Ethereum's issuance curve, Degen Chain and more - The Daily Gwei Refuel #757 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The Daily way refuel W up latest news etherum ecosystem I'm your host and this is Su the 1st of April 2024 I everyone let's get into it so before we get into it just one I guess housekeeping item that I wanted to talk about so you guys know that eth Global is coming up in Sydney uh that's happening in early may I just put in my application over the weekend got accepted to be a judge at the eth global hackathon there so I'm very much looking forward to that obviously it being in Sydney is like the first eth conference in Sydney since I I think edcon in 2019 so I'm super excited you know it's been like 5 years since then so I'm super excited for another eth conference conference to be happening in Australia here but I did want to mention that I am

planning or at least trying to plan to have a daily guay dinner uh before the event so if you are going to be in Sydney or going to the event or kind of interested in this dinner I'm thinking of doing it on the 30th of April or the 1st of May I think one of those two dates there and it'll basically be a dinner of about probably 20 people uh from the daily gay community and around it so if you are interested in going to be in Sydney at that date please DM me and I'll put you on the list there is still space on the list but it is really going to be like a first come first serve basis um and also you know please don't say yes unless you're like 100% going to come because people are going to miss out obviously uh if you you know

say yes and you're on the list and then you don't come and then other people could have come so yeah just definitely reach out if you are 100% going to be in Sydney on the 30th of April the 1st of May and then I'll get numbers and then I'll be able to kind of book a dinner I'd really love to meet up with a lot of fellow deadly Le way kind of community members there but anyway on that note going to jump into the news now because I did an episode on Saturday and because it's obviously the Easter long weekend there hasn't been that much news over the weekend so not too much to cover but the stuff that I want to cover is going to take a little bit to cover so there's still going to be a full episode today so very much going to get into that in a

sec last thing is that I'm going to be on the uh Bank list weekly roll up this week with David very much looking forward to that so yeah look out for me there I'm going to discuss all the news of the week like I usually do on the refill but with David you know David's a good spar partner so to speak when we kind of discuss these things that's happening uh in ethereum there all right so as you're all probably aware by now there has been a lot of discussion about the eth issuance curve over the last few days in particularly over the last kind of couple of weeks but over the last few days it has gotten quite heated you've seen people talk about this on crypto Twitter on farcaster basically discussing you know should or shouldn't we alter the eth issuance curve on a

number of different verticals here for a number of different reasons here now I do want to say that you should definitely go read Mike nea's post here I'll link it in the YouTube description below because it basically summarizes the discussion around issuance and around why the researchers believe that we should be lowering issuance or at least kind of I guess capping issuance here uh but there are related stuff to there is related stuff to read as well which I'll link uh in the YouTube description below I mean it's linked in Mike's post here you should definitely go check that out but I'm not necessarily going to be talking too much about the proposal and more so about E's kind of monetary policy generally and why it is really hard to change it so I want to start off by giving a bit of history on ethereum's monetary policy so

from basically day one ethereum didn't really have like a strong monetary policy it was put out there you know there was five eth per block to reward Miners and it was basically an afterthought really from day one and day one being obviously Genesis you know mid 2015 here and even before that when it was being designed you know we didn't want too much issuance we didn't want too little and we obviously wanted to pay Miners and obviously at the time the uh price of eth was very different to what it is today the ethereum ecosystem was tiny compared to what it is today so it was a different world altogether so reflecting on that and reflecting on over the years of what the ethereum monetary policy became I think by 2017 2018 it really became this notion of minimum viable issuance now this term is

subjective on purpose like it is not an objective thing like within Bitcoin they have an objective thing where they're like okay there was only ever going to be 21 million Bitcoin we're going to Harve it every four years and we're not going to touch it at all like that's their monetary policy right and there are trade-offs there where the long-term sustainability of that monetary policy is definitely in question it has been for quite a while uh basically you know will the block rewards be enough to pay miners for pay for security uh when the block reward gets too small and will the fee Revenue make up for the dwindling block reward and that historically has not been the case at all there's been some spikes here and there but if you look at the long-term sustainability of it it looks like that Bitcoin will not

be long-term sustainable with its current monetary policy but I'm not here to to kind of talk about bitcoin's monetary policy it was just giving a bit of history there as it relates to ethereums so ethereum went the other uh kind of side of things went the other way and basically said okay well we know we can't guarantee that fee revenue is going to make up for the block reward going down over time so what can we do well we can add a Perpetual issuance to ethereum right where basically we have issuance forever essentially at a predeter rate called the issuance curve uh especially post merged it's it's based on an issuance curve based on how much eth is staked and then we also have a fee burn in place where essentially okay we you know there's a lot of fee Revenue but let's burn most of it so

that we can potentially have a deflation Ary e now deflationary eth is not guaranteed it is a byproduct of the fact that we have a lot of demand for eth L1 and then that demand gets translated into to you know a fee burn where most of the fees are burned and then we become net deflationary but as I said net deflationary is not guaranteed and right now you know at 19u we're not deflationary we're issuing a bit more than we're burning you know it's not that much more uh but yeah we're issuing a bit more than we're burning and you can check out all of these metrics on ultrasound money but the reason why we we kind of did this is because it fits into the minimum viable issuance kind of Paradigm where essentially we know that we've got the issuance curve at the point where it has enough issuance in

order to secure the network in order to attract stakers to the network uh and then we offset that with uh with a fee burn uh so that that's basically what the monetary policy is as it as it stands today now the proposals that have been put forward by uh I guess like originally Caspar and Ansgar from the ethereum foundation they're the researchers leading this but also from a bunch of other people talking about this particular particularly Mike has covered this is basically that in this par paradig where we have liquid staking tokens or liquid reaking tokens and the thing is we don't have a cap on how much eth can be issued it's it's become a concern that maybe we're going to get to too much eth being staked and essentially that means that we're basically overpaying for security essentially because there is diminishing

returns to how much eth is getting staked we run the risk of an LST or an LRT displacing ether's money and we also run the risk of of centralization from from that angle there so that's there's a lot of different angles to this but as I said I didn't want to dive too deep into the proposals themselves because the debate around that is is wide and the it's based on assumptions which I will get into towards the end but what I really wanted to discuss is why it's so hard to change the ethereum monetary policy so the reason why it's so hard to change it is because of the fact that changing it isn't just directly related to how much Stak is or how much miners get paid changing it is directly related to how eth is viewed as a money and a store of value if you change the

monetary policy too often then people don't have confidence in the monetary policy they basically say okay it's being changed tooo often you know why are we changing it so often you know can it change again next year or can it change again next month you know who's responsible for putting forward proposals to change it you know who's responsible for talking about this and discussing this so on and so forth right so it basically erods at the credible neutrality of ethereum's monetary policy if you change it too often now as I said etherum monetary policy is minimum viable issuance and up until this point we have stuck by that we've basically only reduced issuance to the minimal amount that was viable to keep the network secure now the proposal that's been put forward here is actually in line with that because it proposes capping the amount of stake on the

network and also lowering issuance to reflect that in order to lower the yield overall so it does actually fit in with that Paradigm of minimum viable issuance here but the issue that people have with this proposal and with any proposal to change the monetary policy is that they think that the damage that it does to ethereum's Credible neutrality as as a network in its monetary policy um you know as as as a credibly neutral thing uh vastly outweighs the benefits that we could see here because you have to think about where eth is as an asset today where the ethereum ecosystem is as a an ecosystem today so there are two main factors here if you were to change the monetary policy today or two two social contracts that you kind of break here I guess so you don't break the minimum viable issuance social contract with the

proposal as it stands today at least in my view but you break the social contract around staking so right now people assume that they're going to be able to stake with no cap uh and that's not just people it's also the uh staking pools out there right they assume that they're going to keep being able to bring in more Stak keep growing themselves and there is a baked in Assumption there that they're able to do this as part of the free market economy there's not going to be any kind of I guess like invisible hand or very visible hand in this in this sense that comes in and Alters this social contract so that's the first thing that you would potentially Break by putting in a change like this and the second thing that you would break is maybe some of the institutional adoption that we've been

seeing because the institutions looking at eth right now as an asset uh is basically twofold they look at it as an investable store of value and of money to get exposure to the ethereum ecosystem and then they look at it as a way to to essentially offer a yield right via staking now as I've said before even if the ETFs get approved on May 23rd I don't think they're going to get approved with staking but staking will eventually come in a form of an ETF and then these institutions are going to want to stake this eth in order to get a yield right and the yield that they're going to get is going to be highly dependent on if this proposal goes through or not and also at the same time if there is a cap on the amount of St ether can be staked well then

essentially like it becomes a bit distorted here where essentially any one new that wants the stake can essentially I guess like buy existing stake off of the off of the um the network in the form of an LST or LRT or essentially they have to they basically wait until someone leaves and then they can enter sort of thing at least based on the on the current proposal so and I may be getting some stuff wrong here that's why I suggest you go read them for yourselves but that's the kind of I guess like tldd here on why people have issues with it and why I guess people believe that it shouldn't happen that the E issuance curve should be just the way it is today and it doesn't really uh require any tweaking doesn't really require any changing and by changing it we essentially have a lot of negative

externalities uh that I just described that shouldn't be uh I guess realized at this point in time because we fought so hard to get e to this point to be viewed as a money and a story of value and by compromising on that we basically erode a lot of what we fought for over the past now I don't want to give my kind of permission my position on this because like I I don't want to muddy the waters here with what I think about this and I don't think my opinion is really relevant here I'm glad to see discussions happening but I think that people really need to understand understand where each party is coming from in this sense and that was the point of me just discussing all of that you know you have one side of things where people are like we don't want to

change the monetary policy at all because of the fact that it it it erodes ethereum's credible neutrality it erodes its uh I guess um status as a money and as a story of value and it's just not something that people believe is critical then you have the other side of things where the researchers are basically saying well we believe it's critical based on a couple of assumptions that they've made now I'll dive into what the actual proposals are so the actual proposal itself to me studying it learning about it talking to uh the you the researchers who have proposed this is basically that based on the assumptions that they've made that a lot of eth is going to be Stak and a lot of is going to be stake with lsts their proposal would basically just bring forward a reality that will eventually happen anyway and what I mean by this is

that let's say like 80% of eth is staked right we can be fairly confident that almost all of that is going to be staked with LST LST or LT protocols it is not going to be solo stake solo staking is always going to be a minority here and I've discussed this before you know various reasons as to to this is so I'm not going to rehash that now but that's the assumptions that they're making at least the two major assumptions is that most of the E is going to be staked eventually you know maybe in the next couple years or something and then most of it is going to go to lsts and lrts I think that the assumption that that 80% 90% or even 100% of eth is going to be staked is a stronger sorry a weaker assumption than the assumption that most

of it is going to be staked with lsts and LTS I think that we can all agree that you know going forward most stake is going to go into the existing liquid staking liid reaking protocols but I think there is a lot of disagreement around how much stake is actually going to go in is it going to be you know 50% is it going to be 80% is it going to be only 40% like there's a lot of disagreements there but those are the two assumptions that we're working off of here now let's assume that the reality comes to pass that 80% of eth is staked well at that point or 70 80% what whatever number it is at that point we've basically uh I guess like gotten to the same reality or the same I guess position that we would have gotten into if the proposal went forward because

essentially at 70 or 80% e State the yield would be very very low for everyone because the yield I mean the overall e issuance goes up as more eth is staked but because there's more e Stak you have to pay out more stakers you have to pay out more eth in the yield so the overall yield for everyone goes down and I'm just talking about the consensus layer rewards here I'm not talking about the execution layer rewards because the consensus layer rewards is the eth issuance is the new eth issuance the execution layer rewards is uh fees and um and me right so it's basically the the the tip version know the fees and the M Revenue here but yeah as I was saying if we get to like 70 80% e Stak essentially we just basically get to the same future that we would have

gotten to if we had this proposal in place anyway where there's low yield being uh I guess given to to all stakers and also LST and L protocols uh would remain dominant so the way I view this proposal is that the researchers are trying to find a way to essentially bring this inevitable future forward but do it in a way that is less bad than it would be if we didn't put this proposal proposal in because not putting this proposal in is a decision keeping the status quo is a decision you know you can't just say that indecision isn't decision it is like not making uh not putting this proposal in is a decision and it has consequences based on you know both reality and assumptions of what reality will look like into the future so that's how I'm viewing this whole thing is that after speaking to

people I I I think that they don't actually believe that this is a good proposal so to speak they believe that it is a less bad I guess like less bad uh reality than we would be in if we weren't to put this proposal in and I don't know what my stance is on that just yet I don't know if I agree or disagree with that yet but I think that the main issue and why this discussion has become so heated is because of the fact that people don't understand what the actual proposal is all they've seen is the researchers saying oh we need to alter or we need to tamper with or we need to change the eth issuance curve in order to satisfy some things based on assumptions and everyone's losing their heads over it they're like no we can't change the eth monetary policy because

of such such such reason and they're coming at it from an emotional standpoint rather than an objective standpoint and I understand why because if you feel like your eth investment is being I guess threatened by the fact that you you feel like a proposal to change the issuance would hurt ethereum's or eth's I guess stance as a money and as a story of value then of course you're going to be emotional about it and I totally understand that but what I do ask of people I guess like if you're part of this discussion or if you're trying to be part of this discussion is try to remain objective here actually read what the proposals are and actually understand that at the heart of it the proposals really are just bringing forward a few future that is probably going to happen anyway I'm not going to say it's 100% going to

happen cuz we don't know what the eth terminal eth stake rate is going to be right but I think that the the assumptions being made are not too wild the assumption that more and more people are going to stake over time and more and more people are going to stake with lsts and LTS are not wild assumptions in my eyes maybe it's wild in the the timeline here because you can debate the timeline like does this happen within the next two years or does this happen in the next 5 years or 10 years like and and by this I mean do we get to 70 or 80% e Stak on that timeline that's I think the main point of debate is that I think we all can agree that more and more e is going to be staked over time but the two disagreements is are we

going to get to like 80% e Stak and what's the timeline to get there I think those that's that's the really the heart of it from what I've read from people because there's a lot of heated discussions happening on this both on Twitter and and private circles that I'm in and there's a lot of good points being brought up on both sides but I think people are talking past each other where essentially that you have the the no Camp talking from the perspective of we shouldn't change E's monetary policy at all because of such and such reasons and the ones I just outlined for you guys and then you have the other side where they're like okay well if we make these relatively safe and and not wild assumptions that this is the going to be the reality in the end anyway why not deal with it now then wait for this

reality to eventually kind of come to pass and then it's much harder to deal with at that point because for example if you want to cap the percentage of e Stak at 40% and we do that today right then we're basically acting on the assumption that uh more and more if it's going to be staked but we're going to be able to cap it at 40% and then that's it basically right because today it's less than 40% and then we'll be able to to cap there so there is a defined path there but if we get to the point where 80% of eat the Stak and then we're like oh we need to cap it now you know let's put the cap in let's change the issuance curve now well if you cap it at 40% then that basically means that you need to to bleed out 40% of the E Stakes

because it's already at 80% right so that's what I think the researchers kind of worried about is that we have to make assumptions here but if their assumptions are right that we get to 80% of e stake within the next kind of to 3 years you know by that point it's just way too late to implement a change like this so that's why they wanted to get the change into Electra that's why they've been pushing to get this change in as soon as possible is because there is in their eyes an existential maybe not existential but like a critical risk here to the network in terms of you know how you view it from a security perspective but also how you view eth as an asset in terms of eth's use as a story value as a money and not being supplanted by an LST or an LRT so there

is a lot of different things happening here guys there's a lot of different discussions Happening Here and I think people are talking past each other because they're arguing from different points uh and I will say that my stance in particular is that I mean not with regards to this proposal itself but my stance in particular is that yes there should be an extremely high barrier to change its monetary policy extremely it is the one thing I believe on the network that should be the hardest to change out of everything else I I I'm in that camp firmly and I think the researchers are also in that camp mind you like I don't think I don't want to speak for them but I don't think I think it should be easy to change the the monetary policy they understand all of the arguments that people are bringing

up so yes it should be an extremely high barrier to entry but on the second part if there is a well reasoned risk to the security of the network to the functioning of the network to the I guess value of e as a story value as and a money which I actually think that these researchers have well reasoned about it then we should pay serious attention to that and we should actually uh you know maybe forgo the uh the notion that it should be you know really really hard and it should be an existential risk to the network to change the money policy and understand that if we wait for an existential risk to actually eventuate then it's probably too late at that point in terms of viewing it from this lens in terms of viewing it from the lens of what these researchers are viewing it from so

hopefully that summarizes all of that for you I know I went on for a while about that but it is obviously a big issue within the ethereum ecosystem right now it is something that's being debated um but I don't as I said I don't know where I stand right now on this I'm trying to I guess ingest or digest all of the arguments being made on every side but I as like the one thing that I'm very hard stanced on is that it should be very very hard to change the ethereum monetary policy it should not be easy to do that and I don't think you'll find anyone that actually disagrees with that notion I think that you'll find that there are people who come at it from a different angle you know the research angle the Community member angle The Ether a story value

money angle but then you have the the the kind of I guess like shelling point that yes it should be very very hard to change the monetary policy so hopefully that gives you guys a summary on all of those discussions happening there but as I said I highly implore you to go and read the blog posts they're all available in Mike's post uh and there's a lot of content here there isn't just blog post there's also the podcast that Anar and Casper did with hazu uh and I think once you digest all of that information you'll get a much better understanding of what's actually being proposed here and why the researchers feel that it is an urgent thing that they feel should be in the Electra hard fork or should be in the Petra hard fork or potentially the one that comes after it but yeah anyway I'm going to end my

kind of rant on that there you can go read these for yourself I'll link it in the YouTube description below for you to do so all right so moving on to some layer 2 discussions so base over I guess like the weekend had an absolutely monster trading day on uh its uh on its layer 2 here and you can see uniso tweeted out that uh there was $1 billion of volume done uh trading volume done on Unis swop alone on base yesterday I believe uh this was the um this was May 31st here that's crazy guys and you can see how crazy the growth is it's really all happened in March like it really is b/ l2c right now where people have finally realized that hey okay well layer 2s are cheap now so let's go and

use them because you can actually see it pretty much happened as soon as Denon went live like Denon went live on March 13th and you can see immediately after March 13th it has been up only in terms of like trading volumes and activity on the on Bas and on I guess like l2s in general and I remember I tweeted about this by saying that I believe that 4844 came at the perfect time and acted as a nice stimulus package for ethereum where he basically reduced the fees massively you know fees went down from a dollar or more of for a swap down to subc for a swap and they're still pretty cheap right now but they are quipping up I mean if you look at Bas on gas fees.

I'll just bring this up for you guys you can see that to do a swap right now is approaching 10 cents and this was expected obviously because data costs are still low uh with blobs but the execution costs have gotten higher and bass is actually going to be increasing their gas limit again this week by another 50% so that should bring fees down again but it's all this concept of induced demand where essentially you increase capacity you bring more demand in because there was demand that already existed it just was lat in demand and now that's filling up the the the the kind of block space again so it really is as I've mentioned plenty of times a cat and mouse game here of just chasing this on the um the execution side and then eventually we're going to get to the part where data cost start going up

again because blobs will be in demand again people will be out beting each other for blobs not people but like the layer twos the rollups will be out bitting each other for blobs and then the the data costs go up as well as the execution costs and eventually we get back to where we started and that's a good thing that means that we've basically grown the p and now we're at the scaling limits again okay so how do we Rectify that well we increase the size of blobs we increase the count of blobs and we increased the execution side as well in terms of the um scaling the execution side in terms of Base increasing its gas limit and doing other things and then we can and then these rollups can also do better things like more compression on the on the data side of things to to minimize their blob

footprint so there's lots of different things that can be done here but I said this like way before 4844 went live where I said that yes it's going to be an initial kind of collapse in trading costs or a collapse in fees but then that's going to slowly creep up over time given that the fact that we've just opened the the l2s up to a huge amount of demand and there was going to be an L2 season I mean I put out this tweet in June of 2023 where I said that there was going to be an L2 season within the next six to 12 months due primarily to 4844 but also due to Bas because Bas is that shelling point for people where they're like oh my God you know coinbase is is building base and coinbase is going to bring everyone on chain so let's get on

base and let's trade the coins on there and there's a lot of meme coin Trading going on of course you know DJ has gone nuts I'm going to talk about DJ in a sec cuz I know it's a bit of a bit of a controversial thing here but yeah I mean in terms of like costs they're going to keep going up uh slowly over time because the demand's going to keep coming in but as I said that's a good thing that means that the ethereum scaling road map the rollup Centric road map is playing out as expected and we can keep tweaking these things in terms of uh you know adding further scalability by increasing the size and count of blobs as well as scaling on the execution side of things there all right speaking of dgen so this is being controversial because dgen is a meme

coin I guess but I think that it's more than a meme coin and I'll explain why I do want to disclose here that uh I had an initial airdrop that I got from dgen from U being tipped dgen on farcaster originally it was worth like I guess $3,000 or something and I ended up holding it and it ended up being worth a lot more I think before I sold so I sold half of it over the weekend but before I sold it the total was about $110,000 that and it's on sle e you can check this for yourself I'm not just doxing myself here um and I ended up selling half of it which was uh because I was like you know this is this is kind of crazy I want to sell half of it because I had a target of if I get to

100K worth of DJ I'm going to sell it I only sold half because I want to keep half because if you hold D gen it gives you a tipping allowance each day and I enjoy tipping people on on farcaster and it's just a community that I like being a part of so I've kept half of it for now when I sell that I'll I'll tell I'll say it in the daily grade this good Channel there but I just want to disclose that because maybe that you know is is impacting my view on dgen here or it was impacting my view on um on what dgen is uh but I also will disclose that I was offered the uh I guess like a angel investment round that djen did and I rejected it I mean I got on a call with the founder great guy love what he's building and everything

but I said you know I can't invest in mem coins you know I had the air drop at the time I was like you know whatever this this was this would be my exposure to De gen but I I can't you know invest in meme coins it's not part of my thing there so I did pass on that and I believe that that investment went up like 50x if you were part of that round so again like there is a I guess a potential conflict here because I still own the some DJ tokens but I did pass on on the round there uh because the fact that it doesn't fit in with my philosophy of of what I invest in and never invested directly in meme coins so yeah but anyway with that out of the way I do want to discuss dgen generally so

for those of you who don't know DJ started off as basically a tipping currency on faras it was something created by a game a guy named jessic I think that's how you pronounce his name uh and it was basically just this fun thing for people to to play around with on far it was very small at the time it wasn't launched as kind of um something that was supposed to be like a a proper meme coin or a proper thing that People Pumped and dumped or whatever like a lot of these meme coins are today and it wasn't really promoted heavily or anything like that it was just some fun thing to do now of course over time it started growing and then the founder was like okay well you know I want to take this thing further like on the call with him uh this guy was like I was just

doing this thing for fun basically and I just wanted to create something fun on farasa but now it's it's growing and now people are interested in investing in it so hey you know I'm going to take some investment in and basically build this thing out and that's exactly what he's done so djen actually isn't just a tipping currency on farcaster anymore they're a whole Eco system so they launched their own L3 called dgen chain as an arbitrum orbit chain on top of base and this is pretty cool because this is the like modular road map playing out so essentially what Deen chain is is that it's a layer three that sits on top of the base L2 and it uses any trust for data availability so it uses offchain da and by and because it's doing that it means that the fees are incredibly cheap on

on this L3 and the the block times are very very quick as well so the transactions are very very fast uh and really it's just an application specific chain for dgen where essentially what's been funny is that people have bridged their dgen tokens there and DJ is the native gas token of this L3 and then they're also buying other meme coins that have been made on D gen chain so we've basically made like an application specific chain for meme coins now I guess the other side of this is that people are debating know why do you need an L3 for this why couldn't this just just being L2 uh and you know it being in L3 and using offchain da it's just like completely centralized so why do we even need this thing to begin with and so on and so forth to those arguments I

basically say well as an L2 it wouldn't be as cheap as an L3 because you would be paying the direct data costs you wouldn't unless you're using I guess like an offchain da here it would potentially be I guess like slower and it would be uh something that essentially is more than you need for What DJ and chain is trying to be because DJ and chain is trying to be a very application specific thing whereas l2s can be a lot broader than that and I i' I think I've said this before where I I get the point that people say okay well you can do an application specific chain as an L2 but an L2 is more involved than than an L3 here um and also when it comes to very specific use cases like DJ chain for example I feel like that being centralized or I guess

like mostly centralized is not really a big deal and I say this because I think when people are buying meme coins or I guess like gambling on Meme coins you know there been this discussion for a long time that people are like oh well you know people don't care about decentralization for meme coins they just want to have like cheap fees and fast transactions and I'm like okay well you know that makes sense like I don't think anyone gambling on these meme coins are like I wish my meme coin was more decentralized I I don't think people really think like that so in that world where that's the reality why wouldn't something that's like very centralized win right why wouldn't because if if you're very centralized you can do the cheapest fees and the fastest transactions so why wouldn't that win and we've seen that play out

like DJ chain it has a lot of really great activity or great metrics I should say right now and a lot of activity happening on it as you can see from this tweet in front of me there's been over 2 million transactions millions of dollars bridged you know 24,000 active addresses I think it's even more than this now because this this is stats from March 30th so two days ago now so when you kind of take that and you see that playing out well that's the reality like not everyone's going to care about decentralization especially when it comes to mean coins and I totally get that and I totally understand that even as a decentralization maxi myself I totally understand from like this perspective it doesn't really make sense for a mem coin to be decentralized right for or for a for DJ chain to be

necessarily decentralized yeah and maybe people will attack me and say oh well that's going against you saying you're a decentralization maxi it's like yeah okay I get that but at the same time I try to live in reality I don't want to live in like la la la Dreamland as you know people think that all the East people just live in la la Dreamland I mean for anyone who been who's been listening to the refuel for uh for for years now you know that I always try to stick with the reality and the facts yeah even though my ideals fall more into maybe the I wish everything was decentralized land um I I I totally understand why there is a trade-off here on things right decentralization is costly decentralization does not come cheap and when you're talking about things like a tipping meme coin on

farcaster I don't necessarily believe that it has to be like hyper decentralized right and it goes back to my analogy where essentially ethereum L1 is like the uh you know like a like a nation state Army and uh when you go onto layer 2 you have that nation state Army protecting you if it is a more involved L2 but also it's probably you know less decentralized and less secure than ethereum L1 and then you go up even in higher layer to L3 well then you you're getting into a territory where okay well the the nation state Army is no longer directly protecting you right but hey maybe your local police department is directly protecting you or maybe you've got like some home security that's directly protecting you so it's kind of those loose analogies around how much security you need and I think that the that l3s make sense for those sorts

of things but there is a large debate around do we even need l3s or not and I think that it's kind of funny to like the polygon guys saying you know we don't need l3s we don't think this is actually beneficial and then you have the arbitrum guys being like well no we think l3s are beneficial for such and such reasons and it's a really good debate that I see happening right now but yeah those are my general views on on kind of DJ there and the dgen L3 and everything that's that's happening there whether this is sustainable or not is another thing entirely I'm not saying that you guys should go and buy D gen or get you know or should go and do anything speculative with it that's up to you if you want to do that but I disclosed my potential conflicts here I

disclose that I think it's a really cool thing cuz I've have fun with it you know I'm having fun with it on um on farcast and I also think that this you know DJ chain is the first L3 that's actually has a lot of activity on it and I think that's showing us that people are you know are happy to use this stuff people people want to use this stuff people uh don't really care about decentralization when it comes to meme coins right and I think that when you think about it like that you start to open up a wider design space here and much more experimentation and on that note actually the other thing that I wanted to talk about was um was D here which is a payments protocol C essentially or trying to basically do really cheap and fast payments on in the

ethereum ecosystem here and trying to do them cross chain as well you can see here that with this um with this uh with with relay protocol here within your demo wallet or within the demo ecosystem essentially what you can do is you can uh do payments between like other optimism and base or optimism and arbitr right cross chain payments here but also the reason I wanted to talk about payments in particular was that I think payments are are a pretty good use case for l3s as well or for an L2 that's really really cheap but maybe more centralized because most payments or the vast majority of payments are going to be micro payments or small payments like for example if you're purchasing uh coffee you don't need to do that on ethereum L1 like your coffee purchase does not need to be secured by an you

know the equivalent of a nation state Army and you're definitely aren't going to be doing coffee purchases on L1 because L1 is super expensive but then on L2 it gets a lot cheaper so maybe it makes sense to do them there but then on potentially in L3 it gets even cheaper here and yes maybe it's centralized but that's fine for payments like I actually don't think payments need to be you know fully decentralized I think as long as payments are like non-custodial as long as payments are running on a uh you know a layer that you can verify that you can kind of I guess verify that he's acting uh not maliciously and he's acting with a trust minimized way I don't think it's a concern if the data is off chain right I don't think it's a concern if there are some centralized controls in place

like a multisig for example from the company operating at at that at that point there so that's how I generally view these things but you can go check out demo for yourself it's a really cool payments payments ecosystem I'll link it in the YouTube description below for you to do so um but yeah last thing I wanted to talk about here cuz I know I've gone over time is a tweet that I put out just before where I said and this is regarding the markets I said I've been in crypto for quite a while from 2013 to 2017 on and off and then from 2017 to today being completely obsessed with ethereum I can say with full confidence that this is by far the weirdest bull market that has ever ex that crypto has ever had not only does it seem like the fouryear cycle is dead but anyone trying

to do fundamentals based investing is having a real bad time uh for the most part Market is still Max PvP with the majority of players being Crypton natives which would explain all of the above and then throw in the ETF which explains why BTC has been so strong I won't really believe that retail is here in any meaningful way until we see the entire Market going up together not these isolated sector specific pumps that are very obviously pushed by crypto Natives and just involve a hot ball of money rotating around so you guys know this has been my general thesis around this bull market for a while now where people are saying oh you know there's so much retail in in right now it's so frothy so on and so forth and I challenge that completely I very much don't think that there's many retail in

right now there is maybe like 10% maybe 15% of of of retail investors that came back but I think a lot of these investors are ones that already know crypto natives they you know they may be a friend of a crypto native I really don't think we're seeing the same inflow that we saw in like the first half of 2021 where essentially you have like a mass I guess inflow of these investors that only come in when it's a crypto bull market and I've talked about this hot ball of money before a lot where essentially these meme coins that are pumping guys like these are mem coins that are getting shied on crypto Twitter they're not meme coins that have started on like Tik Tok or YouTube when you start seeing meme coins that no one on crypto Twitter is talking about going absolutely nuts that's when you can kind

of get an inkling that okay well the Normy retail is back because those meme coins will have started on Tik Tok where crypto Twitter is you know isn't part of and some of these include things safe Moon last cycle where I remember this thing safe Moon it pumped ridiculously and by the time crypto Twitter had heard about it it was already in the billions of market cap and where do you think safe Moon started it started on Tik Tok so until that happens until the you know the non- Crypton native things start going up in value until we start seeing the whole Market going up together rather than these very obviously shielded kind of meme coins on crypto Twitter that are pumping then I don't believe that the vast majority of retail here I do believe that it's just a hot ball of money rotating around and the

exception obviously BTC but we have a very obvious example as to why BT or very obvious explanation as to why BTC has been pumping and it's the ETF like no one can deny that the ETF is directly tied to BTC going up in value and it would also explain a lot about why eth has lagged the market generally because they don't want to be in the safest assets right they want to take risk they want to go down the risk curve and eth I think by far is besides BTC is one of the safest assets in crypto so the reason why ether's been lagging is because everyone thinks oh well you know I've got time to buy eth it's a safe asset you know I'll just go speculate on these meme coins and then I'll sell it back to eth before eth pumps sort of

thing and that's why eth moves so so violently I mean eth moved from 2,000 to 4,000 very violently right and now we're kind of consolidating in the 3500 range here but I do think that the next move on eth is going to be just as violent it's going to go to all-time highs and be on there and um and that's because people fomo in they're not exposed to eth anymore and they're like okay well you know I'm done down the risk curve now I want to take profits back to eth I think that's going to play out over time but yeah that's why eth moves uh slowly and then violently because eth is considered a really safe asset and when you don't have new money coming in and you in a big way and you have this hot ball of money coming in uh just hot ball

of money rotating around they're not necessarily having fomo to rotate into eth they're having fomo to rotate into all these meme coins obviously because they've been going you know they've been pumping for so long they don't want to miss out and they want to use those to stack more eth and and as I said to explain the BTC strength is the e F and that is new money coming in the ETF has brought new money in but that money is not the regular money that we're used to that goes into you know coinbase for example and buys coins on there and then Bridges out from coinbase and then buys uh coins on chain or whatever that money is uh a lot of money that is in people's retirements accounts that is a different pool of money so you you now have two distinct pools pools of money you have

the ETF money and you have the the Nori money and I guess like the third maybe maybe there's three actually and then you have like the Crypton native uh dgen money so right now we really only have that hot ball of Crypton native DJ money in you know on chain doing things like rotating between mem coins and we also have the the the um BTC ETF pull of money that is only going into BTC via the ETFs so eth is kind of stuck in the middle right now where Crypton natives want it but they don't want it now it's not like a fomo to get into it right now and also eth doesn't have an ETF yet so eth doesn't have the ETF money coming in but that's going to change at some point where essentially e eth will have the ETF money coming in and eth will also

have the money from natives because of the fact that they're like okay I'm done with these D gen stuff I want to go buy eth because I need to stack more eth because it's a safe asset to keep Assets in so on and so forth so that's how I explain the current kind of Market Dynamic here and that's why the bull market has been so weird because we have a distortion of the ETF money going into BTC only and then that being a wealth effect for Crypton native BTC holders to rotate out of BTC into more dgen stuff and they're kind of skip over eth because they consider it to be too safe but eth is not going to I guess like suffer from that over the long term it's actually really good for eth over the long term but over the short to maybe

medium term it can be frustrating because you're like oh why isn't eth moving and I think that I just explained why eth isn't moving like other things are but you know I'm still hopeful that eth is going to get an ETF by May 23rd here but even if it doesn't you know I I don't think that's necessarily bearish for eth I think that everyone knows that eth is getting an ETF eventually anyway it's just like a timing thing here um but the ETF stuff obviously I've talked about to death y have I'm not going to rehash that now but that's my general view on what's going on with the market here so on that note that's I'm going to end it there for today so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up

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