Market chaos, Cross-L2 roadmap and more - The Daily Gwei Refuel #801 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delway refuel where up latest news in etherum ecosystem I'm your host Anthony Sano the 5th of August 2024 all right everyone let's get into it so I wasn't going to record an episode today because there actually wasn't that much news to cover from the last few days uh for obvious reasons the elephant in the room is that the markets have had a bit of a tumble to say the least and because of that I guess no one really wants to talk about the tech or put out I guess project updates and stuff like that there are a few of those things but I think think most of this episode's going to be focused on making a few comments about the markets even though I I don't really feel that uh it's not maybe not not relevant but I

don't really feel it's going to be anything new for you guys like I sometimes feel like a priest giving a sermon to an extent where I'm basically repeating myself over and over again um and repeating what I'm saying over and over again when it comes to the markets because my stance and opinions don't tend to change on things and don't tend to change on the I guess like wider long-term outlook here and I guess obviously as you guys are well aware of by now the prices of eth BTC and pretty much everything else just fell off a cliff over the last few days the last 48 hours really especially now of course you've seen everyone on crypto Twitter and in other places like the Discord channels that you're in and chats that you're in come up with all these sorts of reasons as to why the markets blew up oh you know such and such player is

dumping eth uh you can see it on chain or you know the carry trade in the yen is unwinding or the bank of Japan blew everything up or this and that that and that this always happens every time there's like a massive crash like this because this is a massive crash guys there's no sugar coding this is one of the biggest crashes in in crypto history for sure um and it is not like a normal crash where it's a correction because we've gone up a lot it's more of a oh did something break or did someone blow up or you know why is that person doing that kind of crash there and that's why it can be so scary for people and that's why people get so I guess like fearful and and start thinking oh it's all over and start thinking am I going to lose everything now like I've

over invested too much I should have sold at such and such price I should have taken profits there so on and so forth and I I totally get that um but for me I mean I've been through this stuff so many times over the years that I always come back to my number one rule in crypto which is just to survive right I've told as I said to you guys I'm not going to be telling you anything new here and I feel like I'm just repeating myself but I figured it was worth saying something because I think a lot of you guys look to me for for guidance not just on covering the ethereum tech side but also on the market side but at the same time I can't tell the future just like anyone now so I can't tell what the Market's going to do I obviously strongly strongly believe that eth is

going to be more valuable over the long term and that's been uh true for most of E's life but I have no idea what the price is going to do in the short to medium term and even in the long term I can't say with 100% certainty that eth is going to be uh more valuable valuable in a couple of years than it is today like there's no way for me to guarantee that and I I try not to give the impression that I can guarantee that but that's why I always stick with you know just survive don't take on Leverage don't overinvestment don't get too emotionally invested in it and especially another rule that I've been trying to really hit home with people recently is that don't pin all your hopes and dreams on your crypto Investments don't think to yourself oh all I have to do is grind for a couple of years at my normal job that I don't

like and then crypto's going to pay off and I'll be able to do whatever I want to do please don't do that because I mean I understand why you want to do that I understand that not everyone gets to work uh you know nice perfect job not everyone gets to work their dream job a lot of people just work jobs just for the sake of it just to make money to to make ends meet I totally understand that but by pining all of your hopes and dreams on crypto what you're doing is you're now overinvestigation what if I do that then I'll be able to uh you know pay off my mortgage or then

I'll be able to basically quit my job and work for myself or work on this and work on that and by doing that by getting that emotionally invested in it you start making mistakes you start basically panicking whenever things aren't going the way that you thought they were going and today is one of those days where if you were really overly invested emotionally in in the market and you've seen eth go from 4K a few months ago to almost 2K today you're thinking to yourself is it over like are all my hopes and dreams now out the window like am I ever going to get uh that that opportunity again to sell and take those profits and you know better my life so I I totally understand that whole aspect to it don't get me wrong I'm not I'm not detached from that I'm not out of touch uh with that just because like I don't necessarily feel

that because of the fact that one I mean I did over I did emotionally overinvestment so I'm in a very different position to a lot of you guys out there so that that helps me keeps me grounded but I'd be lying if I didn't say you know I looked at the price and see what it was doing it didn't feel anything like most days I don't really feel anything but today I was like oh wow okay this is a big crash what's happening here and obviously you know we all Tred to uh piece together all the pieces we all try to create a complete picture out of all the different pieces of the puzzle that we come across but the problem with that is that like uh you will basically inflict your or put your own bias onto these things if if you're biased towards the macro if you

think the macro counts for everything then of course you're going to be more biased or you're going to sympath sympathize more with the reasoning around oh the reason why crypto dumped was because um the bank of Japan raised rates the other day which led to this carry trade or this Yen carry trade unwind which led to the Japanese stock market falling over which is going to be a contagion to the European and US Stock markets and then the FED is going to be forced to hike rates but traditionally that's been bearish and you know over the short term and you're just going to like drive yourself crazy but you're going to be biased to towards that whereas if you're more of a crypto native you might be biased to what you saw on on chain where jump crypto was sending a lot of e to exchanges uh and people basically saying why are they

sending all these e eth to exchanges just to dump like indiscriminately did they blow up did something happen uh and apparently Paradigm did it too another V VC firm in the in the ecosystem pretty sure everyone's aware what Paradigm is but depending on what your bias is you're going to essentially put more weight on one reason or another but at the end of the day doesn't matter what the reason is what matters is where the price is that the price went down and whether you want to buy now or whether you want to wait or whether you aren't don't have enough cash to buy so you just sit on what you've got and write it out that's really all that matters at the end of the day I don't think anything else uh really matters like protecting yourself making sure you survive is the number one rule everything else is really just noise now

you guys know I don't really look at charts a lot on the refuel but I figured it was worth bringing up a chart here because I did mention in the daily grade Discord Channel today briefly that this latest crash or this latest I mean it is a crash it's more than a dump this latest crash gave me very strong flashbacks to the co dump and you can actually clearly see the co dump on the chart here it happened in about March of 2020 and it was a much bigger dump than what we saw today like if you actually look here and go from the 17th of Feb where prices started going down all the way to when was this uh this was only the 9th of March so you had basically 3 weeks in 3 weeks eth went down 70% right uh and then there was a single day where eth I believe went down 50% whereas if

you take it from the top here of what let's just say 4K and then you go down here eth is down e went down about 45% so less than it did back then but that's still a very big dip over the last two days alone eth went down like 36% so obviously it's not as uh I guess like um volatile as it was back then it's not some huge Global shock to the system like Co was but it's very similar price action in that we have this big kind of systemic thing going on uh within the like wider macro environment but also within crypto we had this massive kind of selloff this massively big kind of I guess dumping of the whole Market in discriminately uh and this has come off the back of a pretty good run like even the cover dump people don't remember this but the cover dump actually

happened after a pretty good run for Ethan in BTC like at the start of the year eth uh sorry at the start of 2019 uh sorry Start of 2020 I should say eth was around $130 and it went all the way up to almost $300 so it increased by about 130% in a matter of uh what was it six weeks or something like that so it had been going up a lot before this and it was looking like it was going to continue to go up and recover same is true for for this you can see it on the chart here eth had been going up a lot yes there was a bit of I guess like noise around here but eth and I mean if especially if you look at BTC it's probably clear on BTC had gone up a lot already and I've drawn some circles here

just to compare things but I I like comparing things on the chart just um just privately and seeing where we are in the cycle but uh a lot of the ends up being wrong so I never show it on the refuel but essentially like you can kind of see this here right it went up a lot and then it's it's come down here so the same was true for for Co here the prices went up and then and then obviously it came down in that Co dump there now does that mean that the dump is over now does that mean we're going to recover because if you look after the co dump we basically recovered and went on to have that that bull market in 2020/2021 I don't know um macro conditions also favor you know this this kind of vibe in that back then the uh fed obviously cut rates really quickly

and they injected a lot of money into the system because of uh because of Co but this time around we don't have Co guys like it it's we we have I guess like in in the macro environment at least from what I can tell uh stuff breaking we have I guess just justification for the FED to cut rates because inflation has slowed but now unemployment is going up and it looks like there might be a recession on the horizon things like that I mean you guys know I'm not a big macro guy but this is just the stuff that I've been seeing so those same conditions also exist as what we saw uh last time but again you could drive yourself crazy just trying to analyze all of this I think that when it comes to your own personal I guess like investing uh not

thesis because obviously the thesis probably won't change if you've got like a multi-year thesis here but your own kind of investing style you really have to make a decision about what that style is going to be are you going to DCA in every week with a little bit of your paycheck and then just not care what the price is every week right and and do that over the long term or are you going to wait and maybe you do do that once a month or are you going to wait for for big crashes like today and then buy all at once like deploy deploy a lot of capital that you've been saving up all at once there are risks inherent to both ways of doing things the risk of DCA in every week is that maybe you're doing that in a bare market and all of a sudden you've lost like 60 70% of all

the money you've put in during the year and then you don't get to actually make a profit on that for a couple of years there's a massive opportunity cost to that then the other risk of maybe going all in at uh once a month or sorry going all in on crashes like this is or saving your money to go all in on crashes like this is that you don't get those crashes you know for example if let's just say you this is 20120 and BTC is like 10 grand and then it goes up to uh 18K and you're like okay well I think BTC is going to crash back down and then I'll deploy U my Capital I think it's going to go back down to like 12K or something and then I'll deploy all the capital that I've been saving well it didn't do

that right it kept going up from there and it went up to 70k um and then it came back down to 27 or what was it 20 29 then went back up to 70k and then came down and it went down to 15.6k so in the best case scenario you got to buy years later mind you 15.6k if you were waiting to deploy that cash still but in reality you may have just deployed that cash higher up here and that you'd be and then you would have been underwater for another couple of years or two and a half years actually on that trade so as I said there are risks inherent to every strategy and it's all about picking what's best for you and but this is why investing is so hard guys I've I've actually tried to to drill this into people's heads as well over the years is that crypto tends to lull you into a

false sense of security in Bull markets and it may make you feel like investing is easy it may make you feel like that um you just put money into anything and it'll be fine I mean we had a bit of this recently with the mcoin stuff but it's not it's definitely not that it's definitely very very difficult guys like more difficult than anyone can even imagine and that's why most people will not make money in this industry on net over multiple years even if they got in really early I know people that got in so so early to eth that blew themselves up I know people who have got in so so early into other tokens and round tripped the whole thing like and and and I'm sure there are many accountants Among Us that have even better information on this because they see people's tax returns right so you know you may think that everyone's making all

this money or you may think that everyone's getting richest because things are going up but that's not necessarily true because it could go up a lot and they could just round trip it on the way back because a lot of people don't tend to take profits the same way you probably didn't think to yourself oh maybe I should sell some at you know 3.5k or 4K uh the same thing happens to everyone else where they just don't take profits and I'm not saying that obviously in hindsight you probably think to yourself I should have sold like 4K e that's obviously hindsight guys like no one could tell the future here but it's the same same logic and at least with eth you're investing in something with with fundamentals behind it with these mcoin things and with other very much more riskier things they tend to not come back because they are

much riskier they are basically seed stage companies or or preed stage companies that have a token that um basically fail they have maybe a little Spurt of growth and they fail and they fall off or their mem coins which have zero fundamental value to them at all and are literally just a game of musical chairs and then because uh they're like that most of them or the vast majority of them uh don't become things that come back they're not there's no such thing as a blue chip meme coin guys like I mean if you wanted to make an argument that there is a blue chip meme coin one that's been around for a very long time and continues to you know hold its value relatively over over a long periods of time you could say Dogecoin but other than that there's there's not really anything else unless you consider cardano to be a meme coin right but like

U the actual kind of like meme coins that people talk about the ones that that have been so hyped up this cycle um that it's the same it's much worse for those things because there's no fundamentals backing things up there's just the game of chicken oh sorry the game of musical chairs and once that's gone once that's out people move on to the next thing because they're like well I already played that game it's boring I either you know they either lost money on that game or they made a lot of money and that's the funny thing about it if you make a lot of money on an asset and you cash it out uh and then it goes down a lot you're most likely not going to buy back into that asset especially because if you sold because you realize that the asset was not worth anything to

begin with those buyers aren't coming back whereas it is distinctly different for BTC and E where people will typically if they they're trying to trade the markets or trying to trade the the multi-year Cycles here what they'll do is that they'll sell BTC and E when they think things are hot and they'll buy back into those things because they actually want to own those assets they actually know that those assets have fundamental value backing them so there are major differences here between assets but that's why I when I talk about like crypto as a whole I have to kind of split it up because BC and eth to me are their own thing and then there's the rest of crypto and really with the rest of crypto you were literally betting on very early stage I mean may maybe companies is the wrong word but you're betting on early stage

Ventures and you need to keep aware of that and when it comes to meme Co as I said you're not betting on anything except a meme you're betting on a shared delusion essentially and that's not to disparage people for doing this and I'm not saying people shouldn't shouldn't be able to do this but you need to know what you're getting yourself into right so so yeah and and I think that's uh that that's most of what I wanted to say guys I think it's repeating a lot of what I said in the past and as I said like it's nothing new just survive don't use leverage don't get yourself blown up because you can make a lot of paper wealth and then blow yourself up and lose it all like you may not think it can happen to you but it can it can and I I've seen it happen to people it's

happened to me a few times before um yes you can always bounce back but only if you learn from your mistakes and honestly if you blow up your whole portfolio after holding it for for a couple of years or you know let's say you held your whole portfolio for three years you held during the tough times that bare market and finally you've made like a lot of paper Gams you're like okay I'm not going to sell just yet I think the Market's just getting going and then you get wiped the out in one of these dumps and you lose everything because you were on Leverage or you you were too emotionally invested and you panic sold everything and then you watch price Skyrocket in the following weeks and months right you're probably going to not want to be involved in crypto at all because you will feel so about yourself at that

point so that's why that's that's the big reason why I say don't blow yourself up because yes you can come back stronger yes you can make it back but at the same time you probably not going to want to because your emotional state is not going to be in in the you're not going to be in the right frame of mind to be able to do that there so just some friendly uh advice not investment advice just like friendly kind of General kind of Market advice and general advice on how to think about things or how at least how I think about things um in terms of where things go from here look as I said at the top I don't know guys like I've got no idea and sometimes I get ahead of myself I freely admit that where I get too bullish at one point um and then I say you know sometimes I say

think things like I wouldn't be surprised if we see alltime high at some point in the next few weeks on and obviously that didn't happen uh and I fully admit that I was ahead of myself there but I think I I I it's worth reiterating that you guys know I'm a long-term guy I think that happens with me is that I get ahead of myself because I I tend to sometimes be so bullish on eth that like I think that's going to be bullish over the short term but in reality it's going to take longer to play out so I do think and I do still believe obviously uh which should be obvious to everyone that uh that eth is Contin is and continues to be a good long-term hold it is a good story of value in my opinion it is something that will acove value slowly over time uh but

outside of that and I mean outside of beta Sayan e i I can't really recommend anything else or I can't really point to anything else that I would like to hold over the long term there are definitely things you can buy today like right now there are lots of things on sale and I when I say on sale I mean like from a point of view of of myself if I had the cash to deploy right now and I wasn't buying eth with it there are a lot of things out there that I look at I'm like you know these things are are really undervalued and I say undervalued in the in the in the grand sense of do I think that in a year from now these things are going to be higher than what they are today not in the sense of uh do I think

this thing is fundamentally under valed and it's going to AC so much value because everyone's going to see the light and they're going to know that this asset is pristine because they get access to such and such whatever no not at all and and I'm not going to mention these assets to you guys these are just ones that I've I've looked at and and I've come to the conclusion that I think at this point in time they would be decent buys but the reason I'm not going to mention it is because I don't want you guys to copy trade me I don't want you guys to uh to just buy things because I think that they're good but I'm bringing it up because it's more to illustrate the point that uh in times like this is where people or or I guess like um smarter people and more and

smarter investors load up on certain things that they have a fundamental belief on uh and are able to ride that wave into the the next bull market because I've said said this before as well guys there will always be another bull market and just like there is always another bare Market things work in Cycles I'm not saying we're in a bare market now I don't think we are I think this is is definitely very akin to the the co dump I think that the conditions are definitely not right for a long-term bare Market at all not within crypto look if the macro stuff really gets dire where everything just starts blowing the hell up and and the stock market goes into a downtrend for a long period of time yeah sure crypto is not going to escape that but I'm just personally like not feeling it to be honest U but if you are feeling it don't take my word do

what you what's best for you but yeah my view is is kind of like we're going to spend a little while here recharging and I do think that going into maybe even later this year and next year it's still going to be quite bullish for for crypto overall there but that's all I really had to say for today as I as I said uh just survive guys just relax you know take a few days just relax and digest everything that's happened because making decisions now you're probably in an emotional state probably not going to be making the right decisions so it's always good to step away and not be staring at the 5 minute charts wondering what the hell is going on because that is all noise there now one last thing I wanted to talk about when it comes to the markets uh is their impact on layer

1 ethereum and layer 2's on ethereum now as far as I know layer one and layer 2 uh fun functioned really well like all the layer 2s functioned really well I didn't see any going down I saw some Fe spikes on a few of them of course but that's only natural with the with the increased volatility layer 1 gas did go super high actually I saw it about at about 650 and right now it's at 39 which as you guys know is really really high compared to the last couple of months of like one gay gas prices now of course this is because of the the fact that things were so volatile lots of meev bots going crazy there were lots of high me payments out to validators I actually proposed to block um for rocker pool with I believe a 4.5 e block reward now that went to the smoothing pool so it

actually went to uh the the the whole rocker pool ecosystem to all our eth holders here um so basically it became our block right instead of my block which is which is cool um but yeah there was just a lot of volatility across uh across the entire ecosystem not just ethereum obviously but other other ecosystems as well but as far as I know yeah layer one's uh functioned just fine yes gas went astronomical but that's normal for layer one uh and layer tw's functioned really well as well with fees remaining relatively cheap um uh on there none of them as far as I know went down went offline um none of them stopped producing blocks or anything like that it seems like everything uh went well which is which is awesome guys like it's really awesome to see and not just the the layers themselves but also the defi protocols on top so stany here

tweeted out about arve saying you know Ave protocol with stod Market stress across 14 active markets on various l1s and l2s securing $21 billion worth of value the RV treasury was rewarded with $6 million in Revenue overnight from decentralized liquidations for keeping the markets safe this is why building defi is for the win and really I mean it is like this is incredible that that we that we still have this and people take it for granted that we have these massive defi protocols across layer ones and layer 2os that essentially allow us to have 24/7 access to our capital and to Capital that we have at risk like imagine if you were in AR um and you had a position that you wanted to unwind on layer one yes you would have to pay a really high gas fee but you have

basically guaranteed inclusion if you pay the right fee and then at layer twos the fee was a lot smaller and you were able to to to basically uh get save your position if you needed to or maybe you wanted to take out leverage because you're like holy the prices are so discounted right now but I have no money uh I have no money to to buy I want to take on Leverage to buy but you guys know my my view on this is that it's extremely risky and I don't recommend leverage ever but there are people that do this right but it's amazing that people are able to do this through a because you can imagine uh within within centralized uh plays there's there's definitely a lot of um a lot of risk there not just risk in that maybe your account gets Frozen at the wrong time

for whatever reason or maybe the exchange goes down for whatever reason you just don't have access to that so there is a real like specially there's something really special about like the liveness guarantee that uh that especially layer one ethereum gives you when it comes to these def protocols and it's not just a it's obviously things like Unis Swap and other decentralized exchanges as well that allow you to trade assets here uh but of course for that liveness in return uh fees go up right fees on layer one go up because uh the liveness comes from the fact that ethereum is extremely resilient and stable due to uh being so I guess limited and the throughput is so limited uh and uh because of that the fees go up on layer one but then layer 2os have cheap fees and also have similar features here but they've also got some

risks obviously centralization risks uh liveness is not as good as ethereum layer 1 but there's always uh trade-offs here but yeah it was really great to see that um that everything held up really well here so kudos to all the D projects that and especially all the old ones that keep building and have kept building and have kept their their protocols uh going really strong even though they get very little attention these days which is quite sad but it is just what it is there but I think that's going to be it for the market stuff there's a couple of tech related updates just to go through here before I finish off today's episode one from vitalex so this was just a tweet that vitalik um tweeted out just before where he said the cross L2 road map in one tweet and he listed a bunch of different things that are being worked on for the cross

L2 road map to basically be realized and this has obviously got to do with interoperability between the l2s sharing liquidity all that good stuff there but these are on the technical side of things these aren't really on the the user facing side so there's three aips that he's listed here as well as um uh as well as uh things that would come in something he's calling phase two which is stuff like proof aggregation key store rollups and and L1 slow static calls so as I said technical stuff on the on on L1 and and L2 here not necessarily user facing but will allow the uh the apps to plug into this in order for it to be user facing in order to have that uh cross L2 interoperability that uh not just for their transactions but also for

liquidity CU that's pretty much like what everyone wants right and I spoke about this the other day but yeah if you wanted to to learn more about this you can go check out vitalik's tweet it's got everything here that you can just Google you can like Google these EIP numbers like EIP 3770 read more about it there falex in the comments basically uh or in the in the replies talking about this as well so you can go check that out uh if you didn't see it just before uh and last up here just wanted to shout out that infinex now has their light paper published so if you're interested in diving more more deeper into the infinex ecosystem and knowing what they're actually about because I know I know a lot of you were part of the infinex um crate campaign recently you were farming those crates and now you're wondering what comes next you know

what's after the crates like what the hell did I just Farm These crates for well this infinex light paper will give you a nice overview of the infinex ecosystem it is incomplete it's still in in in in draft form but it'll basically give you the overview of what infinex is trying to do what their goals are uh and everything in between there so you can go give that a read I'll link it in the YouTube description uh below for you to do so but on that note just wanted to finish up with some final words uh on on the markets here um I know I keep repeating this but guys like please just just survive like just survive survive and thrive and make sure that you're not over uh you know getting too emotionally invested in things because as I said that leads to ruin usually that leads to

blowing yourself up that leads to getting dis disenfranchised with ethereum with the crypto ecosystem and that leads to you doing what some people do in the daily grade discool Channel where I read these comments and I'm like guys like come on like zoom out a bit like did you did you really just get into this ecosystem just to make money like why are you even here if it's just to make money like I get wanting to make money but there is more to this ecosystem than that and honestly I believe that you'll be uh I guess like you'll have a better time making money in this ecosystem if you are actually in it for the tech if you are actually interested in the tech because if you're only in it for the money then that defines your whole view of crypto so that that basically means that the market dictates your emotions towards

crypto generally and there's nothing wrong with being in it just for the money but if you are then honestly I don't I I I don't think it's worth complaining then because you you are taking on basically the risk of being in it for for just the money uh and that risk is that things aren't going to do what you want them to do they're not going to be up only and they're not going to be in a super cycle those things are pushed by people to trick you into being exit liquidity guys there's no such thing as a super cycle there is no such thing as up only right there is as I said there's always another bull market there's always another bare Market your job is to survive those market conditions and make sure that you yourself take the profit you need to take in order to get what you want whether that's a house a car take care

of your family whatever it is that is the gold those are the golden rules you follow those rules you should be okay but easier said than none of course uh but yeah anyway enough about that that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subcribe to the newsletter join the Discord Channel and I'll catch you all next time thanks everyone