New staking guide, Growthepie updates and more - The Daily Gwei Refuel #667 - Ethereum Updates

Transcript

hello everyone welcome to another episode of daily gray refuel where he kept the latest news in ethereum ecosystem I'm your host Anthony 5th of October 2024. right everyone let's get into it so I did speak yesterday about the uh Ripple case and about how the SEC lost its uh kind of appeal uh in in court here now Justin Slaughter who's the policy director at Paradigm had a great take on this that came out after I did yesterday's video so I just wanted to add this on to the things that I said yesterday he said the major implications of Judge Torres refusing to allow an interlock interlock Turi Appeal on Ripple uh one no chance of judge torres's ruling being overturned before the end of 2024 as the SEC had obviously hoped number two no chance this case can

get to the Supreme Court before 2026 and then Justin continues basically we continue to live in a world where the SEC is losing cases in the lower courts but the Supreme Court has yes to yet to rule decisively on whether crypto tokens might be Securities subject to SEC jurisdiction commodity or commodity subject to CFC cftc jurisdiction or something else and he continues note I'm of the opinion that the Supreme Court which is very hostile to agency Independence and Powers which are explicitly granted by a recent congresses will be very hostile to the ssc's arguments here so I think going to the Supreme Court on Ripple will be a Bad Bet for the SEC so yeah this is more of what I was talking about yesterday about obviously how um Ripple lost this this appeal here but I didn't

touch on the fact that this cannot be overturned you know this um this case cannot be overturned uh before the end of 2024 so I believe that they can't appeal again until the end they being the SEC can't appeal again until the end of 2024 and no chance that this case can go to the Supreme Court before 2026 so we have some breathing room here uh on on this front uh which is pretty cool to see and it's not not a loss for the SEC obviously as well but it's interesting for Justin to bring up the Supreme Court here now obviously you guys know I'm not uh I'm not US citizen I'm not uh not totally versed on how the U.S system works but from my reading uh the Supreme Court uh as Justin says yarn is very hostile to these government agencies so the SEC probably doesn't want these

cases to end up at the Supreme Court because then if the Supreme Court basically votes against them or I guess um settles against them then that's even worse than what they're in now and it basically puts them in possibly from my understanding the worst position that they could probably be in when trying to bring enforcement actions against crypto companies here but I still think they're in a pretty bad position already I mean as I said they've lost all these cases so far they're approving the ETFs as well like the Futures ETFs uh and it looks like they're going to be approving the Bitcoin spot ETF very soon to be honest and you know I've seen some people say it could actually happen this month because of the uh the grayscale conversion thing I don't know for sure if it'll happen uh this month or anything like that but as I said to you

guys it's happening either in Q4 or or q1 like there is in my mind there's really no doubt there about that and it's just a matter of kind of when the SEC decides to to approve it here but I think everyone's pretty much like already accepted the fact that it is happening and obviously from then in all we're kind of speculating on when the spot ETF happens look if if eath gets a spot ETF next year like that that to me would signal a just complete 180 that the SEC has done and it's kind of funny because it would water down the sec's arguments they would have a really hard time going after really any other kind of crypto asset or crypto asset company or crypto company I should say in this space

um and also it would really really hurt their chances of of winning the coinbase case as well right so we'll have to see how that all shakes out but I also wanted to know what the coinbase case I had a few people talk to me about this I want to reiterate again that coinbase is the one being sued by the SEC not the companies of the tokens named in the coinbase suit the the tokens that were named in the coinbase and binance suit were named as I guess like evidence that the SEC wanted to put forward to argue that coinbase has been operating illegally by trading unregistered Securities but the SSC hasn't gone after hasn't gone off the polygon hasn't gone after Lido right these entities they've gone after coinbase and coinbase alone and they've used these arguments of you

know uh Matic is it a security solves the security aldios are security and a bunch of others in there in order to to kind of like uh bolster their case right so I figured that was worth reiterating because I I've seen people still be confused about that and that's really kind of bullish right because it means that if coinbase wins uh then it's that's a really great precedent but also it shows that the SEC in particular doesn't really want to go after the asset issuers themselves uh you know because if they did they'd go after like they do go after them sometimes but a lot of the bigger ones they haven't really gone after and I think that's because they know that they would have a hard time because these uh these these projects would actually fight them in court like obviously with the Ripple um

thing they lost there but these other kind of um uh projects like the foundations behind them would definitely take the SEC to court and on top of that I don't even know if the SEC has jurisdiction over most of these things because these tokens weren't actually issued in the US and a lot of the time if they did an icr or a token sale it was not uh available to be sold to U.S retail investors it was only U.S accredited investors um so the and and all of the kind of like kyc and AML stuff was done through there so when you really look at it from that perspective yeah the SSA has a really uphill battle here and I feel like they're just going to keep losing if they go to court so yeah I mean no uh love lost there from me definitely think

this is a good thing for crypto uh and it's great to see Justin here adding some more clarity around uh this recent ruling in in the Ripple case here all right speaking of the ETFs the eighth Futures ETF started seeing some flows today uh not a ton but some apparently 15.6 million dollars with Van neck uh in an early lead over Pro share CR now as hell press noted in the replies here this could be due to some uh kind of investors that uh that Vanek has gotten involved here or could be some some market makers or seeding Capital whatever it is it's still good to see a little bit of volume kind of popping up here but as I said yesterday it doesn't really signal anything because we're in the depths of a bear Market in the depths of the I guess crab market I should say uh these products

are not necessarily very interesting uh right now especially they're not interesting to crypto natives anyone buying crypto right now is probably just buying spot right so if the if we if we saw such weak inflows for a spot ETF I would be more concerned I guess you could say but when it's a Futures ETF I don't really care too much about that and as I said like the the Bitcoin Futures ETF launched at the top of the market last time in the end of 2021 there so if it was to launch today I doubt it would seem much more inflows than the E Futures ETF has seen because as I said as I've been saying for months now the only people buying crypto right now are the ones that are buying for the long term you know you've got the Traders the day Traders stuff like that

but they're not they're not uh they're not relevant to my kind of argument here in terms of who's buying these things to hold for potentially longer periods of time like especially when it comes to ETFs you know people will probably want to hold them for for years to take advantage of the tax benefits here um but you know the only people doing that right now the long-term crypto investors and they're buying spot you know I'm not buying a Futures ETF I don't really know anyone in crypto that is buying a Futures ETF so that's another reason why these products have not kind of uh have not seen those inflows there but as I said it is not really any kind of signal kind of noise to me but I figured it was worth kind of updating you guys on this anyway all right so I came across these tweets

today from steak or stegosaurus dot eath so apparently they've put together a a comprehensive staking guide here which you can go check out for yourself and this will apparently get you all up to speed and help you help you become a solo Staker here and he's got a tweet about this which I'll link in the YouTube description below but I had a quick look over the guide and over what what they've got packed in here it's pretty comprehensive you can go to sections like roles of a node operator you can actually see diagrams just describing what a node operator does which is pretty cool I haven't really seen that kind of explicitly uh uh uh uh printed out before then you have responsibilities of a node operator rewards and penalties as well which is pretty good uh to to kind of break down and as you can see they're breaking down

the rewards by referencing the ultrasound money website too uh and then you've got like a overview over what setups to use uh and and kind of how to install the operating system install the validators all that good stuff there so if you've been on the fence about setting up your own solo stacking operation and you wanted an easy guide to to kind of help you along with that I can recommend this one as I said I went through it and it seems pretty pretty good so definitely go check this out I'll link it in the YouTube description below but this isn't the only one that exists there are plenty of guides out there today but I think when it comes to staking guides you want them to be as simple as possible while also answering your questions like the the top question for a lot of people will be you know

what are the Rewards well the rewards and and penalties of course are listed at the top here and the the funny thing is is that with the penalties people are often very worried about going offline and as I've described plenty of times in the refill before going offline is not a big deal uh unless you go offline uh with a lot of other validates at the same time which I've actually covered here covered here in the section of coralab downtime unless that happens you'll be totally fine if you just go offline because your internet went off or your power went off or something like that uh the penalties are extremely small uh and that it's called an inactivity leak so you're not getting slashed you're just getting a slow bleed of eth out for being offline which can be made back up once you come back

online now obviously the biggest I guess like um loss that you could suffer is that if you were going to propose a block in the time that you were offline you would miss the block and then you would potentially miss some juicy rewards there but I mean for the majority of people the chances of happening is pretty small you know unless you're running a lot of validators it's It's you know it's pretty small right and then they go on you know double signing the actual way to get slashed and stuff like that which is which is pretty cool to see they talk about client diversity as well which I thought was really great um but yeah anyway I'm not going to cover the whole thing here you can go check this out for yourself I'll link it in the YouTube description below for you to do so

all right the privacy and scaling Explorations team are out of the efvr has a great little EIP draft here for something called proof of solvency which is a standard for centralized exchanges to use to prove their solvency in a privacy preserving way at least that's the kind of um a Vibe I get from this or the kind of read I get from this so there is currently an EIP draft there is a two-part explanatory blog post which you can check out here and a GitHub organization with more details about this you can go check this out for yourself I'll link in the YouTube description below but I wanted to break down what this kind of is from a high level so there's been this push for a while in the crypto ecosystem for many years now honestly honestly of getting these centralized exchanges to essentially sign messages

over what addresses they own in order to prove that they have the assets that they say they do now there is actually a section for this on coin gecko so if we go to coin gecko I'm going to bring this up to show you what this looks like um here's uh here's coin Gecko and then you go to let's go to crypto exchanges at the top and then you can see the reserves data is listed as available or unavailable and then there's um and then it's got little notes here so if you click through to them you can actually find this data but reserves data is only one uh piece of the puzzle because when it comes to solvency you have to actually account for the amount of crypto in reserve and the amount of debt The Exchange has or the amount of I guess liabilities I should say that the

exchange has right so the the liabilities and um and the and the the assets that they control the reserves have to match or else you basically have a mismatch here and you potentially have a a kind of um a kind of situation where if for some reason there was a bank run on the exchange uh like for 100 of the assets on there they wouldn't be able to meet those uh those kind of withdrawal liabilities because of other liabilities elsewhere and we obviously saw what the worst case scenario of this looks like with FTX recently um but yeah this EIP from my understanding would basically make it so that it was enshrined in the ethereum protocol where essentially these um centralized exchanges could could prove their solvency uh in protocol here so yeah you can go read more details about

this as I said there is a detailed blog post in part one and and part two uh which I'll link in the YouTube description below but that's essentially my read on it but I may have gotten it wrong but you can see yeah assets and liabilities they already list this out here and basically uh that that's what solvency is solvency isn't just having the assets it's also having the assets matched against liabilities uh and vice versa there so you can go check that out we'll link it in the YouTube description below for you to do so all right so Tony uh the Mev Guru really or the Mev data visualization Guru that I've I've talked about a bunch of times on the reefer before has a new chart out here where he said this chart shows slot shares of Builders within Mev Boost payments intervals in eth while Builders

such as eth Builder land many blocks with small Mev Boost payments Beaver build seems to leverage a Competitive Edge as Mev opportunities uh increase so you can actually see just a breakdown here of what the block building landscape looks like the block building landscape is incredibly incompetitive it's incredibly specialized and it's very intricate in how these different Builders want to take advantage of strategies because there's obviously not profit not not a lot of profit in in every block right and it depends on Market activity depends on on what the gas prices are depends on what's happening on chain but there are plenty of instances of Builders foregoing building blocks because they're just not profitable enough for them to do that and they'd rather wait for for other blocks to to come along and then maybe

the block just gets built by a vanilla validator because of that or it gets built by another Builder that doesn't really care uh or or has less of a market share uh but yeah this whole kind of Builder market and and I guess build a search are kind of ecosystem is really fascinating to me and as I said Tony is the master of visualizing all of this you can go to his Twitter profile and check out all his websites through his his bio here uh but this is also an issue for the ethereum network generally to solve right where I've described before about how having centralization among Builders is the end game because really uh uh it's kind of like a Fool's errand to expect that we're going to be able to decentralize the Builder role because the incentives just aren't there but the uh the the problem is is that

the builders have control over what transactions make it into the blocks that they build and then that leads to censorship and as I mentioned last time four of the five top Builders are currently censoring uh the tornado cash transactions which means that it doesn't even matter if 100 of the relays weren't censoring uh it would still be centered because of the builders here so when you look at it from that perspective how do we solve that issue I've talked about inclusion lists before which are this thing that basically allows us to give power back to the validators rather than Builders being able to to kind of like a censor transactions and in that world it's okay uh if the builders uh you know are hyper centralized but still you want to see at least some competition amongst the builders right because at the end of

the day it's an incentive thing it's an economics thing uh but yeah it's kind of wild that only five Builders account for most of the market share on the network right now I do wonder if that can change in the future but with these other Protections in place like PBS and and also inclusion lists I don't necessarily think we're going to have to worry too much about decentralization decentralizing the Builder role here but anyway you can check out these websites as I said go to Tony's profile we'll link it in the YouTube description below for you to do so all right growthepie dot XYZ has some new updates to their website that they've announced today so they've said here we've added a few cherries on top of our Delicious Pie the new landing page of our website is up frosted with cool insights we've added two sections

Layer Two traction and block space overview um track Layer Two traction with aggregated data from all the top layer twos your convenience and experience are a top priority for us and now you can have an overview of the top gas consuming contracts across all the layer 2's block space in different time frames uh which is pretty cool to see as well but yeah I mean to go the pi dot XYZ has been this breakout website for tracking l2s just over the last few months I think they've been around um it's just been great to monitor their growth here monitor how many kind of metrics that they've been how they've been putting here because L2 beat is great but I think l2b um you know obviously doesn't track as much as grow the pie does but it also focuses on a different kind of thing of

essentially trying to break down the technicals and the weeds of the different l2s like if you go to l2b I I can show you what this looks like right now they've got some metrics that they show show here which is fine like the top TBR metrics you know the activity metrics value locked generally but then if you go down to their their kind of um Listia you can actually see they've got the PI right which is basically the um the decentralization pi essentially and the risk Pi they can show you what this what a current L2 looks like what stage it's in and then you click through to the L2 and you have an absolutely absolute wealth of knowledge about the L2 itself with links to contracts uh diagrams explaining how it works all that good stuff there whereas with grow the pie you have a lot more focus on the

metrics rather than that kind of I guess like under the hood stuff even though they've got some of that stuff as well they've got a Wiki here uh that kind of describes um the fundamentals and and the API and stuff like that as well as as a Blog which they go over some things and I'm sure they're going to be adding more stuff like that into the future but if you want to dive deep into different L2 metrics then grow the pi that XYZ is definitely your One-Stop shop along with um Doon analytics dashboards as well which have been pretty comprehensive too but they're more scattered grow the pie is more bad centralized repo of this which is which is pretty cool but there are so many metrics on here I'm not going to talk too much about it you can go check these out for yourself but

great to see them continue to uh can you continue to grow their own pie here uh and you can check this out I'll link it in the YouTube description below for you to do so all right so there's a new paper out here uh from uh akaki a David and Ed Felton from the off-chan labs team and the ethereum foundation all about studying the economics of of EIP 4844 and how how Roll-Ups might react to a new market so this is actually a proper research paper that you can check out but there's a tldr in this in this tweets right here I haven't read the research paper yet but this is the stuff that kind of interests me in that when 4844 goes live what's it actually going to look like in practice you know how many l2s are going to be opting to use

uh blobs versus cool data how how often are they going to be using these blobs like how often they're gonna be posting the stuff there are they going to be out competed by other l2s all those kind of open questions there I think this paper addresses a lot of them so I'll link the paper in the YouTube description below for you to check out there but when it comes to yeah the economics of these things it's quite fascinating and I think it's fascinating also from the perspective of okay in a 4844 world and all activity moves to l2s what is the L1 kind of activity look like you know do we make up for the lower single or I guess like um lower small amounts of transaction gas fees in aggregate gas fees because I've seen a lot of people kind of concerned lately where they've

said oh gray has been in the single digits for quite a while now on layer one you know the gas prices I should say not not quite um gas prices have been in the single digits uh for for a while now you know is that because people have moved to l2s sure that's an element to it but I think at the same time the Market's just quiet right anytime you actually see the market hit up a little bit gas goes straight back into the double digits like and and not just like the teens but but into the 20s and sometimes 30s as well so I think we have to wait and see what this looks like in a bull market like if we have 48 44 live we have all these l2s live what do L1 gas prices look like when activity picks up again I can pretty much guarantee you

that L1 is going to get expensive again and we're probably going to see Triple digit gas prices at some point as well uh because at the end of the day it's this concept of induced demand where yes we have more space right right now more block space right now but as soon as the man comes back that gets filled up very quickly the ethereum L1 hasn't scaled at all we haven't increased the gas limit of ethereum L1 right all we've done is off load some of this demand to l2s now there are still plenty of people on L1 there's a lot of liquidity on L1 and there's a lot of Mev to be extracted on L1 as well which is what pushes up the gas prices typically and where when is Mev most profitable obviously when the market is hot and when things are volatile so we're going to have to see

when uh when the bull market comes back what that actually looks like there but I don't I don't think I need to see it to guarantee that the gas is at least going to go back to you know probably mid double digits if not triple digits uh during the during the peak periods there uh but l2s will also see an explosive amount of growth too we're just gonna have so much growth across both L2 and L1 then it's going to be pretty awesome to see there but yeah we'll just wait till the bull market comes back hopefully next year as I've been saying but yeah I'll keep you guys updated on that one there all right so immutable has posted a tweet today uh titled immutable ZK AVM the road to mainnet and Beyond they continue with the recent launch of the immutable ZK evm testnet along with

numerous games that have already begun building on it immutable ZK evm powered by polygon is on track to become the home of gaming on ethereum now I should disclose I'm an investor in immutable and obviously an advisor to polygon here but I think the reason why I wanted to bring this tweet up today was one to give you an idea of where immutable ZK ZK VM is at today and you can actually read this this tweet for for an update on that but two if you're following along with the crypto gaming space I think immutable is probably one of the the top projects that you should be following along with because there are just so many games building within its ecosystem and they're not only building um within its ecosystem they're building on this new technology this zkvm technology that polygon has has put together here which obviously is still

on testnet but plans to to go to main Nets in December January as they've listed here and then uh the then there's going to be immutable ZK AVM dedicated app chains as well which can all interoper interoperate with uh with every other chain here so yeah just something that I forget was worth shouting out to those of you who are interested in crypto gaming you should go check out this tweet you should definitely follow along with immutable I'll link it in the YouTube description below for you to do so all right uh so polygon has announced today that as a result of community consultations the Pol contracts will be live on the girly test now now of course this is one part of the polygon 2.0 roadmap here of converting the Matic token to the Pol token uh and you can actually see the different polygon

Improvement proposals that were approved TR for this and you can go check this out in this link here uh but I've got a few questions about this as well actually and I just wanted to clarify that you don't have to do anything today you don't have to convert your Matic tokens to poll tokens yet this is just a test net and then when it goes live on mainnet you'll have a very long time to convert them there will be no rush and it will be done very seamlessly there'll be an interface for it and everything like that token um swaps like this or token conversions like this have been done plenty of times in the past that's not something new um but in saying that I would definitely check with your accountant or tax advisors on things like this because in some jurisdictions they would argue that

a conversion like this uh is a capital a capital uh I guess disposal so it could incur capital gains tax uh or capital or a capital loss um but any sane taxation body shouldn't uh shouldn't uh uh agree to that or shouldn't um uh say that that's a thing because there's nothing changing here they're they're the same asset right like Manic and Paul the exact same asset but I'm not a Tax Advisor so I'm not going to to tell you what is definitively the the law or the way the different tax officers will see it but the way I think about it is that Manic and pole uh are fraud intents and purposes the same token so there is no disposal here it's just that you need to obviously upgrade to the the poll token because the Matic token is getting

phased out so so yeah that's my view of it but definitely check with your own accountant or Tax Advisor or whoever you ask for tax advice because that is something that that has been asked to me and I can't give any definitive answers here I can just give my opinion obviously on how this should be treated and as I said it shouldn't be traded as a disposal of the ass of one asset for another it should just be traded as a a conversion of the same assets um and and for tax purposes it doesn't it doesn't incur any capital gain or loss here so nothing really changes from that perspective but that's just my opinion there um and I and obviously it'll vary kind of wildly from jurisdiction to jurisdiction but something to keep in mind for all the the medic holders out there all right last up just wanted to quickly

shout out that I'm going to be talking uh with Eric tomorrow I know we've rugged the daily gray drive through for a few weeks now we've both had things on but we are recording one tomorrow tomorrow being Friday and then it will be published Saturday at around the same time that the daily gray refuels go out uh and a big topic of tomorrow's discussion is going to be all about lsts and this concept of potentially enshrining LST so Eric asked on Twitter today is there a technical reason why we aren't pursuing enshrined liquid staking either the protocol level essentially killing off liquid staking providers I remember it discussed long ago but now that lsts are a threat to ethereum should we ramp up the research as a community and I started talking to Eric about this uh just in in DMS and then we were like hey you know what this would

be a good topic for a drive through so we're going to save it for then and I'm not going to talk about it now um but but in saying that I have talked a lot about this concept before on the refuel uh many times actually and about how uh you know enshrining certain things leads to perverse incentives enshrining certain things doesn't actually help things I think because of italics blog posts people are thinking about this a lot more lately about this concept of enshrinement but I think what people need to understand is that enshrining things is not a silver bullet to fix issues because and I'll just say this one thing about this particular issue people think that and I'm not saying Eric thinks this but I've seen people say before they're in shrining and LST would essentially solve the problem of concentration in Lido for

example or concentration of steak I don't think that would happen at all I actually think that it would worsen the problem of concentration of steak because of reasons that are outlined tomorrow I'm not going to spoil them now for you but that's my my general kind of uh thoughts on that there so yeah anyway look forward to I guess the podcast is going out Saturday but I'm going to record it tomorrow with Eric as I said it'll be at the same time as the refuel is and on that note as well with timing uh daylight savings kicked in in Australia so you may notice that the refuel actually goes out an hour earlier I think or an hour later than usual it always me up the the time difference there and then I believe in the US or when they kind of activate daylight savings I think uh soon

um the refill will be two hours different to when it normally goes out I don't know if it's two hours in the in the past or in the future I don't know but if you've noticed that going out at different at different times in your local time it's because yeah daylight savings click um are kicked in in Australia and we put all our clocks forward one hour of course which I love because I like longer nights and it's warming up here maybe the last couple days actually it's been raining non-stop in Melbourne but uh it's warming up here a bit and I love the better weather but yeah it does change the timing around the refill because for me I still put the refuel out at about 11 45 PM my time but I obviously understand that the refuel is is global and and people are all around

the world listen and watch it so yeah I just wanted to clarify that for you guys there but anyway 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 the Discord Channel and I'll catch you all tomorrow thanks everyone