competition now within the staking ecosystem especially with regards to reaking as well because L doesn't have an LRT it is not a liquid reaking token it is still an LST and right now lsts are capped Within igen layer whereas igen pods are not so services like ethery Renzo and others can get around those caps by staking a native eth and and and spinning up igon pods here or reaking native eth and

spinning up igen pods here so that's been a really great driver there but eifi um has actually stuck out because of not just the way that they've run their campaign obviously with their airdrop stuff but also with their other products that they've brought to market now I I want to disclose here as you guys know I'm an adviser to eifi um but what I've been really impressed by is the fact that they not only have their staking product but they also have uh I guess like this liquid product that is live right now which has over $100 million of tvl in it which is which makes it the largest single defi strategy volt so for those of you who don't know this liquid volt is basically an automated Vault with best-in-class yields on your eify asset so essentially it is a automatically managed kind of

Vault on the eify side where essentially they try to maximize your apy and your points farming on ethery and igen layer by putting it into this strategy so you take more Risk by doing this but you get potentially more reward from I guess like future token aird drops of of ethery but also uh from igen layer as well here so when you take all that together and you look at all that together uh it's no wonder that ethery has been growing so quickly here because not only do they have this liquid product out today they also going to have another future product out called Cash which is going to allow you to use your ethery balances um with a um a point of sale terminal so it basically as cash so like there's a lot of cool things happening here so it's not just the staking product it's not just the

reaking product but it's also these other products here whereas something like a you know a lighter for example they've had their staking product and they've been dominant for quite a while but they haven't really done much on top of that you know they've gotten a lot of Integrations with other services and and products but on top of that they haven't really done too much so that's where this competition comes in and is basically able to to do a lot more and to innovate a lot more here so just wanted to point that out for you guys because I don't think many people have taken notice of the fact that there is a lot of competition in the St space right now a lot more than we traditionally have seen and it really falls back into what I was saying uh you know a while ago about that great reshuffling of

steak I know it's been a slow moving ship I know it's been very slow I mean it's been a almost a year now since chapella went live but the ship has been moving and if you actually look at L's dominance from I think like I mean it's been relatively flat but it is coming down if we go here on Hill Dobby's kind of chart here and we go to when chapella went live which was yeah 2023 yeah let me have a look here April 2023 I think it was like the 10th around the 10th of April 2023 you know lios dominance was 31.4% now today it is around 30.3% so it's it's it's come down a little bit or hasn't come down a lot but that is not its kind of like real market share it is its relative market share its real market share I mean uh is is is down a

lot more as well because of the fact that a lot more eth has gone into other uh other other staking protocols here as you can see they kind of appear in different colors but at the same time I would say that a lot of um a lot of the kind of like Lio steak hasn't left yet because it hasn't really been vampire you know puffer has a billion dollars of Ste or more than a billion dollars of s ready to get vampire attacked here uh from Lio which is going to bring them below 30% easily and then you have all these other protocols you know still spinning up still kind of getting more St more and more steak in so there really is this I guess a really beautiful kind of reshuffling happening here um and you know it's it's taken a while but we've

successfully stopped Lio from growing now we need to get their market share down even further here but yeah anyway you can go check out ether fries product for yourself and as usual check out Hill Dobby's eth staking dashboard it is still the best staking dashboard that I have come across to track all of this sorts of stuff all right so as usual bass I think since uh Denon went live bass has just been going absolutely nuts like and because of that the fees on base have been going up and as I explained I think yesterday and on a few other refuels this is totally normal Behavior Uh based on the fact that the bottleneck is now the execution side not the data side but Jess poak from the base team here basically tweeted out a t ldr of why fees are high on base and what they're

doing to alleviate this so of course uh the L1 data costs were reduced to near zero with 4844 but lower fees induced five times more Demand on base so their gas current gas Target is relatively low at 2.5 megag gas a second so block blocks are above the target gas which means fees are rising and lower fees are their P0 which means it's their basically critical priority and they are on it and to address this Jesse CS we are prepping to raise bases gas Target to 5 to 7.5 uh megag gas per second which is a two to three times increase by load testing to understand impact and then par they're working on Parallel pathing that will let us achieve our medium-term goal of 1 gag per second which is a 400x increase so you can

probably expect this two to three times increase relatively soon which is a pretty big increase I think and and it means that the fee should come down again uh but then they say here a medium-term goal which could be like 6 to 12 months they're going to increase it by 400x and once they do that the I think bottleneck is going to shift back to data it's going to shift back to blobs because if they do get a massive spiking demand of say like you know 10 to 100x or something then the costs are going to go up on the data side because they're going to be consuming a lot more blobs than what they are today and this is just bass this isn't counting all the other uh rollups and all the other ones that are coming online as well like I know that there's more and more coming

online over time more and more that are going to be using blobs over over time there but yeah you can read Jesse's Twi tweet thread I'll link in the YouTube description below but speaking of rollups that are be going to be taking advantage of blobs scroll has been notably notably at notably notably absent from uh The Blob World they haven't enabled blobs on their Network just yet but they did do a tweet thread where they explained that they're going to be adding support for blobs by the end of April so that's just another Network coming online to consume blobs here and they're also got a bunch of other upgrades coming to the scroll zkm by the end of May so over the next couple months you should see cheaper fees on scroll and and and and more but you can read their tweet thread for an

explanation about exactly what they're doing here I'll link it in the YouTube description below for you to do so all right last thing on the layer twos just keeping in theme of what I was talking about with regards to growth grow thexyz tweeted out they we had an all-time high in transaction count on layer 2os uh yesterday or I guess today uh 7 million transactions were recorded 1.43 million of which were on base and you can see this chart here as well as go to the grow P website and see it for yourself but it's up only guys and that makes sense given that there is more capacity now for more transactions because of the fact that uh the you know the fees were cheaper so people are basically hitting the limits of these networks but then as the execution side scales more so for example when Bas

scales 400x from here there's going to be 400x uh it's not a onetoone thing cuz complexities of transactions kind of um play into this but there's going to be like a massive increase in the number of transactions given that the fact there is a lot of demand uh you know it's it's kind of like Basse season right now a lot of people kind of rotated into Bas but I think that you know l2s are the playground for the foreseeable future and they're going to keep scaling a lot faster than the L1 counterparts I think which is which is awesome the fact that we now have like these uh levers that we can pull to scale both both on the data and the execution side of things which is going to keep Fe relatively cheap for for quite a while here and is going to keep the user experience uh you know

really great and and getting better over time there but you can go check this out go to the growth. XYZ website there's a bunch of other metrics there that you can check out as well right finally here I just wanted to highlight a new article from dothy and this one is all about EIP 374 so essentially this explains exactly what Erp 3074 is I think it is probably the best thing you're going to be able to read on 3074 to understand what it is just a refresher for you guys that don't know what uh 3074 has to do with it has to do with account obstruction all that involves and this has been an EIP that has been I guess like around for a while and people have wanted it to go into the network for a while and it basically seems like it could make it into Petra

so I think it is worth definitely reading this e reading this article from dothy who does a great job of explaining what this is why it's a benefit for users and why it belongs in on the network and why it should go in with pectra so yeah you can go give this a read I'll link it in the YouTube description below for you to do so but I think on that note that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone