RAI raises $4.4mil, Grayscale eating ETH and more - The Daily Gwei Refuel #56 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily way refuel where i recap the latest news in the ethereum ecosystem i'm your host anthony sosano and today is the 12th of february 2021. all right everyone let's get into the news from the last 24 hours so i think the biggest piece of news was that uh ray dalio famed investor is going to be a keynote speaker at the coindesk consensus event now for those who don't know this is a pretty major event and this year it's being held virtually uh due to covert 19 of course um but basically it brings together a lot of uh people in in kind of the ecosystem that i guess crosses all kind of paths right you know we usually have like different conferences for like just bitcoin only or ethereum only

or whatever right but uh consensus brings together not just the bitcoiners and or the ethereums but both of them together and then you know people from outside the ecosystem traditional finance people so it's got a big reach it's one of the biggest conferences if not the biggest of the year i think uh and ray dalio for those who don't know is a legendary investor he is uh the um a founder of bridgewater associates he is has a net worth of about 20 billion dollars and considered one of the greatest investors of all time um and he's more of a macro investor and what that means is that he takes a more long-term kind of outlook on things and likes to invest with a macro kind of outlook uh he's informed a lot of my thinking around certain things uh he's got a great video on youtube called how the economic

machine works it is absolutely fantastic and it explains kind of exactly that how i guess the economy in general works on like a macro time scale i highly recommend going and watching that but basically his bitcoin views or his crypto views have been kind of tempered i guess over the last few years he i don't think he's outright said he doesn't think it's a good investment or anything like that maybe he has i can't remember exactly but he's been kind of like i guess neutral to maybe bearish on it for a little while but he seems to have been coming around to it lately and i think a lot of it's got to do with uh the covert 19 and then what that led to all the money printing right in not only in the u.s but in other countries around the world so i i take it that rey is probably

looking at this and thinking hmm you know could bitcoin be the digital gold right could it be a a better story value than gold and you know a lot of people think it can be and personally i mean i think it can be a better story value than gold i mean it's got much more desirable properties um so yeah he's getting guess more i kind of gets like more like warmed up to the idea of investing in this asset class now uh people are speculating that because he's going to be the keynote speaker at consensus uh in in may so it goes from may 24th to 27th it's a virtual event people are speculating that he's going to announce a bitcoin purchase or a a purchase for bitcoin and putting it on either his company's balance sheet or his own kind of like personal investment

and i don't think that's too far-fetched right i remember talking a couple weeks ago how people were speculating that elon musk or tesla had bought btc because he put it in his bio and that turned out to be true right so it seems like we're just seeing the dominoes kind of fall here of these traditional finance folk kind of coming in you know taking a position it's pretty much bitcoin first but i think it's going to trickle down to the other kind of assets like especially eath and and defy and stuff like that but we didn't see this in 2017. i mean i spoke about this on yesterday's refuel and and this is the main reason why i'm still very very bullish even though we're kind of crazy right now is because this traditional finance money this kind of like uh i guess old money you can call it was was pretty

much nowhere to be seen in 2017 you had bits and pieces here and there are people saying yeah we might invest we might do this we might do that but then obviously kind of like the bubble popped and everyone lost interest in it but now that i think you know bitcoin especially has come back from bear markets like three or four times now people are kind of looking at this and being like okay it's over a trillion dollar asset class now you know bitcoin is approaching the trillion dollars on its own um uh you know uh all these other people are investing in it right uh why aren't i so it becomes like you know it's too risky to be the first one the first one in but then it becomes too risky to not be in it all because you're gonna you're gonna be late

essentially so i think that's why we're seeing a lot of these kind of i guess tradify uh people come in and companies and institutions come in which is a very key difference to 2017 and it's why i keep saying that we cannot use the same top signals that we used in 2017 anymore not to say there's not going to be local tops along the way where we drop 30 i'm sure there will be uh but in terms of like a cycle top i have no idea where that is at this point you know we could keep going like this for a little while if these companies and these institutions keep plowing money in and keep announcing it um you know there is diminishing returns you know every time you hear another announcement you're just like okay cool and then okay cool and then eventually it just becomes like oh meh

who cares like that's old news now and that's kind of how bear markets and uh sorry bull markets end it's like it's when these really bullish news everyone's just kind of brushing off right they're just like oh i've seen this before you know this isn't making me bullish anymore and that's kind of how it just kind of fizzles out like there is a there is a kind of explosion at the end of it but it kind of like fizzles out and then and then that's how we go into a bear market but i just don't know where we're going to go from here it's it's it's i mean i'm not going to say i'm never gonna say like this time is different because you know i i don't think uh that that applies on like a macro scale in terms of like boom and bust

cycles but in terms of like it being different to 2017 and different players and different key players it definitely is right it's very obvious that it is um and it's hilarious how icos were like the main use case in 2017 for ethereum right it was the main money driver into kind of the ecosystem and now icos are basically like still non-existent like even the ieos the the initial exchange offerings are pretty much dead as well um we do still have token launchers of course but they're more like these we'll just put the the token on uni swap and then you know price discovery can happen there so from that perspective it's it's just amazing that you know it's you know way over all-time high now we're not way over but like over all-time high now and you know we don't have that kind of ico money

that pushed ethel up a lot in 2017. so heath itself has matured a lot too so this time is different from a lot of different angles but don't be fooled into thinking that this time is different in that we can't go into another bear market because that's how you you know you don't sell right that's how you never sell that's how you say to yourself i'm just going to hold it's going to be fine you know maybe it is fine i don't know but i i i think that's unlikely because the the the common denominator across all markets um in across all time is humans right like humans are always there and humans don't really change on these shorter time frames maybe they change over millions of years or hundreds of thousands of years but over short time frames like decades humans don't change their nature right

we're greedy you know we suffer from fear and and like extreme fear and extreme greed we suffer from all kinds of emotions biases right that's why the time is never different it's always the same kind of boom and bust uh cycle that we see play out not just in crypto but across the global economy as well um and it's not just human emotion right it's it's the different ways things happen like especially with monetary policy you know there's different levers that governments can pull or sorry central banks can pull uh and that you know this is and because uh you know there's debt that the economy basically run on debt we have these booming bus cycles but ray dalio's video about the economic machine actually explains all this so i highly recommend going and watching that and it'll give you a better kind of

macro view of the markets and be able and you'll be able to better position yourself and you know it it did heavily inform my investing within crypto if i'm being honest and i'm i'm a macro guy i take a a kind of long term outlook on everything that i kind of invest in um well most things some things i'll like flip or whatever you know everyone likes to have some fun but i just for me and for most people i actually think that a long term strategy is much more healthy and much better than you know trying to day trade like most people can't do that most people will lose but if you're a day trader and you're profitable and you enjoy it then then go for it nothing against that but if you're an investor and you want to take more more of a macro and

long-term outlook ray dalio is the person to read he's got he's got books you know he's got blog posts he does on his linkedin twitter threads that video i just told you about he's got everything so definitely go check that out but yeah very very uh looking forward to seeing him at consensus and see what he has to say maybe he doesn't disclose a position in btc maybe he's just more bullish on it i'd be very surprised if he hasn't bought it at this point like very surprised but we'll uh we'll have to wait and see i think so josh stark from the ethereum foundation put out this tweet today saying that one million dollars have been has been allocated to 25 different projects in this staking community grantee uh kind of uh announcement here i think i went through this on one of the refuels

maybe last week uh or a few days ago on february 9th so yeah i did basically all these different teams being funded by or i guess like not funded by by giving grants by the ethereum foundation for their work with eth2 so it's really awesome to see that you know a million dollars went to that and it was across different things like community and education like guides and and kind of stuff like that uh the tooling data analysis and visualization and and research in general so yeah really really cool to see the ethereum foundation supporting the community through these grants especially in the e2 space so for those who have been following me on uh following on twitter i have been tweeting out the past couple of days that gas prices are actually going to under 100 way at times and i

think if i i i think the time if i had to put a time on it for me it's around like 4 or 5 p.m which i think for the us at least like the west coast it's like 10 or 11 p.m and and then the east coast is maybe like 1am um so if you're up at that time if you're in the u.s right in europe i think it's like early morning um then definitely try and get some transactions in because you know the i mean the gas fees right now is what 158 you know if it's under 100 that's like you're saving a third on gas and and you should queue up some transactions for that for sure i mean i think making a list of things that you don't want to do today and i can wait until gas prices come down

and then when gas prices do come down you quickly go through that list and do it is the best way to approach this now obviously you know it's not fun having to do that but you know if you if you are waiting for that then yeah definitely you know there's been kind of gaps about an hour where gray has been under 100 over the past couple days so yeah definitely keep an eye on that so hayden adams from uni swap put out a really great tweet uh thread today explaining basically how the investors in uni swap especially the early investors have added value to unisup as a platform now for those who don't know uh uni swap basically began uh really really early on maybe 2017 or 2018 with a grant from the ethereum foundation to hayden

to build the first version of uni swap and the grant was worth a hundred thousand dollars um so it wasn't that much right that's one years of like a kind of like entry-level developer salary in most of in most of the us um so definitely not you know nothing to kind of like write home about but basically um that funded the first version of uni swap and then when news was up and running and people and kind of investors saw that uh their their first investor paradigm i think put one million dollars into them uh as a sole investor in 2019 so early 2019 at edcon they invested a million dollars into into uni swap then and then at the time uh i think i've spoken about this before how during 2019 tokens were regarded as basically dead like

pretty much everyone thought that if your project had a token it was a liability so there was no i don't know if there was any plans at the time to do a token for uni swap but it was definitely not a popular thing to do so it wasn't top of mind for anyone but i'm i'm sure it was like in the conversation but i don't know for sure but anyway paradigm put a million dollars of their own money into unison i'm sure they didn't expect to to kind of like get the return they've had at this point but the thing with paradigm as a fund for those who don't know them they actually make very concentrated bets so they don't just invest in everything but they make very concentrated bets and they basically um help their their portfolio companies more than any other investor that i've heard of at least

maybe i'm wrong there but i've heard very good things about paradigm uh a16z and usb are much bigger investors so a160s a famed investor like i mean they're huge right they don't just do crypto they do kind of tech in general and they've been around for like 20 years and then usb is the same thing union square ventures so excuse me so yeah paradigm is just a crypto asset kind of focused fund and they were the first into uni swap and then a160 and usb join later but basically in this thread from hayden he says that the investors don't just give them their capital they give them uh kind of like help with across like a bunch of different areas and he actually lists them here so he says they give they gave hayden and his team help on advising

sourcing candidates conducting interviews making introductions writing smart contracts writing white papers reading explaining other people's paper smart contracts historical analysis letting them letting hayden sleep on their couch proofreading blog posts insider info content creation breakthrough unisop related math research playing halo 3 educating regulators and institutions product design feedback and a whole lot more i don't know what else it could add to that list that's a very long list but basically the reason why i wanted to talk about this is because as a kind of person that's i guess both an investor and advisor to a lot of different projects this is what you don't see going on behind the curtain when a lot of people see that these uh vcs get into a project early on and

invest in it they just think oh the vc's got a massive discount and they're just gonna like sit on that and then when the token goes live they're gonna make bank there are certainly some investors like that vcs and funds like that i'm not denying that at all but the the the ones with more of a long-term outlook and the the best ones are the ones that actually help their portfolio companies across a wide range of different areas as hayden is listed here and add a ton of value and the best investors like paradigm are the ones who actually make it so that if paradigm didn't exist and wasn't a part of uni-swap's life unisop's chance of success may have been a lot lower so those are the those are the kind of best investors there so you could actually think of these investors as just part of the team at the end of

the day right so and no one ever complains about team allocations really i mean unless it's like something really uh really you know crazy like 50 or something but in general like a team allocation of 20 to 30 is not really kind of scoffed at right so you can just think of an investors as as part of the team and without these early investors it would have been very very hard for unisop to succeed and and i think especially because uni swap raised during 2019 which was like a depths of a bear market and money was very scarce back then especially for a project like uni swap that didn't have any plans for a token i'm sure they didn't have any plans for a token back then and there was no kind of like obvious way they were going to make money so you know paradigm took a big kind of

bet here like for those who are around in 2019 especially early 2019 you know exactly what i'm talking about but if you weren't around i'm telling you right now it's a night and day difference if you think it's like right now we're in like a bull market money's flowing everyone's making money it feels like no one can lose right everything's frothy think of like that but then the complete opposite of it right everyone's like losing money you know they pop their paper gains have gone down they just got through a brutal 2018 bear market you know people don't have money to invest you know ethereum's kind of like main use case of icos was dead d fire was very nascent like extremely nice in it was like a a kind of like play thing essentially right um you know older kind of like bitcoin as we call it was called we're

calling ethereum dead and eth especially had like completely tanked against bitcoin uh which was really brutal as well so you can basically uh draw that draw that kind of like comparison and that's how you understand that you know the best investments are usually made during bear markets and that's where the most people make the most money but they're also the hardest investments to make and i wrote a little bit about this in today's delegate newsletter where i basically said that being early is is awesome but being early and holding on during the toughest times is extremely difficult and i've seen many many people sell because they just couldn't handle it it's mentally exhausting especially in crypto because you know you can sit there for like two years during the bear market

waiting for each to go back up or waiting for your token to go back up right and look looking at it every day and every time it pumps a little bit you have a little bit of hope right you're like oh is this it are we finally moving back up and you know for a lot of the time it wasn't and in 2019 especially each price in the first half of 2019 went to like 380 and then it crashed back down to like 100 and something like the low hundreds by the end of the year and then you know we started moving back up in 2020 and then we had covered but i think in 2020 even with the covert dump people were still very bullish but i i just like i think the people who weren't around didn't experience it just don't fully appreciate how bad it was like how

depressing it was for everyone involved at the time but what got us all through it was that we really believed in this mission and the builders believed in this mission and these investors like paradigm believed in this mission and they were happy to put money into this sort of stuff so yeah i think just looking at like the surface level stuff like vcs getting into early rounds is is wrong um you know mo a lot of the vcs i know and a lot of the firms i know that i talk to they are extremely helpful like they are very friendly they are not out there just to extract as much value as possible they are there to add as much value as possible so yeah i just wanted to kind of give a note there but i'll link this thread in the youtube description you can go check

it out it's a pretty good thread from hayden here so reflexolabs has announced the series a round led by pantera capital and lem uh lemniscap lemniscap i think that's how you say it uh and then they have participation from the venture dow the lao uh div dot vc a divergence ventures sorry uh kane and stani who are in every single round as an angel these days uh cyrus unessi and mariana conte who both worked at uh make a dao so um for those who don't know reflexor labs is building a alternative decentralized stable coin to die called a rye and they're using a novel mechanism uh to do this that i don't fully understand i'll be honest um because it's it's kind of a little bit complex and i haven't

really done a deep dive yet but um it's basically trying to be a fully kind of i guess like eight-backed uh decentralized stable coin because you know i think what ended up happening was like a bunch of people got pretty disgruntled that uh maker moved to multicultural dye right where dies backed by more than just eighth or more than just like decentralized assets so i think that reflects the labs is kind of like a um i guess a um an answer to this or at least an attempt to be an answer to this so uh yeah they're building building rye here or ray ray or rye not sure how to say it it's it's spelt r-a-i so ray o'rya or whatever whichever way you want to say it maybe rye because die right maybe i'm an idiot for saying ray because there's no y at the end there

but anyway um congrats to them on the rays for sure i think this is great i think having having cyrus and mariano on board is extremely strong i mean cyrus was head of risk at maker dao and mariano conte was a head of oracle's and kind of like did a lot of the smart contract work and was at maker for for a while and i think cyrus joined maker dow in february of 2019 and left only recently maybe a few months ago so he was there for a little while as well so yeah with big wins for them there and of course having kane and stanley on board you know can't go wrong there two of the best builders in d5 so congrats to them on the on the raise uh how much did they raise actually i'm not sure uh 4.4 million dollar raise so

yeah i mean that's a that's a pretty good raise right 4.4 million dollars for a series a i'm sure they're going to have a token for for all of us kind of people to ape in the ones that didn't get into this round so we'll see how that goes for sure so uh the documenting ethereum account here posted a picture or a chart at least that said uh grayscale added 52 730 eth over the past 24 hours to their kind of fund worth almost 100 million dollars so i mean i've spoken about grayscale before and as you can see on the chart their fund was actually paused for quite a while so um that this kind of like i i guess you can see it here it's flat right it was flat from like the 7th of december or whatever it was to like the 31st of january where they

kind of closed the fund off and um they did that for whatever reason i didn't look into the reason but they closed it off to new investors and then uh recently i think on like the first of feb they reopened it and you can see it started going back up again and it's gone back up pretty pretty rapidly they're approaching i think there are almost three million eighth held in that in grayscale right now which is like 2.8 of the supply or something like that so there's very big appetite here from uh from people in the i guess like traditional finance system that want eth and for those who don't know what this product is grayscale has a product called efe which is basically a tax advantage product for people to use that they can use in their retirement accounts because we don't have an

eth etf or a btc atf for example that would do this grayscale basically created these products that do come with their own issues i've spoken about the grayscale premium before and you've probably seen it spoken about before where the price of the e3 kind of asset would get way ahead of the underlying price of eth and then arbitrages would come in and close the gap there and that would mean that the people who bought e3 kind of got wrecked if they bought the top which is unfortunate but without an etf this is the only kind of vehicle that people have tax advantage access to to eat through so yeah i mean it still just shows that there's just incredible demand for ethan this is kind of a black hole here you don't really see this going down as you can see it just it only goes up

so it's just going to keep sucking in more eighth which i think is going to be very bullish for the eighth price and a bit of a bit of an alpha leak here and this is an investment advice like i etha's obviously being kind of flat lately right it's like kind of trending sideways slash up while all this other kind of stuff in the market's been pumping i don't think that's going to last very long if i'm being honest i think you know we might see a nice big move of eth up maybe even over this weekend i think it's very very due for it i think is extremely undervalued for what it is still considering how much activity is on the network right how much you know bullish kind of stuff's going on right the amount of eth locked in d5 in eth2 um all this sort of stuff so

yeah i i wouldn't expect each to stay around this level for too much longer but not investment advice i'm not trading based on that thought i have my eighth bag that i stuck during the bear market of course and i hope all of you did too um but basically uh yeah it's just more bullish news for eth every day at this point so eth global has announced their next hackathon called scaling ethereum which is taking place from april 9th to may 14th this of course will be an online hackathon uh where people can come and build scaling technologies so different scaling implementations all based on ethereum like uh uh you know basically uh like e2 uh roll ups channels zk snarks zk stocks and uh you know more and optimistic rollups and things like that so uh this is timely of course and

really great i'm glad to see if global supporting this i'm really really excited to see what projects come out of this because obviously scalability is top of mind for absolutely everyone right now it is what i like to call the ethereum scaling war effort and i wrote about this a few months ago i think in june of 2020 in the daily grade newsletter where i said that the entire ecosystem feels the pain of the high fees and the scalability issues so we need to kind of like get a war effort together and and do this and you know war efforts for those who don't know is basically this term given to uh this kind of like i guess effort that uh countries go through when they want to fund a war so you know everyone kind of puts their money in the government sells bonds to

people and they buy them and then everyone kind of works together um in times of war and obviously there's no like war with fighting going on with ethereum right now but the reason i call it the scaling war effort is because everyone you know needs to pull their resources together and help as much as they can to scale ethereum so eth global's one player the ethereum foundation's one player all the different layer two teams or other players right us as community members are players too we need to adopt layer two we need to educate people on it we need to give feedback to the teams we need to help as much as we can right everyone that's using ethereum today has a part to play and that's why i call it the ethereum scaling war effort and uh basically we're seeing this play out now

so i'm very very excited to see what happens with this with this hackathon it's as i mentioned yesterday when i was talking about the eighth global market make winners i'm these kind of hackathons produce the highest quality kind of hacks that i've seen um out of any kind of hackathon maybe eth denver comes a comes a nice close second there but basically you can't go wrong with an eighth global hackathon so if you're a dev wanting to work on this definitely go register the link will be in the youtube description for you so a wiki from uh git coin grants uh basically posted a teaser image here uh that ground surround nine is coming soon of course i can't remember the exact date maybe it's got it here uh okay he says yeah there's a countdown 28 days so

28 days from now is like the end of the month basically i think it from memory it starts on like march first or second but anyway they've they've got an updated website it looks like which looks very nice uh you know one thing with git coin i love the platform but i i figured the website could use a lot of work um but yeah they've got like a nice little updated website here um and basically they're asking people to to slide into their dms to get involved and what getting involved means is becoming a matching partner essentially um i think if you are someone who has made a lot of money i guess during the bull market and you feel like becoming a matching partner you can do this and you don't have to put in much money i have seen matching partners just putting ten thousand

dollars and that might be a lot of money to some of you i'm not saying it isn't but it's not like you have to put in a hundred thousand dollars or a million dollars right you know some some people do that some projects do that and that's fine but you can put in i mean i'm sure you can put in any amount you want and even if you don't want to do the matching you can just donate right so you're gonna get a chance to donate and get your donations matched i think this is gonna be the biggest bitcoin matching round ever because of all the money everyone's made hopefully we don't get a massive crash you know before this git coin grants round starts because it might scare people off but in general i think yeah all the projects have made a lot of money people are

giving back this is just amazing so yeah really looking forward to the next bitcoin grants around here as i said it's in about a uh it's in about a month or 28 days i'm doing my math wrong there so it should be like march 10th right not not march first uh i was i was saying 18 days in my head instead of 28 days um but yeah it's coming soon you'll hear all about all about it because i'll show it on on twitter because i want you all to donate and to it because you know they even have layer 2 tech kind of integrated so i really want to see get coin supported and i'm i'm probably going to talk about it on every refuel while the rounds going on and reminding you guys to donate but uh anyway i'll move on for now but yeah

good to see them updating the site here so danny ryan put out the latest eth2 quick update uh these are a bunch these are updates that he puts out every now and again to basically give you a quick update on e3 this was a very quick update there wasn't much here but there actually was um a bit of info that i wanted to talk about which was basically i think uh maybe the link's not in here um uh essentially uh i think what he was talking about here is that uh there was an easter workshop for the eighth one to e3 merge and sharding and there was also a lot of talk around stateless clients if you don't know what that is you can google stateless clients or go on each research and you'll see it there but basically um the biggest thing happening with eth2 right now is i think

the next hard fork which is going to happen uh in i think june or july of this year and what it's going to do is it's going to adjust a few things a few bug fixes with the i think the reward payouts and penalties and things like that uh it's going to get the kind of platform ready for stateless clients and it's gonna i think it's got something to do with the merge as well so yeah a lot of stuff happening in eth2 land but you probably aren't hearing about it because a lot of it is happening behind the scenes um a lot of it is just waiting right as i've mentioned before on the refuel the research and developers are now waiting uh uh you know for the beacon chain to be live and running perfectly for six to twelve months before they feel comfortable doing any

major kind of things like adding shouting or doing the merger i think i think they're probably going to wait a year um at least which will put us to december of this year until even kind of kind of putting a timeline on the merger it's already been done uh on test nets where they merged eth1 into eth2 but merging eighth one into e3 right now would be incredibly risky and not worth it like yes okay cool we'd be able to like do it sooner but the risk that something goes wrong is far too great far too great because eth1 is a you know 250 billion dollar network and eth2 is a is a new network that's only been live for like three months uh not even like two and two and a half months um

and is using a proof-of-stake consensus mechanism that is only been live for two and a half months right and it's novel and it's new um so yeah we need to kind of wait for that to happen so yeah i mean and on top of that i guess like the the the main two questions i get asked for timelines on is erp one five five nine and the merger one five five nine i still expect to come this year i expected to come you know q2 latest kind of not q2 maybe maybe towards the end of q2 but probably in q3 sometime so uh me no maybe july august september sort of thing but definitely expect it to come this year and then the merger will be next year there's there is no way the merge is happening this year unless there's some kind of emergency reason to do it you

know maybe the miners got together and revolting against us for putting eip1559 in i don't think that's a that's a huge risk but yeah that's that's kind of the timeline right now six to nine months was what tim baiko gave for eip1559 and that was like a few days ago so that lines up with the kind of like you know or july august september kind of timeline there and then the merger as i said there's no dates or timelines given but i know for a fact it's not happening this year definitely not having this year so look for it next year i hope it happens next year you know i'm not going to try and get your hopes up and say it's definitely happening next year there could be unforeseen kind of things here but i'm pretty confident it will happen next year not sure on the time

but just be aware that everyone wants this to happen we want to get off proof of work as soon as possible but we want to do it in a safe way and we don't want to basically blow up the heat one chain in the process all right so last thing i tweeted about uh kind of flash loans before and i said flash loans are probably the most sci-fi thing ethereum has ever produced now for those who don't know what flash loans are they are mind-boggling and amazing and there's so many things you can do with them but basically i'll give you a quick explanation of what flash loans are so what ethereum allows you to do is you can do anything you want in one ethereum block right so basically an ethereum block is about 15 seconds so if you want to do kind of like

something with flash loans what you would do is you would borrow for starters sorry flash loans let you borrow any amount of capital you want right from a platform so you could go borrow 100 million dollars from rv for example right um without any collateral with a flash loan because if it's only gonna it's only gonna complete the the borrow if you pay that back in the same ethereum block so what you would do and i'll give you an example because it's easier to explain say you wanted to kind of like flash loan 100 million dollars right and you wanted to do something you know people use it for like hacks and things like that but maybe you just wanted to do an arbitrage opportunity a massive on-chain arbitrage opportunity so say you got 100 million dollars right

you you flash loaned it and then in you have to do this all in the same ethereum block so all in the same 15 seconds you flash loan you do your thing right you do your arb whatever and then the arb is profitable so you take the profit from it and then you pay back the original flash loan to to avail wherever you flash learn it from and then the ethereum block is mined and all the transactions are confirmed and and it goes through so you can do like zero collateral borrowing as long as you pay it back in the same block so the transaction is valid if the if all those transactions are valid right so if you flash loan did the uh paid it back you know and everything squares off right you paid back the amount you were supposed to then it's

it's it's it's fine so the reason why flashlights are so cool and so sci-fi is because if you really think about it what flash loans allow you to do is pause time essentially right you can control the entire ethereum blockchain for 15 seconds and do whatever you want within the ethereum blockchain as long as it follows the rules and the rules is is that you pay back the flash loan at the end of whatever you've done essentially right and anyone in the world can do this there is no need for you to get like any kind of approval right this is defy there is no capital requirement here because you don't have to put any collateral up right so literally like anyone literally anyone with any amount of money you could be you know poor and just have a smartphone to your name and do this

right um so this is just like i mean this is why it's sci-fi to me because it's just crazy that this this kind of simple primitive flash loans the the concept of being able to just borrow as much money as you want and as long as you pay it back in the same kind of ethereum block you can um do whatever you want with it is incredibly powerful um and also on that note if you say you do like the arbitrage transaction and it and and it fails right um the whole transaction gets reverted right the flash loan the arbitrage the payback like that whole thing you can set the logic you know when you're doing this but if it doesn't actually succeed then it's like the transaction never even happened no it's actually because it's not included in a block

the only way you'll know that a flash loan happened is if you look at the mempool logs and the only way you get the mempool logs is by monitoring the mempool which a company called block native does actually if you want to check them out they have like a mempool explorer but basically it's it's it's like you control the whole universe for 15 seconds but if you or the entire blockchain for 15 seconds but if you do something that um that uh doesn't follow the rules right you don't pay the loan back the whole transactions uh gets reverted and it's like nothing ever happened so it's just so cool right and and explaining this to someone is is i know it's hard and i know i probably confused you a little bit here i suggest googling it there are some videos out there that explain it better

than i just did but this concept is just amazing just awesome and it's uniquely enabled by blockchains uniquely enabled by d5 and uniquely enabled by ethereum and it's something that people use all the time and you just don't even know about it right you probably hear about it whenever there's a hack or something happening but it's used for much more than that every single day you know probably in every ethereum block i don't know but basically uh yeah that's just just as crazy right flash loans uh my favorite kind of thing in ethereum i think my favorite primitive in ethereum and that's why i called them you know kind of so sci-fi uh because it's something that i don't think many people would have envisioned uh you know even just a couple years ago as being kind of something that people would use to

basically do these arbitrages and do these kind of hacks and exploit economic exploits not probably probably not hacks but like economic exploits um that we've seen happen before so yeah just wanted to give a quick note there on that one but i've gone way over time here so that's it for today everyone thank you again for listening and watching do subscribe to that youtube channel if you haven't yet give that video a thumbs up join the discord channel subscribe to the delhi newsletter and i will catch you all next week have a great weekend everyone