Market volatility, Ethereum's Three Transitions - The Daily Gwei Refuel #602 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the Lakeway refuel where he kept the latest news in ethereum ecosystem I'm your host Dennis asano and say the 12th of June 2023. all right everyone let's get into it so a volatile weekend in the markets as I'm sure you're all aware of a buy now but the funny thing is it wasn't volatile for Ethan BTC really it was mostly volatile for everything else now people are speculating or I guess like drawing the the conclusion here that uh everything else kind of nuked or went down because of the fact that ascc is going after coinbase and binance uh in lawsuits and has listed a bunch of assets on there that they consider to be Securities now I don't know how much I agree with that I know it may seem like the obvious

reason but at the same time I look at the whole kind of market and the way it is right now and I look at history as well and I kind of look at what the market had been doing over the past like month a lot of these coins not Ethan BTC but all these other things had already been bleeding and going down a lot uh quite a lot actually for for at least a month I mean I don't know if it's on my head how long they had been kind of bleeding for here but if I quickly just bring up the chart I can see here it's more than a month they had been going down I think they'd all been in a downtrend since like at least March right so definitely more than a month I mean I'm losing track of time here generally

um but and you know they obviously went down a lot over the weekend but I think that the SSC stuff just acted as a nice little Catalyst a nice little narrative to lead to that dump there now for those of you who haven't kind of like checked this um they're the these assets basically have reset all of their price gains from this year so I think most of them are at their year opening and what that sorry what they started the year at price wise and a lot of them uh are below there as well uh at below that price as well so some of them are back to their I guess uh lows from from last year so that that craziness happened you know it was it was quite scary I think for a lot of people because maybe they weren't used to to that sort of stuff I mean it's

funny because maybe you should be used to that by now considering you're still in this market in a deep bear Market but yeah and what I found funny was the the mood on Twitter I think that you know there are a lot of people going why are we you know why are we nuking and I made a kind of joke about this uh uh uh saying that there weren't that many people asking you but then as I think it was because the dump happened when a lot of people were sleeping then as they woke up they're like what the hell happened to to my coins basically and people were saying why is everyone complaining there's no nuke because they were only looking at Ethan BTC well the thing is is that not everyone just holds Ethan beats or eth and BTC or or BTC right they hold you know they probably

hold Ethan b2c and they probably hold other a lot of other assets as well and obviously depending on how they're weighted in those assets it'll affect their portfolio in different ways like if you're like 50 Ethan 50 uh one of these other coins that went down 30 then obviously you're going to take a pretty big hit in your portfolio there as measured in both eth and and USD so that's why I think we saw a lot of that over the weekend but yeah as I said in terms of reasoning behind it I really do think that the SEC stuff was just a narrative because it wasn't just the coins that were listed in the SEC uh lawsuits it was pretty much everything except Ethan BTC now of course some of those coins that were listed went down more than the others but again I think

that's just a convenient narrative for Traders to use and for people who love the volatility to use in order to to kind of capture that volatility I've talked about this a lot on the reefer before about how in markets like this any volatility is uh you know is welcome for for Traders because obviously they can't make money unless things are volatile so they take advantage of that they push their own narratives I mean it really is just like the Bulls in Reverse it's like it's a polar opposite right like the Bears I mean these Traders I wouldn't even consider them bulls or bears they're just Traders they will trade uh whatever the trend is they'll trade whatever their strategy tells them to they're not really married to any bags um at least they're good Traders right some of them will will definitely marry the the bear market and basically not be

able to get themselves out of it but that's a that's a conversation for for another time there but that's kind of my view on on how this all played out over the weekend I know it was kind of a crazy dip there or dump there but nothing we haven't really seen before but I just think it caught a lot of people off guard because Ethan BTC didn't really go down they did go down a little bit but not 30 I mean if Ethan BTC went down 30 percent uh or 20 even 20 even 10 in a day is pretty pretty big like 20 that would be huge for Ethan BTC but obviously for a lot of these other coins that have much smaller market caps much less liquidity it's not really something to be concerned about because they can go back up as fast as they went

down like you know and and the funny thing is is that it when the bull market comes back I don't expect a lot of these assets to ever reach their all-time highs against eth or BTC again uh I don't even expect a lot of them to reach their all-time highs against USD there are so many of them that will probably not even pump unless it's like the last week of the next bull market but there are quality assets out there I'm not going to list them because I don't like putting my weight behind any one asset except Ethan I don't like looking like I'm getting investment advice or Shilling anything but there are definitely a lot of great assets out there that uh I think that you know if you if you were to to buy them and hold them for the long term you could do

relatively well with them but that's up to you you have to do the research you have to uh you have to be convicted on them you have to sit through the volatility because you know the funny thing is is that if right just as an example in 2019 oh sorry in 2018 went down 94 right then in 2019 it went from like 80 to 360 then it went back to a hundred and then it went to it started it's obviously its new bull market oh wait no then we had the cover dump right it went back up to like 300 or close to 300 dumped back to 100 during the cover dump and then then from there within a year it was at 4 900. so volatility works both ways if you don't have the conviction on the things that you're buying to hold through the volatility

then really you're going to just over trade you're going to panic sell Panic buy you're going to incur all these taxable events depending where you are in the world which which makes it even because you could end up owing more tax than the money you have if you're trying to over trade or emotionally trade there so that's why I think that for most people well pretty much for everyone uh long term long longer term uh I guess like time frame where you literally don't look at the price and you just don't worry about it he's probably the best bet but at the same time I understand that that's a learned skill it's not something that can be taught and it's actually incredibly hard to do investing is not easy bull markets in crypto make it seem like it's easy uh random meme Queen pumps make it seem

like it's easy but you know people you even just taking the meme coin pump for example like not only do you have to buy the coin at pretty much Day Zero when it goes live to to get that 1000x that everyone talks about but you have to hold it to 1000x right like and and all the stuff that goes into that is just incredibly complex it plays on your emotions I mean would you hold something that you consider to literally be a joke coin that you're literally gambling on for for a thousand X after you make 10x on it you probably not right like a lot even even lower than that depending on who you are some people will sell it at a 2X you just gotta remember that people will have different views on things and have different targets some people will

have a you know a Target to get really rich off this thing and we'll hold it no matter what and a lot of times it won't do anything and it'll go to zero but there's so many different complexities that go into trading and investing that it would take me hours to explain them all but that's that's kind of the gist of it there but anyway enough on the on the markets here and about what happened over the weekend I figured I'd just touch on it because I know that uh it was something that people wanted me to talk about but relating back to I guess like the SEC generally there was another tweet that I put out over the weekend where I basically give my I gave my view about the whole kind of SEC thing now I'm not going to read out the whole

tweet because it's a pretty long tweet here but the TR is that I think I mentioned this on the refill before I think Gary Gensler really is just in it for himself I don't think he cares about crypto either way I don't think he hates crypto I don't think he loves JavaScript I think crypto to him is just a convenient thing for him to latch onto in order to achieve his own goals and what are his goals well I mean I think it's pretty obvious he wants to get promoted essentially right he wants to go to the treasury Department he wants to take Jeanette yellen's job so how to do that well you need to get noticed by your superiors just like win any kind of job that you want to get promoted in you have to be noticed by your superiors and that's exactly what he's doing by

bringing enforcement actions against highly visible targets like coinbase and binance and and celebrities and things like that rather than going after the actual scammers and grifters that we know in crypto because they're just not high profile right and people will ask why didn't he go after SPF and FTX well think about this for a second and and do Quan and stuff like that well think about this for a second in crypto we all knew of these things right there were big deals to us we heard about them every day but outside of crypto who knew about SPF like who knew who SPF and FTX was like I if I said to my my parents hey do you know what FTX is you know SPF is before it blew up they would have said no but my dad literally mentioned it to me uh within a couple of days of

it blowing up because it was on the news so just because something seems like it should be something that every everyone knows about because it's so I guess like visible in crypto doesn't mean that it's visible outside of crypto now that FTX blew up and and also there's obviously a lot of um I mean there's a lot of uh people saying that you know uh that uh what's his name Gary Gensler was uh cozying up to SPF which he was and SPF was also a big donor to the Democrats so that probably played a role as well and also there's photos of SBF with Democrats but at the at the time right again there was like an unknown thing there probably wasn't any political will to go after this sky or to look into this thing one because he was a donor

and like going after your own door he was the second biggest donor to Biden I believe in his in his um presidential campaign going after that it's just not politically palatable and also uh they out once it blew up they obviously want to bury that so they have to make noise about other things and then just reference FTX and say we want to you know make sure that it's not a repeat of FTX and whatever other crap that they can come up with but bringing it back to my point here I really just do think that once Gensler moves on from like the SEC I I don't think he's going to care about crypto at all I don't think he's going to talk about it anymore he's going to be worried about what's happening at the treasure in all the stuff there and I do think that he's not

going probably not going to be chairman to see all of these cases play out like the coinbase and binance case is going to go on for a very long time especially the queen base one because coinbase has a lot more to lose I believe than binance binance obviously uh with binance us it's not a huge thing for them I think they're probably just going to close it to be honest and shut it down because they're going to lose their banking partners and then they've got binance Global which is obviously much bigger so they're not going to care too much about us but for coinbase like unless they move the exchange offshore which they may end up doing they still have a lot more to lose because they're customer base most of them are U.S citizens right they are a us-based company they are a public company

um and and obviously uh they want to remain in the US they want to remain a public company and they want to be able to operate in the US because it's a huge market so they have a lot to lose so they're going to fight really really hard um with this case um which means it's going to take years for this to resolve and you know if genza gets promoted to the treasury he's not going to say no that's what he wants so he's going to say yes he's going to go there and then that's it whoever takes over the SEC will have to worry about these cases and the funny thing is if it's someone that's really positive um on crypto I don't know exactly how this works I don't know if the ACC could actually withdraw this you know their case against against coinbase but if

someone is really positive against crypto they're probably going to play a much different game than what has and we may actually get some positive stuff out of the SEC but that's me I guess putting uh I guess like a um a positive spin on things but generally that's just how I think about I don't think that Gensler cares too much about crypto I don't think he cares about it enough to want to destroy it or anything like that I think he just wants to use it as a way to uh Court favor with your superiors which are the high-ranking Democrats which also I guess like have a you know the funny thing is is that the higher ranking Democrats such as Elizabeth Warren they actually hate crypto like she actually hates crypto I also think she's using it as a way to get votes as

well but at the same time I would believe that she doesn't like crypto because she's putting it in the same bucket as uh as as kind of like the the Wall Street people that she's been rallying against for a while now and for for her that's an easy way to get get favor with her voter base and also uh she can just come up with and no one's gonna call her on it uh out of her voter base and people are going to call her I don't know people in crypto and uh and yeah so I as I said I don't hates crypto he's just using it as a way to get his promotion and play politics because at the end of the day this is all politics guys it sucks because you'd think that these Regulators um should be doing their job but at the

end of the day a lot a lot you know the funny thing is a lot of the people that work at these agencies probably are doing their job the ones that aren't interested in political power or anything like that you know just the everyday uh uh Americans that are working at these that these um institutions but the that you know obviously Gary again someone who is a career sorry who is um who's already rich came from JP Morgan wants to progress after political ladder he's not going to stop at the SEC when there is much bigger fish to fryer so that's what I think he's doing there but anyway you can read my Tweet it's got a little bit more information about this I'll link it in the YouTube description below but now I'm going to move on from all this uh market and Regulatory talk into some

ethereum related news so vitalik published vitalik published a Blog Coast over the weekend titled the three transitions in which he describes three major transitions that the ethereum network needs to undergo or is in the process of undergoing in order to become the ethereum network that will I guess service the world and and become somewhere that the that a lot of people that that a lot of people can use basically Mass adoption of the network so these three transitions include the layer two scaling transition so everyone moving to Roll-Ups that one's pretty obvious right we all know about that we all know that L1 is always going to be uh relatively expensive so we need to uh make sure that we scale via Roll-Ups and then end users will sit at roll ups and

that's how we'll and then higher layers and that and that's how we'll scale to the world uh the wallet security transition everyone moving to Smart contract wallets instead of normal wallets that we have today and there's normal wallets are called externally owned accounts uh so we need to move to Smart contract wallets such as uh you know the nurses safe or an urgent wallet uh Soul wallet there's a few there's a fair few of these things actually uh now getting developed and that's not happening as fast as I think that people wanted it to happen but it is happening right it is happening in the background it needs to get cheaper though that's one thing that I've um that I've mentioned before is that the reason why it hasn't happened very quickly is because it's too expensive to create a smart contract while on layer one so we

need obviously to deploy these things to L2 and then get users on L2 and then make it the default for them which is I guess on the wallet providers you know if uni swap wallet had launched as a smart contract wallet only it would we would have seen a huge uptick there but I understand why they didn't launch a smart contract wallet because they're trying to service L1 for now obviously there's not servicing L2 as well but most of the activity is still on L1 so it makes sense there and then the Privacy transition obviously privacy is critical to anything that we do within with ethereum no companies no corporates no institutions they're going to use ethereum in any serious way unless they can have privacy a lot of people uh hate the fact that they don't have privacy they use ethereum because I guess like

there's opportunities for them to make money and they and they HD value in using the network even though it doesn't have privacy but imagine if we did have privacy I imagine if we had privacy by default on on these l2s and that's what Aztec is doing with their new L2 network but that's another key transition that needs to happen here now vitalik's blog post goes into detail about each of these things and you can read it I'll link it in the YouTube description below but I'm glad that he's calling this out because I think that those like besides the wallet security transition um I think the other two things are something that I've been harping on about for a while now I've said that you know L2 scaling and privacy are the two things that I'm I'm most focused on and think two of the things that are most

important to get for for the ethereum ego system to work on in order for us to scale to the world because there are different upgrades within the ethereum ecosystem one of uh different types of upgrades I should say so there are the types of upgrades that affect end users and then there are the types of upgrades that don't directly affect end users but are needed for the health of the network so for example the merge didn't affect end users at all like ends users wouldn't have felt anything different about the merge but obviously we the merge was done for the health of the ethereum network to transition at the proof of stake and for a bunch of obviously other reasons there but end users aren't feeling that same uh regular end users uh you know if you're a Staker you probably felt it because you got more um you got more API because

the execution layer awards were going to but I'm talking about just the regular everyday users that are swapping tokens on unisop and stuff like that they they didn't feel anything with with that transition right um and then you have uh uh uh kind of like um uh the the end user-facing transitions like erp4844 and that goes live or I should say upgrades and user facing upgrades when 4844 goes live uh people are going to feel that on layer twos uh it once the layer 2 is obviously integrated themselves they're going to feel that just like uh with bedrock going live on optimism fees were reduced by at least 50 percent end users felt that right that was an upgrade for them that wasn't just an up it was obviously an upgrade for the protocol as well but the end users felt that it wasn't just a protocol specific

upgrade so there are multiple things happening here but the l2s obviously is where all the user-facing stuff's gonna gonna be happening so those things are critical and obviously privacy is critical in that respect as well though so I'm glad vitalik called both of those things out the smart contract wallet thing is something that I I really definitely should be paying more attention to and talking more about I think it's something that I haven't talked about that often just because I know that we're not there yet it's not at the point where I can basically tell people hey go use this wallet instead of your normal wallet because of this this and this reason um on L1 it's cost prohibitive for a lot of people on L2 they're still not a great ecosystem there that supports it just yet and I think that we need uh

much better interfaces to use these things as well like nurses safe is great but I think it's quite clunky and quite complicated for just regular end users whereas something like a coinbase wallet is really dead simple or a uni swap wallet or a rainbow wallet when those things integrate smart contract wallets I think that's what we're going to see an uptick then maybe when I start talking about it more um but in terms of like the l2s and privacy stuff even the Privacy stuff I mean we're not there yet obviously Toyota cache was a great so much of a success that the US felt the need to sanction it because it worked so well uh but uh also it obviously has been neutered unfortunately for a lot of people because if you're in the US and you use tornado cash uh obviously there are dire consequences for for doing that

but it still works right and that technology is still there so then you have something like Aztec using similar Technology Building out their thing which isn't live yet they did have something live but they've shut that down the Aztec money stuff but now they're building out their privacy preserving L2 so I think we'll get there with privacy as well but uh but yeah generally these three things are critically important for their their the health and growth of the ethereum network and you can check out vitalik's post which I'll link in the YouTube description below for you all right Tony here has shared something uh not from the Mev boost.picks website today but basically this is a hack MD post uh that he published alongside light clients and uh Julian here so he says yeah with what erp1559 zero grass

Trends zero gas transactions are no longer possible um and the authors he introduced uh reintroduced them by implementing a proof of concept for a gas ticketing service it uses blind signatures to fund unfunded accounts in a privacy preserving way and this was a hackathon project that they all hacked on here so it's called gas ticketing a backstage pass to ethereum the tldis that users buy tickets from coordinators that when redeemed fund an unfunded externally owned account or new or um I guess like regular ethereum address this while maintaining privacy so that not even the coordinator know who knows who has bought the redeemed ticket so this I would bucket into one of those more exotic privacy tools out there that I think that not a lot of people really

had thought about and I think the reason why these guys thought about this is because Julian and and like clients are ethereum core developers they literally are a work at um uh on Geth on gold ethereum uh and Tony here obviously I've mentioned him a bunch of times but he's an ethereum researcher so really it's not something that the everyday person is going to think about building but because these uh these people are involved in the core development process they obviously thought of this and they they know you know uh exactly how to build something like this in order to alleviate this issue here so I just thought this was really cool obviously feeds into what I was saying before about privacy but it's a really cool uh cool way to fund an account with eth basically if you don't have it so so basically you you create a new ethereum

wallet there's no Ethan there well by you by doing by using this um protocol or using this um this proof of concept here you can fund that address in a privacy preserving way which is I think very very cool so anyway you can check out this gas ticketing thing I'll link it in the YouTube description below for you to do so all right so I'm sure you guys have seen this nice purple Banner with a number in it all over Twitter over the past few days from uh polygon so Mahalo here one of the co-founders of polygon shared this over the weekend uh but with the number two here which I think so this was shared on June 9th my time so I guess the announcement is probably going to happen today about what this is today being Monday it hasn't happened

yet or at least that time of recording so maybe it's happened by the time you're watching this uh but yeah there is simply a big announcement coming out of the polygon ecosystem now you guys know I'm an advisor to to polygon here just to disclose that there uh but generally I think polygon when they tease things like this it's not something to be taken lightly I think they usually do live up to the hype and I'm very curious to see what this is uh what this all is all about in the details around this because it definitely uh seems some seems like something to me that is going to be a uh he's going to be a big deal so anyway I just wanted to put that on your radar in case it hasn't been announced yet but if it has we'll see what it is I I actually

I I don't even think I should speculate on what it is because I'm not I'm not entirely sure maybe it's uh I don't know maybe it's not gonna do the ZK Tech or some other announcement there but yeah I'm excited to see what it is and and we'll probably revisit it tomorrow on tomorrow's refuel once it's announced all right so you guys will remember that little bug that happened the other day on the arbitrine one network where essentially there were no batches being posted to layer one because uh the uh I guess account ran out of Eve to pay for the gas fees because of a bug in uh in in in one of the contracts there oh sorry in one of the the sequences and arbitrim has posted a proper postmortem all about this that you can check out now which I'll link in the YouTube

description below uh but it's there's a three um no uh three uh things to that are important to note that they highlight here the sequencer did not go down or run out of funds the second so continued accepting user transactions and no user funds were at risk now the full details are in this post-mortem with the timeline as well and action items which you can check out I'll link it in the YouTube description below all right so high has been launched on test now now I've talked about high before it's a multi-cladral fork of rye on optimism so they're practicing getting high on optimism girly right now so the full launch announcement post is here in the in the Forum basically uh I've discussed this before uh I've

discussed hi before when I think it was first announced that it's a multi-cladral version of of Rye uh the collateral types will include these listed here eth Rye lsds like stf and R8 and assets on optimism like op and uni with room for expansion and I remember I think mentioning at the time it's quite funny that rye was started and was just like eighth collateral only because it wanted to be as decentralized as possible and it wanted to just use use Eve because it was uh it was trying to follow in the footsteps of single collateral die but it was using a different mechanism to keep it I guess like quote unquote Peg um but now they're trying something different and they're not pegging it to 3.14 they're picking it to a dollar

because it's I guess like um from a uh a psychology perspective no one wants to kind of trade with something that's paid the 3.14 if it's if it's supposed to be a stable coin they wanna or a US dollar stablecoin they want to trade it when it's packed to a dollar but the reason why I find it funny is because I've said for a very long time I don't think you can create a truly decentralized scalable and stable stable coin with just eth as collateral even staked as collateral it just does not scale very well because you need um you know you obviously you need them if markup to be not only really high but you also need a lot of people to be minting this uh stable coin against eth in order to in sorry in order to get

your market cap really high now at the same time I've been thinking a lot about this recently when it comes to stable coins I think think there is room for stable coins that don't try to be this huge thing uh don't try to be like a trillion dollar stable coin that everyone uses and and try to grow as much as possible I think there is room for something that may be backed by uh I guess like lsds because people want to put their lsds into something and and you uh use it as collateral uh and then just backed by that and then that stablecoin can be used within the ecosystem for those kinds of people so it could still remain like a niche area but still be useful to the people that that wanted that want to do it that way so high might be something like that you

know it could be possible but we'll have to see how that shakes out there so yeah it seems like they're going to be going on to the optimism girly test net uh before a mainnet launch sometime in the future all right so I came across this project that I forgot to mention the other day called a builder so Builder is basically uh the product hunt for a web three so I guess if for those of you who don't know product Hunt is this kind of website that you go to and you can find out all about these new kind of products you know whether they be like web 2 products or products in in the real world essentially uh in order to just go and and I guess use them and and check them out and and see what's new there well

with build up the defy dude here in JC are taking this um this concept and bringing it to a web 3 and trying to track uh web3 projects and the like so if you go to builder.dev you'll be able to see uh everything here so you can see that they've got like this week you can see the new pro products that have been kind of launched or or featured this week and then you can submit your own project here as well there are and you keep it keeps going down the list here and you can upvote different things if you log in or register I wonder if they've got like an ethereum login in no not yet it seems like logging with Twitter or log in with Google uh so far maybe they'll be adding login with with web3 soon like logging within ethereum while that'd be pretty cool

um I think this is still early days though obviously still uh not uh not you know not not totally fleshed out or anything just yet uh uh still I think it's just launched the other day actually June 5th yeah it didn't launch very long ago but still something cool that I figured was worth highlighting just for you guys to find new projects because I know people are always on the hunt for new projects especially a lot of people want to want to airdrop Farm new projects as well so this might be something that is interesting for you to to keep an eye on but yeah I'll link this in the YouTube description below or you can go to buildart.dev Builder not ER so it's Builder but with an a b-u-i-l-d-a DOT Dev that's where it is there and I'll link uh DFI dudes uh Twitter Thread about this in the YouTube

description below for you to check out all right last stop here uh you guys will remember that the ukidao uh I guess Dao was uh uh was pursued by the cftc uh quite a while ago now so there was a case brought against ukidao I can't remember the exact case but essentially there's an update on the uh from this case over the weekend so uh there's a tweet here from Gabrielle that said I'm seeing some misleading takes on yesterday's ukida decision here are some notes clarification from my understanding so there was a default judgment made uh so ukida didn't defend itself so the cftc won the case without needing to prove its theories which means that there's limited presidential significance here because of the fact

that like literally ukidad didn't defend itself so really as as Gabe said here to default judgment cftc one by default because of that and then Gabriel continues by saying no ukidao members were held to be personally liable for anything uh I can't stress this enough nearly every commentator is getting this wrong ukidel itself was held to be liable for the alleged violations not its members and the judge held ukidao is an unincorporated association under California law and California has several types of unincorporated associations some can impose personal liability or members sometimes the judge did not decide ukidao's type of unincorporated association or potential for member liability so the results were that cftc has a judgment against ukidao

itself for 645 000 but no clear path to getting paid that dollars out of ukidas property which is the tokens in the treasury obviously and ukidao is enjoined from continuing to run the Uki protocol which likely means must block U.S users or shut down and the cftc can get ukidow's website taken down passed by providing a notice of the order to icann and seizing the domain but potentially through other means as well so yeah I mean it seems like a non-kci in terms of the precedent that it sets for any future actions against ours since it was a default judgment so that's I guess probably I don't know if this will be the end of this case here but yeah unfortunately there's not much more to say about this case other than uh the cftc one by default because did

not defend itself uh but yeah just figured I'd update you guys on that one but I think on that note 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 subscribe to newsletter join Discord Channel and I'll catch you all tomorrow thanks everyone