More ETF hype, Polygon and Near team up and more - The Daily Gwei Refuel #687 - Ethereum Updates

Transcript

hello everyone welcome to another episode of delway refuel work up the latest news ether ecosystem I'm your host and this isday the 9th of November 2023 all right everyone let's get into it so some fresh ETF hype today out of uh James here who I've highlighted on the refuel a bunch of times before he works with Bloomberg uh so he put out a tweet thread today saying new research note uh we still believe there's a 90% chance by January 10 for a spot BTC ETF approval but if it comes earlier we are entering a window where a wave of approval orders for all the current applicants could occur now this window I believe is the next week week and a half two weeks so if the ETFs are approved in that time uh it seems that James uh and his colleagues would not be surprised by

that and honestly I wouldn't be surprised by that either I have said before that the ETFs could get approved any time between now and and Jan 10th and it would make a lot of sense to probably approve them I guess over the next couple of weeks because just because they're approved doesn't mean that they're going to go live for trading you know they think there's like a minimum one month before they would go live for trading but it's probably going to be longer than that due to the holiday period so maybe the ideal timeline is basically approve in the next couple weeks then wait until January where they actually start trading you know start trading in a fresh new year um and everything just kind of uh begins smoothly like that at least that's kind of my my hope to be honest cuz I remember I remember I I

basically have been saying for a long time now that I would have loved an approval to happen in q1 of next year but I guess like the approval is is really I mean it doesn't really matter if it happens now or like in q1 I don't I don't think that these things would probably start trading before q1 um or or before January from the looks of things even if they were approved in the next couple of weeks but regardless of that I think that the market generally has priced this in or almost priced this in at this point you know because what I could see happening and this isn't like Market or investment advice what I can see happening is is is basically that they get approved and then the market rallies a bit and then we kind of like I guess uh get people selling and taking

profits into into December into the holiday period and then when they actually start trading in January the market starts moving up again because we I think the open question right now for a lot of people is how much demand there is actually going to be for these products because I think a lot of people still have the wrong idea that Futures ETFs are anything kind of similar to spot ETFs and they may have looked at the E Futures ETFs and being like oh that wasn't much of a launch you know there wasn't many inflows there but as I've discussed before on the refuel plenty of times actually um with the futures ETFs they're just a vastly inferior product no one really wants them but everyone wants to spot ETF like I I have multiple people that I've spoken to these are not small small buyers they are definitely Wales um that

I've spoken to where they basically and they're in the US of course where they basically said that they will be buying a spot BTC and spot eth ETF day one but they would never touch the Futures products and it makes sense right the Futures products are just an inferior product it's not worth it especially if you're anticipating that a spot ETF is around the corner which it seems like it is at this point for BTC and then an eth one you know not too long after that so that's what I could kind of foresee happening cuz the market has really rallied a lot recently and it's not just BTC it's obviously everything else that has kind of rallied up and usually when you see these moves based on narratives uh people like to take profits especially leading into holiday periods where obviously people are going to be

buying presents people are going to be traveling people are going to be doing things that cost money people tend to take profits in those environments and you know I could be completely wrong here maybe we just rally the entire holiday period into January and we keep rally and it's up only forever but from my experience it doesn't usually work like that but I guess for what I assume is most of you uh given that you guys are I assume long-term investors this kind of stuff doesn't really play into anything what really matters is the macro or crypto macro Trend crypto macro I guess that's a new term crypto macro trend of if you believe we're actually beginning in the beginnings of a new crypto bll market and I think we are to be honest I mean I said a long time ago that I would tell you guys when I

thought that we're in a crypto Market again or at least kind of like in the very early stages I think we are in like the super early stages right now and what I mean by that is basically we're in the transition period from like the be/ crab into the ball like I think BTC has gone higher than I thought it would this year I didn't think it would actually get above you know stay above or stay far above 30k let alone be above 35k because at time of recording it's at 30 almost 37k which yeah has kind of like not shocked me but surprised me a little bit but I think that it makes sense given all the hype around the ETF stuff it kind of throws a wrench into things and honestly I think that if you look at it like that and you kind of

accept that the cycle maybe starting earlier than otherwise anticipated it might end earlier than otherwise anticipated as well we might be going for like a 3.5e cycle instead of a 4-year cycle and um in that environment it becomes actually harder to kind of pick where we're going to go from here like if this is the early stages of the bull market right now um and BTC goes to all-time high in let's say Q2 next year instead of Q3 or Q4 then you could say that the cycle has been brought forward by at least 3 months maybe 3 to 6 months and then people say okay well where's the top from there well then the theoretical top of the market becomes a Q4 next year q1 2025 but it's hard to tell I think the ETFs definitely throw a spanner in the works for things especially when it comes to the actual

asset that has the ETF because I do think that the BTC ETF will have a dampening effect on btc's volatility um generally and I mean BTC is already an absolutely massive asset it has over a $700 billion Market I think people often forget just how big of an asset it is so when you're looking at it like that there might be uh you know obviously the the height pump The Narrative pump um but then we'll have like a a crypto be Market again and I'm really really curious to see how BTC would fare given that there would still be inflows into the ETFs it would still be passive inflows there that may have a strong dampening effect on BTC um in in in the next bare market and if the E ATF is approved before the next bare Market as well you could expect something similar

there but usually with the these ETFs from what I've read They're they're very much backloaded in terms of volume where essentially they start off slower than they would be in a couple of years in terms of inflows because as you know the product exists for longer as it gets more Lindy as more people hear about it learn about it allocate to it right trade out of other things into it the the the the volume tends to be kind of like back weighted it's not in the first year or so it's more so in in the later years and then you have like a passive kind of terminal inflow into these things as as time goes on there because if you think about the amount of money that could flow into the ETFs it's uh potentially you know tens hundreds of billions if not maybe one day trillions

of dollars depending on the time frame that you're looking at because there's tens of trillions of dollars that flow into these uh these things generally for like retirement accounts and stuff like that uh uh uh over over time right over longer periods of time and if only 1% of that goes into crypto generally BTC and E spot ETFs that's that's a lot of money but as I said the market cap of BTC is already really high and I think people kind of tend to forget about that and you know it's funny because I I tried to explain this to someone recently and I Ed this example of if you look at btc's market cap and it's a bit over 700 billion right now but let's just say for I guess like argument sake it's 700 billion right now if BTC does a 2X right just just a 2X it adds another $700

billion to its market cap which is bigger than the rest of the market combined right so it's bigger than the rest of the crypto Market combined and that's BTC only doing a 2x so this is the order of magnitude difference that you're dealing with with because people will often look at these smaller assets and be like oh my God these smaller assets are outperforming BTC and E by so much it's like yes because in a bull market they are much much easier to push up but they also underperform in the bare market right for the same reasons but in a bull market let's just say you have an asset that has a$1 billion market cap right for that asset to go 10x it only gets it to a $10 billion cap for BTC to go 10x from here would be a $7 trillion cap right so the orders of

magnitude are just completely different here it's just it's it's it's such a difference that it's not even worth comparing but the reason why over the longer term through bears and bull cycles BTC and eth tend to outperform pretty much everything else is because that's the things that people actually want to hold for the long term that they they take profits into those are the stores of value of crypto and that's why you see that outperformance there but you have to really just look at the market cap you can't necessarily look at the the performance that these assets do in the bull market because Ethan BTC are not going to do a 10x right I mean BTC is not going to go to 360,000 this cycle maybe it does one time one day right but it's not going to 360,000 is eth going to like 20K I not this cycle I don't

think so as bullish as I am on eth that's a crazy amount because that would mean that eth e market cap would you know if we 10x it from here would be over $2 trillion in in this cycle right so when you look at it like that uh and you look at it from a market cap perspective the amount of money you need to move market caps like that is crazy High um so so yeah that's that's generally the way I look at these things but uh overall obviously I still think that the ETFs are incredibly bullish I do think that they will have a really long-term positive effect on on the assets that get them like BTC and eth for example um and those assets would just continue to solidify as the stores of value as maybe only the only stores of value the only assets that achieve

that status within the crypto asset uh ecosystem there but anyway moving on from that one uh there was a tweet here that I saw today funny tweet uh so Gary gendler was on some panel and he basically said that uh something along the lines of we live in a fully digital electronic age and not just in trading we already by the way have digital money it's called Bank deposits which obviously is an insane thing for anyone to say um and an insane thing for anyone in crypto to here because we don't have digital money with bank deposits like th that's not digital money that's just an IOU essentially and Tong V here who used to work at the SEC quoted tweeted this and said last I checked you can't self custody Bank deposits nor transfer them

near instant in instant instantaneously to a total stranger without the need for a bank or any other intermediary 24/7 365 days a year nor are they programmable which obviously is kind of like the whole point of what we're building with with onchain products right and I think that these These are the very you know some of the best points you can bring up uh with is that like you can self- custody your assets your crypto assets because they are truly digital assets they're digital first they're not just assets that have been kind of printed onto some uh either either printed physically or they've been printed in some centralized database and they're maybe digital but they're not actually um digitally native and decentralized which means you can't self- custody these things right you can

self- custody cash right and but the thing is that you can't actually self- custody digital money to turn your cash into digital money you have to go through a centralized intermediary like a bank right and banks are extremely inferior compared to what we have within crypto on the front of obviously um transfers you know being able to do transfers being able to verify those transfers uh being able to do it uh without intermediaries being able to do it 24/7 365 days a year and being able to program those assets to do any number of things and obviously I'm preaching to the choir here but garyan are saying these things is just like a symptom of the of the old world the old world thinking that we already have digital money which we don't all we have is a

digital representation of a of of the Fiat kind of like currency which is either you know printed physically obviously as cash and coins and stuff like that um or issued on a centralized database as just a kind of sell in a spreadsheet which is not digital money digital money is crypto money it is money that is issued on a decentralized programmable blockchain and to me really the only true forms of digital money that we have today that would be considered to me to be decentralized uh and secure would be BTC and eth um this stable coins basically the same thing as well okay stable coins centralized stable coins are very similar to bank deposits in that like they're just an IOU on cash in a bank account yes these assets are more

programmable because they're on a blockchain uh and they're able to take advantage of like near instant transfers and stuff like that and you can self- custody them but really it's in my mind it's not like true self- custody because at the end of the day at any moment Circle could freeze the usdc in your account tether could freeze the usdt in your account account and you didn't have true self- custody over it all you really had was an I that can be zeroed out at any moment so if you want to have true self- custody of a digitally native asset I and and for for it to be secure and decentralized and basically near impossible for it to be seized or for it to be stolen or anything like that um uh would be betc and eth in my in my mind yeah but yeah

just something that I figured was worth highlighting because it is a symptom of just the old world thinking here thinking that we have digital money with bank deposits we don't they are just so infurious and definitely not something that we want to be striving towards we want to keep building what we're building with uh crypto systems and blockchains right moving on here to some staking related chat so Rocka pool's main a second main net birthday was today and they've released a blog post here outlining basically the road map for Rocka pool for I guess like the next 12 to 18 months or something like that and this includes all the upgrades that I've talked about before and the two major ones are hou and I believe sattin is the other upgrade uh that they talked about here if I scroll down to the bottom there is

um another upgrade that they talk about uh I think it is Saturn Saturn uh I'm just looking here yeah Saturn release so uh Houston is currently or soon going to be undergoing Audits and I think it is aimed for like a main net release in q1 satin in Q2 of next year and these bring um with them upgrades such as like the mega pools that I've been talking about on the um on the refi before growing the overall protocol growing the RF Supply uh redirecting the RPL rewards from the o to the p and then paying them out to uh to basically increase the overall Effectiveness and efficiency of the Rocka pool protocol and all that good stuff there but this is a pretty lengthy blog post I suggest giving it a read if you're at all interested in what's

happening in the Rocka poool ecosystem over the next few months uh which I am definitely very interested in especially when it comes to like the scaling of Rocka pool because as I've mentioned plenty of times in the past the main issue Rocka pool faces is scaling the r Supply basically like it's got plenty of node operators you know there thousands of node operators but scaling that Rath Supply so that it can be competitive with other liquid staking Solutions out there so if we look at rider. Network here which is the one of my favorite websites for looking at what the stake distribution looks like you can see where Rocka pool is Right rocker pool is about 2.84% of the network I think it's spiked at about 3% um but you know it's still the top five uh and it is still this the second largest liquid staking

protocol but it is severely limited in scalability right now compared to something something like Lio right like Lio is at 31.6% and Lio is much more scalable because it has the fact that you can basically just uh um send um eth or or kind of like deposit eth into the lto contracts and then that eth goes to 36 entities instead of thousands of node operators just those 36 node operators IM Min stth and there's no requirement for like uh for node operators to collateralized with the native token that being ldo whereas in rockol there is with with ar so it's just generally a lot l scalable but in return for that less scalability you get more decentralization that was the trade-off that was made is that we have as I said thousands of node operators for Rocka

pool compared to Lido's 36 node operators and that was the trade-off that was made now the plan in the I guess as part of the Rocka pool road map but generally uh what they want to do is essentially hit that goldilock zone of still being as decentralized as possible with as many node operators as possible but also being uh you know scalable enough to compete with the bigger LST protocols out there like Lio for example and any others that may uh be coming online that may not be as decentralized but be more scalable that could potentially rival rival Rocka pool here and there are others out there I mean you guys know there's plenty of them out there right now but in terms of how far along these things are rockol is the furthest Along by far and Rocka pool I think I saw a stat recently accounts for

30% of the nodes like full nodes on the ethereum network which is a crazy number right 30% of all full nodes on the ethereum network are actually part of the rocket Network here which is I think is really positive yes it's a high number but it's really positive because when you think about let's just put an example here so if coinbase was running 30% of the full nodes on the ethereum network that in my mind would be quite bearish because coinbase is one entity but rocker poool is not one entity rocker poool is a community of node operators thousands of them all running these uh full nodes um as pretty much like individuals for most of the time there are some note operators in there that are companies and ENT and and bigger entities but for the most most part it's individuals and those individuals running those full nodes are

worth a lot more than just like one entity running those full nodes right so I think that's actually really bullish for the decentralization uh of ethereum and obviously of Rocka poool as well but anyway you can check out Rocka pool's blog post I'll link it in the YouTube description below for you to do so all right swell put out a tweet today talking about their plans with reaking so they said here swell is set to enter liquid raking uh very soon and they're actually part of the T contest for IG lay right now that I've talked about in the past um the one that I've I've talked about on the refu a couple of times there you can check that out but in this tweet SW details exactly how they're going to be getting involved in the uh I guess liquid raking game here because you can see what this looks like

you know uh reaking LST and then you restake your s SW and you get like a staked LST here it's it's pretty wild when you when you kind of look at this this token's called um restak swe so it's like a restak Alis so restake swell e is an LRT liquid reaking token that unlocks liquidity for restake lsts and there's some graphics here basically showing what this looks like but yeah this is this is actually pretty crazy when you think about all the stuff that can be done here yes it adds more risk I mean the the compounding of the risk here I mean is something to I guess like take pause and and realize could be a potential um potential I wouldn't say bad thing but potential kind of uh uh risk to maybe swell but also igen layer

and ultimately ethereum but it depends on the size of these things like it depends on what happens with them it depends on where the assets sit it depends what people use them for because at the end of the day this stuff's going to happen no matter what we do like I think this is where people kind of get the wrong idea where they say oh we could just do um you know this on the protocol level or this on the protocol level and would it would fix these these potential issues it's like no it wouldn't because anyone can issue a derivative which is basically what these things are they're derivatives right anyone can issue a derivative for for anything any asset like you can issue any derivative you want and as long as you have the liquidity there and as long as you're able to grow it people are

going to use it they're going to use it as collateral they're going to use it as a quick way to enter exit and enter different positions so I think that rather than focusing on ways to prevent this stuff from happening what we should be focusing on what I think we're generally focusing on is is ways to accept that this is going to happen and then see what the worst case scenarios are and try to architect different ways around recovering from them in case they were happen and I think ethereum already has most if not almost all the defenses it needs to recover from or protect itself against things like this and against increasing risk at the liquid staking level and at the reaking level but we won't know for sure until these things are actually tested and that's the whole point of these things growing

and being able to see them play out in the while but yeah you can go read sw's tweet I'll link it in the YouTube description below for you to do so right just a quick shout out here super fears put out a reminder for us all that ethereum is strongest when individuals run nodes and validators from home and there are lots of pretty easy ways to do this and he links a bunch of them here such as nice node and obviously Rocka poool and dap node and all that good stuff there you can check that out I'll link it in the YouTube description below and there's also eth wizard as well from Remy Roy which I've highlighted on the refill as well for you guys but yeah I mean it honestly has never been easier to run an ethereum full node and validators not only is it

easier to do from a hardware perspective where you don't need the you know powerful Hardware to do it it's really easy to do from from a software perspective now especially with tools like dap node and nice node where essentially they give you a nice user interface uh that you can just run with and then you can just run a node uh and it's all handled uh from this user interface there's no need to go onto the command line and or anything like that so you're not scared away from from doing that there and it's also giving you a nice interface to handle things like upgrades and monitoring the health of your your full noes which is I think the two most involved you have to be is handling upgrades so whenever there's a new ethereum network upgrade to go live you need to make sure that you're box is

upgraded and also handling anything that goes wrong with it such as your node going offline or Hardware becoming corrupted or or or or something like that cuz those things are inevitably going to happen but it's just a fact of life and there's no real way around that like you can't make it uh you can't make that go away like Hardware is always going to fail at some points um you know maybe you run into issues where your SSD isn't big enough and you have to upgrade your SSD because you've used up all the space or maybe you run into issues where you're you're trying to die diagnos why your full node went offline but then it's really because for some reason it lost network connectivity so all of these sorts of things are not things that can be necessarily abstracted away but what we can do is make it easier for

people to to monitor the health of these things and then give them guides on how to actually diag uh troubleshoot these things and and fix it for themselves because I think that we don't want to get to a point where people have like such little patience to try and rectify things because they get frustrated with them that they just go offline and stay offline we want people to run the full noes and then if anything happens we want them to be able to uh fix that themselves troubleshoot that that themelves and the only way to do that is provide ways for them to do that whether that be guides or easy to use tools or anything like that there but as I said you can check out super fizz's tweet I'll link it in the YouTube description below for you to do so all right interesting announcement

out of the polygon ecosystem today and I guess like the Nia ecosystem as well so for those of you who don't know Nia is a layer one blockchain that's been around for quite a while now I think their claim to fame was claiming that they were going to be able to do execu sharding um which is something that ethereum abandoned a little while ago uh and they have done it to be fair but as a layer one they haven't really seen too much use usage over the years but they have teamed up with polygon uh to basically uh build a ZK WM Prova which will allow any WM or web assembly chain to prove on ethereum and have ethereum layer to security and sandep says here you know why is this important well apparently according to the announcement near mainnet will be fully Pro proven to

ethereum using this ZK wasm Prov this is huge because Nia mainnet is able to prove its entire State and execution to ethereum almost like a sovereign validium this creates a trustless ZK Bridge from neara to ethereum so the liquidity can move to and fr from between Nia and the ethereum ecosystem so it's not technically I guess a it's not a rollup right it is technically a layer two but it's it's not even like a a validium like I've talked about before it's a sovereign validum where essentially you'd still be relying on the near validator set for the security here but you have a fully trustless ZK bridge between near and ethereum which when when you really think about what what makes a layer to the most secure it can be um or I guess like the most trustless it can be it really comes down

to the bridges here so that's very very cool and then the second point is that poly the polygon ecosystem gets uh web assembly app chains perhaps even with the Nia main net codebase where Debs can build a sh a sharded smart contracts platform where app Debs can build smart contracts using any programming language of their choice like C++ rust and many others so obviously we know that arbitrum is building their web assembly stuff with um with their arbitrum uh oh man I forgotten the name right now but uh there's a there's a specific name for it that's just alluding me right now they've been doing that stylist arbitrum stylist they've been doing that for quite a while other ecosystems are working on this I think this is really the end game right just be just making it so that anyone can build and write smart contracts in languages other than

solidity uh and be able to compile them down to web assembly and then obviously to evm uh and then go beyond that because the evm is going to get upgraded over the next few years especially at layer 2os I believe the evm is going to become paralyzed at layer 2os right now um there is a project called monad which is a layer one uh uh not a layer two but they're working on improvements to the evm such as paralyzation which is something that the uh salana virtual machine or the svm has which is very powerful and also working on things like local fee markets and stuff like that but all that stuff is going to come to layer 2s and that's just going to improve the layer 2 ecosystem along with these web assembly upgrades and and Technology that's coming into the ethereum ecosystem with polygon and N

teaming up here so very cool to see this today and I guess like just more evidence of layer ones not turning into a layer two but basically coming into the ethereum ecosystem and saying how can we you know better align ourselves with the ethereum network and do it in a trustless and secure way and then then give value back to the ethereum network via uh via the layer 2 ecosystem which is just very very cool to see anyway I'll link this announcement in the YouTube description below you can go check it out for yourself all right last up here just an announcement that the another ethereum scaling startup called stacker has raised $5.5 million in a seed round so the what stacker is trying to develop is something called micro rollups so basically I think stacker is a rollup as

a service uh yeah so they're basically roll up as a service infrastructure provider where they want to create micro rollups or app specific rollups which are aimed at helping developers launch scalable web 3 applications using web 2 programming languages and they said here stacka said that it's modular framework will let developers Focus solely on the application specific logic while it manages the underlying rollup infrastructure so I guess just another one of these teams that are entering The Fray of making it as easy as possible to launch your own rollup on ethereum launch your own layer 2 Network on ethereum without any of the additional complexity of having to worry about the you know the code base having to worry about um all the other stuff that goes with it like spinning up um you know infrastructure from scratch and writing things from scratch uh and as I've said

before there are plenty of these things now you know there's stacker there's uh a Clips there's Sovereign there's obviously the bigger ones like the op stack the polygon cdk ZK syncs working on stuff arbitrum orbit there is so many I mean I think we have too many at this stage right um but and this goes back to a blog post that actually um Paul and published today on warcast not on Twitter they've talked about the fact that the application layer is still being neglected we're just building so much of the uh the block space layer the infrastructure layer with layer twos and and layer ones that we've just ignored the application layer still and I think that that is true uh and I to an extent but I think that it's getting better over time but still like we have so much block space guys we have so like it's

not just that layer two that we have this block space the layer ones have had this block space for ages but we're not filling it because we're not building applications that we should be building to get the demand there and you know I I I actually talked about this in in further detail on the podcast I did that I that I highlighted yesterday that'll be out on Tuesday but yeah if you want to read Po's blog post it's actually on warcast I don't know if I have the link handy right now but it's on I should say farcaster you can go check out their profile and check out the blog post there was also linked in the in the um daily way Discord channel uh but yeah I mean I think that they definitely needs to be more focused on the app layer than infrastructure layer going forward but

still cool to see uh stacker be able to raise this money to develop uh more infrastructure generally um yeah you can read more about them in these post which I'll link in the YouTube description below but I think on that note that's going to be it for today's episode so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up C newsletter join the Disco Channel and I'll catch you all tomorrow thanks everyone