Ethereum blockspace demand, EOF overview and more - The Daily Gwei Refuel #516 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily gray refuel I recap the latest news in the ethereum ecosystem I'm your host the analysisano and today's the 3rd of January 2023. all right everyone let's get into it so we have a weird update from Genesis earn slash uh dcg so you guys have probably been following along with this quite closely uh and the whole genre around dcg slash greyscale and earn and all these kind of uh massive amounts of debt that's owed to certain parties all stemming from I guess the collapse of Terra FTX 3ac and all that other good stuff last year but this update came from Cameron Winklevoss who is obviously part of the week of lost wins one of the co-founders of Gemini and it was a weird thing to read I mean I'm not going to

read out the whole thing but basically it was kind of accusing Barry of Barry who is the founder and CEO of dcg and which is the parent company of grayscale of not doing everything they can to plug the hole that uh that is in the earn the earn program and that is obviously the whole for and for the users which is I think 1.6 billion dollars or something like that uh and then you know Barry replied to this tweet by saying dcg did not borrow 1.6 million billion dollars from Genesis dcg has never missed an interest payment to Genesis and his current on all loans outstanding next loan maturity is May 2023 dcg delivered to Genesis and your advice is a proposal on December 29th and has not received any response to which Cameron Winklevoss replied uh by saying there you go again

stop trying to pretend that you and dcg are innocent bystanders and nothing had nothing to do with creating this mess it's completely disingenuous so how does dcgo Genesis 1.6 billion dollars if it didn't borrow the money oh right the promissory notes will you or will you not commit to solving this by Jan 8th in a manner that treats the 1.1 billion promissory note as 1.1 billion now I don't know the whole story here I don't have it in front of me there have been a bunch of threads I've seen on Twitter talking about this but I think that when trying to find which one of these characters to believe it's kind of hard to believe any of them I would say that it's probably better to err on the side of them all being in the wrong at to some kind of point and the fact that

grayscale is a lending desk and we've seen a lot of those lending desks blow up this year or a lot of the um I guess over leveraged Apes even if they were funds and and VCS and and big trading shops blow up this year uh it's probably better to ER on the side of there being this massive hole that actually exists but I I think I I saw a thread that basically explained that what Cameron and Barry are doing here is basically just battling it out publicly to try and get some public support and try and try and kind of frame it uh as positive for either one of them but when I think about that and when I look at that I think this is just very childish for these massive I guess companies in this space to be uh for the founders of these

companies to be behaving in this way in a very public forum uh is kind of very embarrassing and just speaks to the fact that we need generally better actors in this ecosystem not to say that uh that you know the Winklevoss twins are Bad actors in The Gemini is a bad platform I definitely thought Barry silbert has been quite Shady for for a while uh for a long while actually many people won't know this but Barry Silver was one of the chief people behind pumping ethereum classic in 2016 and he's continued to do that for quite a while and he's also been involved with a lot of other things as well and people have thought that he was really smart and you know he was playing like 5D chess or whatever he was just early like and I've always maintained that he was just very early

he created all his companies uh and he was early to a lot of things made a lot of money off of Bitcoin and eth and other kind of assets early on uh but I don't think he's got any special prowess to how he operates uh now because of this there I definitely do believe that dcg uh I have this whole have this big hole here and they do owe this money but it just depends on what Agreements are in place you know it depends when the debt actually is due uh it depends on what the lawyers can come up with and and what I guess like fixes and bandits can can be come up with because I don't think either gemini or dcg or I guess grayscale want to go into bankruptcy proceedings as I've just explained before those are lengthy not good for anyone the business is basically over at

that point and uh it's not a fun time for the customers especially and I guess like what Gemini is trying to do right now is just make their customers whole uh and what I guess like dcg or Genesis is trying oh sorry grayscale and Genesis I should say so I've been saying grayscale I should be saying Genesis as the lending desk grayscale is actually the um the funds right like gpdc and ethi Genesis is the the trading desk but what uh Gemini is trying to do is just get Genesis to pay up so that they can uh fill the hole for users here which look I don't know which way it's going to go I'm sure there'll be uh you know some amount of money paid back and I'm not sure if they're going to miss the payments or what agreements they're going to come to uh or if they file

bankruptcy and then people are saying well if Genesis files bankruptcy that means dcg has to pull assets out of other places to cover that debt maybe they pull it out of grayscale which would lead to a sell-off of gbtc and efe I I don't think sorry I mean they're different things that they're setting like kind of trusts and stuff like that as well so it's kind of like different ball game um but this is something of like a contagion that's obviously still not resolved and something to pay attention to that's why I bring it up today but anyway you can go check out Cameron's uh open letter here I'll link it in the YouTube description below I don't have any threads handy about uh you know with a better explanation of this whole drama but I'm sure you can find them on Twitter or even on Google if you Google

this all right so interesting little graphic that data always put out as part of a write-up they did on the year in Block space demand across basically uh many different blockchains in crypto so they said uh uh they captioned this graphic by saying tell me again about how Bitcoin is a blockchain that people want to use when you can see that on May 1st in 2022 uh there was one day or that was that day of ethereum fees uh which dwarfed the whole year of Bitcoin fees and this was the other side mint so other side was the board Apes um ecosystem uh project that they're doing against their metaverse project that they're doing that was that day where essentially there was over 200 million

dollars worth of fees going to uh that were paid to the ethereum network most of which were burned of course uh but then some went to miners because we hadn't merged yet uh but that that one day was more fees than Bitcoin had for the entire year in millions of US Dollars by I I don't think it was double by but like 50 60 more in just one day now obviously that's an outlier but if you look at the whole year of 2022 and look at the whole year of of 2021 the picture is still the same and in their in their kind of right up here they actually have a chart that goes through not just ethereum versus Bitcoin but ethereum versus everything and look at this this is the the the nice little graphic here which is kind of cut off a

little bit on uh because of my camera but basically you can see here that ethereum's total block space uh demand for 2022 as measured by fee Revenue in US Dollars was 4.3 billion dollars for the entire year and then you can see for Binet smart chain which was second place was 745 million dollars Tron was third at 174 million dollars and then Bitcoin coming in Forth with 141 million dollars for the whole year and then you have a long tail of other networks such as Solana at 26 million Phantom at 23 polygon at 20 optimism at 18 Dogecoin at 1.6 arbitrim isn't here but I believe arbitrim would be similar to uh uh to uh optimism but this just goes to show like how bitcoin's block space

demand is so low relative to Smart contract chains binance smart chain obviously is an evm compatible smart contract chain and so is Tron as I said before Tron is basically I mean so so there are two major things on Tron one of them is Justin's son using it as his personal little chain where he's got most of his wealth or a lot of his wealth stored on it and he's doing a lot of stuff on there but it's also used for stable coin transfers because it is very very cheap compared to ethereum layer one and Tron as a network is supported uh across many different centralized exchanges so it's actually pretty good for cheap stable coin transfers and then BSC is very similar to ethereum because of its evm compatibility I mean it's pretty much a fork of ethereum right but it has its own ecosystem on there that

binance um binance obviously funnels users into but then ethereum still dwarfs all of these networks even combined all of these networks don't even come close to it the amount of fees that were paid on ethereum layer one in 2022. now the reason I bring this up is twofold one it shows that obviously ethereum block space the only product that the ethereum network sells is in extremely high demand and it still is today even at these low gas prices sorry these low gas fees and and during 2022 the gas fees were much lower than 2021 and we still saw uh this kind of demand here and then two ethereum doesn't actually rely on fear of a new for its network security because we have Perpetual uh issuance uh with privilege in in a proof of stake

worlds uh and then we burn most of the fees to offset that issuance and ethereum isn't deflationary right now since the merge but on net since 1559 went live it is deflationary so that is an extremely strong property of ethereum that I've talked about a lot before and obviously it's part of my bull case for ethereum whereas Bitcoin on the other hand relies on Fair Revenue long term for its security budget because it has the harvestings it has a fixed Supply and within a couple more hardenings or two to three more hardenings uh Bitcoin security budget is going to be severely because it's fear when you does not make up for that I think as a percentage of uh of of security budget here the fear of a new is less than one percent I think of of the fee um sorry of the

security budget because the block award counts for so much of it so that means that once the block award gets significantly reduced in another two to three hardenings Bitcoin security unless the price of BTC goes up significantly is going to be uh severely wounded right it's going to be uh it's going to become insecure uh and whereas ethereum does not have this issue even though ethereum has all the block space demand and I don't see anything driving demand to bitcoin block space because really there's only one thing you can do with Bitcoin the Bitcoin Network it's move BTC around and there just isn't that much demand to move BTC around especially because BTC is supposed to be a store of value first and a money second and no one's really using bit to say as money right and then people say well demand from lightning network

channels opening and closing is going to account for lots of fees on the Bitcoin Network it's not because no one cares about lighting their no one's going to use lightning Network the adoption of lightning network is pathetic compared to its competitors such as ethereum and BSC and Tron and all these other smart contract chains so I just wanted to highlight that but I'm not going to go on more of a rant here than I already have but you should give this blog post a read from data always talking about the European block space demand and all the trends that we're seeing and different things here it goes into much more detail than I have which are you know I'll link this in the YouTube description below for you to do so but I just think that this chart is extremely striking and the fact that ethereum was

able to do you know 60 more fees in one day than Bitcoin did in its entire year just speaks to how in demand ethereum's block space is than Bitcoin and you know some people will flood this and say that's because ethereum charges such high fees choose this network people are forced to do this it's like no no one's forced to use the ethereum network they're willingly doing this especially during a nft mint where people are literally willingly paying the fees because it's worth it for them to do so because they believe they're going to get more value out of the nft that they're minting or buying or whatever as opposed to the fees that they're paying and obviously a lot of this activity is going to move to Layer Two is going forward so it's going to be funny to see how layer 1 block space demand um kind

of changes from here but I've discussed that before on the refill I'm not going to go into it today uh but yeah you can check out this blog post for yourself I'll link it in the YouTube description below alright so we have a great thread here from Jay trilly today which starts off by saying eof consists of five eips set to be implemented in the Shanghai hard fork in parallel this includes new instructions deprecating old instructions deploy time validation and more this will radically change evm byte code it's long as F but let's get into it and this is a thread talking about all the different erps coming as part of the eof umbrella that I've talked about in the past it is for developers if you're not a developer you won't understand what they're talking about in this thread but I just felt it was worth

highlighting because I've talked about eof a lot on the refuel and I've talked about the earps that are going into that and that is definitely something that you should be paying attention to here uh I don't think that eof is is uh sorry I don't think the eof eips are actually guaranteed to be included in Shanghai yet that's just a note that I should make here uh there was still a lot of testing to be done there was still a lot of uh a lot of things to be discussed I think on the next all tour dabs call we're gonna know which is in a couple of days days I believe we're actually going to know if the of erps are going into Shanghai but if they don't make it into Shanghai it's you know most likely they're going to be in the next hard

Fork after that as part of the hard Fork the eip-4844 is hopefully going into as well so yeah but anyway you can go give this thread a read I'll link it in the YouTube description below for you to do so all right so Jasper here from the rockapole community has put out a tweet thread saying attention data analysts web 3 devs writers and more the Grant and Bug Bounty committee sorry the Grant and Bounty committee for rockapool is accepting applications there is a lot of money up for grabs as we start to fund our community I'll be breaking down what the three types are uh and more and this is a thread here which you can go check out so if you're interested in applying uh for a grant a grant or a bounty here in order to uh help out the rocketball community then this thread is for you

there's all relevant links and everything in the thread and information as well for you to check out which I'll link in the YouTube description below but I just wanted to highlight this this is another way to get involved with the ethereum ecosystem specifically obviously the rockapole ecosystem which you guys know I've warmed up to a lot over the last few months and I'm very very bullish on them as a community and as an ecosystem for sure so you should definitely check out them and see if you can get involved I'll link it in the YouTube description below all right so speaking of things that are growing over the past I guess like few months ens just continues its uh growth unabated really I mean you can see the ens stats here for December of 2022 there were 53 000 new registrations 1.6 million dollars in protocol Revenue 22

000 new youth accounts with at least one ens name uh for a total of 630 000 6700 Avatar records sets and 2100 d-web content records set for a total of 18 100 and you can see it in the chart here what the growth is kind of looking like for these new things that they're tracking such as Avatar growth and d-web growth uh what I find really cool about ens's growth is that it doesn't seem to be affected by Bull and Bear markets it seems to be growing organically from people wanting to buy ens names to set you know for their ethereum address to set for their identity and that's something like what avatars are speaking to as well is that they want to have it on chain identity yes the speculation

when it comes to NS names yes people like to buy low character names and resell them and everything like that just like any nft out there there are special properties for for different nfts or brand names all that good stuff there but ens generally has just been on an uptrend and I love seeing it especially just seeing how many new age registrations there are and how much protocol Revenue uh is being made by the ensl yeah and this is I believe there's no liquidity mining programs for ens like the ens token isn't being paid out to people to do this so it's just really cool to see that this is uh you know a lot of organic growth yeah as well as people just I guess speculating on on on domain names or ens names I should say which is totally normal there's nothing wrong with that I think people have have

the tendency to think that just because something is speculative that means that there's something wrong with that and I always felt that that was a weird thing to think because speculation makes crypto go around it makes the world go around it's inherent to all of us we all speculate in one way or another uh and it it makes the markets work it makes crypto work so we shouldn't really be I guess um against speculation until it gets to the point where it's like incessant speculation on like unfettered it becomes really dangerous like what we saw with Tara right that became very dangerous what we saw with all the leverage all the over leveraged people in crypto that's where it can become you know very dangerous but speculating and and people just entering into these markets willingly and and you know treating them like like healthy Market

instead of unhealthy ones I think is good for the overall ecosystem but yeah congrats to ens on another big month in December here all right so scroll has announced today that on January 9th uh their team will be performing a scheduled pre-alpha reset in order to roll out some new and exciting performance optimizations that will help drive a higher throughput in skull's pre-alpha test net details are in this thread which I'll link in the YouTube description below but great to see that Scrolls pre-alpha test net is continuing along here as you guys know scroll is building a ZK evm uh as as part of their kind of rollout here as part of their layer 2 rollout I should say uh and they've been working very hard on that I am an investor in scroll just the disclosure there for you guys um but it seems that they're making

really really great progress and I love seeing the progress of the layer 2 teams generally especially the ZK VMS but just a heads up for you if you have been using the pre-alpha uh test net here there will be a reset and all the details are in this thread with uh along with the upgrades that are coming to the test net as well hopefully we get a I guess like um an alpha test net and then a beta test net and then mainnet from scroll relatively soon the ZK VMS they're all coming they're you know a lot of them are in test net phases right now a lot of them are being tested you can go check them out for yourself uh but yeah definitely check out this thread from scroll for more details on that I'll link it in the YouTube description below all right today Mike here from uh silver

I said that right has put out a a tweet saying you know uh or covering something that I covered a few weeks ago which was the nft Lost Harvest store and that was that smart contract that coin Ledger had developed that allowed you to sell your nft for some very low value to a Smart contract that basically allowed you to uh claim the loss on that nft if you obviously Outlast because it's some nft that isn't worth very much or is basically worthless you can sell it to this contract and that will always be a buyer for you at some really low price well now you could actually do the opposite with what Mike has built here where you can basically uh do the nft repurchase or which basically means you can buy the nft that you sold to the Harvest store contract for the same

price that you sold it to and this is a front end to do that so let's say you sold one of these nfts to the contract and you said okay well I'm just running off this nft it's a loss it's worthless whatever and then for some reason it has a Resurgence and it's now worth a lot more than you sold it to the contract for well lucky you you get to go agree by that nft for the same amount that you sold it to the contract for and uh and basically that becomes your cost basis and then you can if there is a value for it on the open market you can immediately make a profit on that if you want to so just really cool to say that Mike has built an easy to use front end here for people to do that so maybe if

it's worth you checking this out if you have used the nft Lost Harvest store maybe it's worth checking the nfts that you sold to that contract and see maybe they've had a Resurgence because nfts are pretty wild they're pretty random there are some that just pop off randomly for whatever reason and maybe that is something that uh that you've missed well now would be a good time to check it out so I'll link Mike's tweet in the YouTube description below you can go check out the uh what what he's built here uh but really great to see the community uh I guess building on uh things that are being built by companies like coin Ledger I just I was a really big fan of the nft Lost Harbor store so I'm a really big fan of the repurchase or as well it basically completes that

Loop there where you can sell and buy it which I think is a really really great resource for people to have all right just wanted to give a shout out how to bankless's new YouTube channel which is called bankless Clips which is basically a bunch of really really uh well uh really informed videos around ethereum crypto you know layer twos nfts in general from David Hoffman and he put out a new one today actually uh called uh ethereum won the bull market now ethi's winning the bear market and all talking about each season and talking about how all the goals that ethereum is kicking in a less than 15 minute uh time frame here so you can go give that a watch as well uh the channel itself will be linked in the YouTube description below and some of you may point out that I'm not subscribed to the

bankless clips Channel I am just on my personal YouTube account not on the daily wear YouTube account so just so you know I do have some subscriptions on The Daily wear YouTube account but I don't really use it I use my personal account but you should definitely go subscribe to it if you're a fan of bankless which you all should be because they put out amazing content so I'll link this in the YouTube description below for you to go subscribe to all right to round off today's episode I wanted to highlight two things from Dorothy one he did an AMA about ethereum uh the other day I think it was yesterday that I forgot to highlight and I actually haven't retweeted it yet which I will do here where he gave a lot of really great answers uh to these questions that were asked of him and

just for those of you don't know domethy is a long-term daily Wear Community member who also recently joined the ethereum foundation to to work their work on Research topics and things like that so great to see him doing this AMA but one thing I wanted to really point out uh here was a question that Trent answered and an answer from Dorothy to that question so Trent asked the question what do you think about quote unquote ossification and when should a protocol stabilize and Dom answered ossification is a Bitcoin meme IMO the ethereum equivalent should be homeostasis the chain self-regulates to keep its core properties intact forever through cryptographic means first then crypto economic means then through the social layer as a last resort I couldn't have thought of a better answer than this this is amazing I mean

it kind of reads like uh something that I would say on the refill because I have actually touched on this a lot of times but I've never actually used the term homeostasis before which I think is a perfect description of what ethereum should be going for I've never been a fan of ossification and obviously ossification is defined by basically what Bitcoin is today where the layout one doesn't hard for doesn't upgrade there is barely any changes made too the Bitcoin in general and when those changes are made they're done in the form of opt-in only so like a soft Fork they call it where essentially the whole network has to to voluntarily opt into it uh at you know over time right rather than it being done in a hard Fork where hard Forks are also a voluntary thing where you have to basically opt into it

yourself and if you don't want to you don't have to run the software to opt into it you can go to another network if you want um but there's a different school of thought between Bitcoin and ethereum there I don't want ethereum to ever ossify like that I don't think it's beneficial at all I don't think that ethereum should ossify for a very long time I've said before that maybe in the future maybe in 10 15 years it should begin to I guess look like it's ossifying but I don't think that should be the case now that I've I've kind of read dominthe's reply here which makes a lot more sense where it should enter that homeostasis kind of um state where the chain is self-regulating most of the time you know to keep its core properties intact such if it's such a as its monetary policy and its core

promises to be a settlement layer and and what it actually does for uh for participants on the network um through cryptographic means first right through the actual protocol means first then crypto economic means through obviously the consensus backed up by its value and its economic properties and then through the social layer as a last resort as you guys know I always talk about this the social layer is the Bo and all Last Resort it is where we go to when everything else has failed when the the cryptographic um means have failed when the crypto economic means have failed then we really only have the social layer as the last resort and just to further explain this for you guys the cryptographic means is the network itself right is the core protocol rules the the things that are baked into the code that is the

cryptographic means right the consensus engine that ethereum runs all the code that backs up the evm everything there if something wrong happens there then you would expect a crypto economic guarantees to kick in which is obviously part of consensus where each economic value gives the network security it costs such and such amount to attack the network because you would need to acquire such and such eighth or you would need to attack the network then you'll get there's a risk of slashing um and you know that's in protocol slashing and then the social slashing as well which is where the social layer would kick in where if the cryptographic means have failed so there's some major bug and then the crypto economic means have also failed or or or or have failed as well not not both of them have to fail at the same time then the social ad

kicks in to fix that for example major bug there's a monetary policy bug you can print infinite eth and you can't fix that in protocol well you have to go to the social layer social layer basically says well we're going to reverse what happened here we're going to do in a regular State change to get rid of this bug we're gonna fix it and then we're going to go on our merry way uh and that's how that would be fixed by the social layer that's not fixed by any other means um and then a crypto a crypto economic one would be basically in protocol slashing where essentially some percentage of the network is acting against the network rules uh and then they get slash crypto economically basically they lose value they lose eighth value and they get kicked out of the active validator set so I thought

this was just a really great way of breaking it down I thought what domothy's reply about I'm sorry donothy's terminology of homeostasis instead of ossification is what ethereum should be aiming for and yeah I just wanted to add my little flavor there but you should definitely go check out Dom's whole thread which I'll link in the YouTube description below it's a lot of really great questions and answers here I basically felt like a daily gray AMA that I do as well uh which reminds me actually there is going to be a daily gray AMA this Saturday so definitely get your questions in in the AMA series channel in the Discord Channel which you can find a link to in the YouTube description below uh you can ask anything you want about ethereum crypto whatever you want to ask about I'll do my best to answer it for you but be sure

to get your questions in in the AMA series channel before Saturday so that I can get them answered I'll record the episode probably Saturday and get it out um sorry Saturday afternoon my time get it out Saturday morning probably U.S time uh for you guys to enjoy that and then from there there'll be a regular two-week Cadence of these amas coming out as I used to do them as well and you can go check out the previous amas doing the AMA playlist which is linked in the on the YouTube channel which you can go check out for yourself um but yeah that's it on that note that's all I've got for today I'm going to cut this episode a little bit short for today uh but I'll be back tomorrow as usual so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't

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