ETHGlobal Paris finalists, MEV-burn chat and more - The Daily Gwei Refuel #629 - Ethereum Updates

Transcript

hello everyone welcome to another episode of daily great review where he kept the latest news in ethereum ecosystem I'm your host Anthony 24th of July 2023. all right everyone let's get into it so just a friendly reminder that they most likely will not be a refuel for the next three days so Tuesday Wednesday Thursday because I'm going to be traveling in Sydney now I mean I say there most likely won't be one because it just depends if I have time to do one and if I kind of like have been able to keep up with everything happening while attending the the various events over the next um three days uh but yeah I mean don't be surprised if you see one but as I said most likely there won't be one for the next three days and I'll just catch up on everything on Friday so

just a friendly reminder there now I guess jumping into the news from the weekend so we have an update here from parathosh all about the devnet 8. so he said yeah time for devnet updates again we had a sepolia shadow Fork this week this Shadow Fork successfully added eip4844 support to sepolia with a subset of clients sorry this wasn't about the the evidence this is actually about Shadow forking the existing test Nets which obviously is something that has been happening for a little while now we did this a lot leading up to the merge uh but yeah it seems like it was a success uh parathos continues and says we caught a few config related issues early on and we're able to fix it without issue almost all clients are able to stay at Head Post Cancun this test also helped us update all of our

tooling so that we're ready for dencoon shadowfox when the time comes so yeah it seems like everything went quite well here everything's moving along nicely as I mentioned last week there doesn't seem to be any indication that erp4844 is having any show-stopping moments during any of these devnets uh and these kind of like testnet Shadow Fork seems like everything is running smoothly and as I mentioned last week I still think we can expect Den to go live you know October November this year there hasn't been any dates given by the core devs themselves but this is my own estimation as I've said before it's I don't think it's going to happen in December if it does for some reason it'll be like very early December obviously because of the holiday period and it's you know it's already almost August so definitely not going to be

happening in in August or September so you know it could be it could be late October but I'm I'm targeting November right uh November definitely seems like the uh the timeline there but yeah anyway you can read Tony's uh not Tony's you can read parathos's whole tweet thread here uh I'll link it in the YouTube description below now the reason why I said Tony's name is because he's back again with a tweet here all about Mev of course and he starts off this tweet by saying typically validator rewards remain quite consistent and predictable in the long term however the introduction of Mev boost has added an unforeseeable element to this equation for instance in the past 14 days and nearly 20 of validated Revenue has been generated from Mev Boost payments significantly influencing ethereum's economic Dynamics therefore it's

sensible to consider burning a portion of the Mev Boost payments instead of conducting an Unchained Lottery by doing so it's the etholders not the individual validators who benefit from xsmev and this of course talks about me V burn which is a proposal all that was put forward a little while ago by adamothy and Justin Drake I believe are the two uh kind of like leads on that proposal it as far as I know there's not an actual EAP for it yet and hasn't been kind of like uh uh thought off to be included any future network upgrade just yeah and there's still debate on whether Mev Byrne is actually needed uh you know what the kind of trade-offs are here but I think Tony makes a good argument here in that you know one-fifth of all validator rewards is coming from Mev Boost payments right now and that

distorts ethereum's economics right it distorts ethereum's crypto economics and it definitely is not something that we want to see continue to proliferate from a network health and safety perspective and This falls into the broader discussion around Mev and you know how much Mev we want to eliminate from the actual protocol and we're doing things like PBS and and and stuff like that to eliminate the negative externalities there but you know is Mev burn uh something worth doing and Tony argues yes it is because it it re um re-jigs the rewards and basically uh takes them from validators and gives them to all etholders obviously there is an a one-to-one overlap with etholders and validators because to be a validator you have to hold eth right like by by the very nature you have to hold eth uh

whether you're a solo validator or otherwise you have exposure to eth so really at the end of the day all this is doing is I guess like lowering the overall potential Revenue to validators because they won't be getting the or most of if not all of the Mev payments anymore but in turn they get uh the value over the long term eth going up in value against USD because of that extra burn there and this is this is the same kind of logic that's applied to just the fee burning in general via aip1559 so it's like this different school of thought like would you rather have eth going up or slowly over time due to an additional burn mechanism and also the ethereum network become overall

healthier by eliminating external externalities of Mev or would you rather continue to earn that extra bit of yield uh you know it's 20 so it's not like a bit of yield it is a healthy chunk of yield but would you uh rather uh continue to to um receive that at risk of the network potentially becoming unstable at some point in the future due to Mev Dynamics distorting ethereum's economics um but you know you get that extra payment there and that's where the the controversy comes in because I think a lot of the time people generally it doesn't matter who they are I struggle to think of the long term right for erp1559 it was easy for the community to say yes to that because it was um a fear of a new that was being taken from

Miners and given to I guess like the rest of of etholders right whereas when it comes to validators or stakers it's a different discussion because a lot of the ethereum community overlaps with being a validator or a Staker generally right where it doesn't matter how they're doing it there's a lot of overlap there whereas in the past uh the miners actually weren't really part of the core ethereum Community they were part of their own community and really at the the day there were pure profit maximalists they didn't really care about ethereum or eth at least from my experience whereas validators and stakers on the network definitely do care about ethereum and eth and obviously they are exposed to staking Revenue via staking their Ethan any number of different ways and that's why there is a bit of more controversy here

in saying all of that do I think Mev Byrne will end up going into the network I I think so it's difficult to know what form it's going to end up going in uh via you know is all the Mev going to be burned or is only a portion of it or is it going to be like a slow roll out you know it begs the question of you know what the rollout is actually going to look like here is it going to be super controversial is the community actually going to get on board with it I would say eventually the community would be on board with it it they may even be more on board with it in a bear Market than a bull market because in a bull market you would expect the Mev related payments to go up because of the fact that more

on-chan activity leads to more fees leads to more Mev right so yeah it remains to be seen what what's happening here but you know will it be coupled with another upgrad like will PBS and Mev burn go live at the same time because uh depending on how PBS is implemented will that eliminate some of the revenue as well of Mev payments it really depends and it also depends on how much eat the steak too because is everyone's yield going to go down or does the restaking landscape look like there's a lot of open questions here but if I had to guess I would say that Mev burn would eventually go in in some form but yeah anyway you can read Tony's full tweet uh here I'll link it in the YouTube description below for you to check out all right just a heads up the kzg

ceremony has been extended again for another month so if you haven't contributed yet you will have until the 23rd of August at 11 PM at UTC here to contributes so you have another month starting from yesterday to contribute to the kzg ceremony if you haven't yet and it's funny because I guess like apparently according to Carl here there is additional demand and uh for people to participate as part of this round which is kind of funny to me because it has because the kzg ceremony was already open for quite a while there and it seemed like everyone who was going to contribute had already contributed but I mean if more people want to contribute to it and we have the time because obviously 4844 is not going live until probably November then why not extend it

here so yeah I guess like it's extended you can go to the normal website to check that out there it's at ceremony.othereum.org all right Ben Edgington has published the latest chapter of his E2 book which is the consensus chapter he says yeah the consensus chapter is finally coming together since the last update I've added sections on both lmd ghost and Casper FFG and then he says the Gaspar right up coming soonish should be fairly short and most of the issues in fixes stuff is already covered in the annotated Fork Choice section so that's mainly refactoring so for those of you don't know lmd ghost and Casper sffg are the two of the mechanisms that make up ethereum proof of stakes consensus mechanism which is called Gaspar lmd a

ghost is uh the consensus mechanism and Casper FFG or friendly finality Gadget uh sorry I think lmd ghost is the fork choice and Casper FFG is the finality Gadget so that's what gives us our finality here so if you want to learn all about that and dive deeper into it you can check out Ben edgington's book here it is completely free to read and I'll link it in the YouTube description below and he's got the different sections here you can click on lmd ghost you can see lmd ghost is a fork Choice rule used by Naruto to determine the best chain and then Casper FFG it adds finality to the eighth2 consensus protocol I love that he's still calling it eth2 um for those of you don't know Ben Edgington had a newsletter called what's new in eth2 for a very long time basically until the merge happened uh

talking about all of the progress that eth2 was making and then of course because we merged the two chains it's no longer E2 it's just ethereum but he was always quite I don't know if stubborn would be the word but he was quite adamant about continuing to call it East 2 which I I respect the uh the um he's a kind of like uh he's uh his commitment to the cause there but yeah you can go read these two sections if you want to learn more about this it is quite technical but it is interesting uh if you're interested in those sorts of things so I'll link it in the YouTube description below for you to check out all right the eighth Global Paris finalists are now live and detailed in this Twitter thread here so there is a bunch of different projects here I

managed to check out a fair few of them a lot of them are really really cool so I'll link this in the YouTube description below for you to check out uh but the winner of the eth global Paris hackathon was actually ZK microphone which as detailed by uh one of the hackers on that project here and uh Manoj he said in two days we built from scratch an anti-deep fake microphone and one East Global Paris this product can prove that audio was recorded on real microphones and legitimately edited no deep fakes no disinformation and you can check out more info about how they did this in their eth Global um kind of post here which I'll link in the YouTube description below uh for you to check out now the reason why I guess this one and why this is so interesting is because we live in a world where you

know deep fakes uh using AI is prevalent and is going to become even more prevalent and I've already seen plenty of people on the internet get fooled by these things right whether they be AI voices or AI generated videos or anything like that it's very easy to fool the Casual viewer because really if you have a particular bias especially when it comes to things like politics you can generally fool someone pretty easily because you just have to appeal to their bias right whether it's someone saying uh whether it's a politician saying something that you think that they would say anyway and that you want to hear you're more likely to believe that than than something else right now obviously given that this is going to be a huge issue going forward for verifying what actually is real and what's fake

and what's AI generated we need tools like this so like what what um manujini's team have built here is basically a way to prove that the audio was actually legitimate and wasn't just AI generated or generated in some other way that it was uh it was a deep fake and I think audio is really going to be the breakout here because usually with videos you can kind of tell right it's it's probably much easier to tell with videos than it is with audio with audio I've already like I it's funny I was watching um on YouTube for a little while there was this thing where uh former presidents and and current presidents uh and the current president so like Biden Obama and Trump and sometimes George Bush would be on there and they were like rating the you know

video games or doing like tier lists of video games or they were playing Mario Kart and bantering with each other and I'm like holy like these things legitimately sound real like yes if you're listening close enough you can actually tell uh that it's not actually them and obviously the context gives you that it's not actually them then those people are never playing Mario Kart together right but just listening to the audio itself ignoring the kind of the kind of video aspect of it because there wasn't actually a video it was just all audio and the video would be like the Mario Kart track or something like that uh you could legitimately believe that it was their voices so we need a way to basically determine uh what's real and what's fake in this AI world where AI is just going to keep getting better and

better and uh and it's going to be better and better deep fakes and I I guess like that's why I this project one here because it is an Innovative project using zero knowledge technology to uh to basically do this now if you want to know exactly how they've done this you can read the um the 8th level post here and you can read the source code and everything if that's your jam I'll link this in the YouTube description below but definitely something that is very important going forward for not only the crypto ecosystem but I think the World At Large all right so Nexus Mutual over the weekend apparently swapped 27.3 million dollars worth of their eth for a rocket pool e so that's a 14 398th that was swapped into our wraith

uh which and the trade took place on cow swap of course because cow swap is currently the best way to do big on-chain trades I've used Castle a bunch of times for Big on chain trades myself definitely not 27.3 million dollars worth but I always default to using it because it really is um it really is the best when it comes to kind of being Mev resistant and doing those large trades and executing those large trades uh with decent liquidity and and uh very minimal slippage here so not not trying to Shield cow swap too much here but it's legitimately a really great product and I've used it a bunch of times uh and I and I just love using every time I've used it I've had a good experience with it um but yeah this is pretty cool because obviously we want to see decentralized

staking ecosystems continue to grow and we want to see um new eighth coming into staking as well uh not oh not into the existing kind of like large products like Lido coinbase and finance we wanted to see that going into the minority products and I've said before that I think a lot of the growth for the minority products is going to come from new eth rather than eth being shuffled from one service to the other at least over the short term I believe longer term you'll definitely see a reshuffling and honestly over the last couple months we've already seen a pretty big reshuffling from like coinbase and binance to to these other protocols but in terms of getting growth on these newer protocols I think that they should go for the new eth The Ether hasn't been staked yet especially from Dows like Nexus Mutual from projects that have

large eth treasuries that want to put that eth to work and they've done that via rocker pool so just very cool to see this here and very cool to see rocketpool continuing to grow and continuing to get more eat staked with the service all right so optimism apparently is moving forward with two proposals to add ZK proofs to the op stack man how long have I been saying this to you guys for it's it's funny because I remember having this discussion with people and talking about this on the refuel all the way back in maybe 2021 I think or even earlier than maybe 2020 where everyone was saying to me you know what's the point of optimistic Roll-Ups if we're going to have ZK roll up soon or if we're going to have ZK avms you know what's the point of optimistic Roll-Ups

and I basically said to them even back then I said it's much easier for an optimistic roll-up that hasn't existing ecosystem already to add ZK proofs to add validity proofs than it is for a new ZK roll-up or a new ZK AVM to uh form a community around them and that's exactly what's happening with optimism and with arbitrim they're adding these ZK proof capabilities to their networks in order to basically become a ZK roll-up or a validity roll-up depending on what school of um terminology you subscribe to there uh and with these two proposals that optimism is looking at come from o1 labs and risk zero so these um these ZK proofs will be added to all op chains it won't just be the op main net it'll be

added to the op um uh the op stack stack I guess uh Tech stack that all the op chains can tap into so that includes things like base that includes newer chains like um like Avo that I've talked about before uh and any other kind of chains that are building using the op stack they'll be able once this is kind of approved they'll be able to use ZK proofs instead of optimistic or instead of fraud proofs I should say um from my understanding here which basically makes these things ZK Roll-Ups which again as I've said for quite a while now um it was much easier for for the ultimately Roll-Ups to do this than it is for the ZK Roll-Ups to to grow their own ecosystems and optimism and arbitrim definitely both have big ecosystems and we can expect bass to be a really big

ecosystem once it goes live and it's going live soon by the way we're only probably a couple weeks out from it going live for users it is live for developers right now but for users only a couple weeks away way there so great to see this now I'll link this article in the YouTube description below for you to check out there's a GitHub repo you can check out basically uh uh detailing the requests for products for these things and and how this will all work this is just super exciting for me honestly because I've been as I've said I've been talking about this for a long time but I'm also very curious to see what the future of optimistic rollups looks like because if you've been paying attention pretty much everyone is building a ckrop or a ZK AVM no one is really building optimistic Roll-Ups

anymore or a hybrid right a hybrid of a zkrop an optimistic roll-up polygon uh had optimistic well-ups on their roadmap for a while but then they basically said you know what um optimistic Roll-Ups they're cool but it's not worth our time to focus on this because we we should just focus on on zkrops and ZK technology because that's the future and that's what they did right and every pretty much like 90 95 of the projects that you see coming out the layer 2 projects are all based on ZK Roll-Ups or they're using the op stack or or the arbitrim stack knowing that it's going to be turned into a ZK roll up eventually or there'll be the ability to do that there and I think that's just the way of the the way this is going to go um and I think that when it comes to

optimism in particular it seems like they may actually just skip over fraud proofs altogether because they don't have a fraudproof system at all on op mainnet or otherwise right now so are they just going to abandon their fraudproof system and just go straight to to validity proofs into ZK proofs I think it's potentially yes because it doesn't make sense for them to continue to work on something that is going to be obsoleted pretty soon so I know I've criticized them and a lot of people have criticized uh optimism in the past for not having fraud proofs at all but in their eyes they're probably like you know what we'll do it the criticism we'll do it the fact that we won't have fraud proofs but we'll get these ZK proofs uh um implemented and then we'll just LeapFrog over it and I think that's what arbitrim will do as well maybe they

won't do permissionless fraud proofs they'll just do they'll just change to like validity proofs and do permissionless stuff there remains to be seen but that makes more sense to me at least anyway so yeah anyway you can check out this article for yourself I'll link it in the YouTube description below all right last up here and I've left a bit of time here because this is something that I really wanted to discuss today uh Rhett ship here from the gravatar protocol uh asked the question uh today on Twitter he said for which of the following do you think it is okay to have a winner take all or winner take most and why and then he lists a bunch of things such as l1s l2s stable coins dexes lending and liquid staking so I think that the answer is no to all of these generally but I think the

question needs to be reframed a little bit here because an L1 is it there's different meanings to an L1 right like an L1 we know as you know Bitcoin ethereum these old Tau ones or whatever you want to call them out there uh all these things right but they're not all created equal just as I said last week the l2s aren't created equal the l1s aren't either right there is a reason why ethereum R1 is as big as it is and has the most liquidity has the most money on there is the most secure all that sorts of stuff there right there's a reason why people store their wealth on there rather than storing their wealth on some random L1 that has basically no activity on it and you know it can be 51 attack to death like ethereum classic for example and the reason is because ethereum gives you

better settlement guarantees and battle settlement insurances and better credible neutrality better censorship resistant by far than any of these other l1s so I think the question of should an L1 be a winner take all or a winner take most should be split up into two parts there's the L ones just generally right then there are the l1s that are settlement layers and these are things like Bitcoin and ethereum so when it comes to an L1 as a settlement layer I do believe that it should be a winner take all if not winner take most now I'm not just saying this because people you know people may call me an eighth Maxi for saying this or my eat bags whatever it is I'm not saying this because of that I'm saying this because think about what a settlement layer is and think about what a good settlement layer is

and something that the world can trust like if you want to be a global settlement layer think about how much trust people have to have in that in that thing for them to want to store their wealth on that for them to want to do economic transactions on there for them to have assurances that it's going to be around in decades from now and then that it's not just going to fade by the wayside or it's not just going to be attacked or you know it's secure it's censorship resistance so they're not going to get censored on there now out of all the l1s out there ethereum is really the only one that gives you those guarantees it's it has incredible security right has incredible Economic Security crypto Economic Security it has incredible censorship resistance it literally um the defied uh basically censorship that was enforced by or is enforced by

the US government with the ofax stuff right it survived that and thrived and basically killed that um I believe that the uh the out of all the relays only 30 or something a censoring so you basically have a pretty good chance within a block or two of getting your transaction included and that's only censoring the ofak transactions that's not uh the um uh tornado cash transactions right that's not censoring everything so you've got that you've got the credible neutrality that ethereum has built up over the years it's decentralized as hell right there are different teams or all over the world building out the the road map right the independent funding uh you know thousands and thousands of node operators very uh very healthy uh generally um on that front as well so you have all of that right so that means

that people can trust it as a global settlement layer they can trust that they can store their wealth on there today and it'll be there tomorrow they can trust that when they make a transaction it's not going to be censored they can trust that other big institutions in the world will want to use it and there'll be liquidity there for them they'll be able to do these payments people will accept the ethereum network and and stuff like that right and then on top of that you have l2s and and above that want to build on something that they can trust will be there tomorrow that won't rug them that won't go offline on them that will allow them to post their proofs and data to the chain that will be credibly neutral so it doesn't matter what entity it is they have to trust that that settlement

layout will give them the settlement guarantees and assurances that they expect that as I said will not censor them we'll uh we'll secure their transactions we'll allow them to to um to to settle whatever value they want or settle whatever they want on the Chain so in that world I do believe that ethereum as a settlement layer should be a winner take all and it actually has been to this point I'm not including Bitcoin in this because Bitcoin can't do what ethereum can do Bitcoin really has for better or worse but it become a digital gold right and it's never going to be a payments Network in my eye lighting network is a joke but it will definitely be and continue to be a story of value for a lot of people right it has that that same kind of property or

similar properties that ethereum does in terms of like sensitive resistance credible neutrality stuff like that right decentralization all that good stuff there whereas ethereum has that but so much more because ethereum can be a payments Network it can host l2s there can be payments Network on payments networks on it right it can do everything because it has smart contracts because it has a virtual machine it can do basically everything you want it to do yes there's a cost to it and that's why we have l2s to bring that cost down but generally you you know you pay for what you get essentially then so in that world if you just look at the exclude Bitcoin here if you just look at the value of ethereum L1 versus every other L1 out there um and and and you can kind of like look at coin gecko or coin market cap and

actually see this if I go down the list here the ignoring B and B as I said before I ignore B and B because uh B and B isn't just binance smart chain it is also binance the exchange and I do believe that BNB gets most of its value from binance The Exchange rather than BSC um and then xrp I generally ignore as well for various different reasons I I don't really I don't even know what xrp really is or is trying to be at the end of the day I don't consider xrp or Ripple to be a scam but it is really just useless like I I just don't see it doing anything but it has such a large value for whatever reason but if we exclude that if we exclude B and B next on the list would be cardano cadeno is worth 11 billion dollars ethereum is

worth 225 billion dollars so it is worth like 22 times more more than cardano is worth right so the market is already telling you that ethereum is the winner take all of the I guess kind of um uh settlement layer thing or smart contract or L1 generally kind of thing here so I think as I said when it comes to sediment layer it's a winner take all here the rest of it definitely not going to be winner take all l2s as I said before generally you have to split this up as well generalized l2s not going to be met very many of them that succeed uh there's going to be probably less than five that'll that that take all of the activity app chains different story right there's going to

be thousands of those things I don't know what the distribution of activity is going to look like on those but there's going to be lots of those stable coins it seems to be a winner take most right now because tether obviously is is huge it's that 83 billion market cap whereas usdc is 27 billion but I don't know I think it's still early to tell on there it might be a winner take Mauritius because of liquidity reasons we'll have to see dexes it does seem like we're going to take most because unisop is still leading still probably too early lending definitely doesn't seem to be winner take most lending is uh it has a has a few big plays in there like um like are there and and and uh and compound and a bunch of other money markets as well and then liquid staking again remains to

be seen right now it definitely is a winner take most with Lido but as I've said before I still think we need to give it a couple years before we can determine any kind of like real insight into this because Lotto came first had a huge Head Start liquidity about liquidity but there are more and more of these things coming online all the time so it remains to be seen in that in that realm there but the question was you know which is it okay to have a winner take all and most I don't think it's okay to have gonna take all for l2s stable coins dex's lending or liquid staking I do think it's fine for there to be a winner take all or most for a sediment layer L1 and for an L1 generally I don't know because honestly I'm bearish on pretty much all l1s

except ethereum uh and maybe Bitcoin but Bitcoin is its own Beast so I don't think it's really relevant to my opinions on things uh but yeah hopefully that gives you a bit of extra insight into how I think about these things and how I think about settlement layers and settlement guarantees and how that is the most important thing but because at the end of the day if you want to onboard the world the World includes various different entities and individual and and parties right there's individuals there's corporates there's Enterprises there's governments they're not going to just settle their like real things maybe they'll do a proof of concept but they're not going to settle their real value on a unknown kind of layer one or some random layer one they're going to want to go with the thing that gives them the best security guarantees that gives them the best

settlement assurances that they have confidence will be here in decades to come if not centuries to come right um rather than something that they have zero faith in it is like a flash in the pan thing that may only last a few months during a bull market and then fat Fall by the wayside and there's been plenty of those in the past guys there are so many there are like probably over 100 L ones and most of them pretty much all of them are irrelevant right there are a few still hanging on right now but it's too early to tell if they're going to be around in a few years right so we're gonna have to see through various Market Cycles uh but yeah generally that's my take on all of that but I think that's going to be it for today and just a reminder again it's probably

not going to be a refill for the next three days uh but yeah thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll probably catch you all on Friday thanks everyone