ETH ETFs now live, USDC on Base growth and more - The Daily Gwei Refuel #797 - Ethereum Updates

Transcript

hello everyone welcome to another episode of the de R field where C the latest news in ethereum ecosystem I'm your host and this isday 24th of July 2023 all right everyone let's get into it so you already know what day it is it is the day after the eth ETFs went live and what a showing it was a very very strong launch with I think expectations exceeded across the board um mine were about par I think I I think I originally said that if we were at essentially like you know 30% of btc's volumes and inflows from its kind of first day then or I guess like net flows from its first day then essentially we are at market cap parody which is to be expected here so that's pretty much what happened there now I'm going to go through a

bunch of different things with regards to the eth ETFs uh in in a sec but I do want to mention one thing is that I want to caveat all of this by saying uh something that I've SP said lots of times in the past is essentially that this is like one day of ETF activity guys and this is the launch day the ETFs are special because they're passive flow vehicle as I've said so many times before I mean i' I've I've said this to death but I do want to remind you guys they are passive flow vehicle the flows come in over time it is months you know years decades that's that's what these kind of ETFs are for that that long longterm time Horizon which obviously doesn't match very well with the schizophrenic crypto Twitter investors who basically look at the hourly chart and say oh it's not moving up based on

the ETF going live that's bearish like that's just so stupid it's so dumb but yeah just want to cover out all that by saying that this is just the first day this is the launch day we're going to see how things shake out over the next few days but on that note the first day was incredibly bullish we had a positive inflow net inflow of 106.6 million now of course you can check out this website that I talked about on yet on the other day's episode on Monday's episode uh fars side. co.uk they track all of this stuff here and they're basically tracking the flows to e each of the eth ETFs and then showing the total net Flows at the end of the day so you can see here that the two biggest winners from today uh for the eth ETFs was uh Black Rock of course

like that's pretty obvious uh and bitwise actually so Black Rock brought in $266.25 million Fidelity coming in at third place with 71.3 million and the rest 21 shares vanck Invesco Franklin had around I guess like 7 to 13 million inflows and then of course there was a huge outflow from grayscale's ET product which is to be expected of almost $500 million but you add all that up and the net comes to 106.6 million on the positive side here now I think the big open question as per usual is going to be what the rest of the E flows looks like because as I said plenty of times on the refi before like yes e had almost $500 million of outflows but then a lot

of that probably went into black rock Fidelity and bit wise's ETFs right a lot of that went into these other ETFs not so much went into the mini trust that um grayscale has right now but I think that's because they did the auto conversion already of that 10% e into the mini trust so there was already uh a billion dollars of flows basically going from e to the mini trust here but that's not counted as it shouldn't be because of the fact that it was done um essentially like is an an automated fashion it wasn't done through the the traditional means that of what you see here uh but yeah that's what the table looks like uh today now of course we have another 3 days worth of of trading data coming for this week but again it's going to be looking at the you know next few weeks next few months

into the years ter Rory to see what this all looks like and the grayscale eth outflows are going to be over relatively quickly they're not going to last very long that is really just like a rip the Band-Aid off thing and after that we're going to get some I guess like a nicer picture of what those flows will look like similar to what BTC has had and Far Side actually tracks btc's ETFs you can see here on the same page uh and the flows have has generally been quite positive what was interesting though today is that it was a negative flow day overall uh for the BTC ETF attive 78 m and that's because I believe there was a bunch of people rotating out of BTC into eth or at least a portion of their BTC ETFs into eth it was especially apparent with bitwise where you can see here that

bitwise had a net outflow day for their BTC ETF if I go to the the thing here of of $70 million and into their eth ETF they had $24 million uh go in so essentially uh what happens here is is basically that people would have sold off some portion of their BTC ETF and gone into all the bitwise BT ETF I should say sorry and gone into the eth ETF uh there which is which is pretty natural I think if you're going to do a market cap weighted thing 7030 you know 70% BTC 30% eth I think a lot of people have have been doing that there but yeah overall an extremely positive day for flows now of course Eric balunis has been keeping us apprised all day or all yesterday I should say on everything happening with the E ETF so he said here

that he was curious how the eth ETFs would rank in day one volume now this is volume which is different to flows this is trading volume versus all 600 or so new launchers so this is all new ETF launchers in the past 12 months but excluding the BTC ETFs so black rocks eth a would be number one by a lot Fidelity's product would be number two and then the a few others here would be in the top five top 10 top 15 so he says here um and C eth which was the lowest among the group would still rank in the top 10% versus a normal new launch just another way to illustrate how unusual all of this is and I also saw Eric put a tweet out saying that the eth ETF volume was basically top 1% of all ETFs so crypto

is making a big splash here guys like I think that there's been some I guess comments not so much from Eric uh and James the two main Bloomberg guys they've been quite bullish on crypto overall yes they had their I guess like faltering and perceived bearishness with regards to the eth ETF leading up to the approvals there but generally they've been pretty Pro crypto then you look at some other I guess uh tradire analysts out there and they've been very negative on these ETFs they're saying oh it's just D gen retail money it's not real flows uh it doesn't really matter like it's going to slow down and and eventually it's just going to be a nothing Burger but that hasn't been true at all the BTC ETFs are as strong as ever still the strongest ETF launch of all time eth is coming in at pretty much

the second strongest ETF launch at of all time and we're going to see those flows continue over the next you know coming weeks and coming months and in coming years and it's only going to get stronger over time and yes other assets will probably get ETFs in the future not when that will be but I think that's good for crypto overall like having an ETF doesn't guarantee that you're going to get flows either guys like it wasn't a guarantee for BTC it wasn't a guarantee for eth it's not going to be a guarantee for any other asset the assets have their own demand side uh and the assets have their own stories to sell on to clients whether the clients buy into that story or not is up to them so there's no guarantee that okay you have an ETF that means that all this money

suddenly going to hit you because as Eric said here most ETFs do not have anywhere near the launches that the Ethan BTC ETFs have had most of them pretty much don't trade very much at all I think like I saw a tweet from someone I can't remember who it was saying that most ETFs trade under a million dollars a day which is basically nothing right there are complete random meme coins that uh live or die based on like the weekly time frame that trade more than that essentially on on chain uh not even on um centralized exchanges just on chain here so this is a a really big showing here for eth overall now I did want to shout out out just one of the ETFs in particular and that's bit wise's ETF now I'm not buying any of the eth ETFs myself at least not yet but if I

was I would be going with bitwise now I haven't been paid by bitwise to say this I don't I don't have any kind of professional relationship with the bitwise guys I have talked to them in DMS before actually they invited me to ring the bell at the New York Stock Exchange for the launching or to be part of the the ringing the bell uh for the launch of the E ETS but unfortunately I live in Melbourne which is the other side of the world too New York so I couldn't make it in time but these guys uh just Chads they really really understand crypto on a deep level they understand how to bridge the gap between crypto and the traditional Finance world and not only that they also understand what it means to be part of the ethereum ecosystem and what do I mean by that

well basically they are donating 10% of their profits to ethereum open source developers now this includes two firms right now two I guess like guilds you could call them right now the protocol Guild and one that's doing research on I believe it was um I can't remember exactly what it was I think oh here we go the recipient orc PBS Foundation that's right it was it was around PBS proposed to Builder separation so those two orgs are getting 10% of profits from the bitwise eth ETFs donated to them bit wise's fee is also quite low at 0.2% I believe that it is the lowest fee besides the mini trust uh no sorry second lowest but it's on par with some of the others here but it's still very very low and given that they're going to be donating 10% of their profits to ethereum open source developers like I

can't think of a better ETF to buy than the bitwise one if you are a hardcore ethereum person or hardcore eth Maxi because they are not only supporting ethereum but they''re also very competitive on fees they understand the ecosystem very well and they had a really strong showing already with their first day inflows of their ETF which means I think other people are seeing this uh as well here and also on top of this they have Integrations with Crypton native applications like ens so you can see here they announced the bitwise ethereum ETF became the first US ATF to publish its ethereum addresses and set ens subnames for each address you you can actually see those subnames here tied to each of the addresses uh which is just another step further that bitwise has taken that the other issuers

have not taken now of course most if not all the other issuers are not Crypt native I think the only other one that's Crypt native or could be considered Crypt native on the larger side is is gr scale I think 21 shares as well is crypto native but bit wise has just gone above and beyond here so as I said I'm not being paid for this I'm not professionally uh related to any of the bitwise guys but they have just proven time and time again that they are in it for the long haul they understand ethereum values they understand what it means to be involved within the ethereum ecosystem so I wanted to give them a big shout out there because we need to be encouraging more of this we need to be encouraging not only more of these organizations kicking back some of their

profits to ethereum development such as the protocol Guild and and other organizations out there but also using products like ens uh in a unique and interesting way which is exactly what they're what they're doing here so I really do hope that bitwise continues uh their their strength going forward I really do hope that they're the number two ETF I know they're probably not going to be number one because black rock is just so so big but being number two behind black rock is is still phenomenal right like still very very good so I'm hoping that they continue this momentum as time goes on here there's no obviously guarantee of this but we'll see how it goes I think they've just done a master class in in being able to be involved uh with the ethereum community and also being involved on the traire side of things

and really deeply understanding the ethereum value proposition and and on selling that onto people that may know absolutely nothing about ethereum right and trying to relate to to those kinds of people there so yeah that was pretty much like most of the the ETF coverage that I wanted to kind of talk about I think today as I said but I'm going to keep monitoring this as time goes on over the next few weeks we're going to see how things play out there I think maybe the last thing I want to say is regards to Market impact now of course for those of you who have been paying attention all day The Ether price is basically flat on the day now I want to give a bit of History here so when the BTC ETFs launched on January 10th BTC dumped 10% on that day I

believe um and at 15% within the in in those two days and then kept going down and it was a month until the BTC price was back at the price it was when the BTC ETFs went live now I strongly believe this was due to the fact that it was a sell the news event at least temporarily and also there was a massive amount of grayscale outflows I think 50% outflows there because the discount wasn't as uh I guess like small as it is for the E eth discount here and it wasn't priced in because it was the first time it was happening there no one knew that the outflows from the grayscale ETFs were sorry the grayscale gbtc product was going to be that substantial there so it was different but now the market knows the market knows or can predict or at least can

expect that all right let's say the maximum amount of outflows from eth will be 50% because that's what it was for gbtc will price that in the market also had two months between the approval of the 19 b4s and the starting of trading for the eth ETFs which it didn't have for BTC and in those two months the eth price went from 3K to 4K to 2.8k to 3.5k basically the midpoint of that range so essentially the market has already priced this in or at least has attempted to price it in it could still go down over the next few days who knows right for whatever reason and this is all obviously speculating on on rather short-term price action here but I don't think it says anything I don't think there's any signal to be had here that oh okay well look the E ETF flows are

positive on the day why did price not move um it's relevant I think I don't think it matters at all but on top of that as well a lot of the um uh buying and selling gets done OTC too now OTC does hit the market right does eventually have Market impacts here but let's just say that you're an OTC firm and you have billions of dollars of eth to sell right you're just sitting on billions of dollars of eth that's part of your inventory and you you want to sell that well if you sell that OTC that has no Market impact because you're literally just changing hands from one eth holder to the next without going through the the public market and that inventory was already available to them which essentially means that their OTC brok didn't have to go out to the public market and buy more eth to satisfy that

that buy order they already had it for them so it'd be like me basically saying well I have held this 10 e for like a year uh and you know I bought it a year ago on the open market and I'm holding it now I have a friend that comes to me and says hey man I want to buy that 10 eth off you I'll I'll I'll buy it off you for this much I'm like okay here you go man like that that obviously wouldn't happen it' be the other way around I'd be buying eth off someone else but essentially you can see how that won't have an impact on the market because it's completely off-market order the only Market impact that it has is when I bought it uh from the public market and when uh that person if they want to sells that e into the public market

instead of OTC again now of course the reason why the OTC markets have an impact on the upside as well is the fact that the inventory is not unlimited if this person or this this firm has a billion dollars of eth to sell and that gets depleted well they have to go Source another billion dollars of eth if they want to if they want to fill the same order again or they have to go Source more eth to fill the orders and that's where the price is uh that's where it's reflected in market price yeah and that's Essen essentially what happens with these ETFs they're big orders they're probably mostly done OTC um and that's not really visible to us on definitely not on chain it's not visible to us generally anyway but there is a market impact over time because of the fact that there are more buyers and

sellers right the law of markets essentially there's more demand than Supply available for people so that has a market impact even if it is just OTC firms trading they still have to go to the public market to replenish their inventory they can obviously go to other OTC brok Brokers and buy off them but the thing is is that then those OTC Brokers have to go to the public market So eventually the only way to acquire e is from the public market which does push the price up of course because there's less and less eth on the public markets to buy and the and all these people are scrambling to get eth so essentially the eth price floats up over time this price set at the margin this is basically markets 101 here guys it's not very complicated but I did want to put that out there because I've seen

comments like I saw comments within a couple of hours of the ETFs going live being like why is the eth price doing nothing it's like guys what are you talking about we've known that the E ETFs are going live for 2 months now like and we had lots of volatility in those two months as I just described that was the the activity that was the pricing in of the E ETFs going live um over at least over the short term over the medium long term you're going to see a very different picture like I'm as I've said before I'm I have a strong belief that Q3 and Q4 of this year is going to be really good for for eth but that's the medium-term longterm like years into the future I still strongly believe that eth is going to be uh one of the the best risk reward uh kind of

Investments you can make uh for at least the next 10 years like I I really really believe that and I I mean I have like most of my net worth in eth uh excluding my my I guess like my house so most of my net worth in E and I I put my money with my mouth is for sure but yeah I think people need to get I guess like repair their dopamine receptors because I think they' fried them with short-term price action and just focus on the longer term as I said the other day if you're an long-term investor you should not be looking at the day-to-day or week to week or even maybe month-to-month price of eth you should look maybe every 3 months like be like okay well I bought eth at this price I'm going to look at it in 3 months time look at in 3 months

time oh look it's above my buyer price cool you know you don't have to pay very close attention most of the time nothing happens like you can go on the chart and see that like data day a random walk most days the market is going sideways nothing is really happening it's really just a small percentage of days where the market is is extremely volatile where it's basically moving up or down and yes there's trending periods for any type of trend like a be Trend a bull Trend Trend or a c crab Trend but dayto day you're not really going to see that right so yeah anyway enough on the ETF stuff uh for today actually one last thing on the ETF stuff which was related to a pup that's now available so this pup was uh put out here or shared on Twitter here by superf you can go mint

this for yourself this is just celebrating the launch of the eth ETFs in the US and the uh $3 donation for minting the pup goes to the Aus relay which is one of the me boost relays that is non- sensoring so really great to see them getting some support there but yeah you can go check this out and mint the pope for yourself I'll link it in the YouTube description below for you to do so all right so uh just a couple more things to get through for today obviously there wasn't many big announcements from projects today given that they knew they' be overshadowed by the eth ETF uh kind of Fan Fair but there was a big announcement out of Aragon so Aragon 3 the first all-in-one evm node on the efficient software Frontier is now live this is a big release from Aragon here so if you are

running Aragon today then you probably know that this is coming for quite a while now I think I've basically covered this on the refuel a bunch of times before but essentially what they were trying to do with Aragon 3 was improve everything like not just uh on the I guess like archive node side but basically make a better full node generally and basically make a better and more efficient uh node overall for ethereum here so you can see here that they're claiming that Aragon 3 is the best full archive node full node and prudent node in the world uh Aon 3 has a data data structure that allows for Ultra fast RPC call so it's probably even better for services like infura and Alchemy to run Aragon versus something else if these claims are true uh Aragon

3 is designed to reach and exceed 1 gigas per second in Block production which is huge because this can this can also be translated and used at L2 not just L1 here uh and there are a bunch of other features that you can read about I mean I'm not going to read the whole tweet it's it's a giant tweet here but congrats and kudos to Aragon for getting version three of their client out as I said uh you can run this for yourself today there is a link to download it all in the you in the um the Tweet which I'll link in the YouTube description below but yeah big news out of out of Aragon and for those of you who don't know it it's actually both an execution layer uh client and a consensus layer client as well uh so essentially you can

just from my understanding here just run Aragon 3 and you can have a full ethereum no you don't have to run something else which is pretty cool actually and considering Aragon is still a minority client this might be something that you guys would be interested in running obviously it is not um it is still in beta it is very early uh it just got released so you may not want to run it for you know in production for your validators but you can run it in production from just like a full node or an archive node that your validators aren't connected to so you can go check this out I'll link it in the YouTube description uh below for you to do so all right moving on Tim Robinson has posted a blog post today titled what is ethereum now this is basically his I

guess contribution uh on the day of the e ETFs going live because of the fact that now that we have a new investor base to pull from with the ETFs we need to be educating them on what ethereum is we need to be doing it in their language we can't be using the language that I guess gets used on the refuel and gets used in the Discord Channel we definitely need to have a more mainstream appeal uh and definitely need to have a more I guess like Normie friendly pitch for ethereum now of course all the ETF issuers themselves are going to be pitching this in their own way to their own clients but I think having something coming from a crypto native uh is is especially important because there's going to be a lot of people that come into crypto that would definitely want to know what ethereum is

what's the value prop why they should buy eth etc etc and this is definitely a really great blog post to send them which I'll link in the YouTube description below for you to get them up to speed on what ethereum is these days because as I've said plenty of times in the past ethereum is a lot of things guys and it has evolved over time for what it is you know the main Narrative of ethereum of ethereum used to be that it was a global computer like that was the thing that everyone was Shilling ethereum as and that changed over time it's no longer a global computer are but I think the one narrative or the one thing that ethereum basically is above all else is a global sediment layer that for me is like the value prop of ethereum it's a global settlement layer

for all types of value like that is as high level as I can give it but saying that to the everyday person means absolutely nothing they have no idea what that means so you have to basically break that down into different parts you have to use analogies you have to basically say well okay the world's Financial system today you know how you have to wait like 3 days for a y transfer at best well that's because of settlement times that's because it takes forever for things to settle between different parties now you can use those analogies uh because that's relatable for people they have bank accounts they've probably done a wire transfer before and then you can say to them well with ethereum settlement is near instant it's not technically instant it is 12 seconds for slots to settle uh basically for slots to be to be proposed here but

uh but then it's even longer I guess for finality for 13 minutes but that's still substantially faster than anything you get out of tradire right like for for ultimate set here but explaining all that yeah as I said like can be quite daunting and confusing can be something that leads you in a bunch of different directions so you need something concise to send to people which is exactly what Tim has written here so enough of me rambling about this you can go check this out for yourself I'll link it in the YouTube description uh below uh for you to do so there all right last up here I just wanted to shout out uh Bas for essentially doing what I wanted them to do like I remember I think I talked about this at least 6 months ago probably even like even uh even longer

than that where I said that Bas has a unique opportunity to grow usdc adoption on on on the network and become the deao payments layer for usdc obviously tether is very popular on places like Tron it's I think it's as equally popular on ethereum but like Tron is used for small payments now usdt is not now and usdc is trying to compete with usdt so essentially what happens is that obviously base or coinbase isn't going to be promoting their direct competitor because uh coinbase I believe has a 25% ownership share in circle which are the issuers of usdc so they're not going to promote their competitor tether so they have a unique opportunity here where they basically have their Layer Two which they can offer free transactions

for usdc transfers on and they have their vested interest in usdc and they're going to keep pushing it and and they have been like since the start of the year they've been pushing this in a really big way as you can see here that Weekly usdc transfers on base have grown to $20 billion that's $20 billion per week and at the start of the Year this was basically like way less than that I think like I'm just eyeing the chart here was maybe like a billion or a couple billion so this is a 10 times increase uh growth here over over the last 6 months and they're just getting started really guys like bass has really just picked up steam over the last maybe three four months since blobs went live um and then Brian Armstrong quote tweeted this and said the building blocks for crypto payments are finally

here right like Bas is 1 second 1-cent Global transactions usdc is a trusted stable coin it's very liquid it's very uh you know as as as Brian says it's trustworthy because it's backed by some of the biggest uh companies in uh crypto companies in the US we have Smart wallets now which means simplified onboarding no more 12 or 24w seed phrases to remember and tap to pay with NFC payments so you can basically install coinbase wallet today anywhere in the world and get started using uh usdc on there for very you know very cheap and also with very very fast transactions so I am so glad to see that they're really pushing hard they being coinbase is really pushing hard in usdc adoption on Bas because as I've said

before I don't like that tether is um you know so big compared to usdc I would like that those um that market share to close there because I don't like having a deao I wouldn't call tether a monopoly but like I would like there to be at least two players with relatively equal market share uh it's still a long way to go for usdc they did have that setback with that dpeg event that happened was that last year or the year before man it feels like forever ago but they did have that uh that setback with that dpeg but usdc um market cap is now 34 billion usdt is 114 billion so there is quite a gap still there and I'm actually curious to see if the usdc market cap was bigger um in in the past because yeah I think it it picked at like 55 billion and then

fell off a cliff due to the um due to the uh the dpeg right and I think it bottomed at around 24 billion and it's up to 34 billion now so it is still growing guys like and and this is over the last six or seven months so I think that uh as long as that growth continues it's it's a it's a real positive there and I don't want they just to be centralized stable coins like usdt and usdc I want there to be more attempts at decentralized stable coins I know that gho from the Ala ecosystem has been growing quite nicely recently and there are a few others out there um being worked on um but at the end of the day the centralized stable coins are just much easier to scale because of the fact that you can just put US dollars in a

bank account hold it there issue the IOU token you know the tether all usdc here and Away you go whereas with a truly decentralized stable coin what you need to do is set up this whole system you know it has to be all on chain smart contracts you have to make sure that you've got good mechanisms in place to keep the stab keep things stable because you're essentially using a collateral based um based mechanism to do this and if you're not using a collateral based mechanism using some other mechanism that is probably untested or that looks like a Ponzi or that literally is a Ponzi like what terara did with lunar and us so there is a lot of different things at play here so I'm just glad that we at least have the strong centralized stable coins in tether in usdc that people can still use because

as I've said in the past not everything has to be decentralized guys like there is uh not not every app has to be decentralized I I strongly believe obviously that ethereum and its layer 2os should be decentralized and should be censorship resistant uh as a consequence of that but the apps themselves they're going to be centralized decentralized semi centralized right there's going to be different parts to all of this and that's totally fine but I do want to see the decentralized stable coins obviously continue to grow and continue to compete here because D is still the biggest but its growth has relatively been has been relatively stagnant I know there are a lot of different uh kind of things in the works for maker generally but but they they' kind of pivoted into being not just a stable coin over the last

couple years but more than that right with their Ru asset stuff that they're doing their treasury stuff that they're doing so there is a little bit of expanded Focus you could call you could call it right but anyway and I'm enough about stable coins there you guys know my view on stable coins I'm super bullish on them they are the number one killer app that we have in crypto right now it's just great to see that usdt usdc is continuing its growth on base here but I think on that note 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 on Friday thanks everyone