Ethereum blockspace dynamics, Swell L2? and more - The Daily Gwei Refuel #744 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The deily Ref where up latest news near meos system I'm your host anthonyo today 9th of March 2024 all right everyone let's get into it so a special Saturday episode for you all to make up for missing yesterday's episode I didn't want to leave you with two missed episodes this week uh and there is a bunch of stuff to get through of course so I'm going to dive right into it now I know you guys are probably sick of me talking about the ETF stuff but just like one update that I wanted to talk about with regards to the eth ETF and this is a big update this isn't like some kind of small update or me on a rant or anything like that this is actually a substantial update so the SEC met with grayscales attorneys and

coinbase with regards to the spot e ETF on I think March 8th I think it was or March 7th maybe so one or two days ago uh and discussion included analysis of the correlation between the Futures markets and the spot markets of eth and then Nate continues and says coinbase analysis shows correlation between eth Futures and spot markets is every bit as strong as with the Bitcoin markets adding that the SEC appr approved the CME traded ether Futures ETFs and I'm not sure what grounds for disapproval of spot eth ETFs would be just a very very strong signal here that the SEC is obviously talking to the relevant people with regards to the eth ETFs really strong signal that they're going to have a very hard time denying the eth ETF on

the basis of um of the fact that the E Futures ETFs and the BTC Futures ETFs are very tightly correlated with their respective spot products and as we know grayscale won their lawsuit against the SEC based on this basically based on the fact that they believed that the Futures ETFs are basic you know basically the same as a spot ETF and they should both be approved uh and you can see the list of names I think uh in this I don't think it's on the screenshots here that Nate shared but there are a list of names attached to this um and grayscale's uh one of grayscale's attorneys that was present was the one that defended grayscale or I mean not defended grayscale but like fought for gray on behalf of grayscale in their lawsuit against the SEC and and one so you know you can read between the lines

here to an extent but also it's kind of obvious to me that they would have gone and met with the SEC we don't know what was said but like it's you can read between the lines and you basically say that gray scale would have made it clear that if the ETFs were denied they would probably immediately sue the SEC uh because they probably got the lawsuit already ready to go right drafted up uh because I've seen a few people say this but they have like a basically a legal obligation or fiary duty to people that hold the eth E Trust to sue the SEC uh if they were to deny this thing uh because of the fact that they've already gone through the lawsuit with the uh you know the BTC side of things and they won that lawsuit so obviously they're very emboldened here um which makes it really

hard for the SEC to even think about denying these things because they're just opening themselves up to more lawsuits more and it will probably be a very quick lawsuit as well because of the fact that you can just rest on on the uh the precedent that was set when gray scale won in October of last year so this just further kind of signifies to me that that the eth ETFs are definitely getting approved on May 23rd uh I I still believe that I see no reason as to why they wouldn't be uh you know I know people have given arguments as to why they wouldn't be before and I've gone through all of that but yeah just thought this was like a big update that I figured I'd I'd talk about for a little bit with you guys because uh I know that you know at this point as I

said like a lot of people are sick of hearing about the ETF but they are one of the major things happening in crypto right now and you know at the end of the day I I want to cover it especially when it comes to eth because I think that a lot of E's price action and btc's price action and the general Market's price action is due to these ETFs since we are you know at least N9 months ahead of the general kind of 4year cycle that I talked about the other day and how I believe that we don't really have a 4-year cycle anymore uh but the ETFs are obviously a substantial part of that if not the reason that that has kind of happened there and obviously e getting an ETF is a really big deal because of the fact that it's kind of the first

step in the uh wave of tokenization that black rock wants to initialize on ethereum or on I guess like within crypto but but I don't know where else that would do it it makes total sense for them to do it on ethereum uh whether that be layer one or layer 2 remains to be seen maybe they do it everywhere maybe even they make their own layer 2 or something I don't know what they're going to do they haven't really published plans on that but that falls into the bigger road map there and the number one reason I'm so excited about all of this is not because it makes eth go up like yeah that's cool and all but it's because that for the longest time I have strongly believed that ethereum will become the backbone of the new Global Financial system and that's how they this happens right with black rock

getting involved with these other trade institutions getting involved like they're going to get involved or they're going to die basically over a long enough time frame obviously it's not going to happen anytime soon but we all know what happened to companies that didn't evolve with the internet right they went they went by the wayside they died they got a lot smaller you know juggernauts like Blockbuster being the perfect example of one that didn't adapt to things right Kodak another one like they just didn't adapt to the digital internet age uh and they were left by the wayside and I think the same thing happens with ethereum with with crypto with blockchains generally generally where they replace the existing Financial system and then if you don't uh kind of evolve with it you get you get left behind and I think that these bigger players realize that and they

want to integrate with it and as I've said plenty of times on the refi before it doesn't matter if they're centralized guys there's always going to be centralized and decentralized ways to interact with what we're building what matters is the fact that people are actually using it like at the end of the day it's it's all well and good to build like a Hy decentralized cyppher Punk Financial system but if it's only able to be used by a very small group of people it doesn't actually do much for the world like it does it for you know for those small group of people that's totally fine but at the end of the day we're trying to build tools that Empower Humanity we're not going to empower Humanity by keeping it Niche keeping it kind of like uh very hard to use keeping it very inside baseball we're going to

help Humanity we're going to empower Humanity for hundreds of years to come by building better systems to manage money with to manage Financial Services with and giving more opportunities to people that don't have them like half the world doesn't have access at least half probably probably three quarters of the world in terms of human population doesn't have access to uh you know decent financial services and the thing is crypto can give them that access obviously there's still a lot of building to do but that has always been the ultimate goal and you know the ETFs getting kind of um approved and tokenization happening on chain and everything moving on chain is how we get there so bringing the world on chain is our North Star within crypto and all of this stuff uh kind of falls into that but yeah just figured I'd give you guys

an update on that um and I think that you know I I'll keep giving you updates on this cuz as I said it's very important but some good movement here I'm really liking what I'm seeing here all right moving on to a tweet from eth wve so they put out a nice little tweet here basically uh illustrating what the current ethereum blocks look like and what they're going to look like post 4844 so as you guys know in 4844 well when denune goes live uh this week with uh 4844 coming with it it creates a new fee Market or it creates a new transaction type called blobs which is part of its own fee Market outside of the existing uh ethereum one fee Market that we have today it's it's part of or the execution layer fee Market I should say it's part of the consensus layer and

it's Illustrated here you can see that what it looks like today is that there are blocks on ethereum they're made up of various different transactions such as defi related transactions eth transfers nfts you know so on and so forth as well as L2 related transactions now well L2 or roll up related transactions right now post 4844 we're going to have the blocks still but we're also going to have blobs and blobs is going to take most of that rollup or L2 activity for themselves which means it's taking it away from where it currently sits within call data on the execution layer which then opens that up to other kind of I guess like use cases and and other things to fill up and this has been a discussion in the etherum community for quite a while now what that's actually going to look like are

we going to see reduced fees by like 20% is or 15 to 20% on layer one in the short term because a lot of these rollups and layer 2 are going to start posting all of their data to blobs instead of of call data I don't think it's actually going to be that high I feel like there's going to be a few l2s that aren't going to do it on on day one or aren't going to do it for a few weeks I think a lot of the major ones are doing it on day one from what I've seen um but still there are other L2 related uh transactions um and at the same time like L1 is so kind of congested and and and so heavily used and there so much demand for it that we already see swings of like 20 30 40 50%

on on gas on on the day like I remember I think yesterday I saw gas at 80 gray now it's at 40 gray that's a 50% swing uh to the downside in just a day and obviously it can go up goes from 40 to 80 gay that's 100% swing so when we're talking about giving more space I guess to L1 because we're offloading the L2 transactions to blobs or the L2 related stuff to blobs it might have like a little effect shortterm but it's not really something that I think is going to be felt and I think it's going to be material enough for users to really care about because at the end of the day at at we're already way past the I guess point where most users can actually use ethereum L1 like at 40 gay I I mean you're pricing out like the vast

majority of of users even at tengue I would say you're pricing out a lot of users but at 40 I mean it it it starts getting and then you go up up up from there you're pricing out 99% of users and obviously that's part of the ethereum rollup Centric Ro map design where you can use l2s and they're going to be significantly cheaper uh you know they're still significantly cheaper right now even though they share a fee Market with L1 uh but like when blobs comes along that's where the costs are going to collapse there but in terms of actually freeing up L1 yeah I I don't really think it's going to make a material difference there and this goes back to a lot of discussions that the community is having around raising the gas limit as well I think raising the gas limit will definitely have a pretty

substantial effect depending on how much we raise it by like for example if we were to double the gas um limit you know all else being equal you would expect the the gas price to maybe half essentially but it it it doesn't really work like that it's more complex than that and we don't actually know until we were to do it and then there's obviously the concept of induced demand which is a hotly debated topic within the community and it's a hotly debated a topic within just like General kind of um conversations when it comes to supply and demand it's not really just with a crypto context but it's also within the context of things like traffic management you know it's the age-old thing of well we shouldn't build more lanes because those lanes are just going to get filled up straight away because we induce more Demand by saying okay

well this highway had three lanes uh but now it has five lanes and there's more capacity well by saying that it's basically saying to everyone well okay all the people that wasn't weren't using the highway before are now going to use the highway and then you've induced that to man right but then there's the other side of the equation that says well now we're just servicing more users so it shouldn't be a reason not to not to create more more I guess space for people just because you that's going to get filled up like that's a good thing but then you go into the Nuance of things and you're like okay what are you giving up to do that obviously with a highway if you don't have the lands you have to uh to to build it or to build extra Landes you have to start

reclaiming land okay well maybe if does that land belong to someone does that land have housing on it that you would have to like as a government pay pay out or seize the housing in order to build that Highway like there's always trade-offs here right and then you think about it in the ethereum context okay if we raise the gas limit too high do we start kicking off a lot of the lower powered nodes on the network and of course we do because by doubling the gas limit you effectively double the size of the ethereum blockchain and then you're starting to kick off uh uh more and more people off the chain now as I mentioned the other day it is obviously more complexer and nuanced than that it's not just a straight equation like that and there are lots of things being worked on

with regards to statelessness and State expiry and the ver the whole Verge road map there but I'm saying like if we were to do it today because people are calling on it today right they've been calling on it for a little while now and maybe we could raise it like two times at today and it would be relatively okay but I think that also the fact that we're about to launch 4844 blobs which puts more strain on the network we should wait for that to happen then have a discussion around raising the gas limit maybe like 3 months after that because we want to let that bake and let that settle on the network and then potentially raise the gas limit and the nice thing about the raising the gas limit ites it doesn't require a hard Fork all it requires is a flag to be set

on the clients that validate that people running validators will run and then you you basically do what's called vote up the gas limit so essentially you get Buy in from the whole kind of um note operator Network and then you vote it up and that works in a kind of I guess like subjective way where essentially it becomes a social signaling thing where it's like okayy the core devs are on board the core Racers res are on Board General communities on board the note operators are on board okay let's vote up the gas limit sort of thing so I think that will happen you know post 4844 probably a few months after it there'll be there'll be calls for it to happen but I can't see it going much more than a 2X at in that kind of time period there longer term I can

definitely see it going way higher than than that you know we could potentially see 10 20 30X sort of thing but that's when we have things like State expiry statelessness the G verle trees you know the general Verge road map because then we can do it safely without having to uh kick off lower powerered operators off the network and giving up decentralization which is the whole point of of a layer one blockchain as you guys know uh so yeah that's that's how that all relates to I guess kind of this graphic that ewave put out but uh you know I like seeing these Graphics too because it allows us to visualize what the network is actually being used for uh at the end of the day I mean and you can also look at other things not just these Graphics you can go to Ultrasound money and see which contracts

burn the most eth and O over different periods of time as well which is which is always a a fun little exercise to do um but yeah anyway thanks to eway for putting this out there it prompted a a really good uh kind of thought process in my mind when I first saw this and that's what I just basically told you guys I always like talking about this stuff it's one of my favorite topics because it is so nuanced and people try to simplify it but then you dive into the nuance and you realize just how much there is to it uh so I always I enjoy uh talking about it with you guys all right moving on so rated. network has now added ethery to their dashboard so as you guys know rated network will track the market share of ethereum validators on the network uh

and the reason I'm highlighting this update is because e is no small fish they are number six so they are only behind uh Lio coinbase binance rocker pool and Kraken so they have 1. 59% of the network now as you guys know I'm an adviser to ethery just want to disclose that there but there's a couple of reasons why I'm bringing this up firstly is that wow they're already number six like that's crazy growth secondly that growth has happened really really quickly they are a relatively new protocol and they're already number six here um you know and they could be top five very soon I mean kraken's not that far away in terms of percentage terms here um three this shows you the power of economic incentives obviously eifi has run a campaign for quite a while now where essentially you can Farm ethery

points uh which is going to convert get converted into their token which they already announced and then you can Farm Ian layer points which is going to get converted into the you know well it's assumed it's going to get converted into the IG layer token at some point as well and the real kicker was the fact that ethery got around the deposit limits of igen layer because they were doing it as a kind of like they were creating igen pods so they're doing it as like a solo Staker essentially so they weren't using lsts uh they were setting up igon pods which was unlimited there was no cap in the amount of e you can put in and they also have their own LST obviously known as eia um and what's really cool about this as well is that eifi is not just one entity there are actually 10

entities right now that are running the kind of ethery network here and you'll see some familiar names that are part of other networks as well like nethermind for example is one of the node operators they're they're quite a small share but they're there uh Pier 2 they've been around for for a little while all nodes you know Cosmo station there's there's a bunch of them here so it kind of it works like a Lio model I guess where you know they'll have you'll have the the um the entity sitting on top Lio or eify then you'll have the node operators underneath ether's plan is to open that up to many many different node operators and to decentralize it I think Lido's plan is also very similar to that but they they'll maybe move slower than ethery will um but that's you know obviously one of ether's plans there but

I I really like that because when you actually kind of look at this list here you see Lio has 36 not operators right it's obviously better than having one uh because they have like 31.1% of the network they have 36 node operators but then you go into coinbase who has 14.3% of the network and that's one entity that's one node operator technically binance 4.1% at at one uh at one entity uh Kraken at 2.4% one entity obviously Rocka poool at 2.6% has you know thousands of node operators which is really really cool and then ethery at at 10 and then under that you've got like Ledger live which is one Bitcoin swe which is one okx which is one so the fact of the matter is like as for the reasons I outlined is why I'm so excited about the fact that eifi has grown so

quickly is because they're not your average uh staking protocol right they're actually uh you know doing a lot of innovative stuff and they've grown really really quickly because of those financial incentives and this goes back to what I've been saying for it have to be like at least 12 months at this point probably 18 months where I said that the only way you're going to reduce the dominance of the bigger players in particular Lio and and coinbase is by competing with them like the social signaling stuff is fine the social layer stuff is fine it actually raises awareness and and I'm all for doing that but it has to actually uh turn into action you can't just like say things and expect things to happen it actually has to turn into action and protocols like eifi and swell and and puffa and Renzo and a bunch of others I mean

there's so many now have uh been doing that right have been competing and continuing to compete and have been basically preventing Lio from growing bigger than what it has yes L's been stuck around 31 32% for quite a while now but that's a good thing it means that their relative market share has not grown their real market share has of course because more e has been staked across the board but their relative market share has not grown um and has has basically I would say like retraced a little bit obviously it's not not too big here and you still have puffer vampire attack to come as well but you know considering all of that taking all that into account it's just great to see this and I actually can't wait for a ra Network to add the other entities here I think puffer would be quite big as well

because they have uh you know over a billion dollars at least probably $1.5 billion or something worth of eth so I think they should be over 1% um swell should be close to that as well I'm not sure on the other ones I know there's mantel as well as as Renzo and and a few others out there so if you add all those up like that's just that's just awesome it's just it's just really cool because you've got like more and more entities now that are relatively small I guess but still like they're not just one entity like as I said with ethery there is obviously e entity is one entity but like the 10 note operators underneath they have plans to be a fully decentralized staking protocol so do the other ones like SW and puffer and and and and a few others out there so uh

yeah we're actually kind of I wouldn't say slaying the LI o beast but we're preventing the beast from getting bigger which is the whole point of this and I'm really really glad to see uh it kind of come to fruition and to see a lot of the stuff that I talked about a a while ago come to fruition because uh as I said like I think I said this probably two years ago I I I don't know it was it was a long time ago I said that ethereum staking is like a giant ship and turning the ship around takes a a long time that reshuffling that I spoke about uh a while ago now takes a while to play out but we're seeing it play out it's just that uh we have to kind of look back and see uh kind of how things play out over

the longer term rather than over the short term and I think I remember saying that a year ago when chapella went live actually uh just under a year ago was 11 months so it'll be year next month I said that I'd love to do an analysis on that date in a year and see how the staking landscape has changed and I actually consider it to have changed dramatically in the in the last year I mean we got the Advent liquid reaking tokens which have really changed things pretty substantially coinbase's Market Shar has come down L's market shares stopped growing you know so on and so forth so I hope someone does do an analysis like one year post chapella if not I'll do like my own cursory kind of analysis to see how things uh shaked out there uh but yeah I mean it's a it's a

multi-year long process uh it's not going to happen overnight uh but that's generally how I how I kind of look at all of this all right speaking of swell uh they are teasing something on Twitter so uh it seems like they are going to have their own chain I mean you can see here that they've got uh four logos surrounding their their own logo in this video so they've got polygon uh igon layer chain link and ALT layer so my assumption or I guess like my um what is it my my guess is that they're going to be creating their own uh polygon chain or or you know something to do with alt layer as well like cuz these things are layer to um as a service kind of things poly polygon cdk uh and also the um the old layer uh kind of city oh the old

layer um stack as well uh but you've also got like chain link as well which would be price feeds obviously and then igen layout which is part of the whole reaking thing here so to speculate I would say that swell is going to be launching their own L2 and that's going to be a staking reaking layer for people to interact with in order to save on obviously gas cost to make things faster to make entering and exiting swell a lot a lot more seamless as a as a kind of product here I'm excited I'm excited for this I don't know when this is going to be announced I mean I you guys know I'm also an adviser and investor in SW but I haven't really heard anything about this I haven't asked about it I don't like kind of getting any inside information if you will about these sorts of things

um because I I actually like being surprised myself because it gets me more excited not having advanced notice of things if I'm being honest uh but yeah I mean this is cool I'm actually curious to see how this how this plays out here because like I I've said in the past I think we have a lot of like l2s but I think that if you're building within the and and an existing ecosystem instead of spinning up your own totally new thing that's the way to go about it because if they do build with polygon then they've got access to polygon's entire kind of Suite which is their aggregation layer that they're building which basically sits underneath all of the polygon chains and then there's interoperability there there's composability there so they become part of that ecosystem just like how within optimism you have op main net and bass and mode and a few

others out there and then arbitrum you have arbitrum one and and and the orbit chains and stuff like that right Nova and all all those sorts of things and there are other ones out there other Frameworks but that's how I would that's how I kind of see it playing out all these quote unquote super chains these super L2 chains are being uh the kind of home for people to launch their own chain on and then everything becomes interoperable especially obviously with ethereum as well and then you have like things further down the line like pre-c confirmations or base pre-c confirmations uh and and and boosted roll base boosted rollups like there's so much coming guys it's actually super exciting just thinking about how much stuff is coming when it comes to the L2 space and how many things are actually being being uh are kind of improved upon

at at at a rapid Pace but yeah we'll have to see what swell comes up with maybe they'll announce it this week probably not going to announce it on a weekend but we'll see uh what they come up with and what they announce over the next few days all right speaking of arbitrum you guys know that I think a few weeks ago it was announced that arbitrum orbit l3s are now able to be launched on not just arbitrum L2 but any L2 so you can launch it on uh uh Bas as an L2 you can launch it on op mainnet you can launch it on wopo l2s it doesn't matter where you launch it because uh it's Now supported by Conduit here uh which is really cool because it means that you're not locked into anyone ecosystem you can use the best tech um to settle wherever you want

like l3s are I remember saying that L3 the the terminology would get made fun of and it for sure has I mean I see people kind of making fun of it all the time but I think that when it comes to the mental model around l3s all you got to do is think about them as as app chains really like they're they're probably going to be like the real app chains whereas the l2s themselves will be generalized like the most successful l2s and then if you want like this the the actual app chains the specific app chains then they probably will gravitate towards l3s because it all depends on I guess like flexibility like how much flexibility you want to have when building these things uh and it also depends on things like cost as well l3s are going to be cheaper but it's also a

security thing because as an L3 you're you're now relying on the L2 for settlement and the L2 obviously relies on the L1 but if the L2 that you're relying on goes offline the l1's not going to help you in any way because you now have cut off that that kind of uh I guess like middle layer between you and the L1 so you go offline as well so it is more risky there but that's why I think with L3 is it's going to be specific app chains probably for lower value use cases that don't need the you know the security of L1 uh and there are and they they're probably better than creating something like a like a full-blown uh validum or something like that right where essentially you store the data are kind of like offchain you get less security guarantees than you were to do onchain uh it but at the same

time it's kind of a similar trade-off where with an L3 you're now relying on the L2 and you're that's your weakest link so you're now only as secure and asum available as the L2 that you're settling to so we've already seen the l2s go offline multiple times right like that because they they're basically in very early stages or have been traditionally you know Arbitron one has gone offline I believe op main has gone offline I believe even bass has gone offline so if that was to happen and you built an L3 on one of these things your L3 is going going to also I mean offline is like the maybe the wrong term here because you can still process transactions but you wouldn't be settling them to anywhere it would be like in a backlog and those transactions would be optimistic in that you have to

basically wait until the L2 comes back online so you can settle to the L2 and then settle to the L1 and then they be become uh more finalized than optimistic basically but you could still process transactions the L3 wouldn't necessarily go offline your kind of settlement guarantee just wouldn't be there though that's why I'm saying like it just depends on on what you need what kind of security level you need there uh but anyway there were the reason I'm talking about it is because uh conduit uh one of the um uh the I guess like teams working in the rollup space introduced arbitrum Orbit l3s on bass so they basically made a really easy tool to use where you can basically just click and launch your chain like it's literally a few clicks and there you go you've launched your L3 on on base here you can pay with a

credit card and everything like it's actually pretty cool how quickly this is to deploy so you can go check that out I'll link that in the YouTube description below for you to do so all right espresso systems a team building a shared sequencer uh kind of Stack has announced today that they are looking at based espresso which is going to be their latest development towards a future of composable l2s they say here this design sees l2s retain autonomy over their sequencing rights and supports any ethereum L2 from based rollups to validium so a major concern around shared sequences uh is the fact that when you join a shared sequencer Network you do give up autonomy and you do give up or potentially give up fear

revenue for your own network and control over things like me and a bunch of other stuff right so there is a thesis floating around that basically says well why would any of the l2s want to join a shared Seer Network right like if they give up all this stuff to just become composable with other l2s would like is there an incentive for them to do that right is the is the trade-off worth it uh and then people come along and say okay well let's like not force them to do that let's still retain composability let's still retain all those good properties but let's still give them their autonomy and I think that's where espresso comes in with this based system which allows the l2s to as they say retain autonomy over their sequencing rights which means over the rights to order transactions which is stuff like

me for their respective networks and and and obviously feir revenue and all that sorts of stuff there um and supporting both based rollups and validium so not just um rollups themselves but also validium which is really great to see so there's a blog post here you can check out to outline how they imagine especi as really being a Marketplace for shared sequencing uh versus being just a shared sequencer and that's exactly what the you know one what they're talking about today would go to addressing because as I mentioned like just being a shared sequencer itself is probably not going to be enough to get Buy in from different teams because they give up so much but creating a marketplace around it uh would hopefully realign incentives around all of this and B basically have like a market based approach to getting these teams to want to use this

technology but anyway I'm running out of time here and I've got one last thing I wanted to talk about so I just wanted to put that on your radar you can go check this out I'll link it in the YouTube description below for you to do so all right last thing here is just a tweet from sham the founder of igen L that I thought was really interesting and really reframed a bunch of stuff in my mind so he tweeted out we have been selling blockchains as offering censorship resistance and property rights to users while a noble cause this is hard to gather enough support for we should instead sell censorship resistance and property rights to developers developers have no rigid property rights to build on top of uh an API or digital platform the API can change or sensor a developer willy-nilly even more when a developer acquires

traction they are sure to be cut out this is the unlock for the rapid growth of the digital economy with rigid property rights that a digital API is mutably available to be accessed in a verified Manner and censorship resistance other devs can build on top of digital platforms and API at an unparalleled pace so I I totally agree with this I think generally when I talk about sensorship resistance I'm actually talking about with regards to both users and developers or basically anyone any kind of e ecosystem participant anyone using the chain so like I'm not just focused on users but a lot of people do focus on users and forget just how powerful it is for developers and to give an example here uh a lot of you may remember that in the early days of platforms like Facebook people could build third party clients for Facebook

they could build on Facebook's API it was relatively open it wasn't totally open you had you know you obviously had the follow um certain rule sets and obviously you're at kind of like Facebook's Mercy but it was relatively open you could build clients on top of it now of course this wasn't good for Facebook because it meant that if people were using third party clients they weren't using the Facebook client and they weren't being served the ads that Facebook wanted you to see that that your data was not being mined in the same way uh because you're not using their client they can't kind of U Mine your your your browsing habits stuff like that so they shut that down and so did everyone else Twitter used to have this ability Reddit had this ability and still kind of has it ins some capacity but they made it very expensive for this

to happen um and that's simply a economic incentive for them to do that obviously uh it all it all comes back to economic incentives at the end of the day whereas within ethereum no one can do that with a truly decentralized protocol I mean this is the whole point of farcaster right where farcaster is being built as a protocol which anyone can build a client on top of and then it's decentralized so no one can stop you from doing that so there's no kind of master switch to turn it on and off and I think the clearest example of this is um you know outside of farcast is unis swap Unis swap is a truly decentralized def protocol that exists on ethereum L1 other layers it has been there for a very long time uh you know unop V1 V2 and now V3 and in the future

V4 and there are plenty of different interfaces to interact with Unis Swap and this would is only possible because of the fact that the Unis swap API aka the smart contract is open source is decentralized is immutable and cannot be twitched on and off by a you know a master switch and this gives Developers confidence that they can build their products on top of these things without just being rugged essentially which is incredibly powerful we as and as sh mentions here we do not have this in the web 2 digital realm pretty much everything in web 2 is very centralized and anything that you try to build if it gets big enough will automatically be turned into a a feature of that protocol or they'll kill your app and then uh you know integrate it within within kind of like their stack or they'll they'll kind

of acquire you and then kill the the version of the app that your users loved and then integrate into to theirs in order to monetize it so really within the web 3 space this is our kind of uh I guess claim to fame this is this thing that we should be selling uh I'm not selling in the sense of like being a Salesman but like kind of putting out into the world that hey yeah okay we buildt these networks as a censorship resistance for users they can do whatever transaction they want yeah okay sometimes criminals will use it just like they use the you know the normal things like cash to move money around stuff like that that's that's just part you know that just comes with the territory of of interacting with any Financial system but the real powerful thing is for developers it's like hey

devs like how many times have you felt like you were going to get rugged by different apis because they're centralized well here's an API that on you know here's a bunch of apis called smart contracts that are built on decentralized uh Ledges on sens resistant Ledges that you can go into and you can uh play around with and you can build stuff on and you're not going to get rugged uh for doing that so that is probably more powerful than uh than kind of like any other thing that we can uh we can kind of talk about when it comes to these networks and it comes to sensorship resistance of blockchains but anyway on that that note I'm going to end it there for today so thank you everyone for listening and watching be sure to subscribe to the channel yet if you haven't yet give the video a thumbs

up subscribe to newsletter join the Discord Channel and I'll catch you all on Monday thanks everyone