Stablecoin chat, Argent L2 waitlist and much more - The Daily Gwei Refuel #178 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delegate refuel where recap the latest news and ethereum ecosystem i'm your host anthony sosano and today's the third of august 2021 all right everyone let's get into it so the uh bankless ethub live stream for erp 1559 was announced today so i'm going to be joining ryan sean adams david hoffman dc investor justin drake hudson jameson and eric connor for this live stream on approximately 8 a.m eastern daylight time on thursday in eastern time in the u.s sorry uh so for me that is i think late night like 10 or 11 p.m at night on on uh on thursday uh and i think first you know for europe it would be maybe around one two o'clock or something like

that uh but anyway you can go to the link here uh you know and and set a reminder for yourselves but this is gonna be really cool i think i mean it's one five five nine week as they've said here they've actually got other things happening um during this week uh today they've got an eip1559 expert panel uh happening um on on bank list here and then they've got the you know the live stream with us on on on thursday uh and then uh thursday as well a couple of hours after uh there's going to be a live recording of uh the bankless podcast with dc investor squish crypto and uh james wang here so yeah really really cool to see bankless um you know having so much coverage here i mean i love listening to their podcasts that they do and i think this one with the expert panel here with

tim biko barnaby monoi mono i think that's how you say his name hazu light clients and mike zoltu is going to be really interesting because they've been some of the people at the forefront of one five five nine research and development so definitely tune into that as well but i hope to see you all at the live stream here on thursday so um you know we've been going over on the refuel lately and i'm sure you've seen on twitter about this kind of like crypto regulation that's been stuffed into the infrastructure bill now the eff the electronic frontier foundation put together a thread today which basically uh says here are six reasons we hate the new cryptocurrency surveillance provision buried in biden's infrastructure bill and i'll read out each reason because it's not going to take me too long to do so but the first reason is

it will require new surveillance of everyday uses of cryptocurrency secondly it could force software creators and others who do not custody cryptocurrency for their users to implement cumbersome surveillance systems or stop offering services in the united states this would apply to things like decentralized exchanges because they are non-custodial but it would be expected that somehow the uh decentralized exchange operators uh at least the smart contract owners if there was like an admin key there they would have to uh basically um surveil their customers through kyc ml and reporting and all that sorts of stuff and it's obviously unworkable for something like uni swap which is totally decentralized the protocol layer so yeah it's just a misguided regulation there the third reason is it will create more honeypots of private information

about cryptocurrency users that could attract malicious actors i mean that's just a no-brainer anytime you have kind of like reporting requirements you're just basically reporting on users and creating these treasure troves of uh basically a private information that can uh or probably will be sooner or later uh kind of hacked and leaked on the internet we've had plenty of those play out in the past you know not just within cryptocurrency obviously with the ledger leak that happened a few months ago but also generally across like the web 2 space uh the fourth reason here it will create more legal complexity to developing blockchain projects or verifying transactions in the united states likely leading to more innovation moving overseas i mean this is self-explanatory and a no-brainer you start clamping down too hard on crypto and crypto companies they're just going to move to friendlier

jurisdictions we've already seen this play out somewhat we've seen people move for tax reasons too there's a lot of people moving because the tax laws in the us aren't exactly uh depending on the state aren't exactly very very kind are very favorable and there's not just there's really not much guidance there so we've already seen this been happening over the last few years uh the fifth reason is it is impossible for miners and developers to comply with these new reporting requirements so one of the i guess uh most kind of like hardcore of the regulations in this bill is that it would require miners and stakers to report on i guess like the users so essentially i mean the reason why this is crazy is because like you every uh i guess like user of a chain is is essentially something someone that the miners and stakers are servicing

because if they mine a block or propose a block as a stake or a test tool block or you know build on top of the blockchain when they're kind of like mining it and building on top of the canonical chain uh it basically leads to them having to report on basically every single user of the chain which makes absolutely no sense and is really really insane so i think that one's actually probably the most hardcore requirement and totally unworkable right and the sixth uh it creates uncertainty about the ability to conduct cryptocurrency transactions directly with others via open source code for example through smart contracts and decentralized exchanges as i explained before uh this would just be like really i mean open a can of worms that just isn't um something that's workable in any kind of like uh fashion or anything like that um so you know the

eff also posted a blog post here where you can kind of like read a bit more information about this and kind of like i mean it's it's kind of lengthy uh not not too lengthy but like it's it's much more much longer than the twitter thread and gives a lot of good context around here now i've been talking about this for for a little while on on the refill for i guess like the past week or so and i've been covering uh tweet threads from like jake travinsky from coin center uh people and things like that i think there's still amendments being made to this bill there's still a lot of things happening here as i said this is like an infrastructure bill which means it is something that is totally unrelated to cryptocurrency so cryptocurrency regulations don't even have any um i guess like business being

in here but if uh they are going to be in there we should really make sure that they are basically uh really uh light regulation or something that at least is workable and makes sense and doesn't uh kind of like create these insane draconic laws around crypto in the us because as much as you can say our people can just move to friendly jurisdictions the us is probably uh the biggest kind of like consumer of cryptocurrency uh uh to this day um you know obviously china has recently cracked down on cryptocurrency both on mining on on centralized exchanges so the the kind of like china uh the china activity uh is is slowing down unfortunately uh because of that um but you know parts of like uh other parts of asia are picking up the slack there there's a lot of

activity happening in southeast asia with crypto europe is obviously big but i think the united states is still by far the the biggest kind of player in the crypto scene so we definitely don't want these regulations going through and kind of like slowing down the innovation happening in the us around crypto and you know i guess kind of like forcing a little bit of a reset or they're stalling the crypto industry because if there are these regulations it would it would basically mean if these go in place it would basically mean a lot of the us kind of base teams and and a lot of the u.s activity for crypto would have to slowly move overseas and that could take years so uh you know it's better to nip this in the in the bud before it goes through then just say oh if it goes through we

can just like leave the country i mean that's like the worst case scenario that is not the optimal path the optimal path is making sure that these draconian regulation regulations don't go in in the first place so askew on twitter today uh posted this interesting chart which i wrote about in the delegate newsletter but essentially it shows kind of like the stable coin market cap share between like the most popular stable coins you can see here usdt is 62 of total stable coin market cap usdc is 27.4 percent tusd is only 1.2 percent die 5.6 percent uh busd is a 12 and there's a couple of others in there as well but you get the idea what what i read about in the newsletter today is that i actually think this is a really

positive development now you know up until like a few years ago until usdc kind of started growing you know especially especially through d5 tether basically had like 90 plus dominance on the stablecoin industry probably higher than that i mean for a long time they had like almost 100 dominance and obviously there's been a lot of drama about tether over the years it's totally opaque uh you know there's barely any transparency into tether uh that you know there's this shady stuff going on and people really don't like the fact that the crypto ecosystem is so reliant on tether and for good reason um but you know now that we have had the usdc growth it's kind of like chipping into uh tethers market share same with busd but really all we're doing with these other centralized stable coins is replacing

the old boss with a new boss that is exactly the same as the the old boss right okay maybe not exactly the same but still very similar you could argue that usdc is more transparent than usdt which to be fair it probably is um you could say that it's been less shady historically it's based in the directly in the u.s so it has more oversight things like that um busd i would consider pretty shady because like buying it's directly tied to binance and bioness has been coming under fire a lot by regulators recently and then you know there's dye as a decentralized alternative at 5.6 percent of market share but a lot of dye is backed by usdc these days so can you even call dia de centralized stablecoin uh you know that's up for debate as well and then you have like the long tail of

all these other experiments playing out such as the algorithmic stable coins which pretty much most of them have blown up at this point uh you have things like fey protocol uh you have uh rye uh there's a bunch of others out there i mean there's some uh some uh i guess like hybrid algorithmic uh kind of like decentralized uh stable coins i mean there's so many of them right now i've lost track but they are nowhere near kind of competing with usdc and usdt i mean that they basically have a duopoly on stablecoins at this point in time um now because of this i've seen people kind of bring up an argument that oh well you know these stable coin issuers are like king makers on ethereum now if there was like a chain split they would be the ones to kind of like i guess choose which chain one in a

controversial hard fork and i i kind of get the argument because essentially what that would mean was circle the issuer of usdc would basically say okay well on this chain we're going to honor usdc redemptions and on this chain we are not which means that the one that they are not all the usdc on there would be worthless go to zero d5 blows up essentially right like all the liquidity pools kind of blow up there people get liquidated things just start falling apart but in saying that the same thing could be said for something like a centralized exchange for example what if a centralized exchange uh saw this kind of controversial split or at least a bunch of them a bunch of the centralized exchanges and said okay well i'm only going to support the eighth on this chain and not on the other chain this is the

real eighth this is the one that's worth twenty five hundred dollars and the other eighth can be worth whatever the market thinks is worth but we're not going to list it sort of thing right the the kind of the other chains eighth so are they not king makers in that regard right like i know are they not exerting like lots of power of the ecosystem and we saw this play out with the the fork wars in 2017 with bitcoin and bitcoin cash where there were a bunch of exchanges really um going to support the fork uh that was basically uh going to like reject segwit essentially but then at the last minute they kind of caved and said that okay well it's better that we do bitcoin cash uh sorry that we split off and just do bitcoin cash instead of kind of like causing drama with bitcoin

and i think from that there's like very strong precedent that this big central entities like exchanges and stable coin issues they do not pick which chain wins in a controversial split the users pick that the users always pick that the whole ecosystem coming together picks that and the users aren't just like people like me and you're using the chain every day the users consist of pretty much like every entity every stakeholder within the system whether they be centralized exchanges or the the issuers of stable coins whether they be the default projects the infrastructure around that um you know all the kind of like other uh other kind of like peripheral things like uh uh you know um not just the big exchanges but like the small brokerages things and those people getting involved that the core developers obviously stuff

like that and if the majority of those kind of like people say that this chain is the real ethereum in a controversial split well then that chain is the real ethereum like that as simple as that that's how the decentralized governance process works within ethereum and we've seen this play out with like uh with tons of things within ethereum over the years with all the network upgrades that have happened you know for example eip1559 um you know we saw that the miners were against it and they're probably still against it but they cave because they realize that they're not going to win that fight the rest of the ecosystem wants uh that you know one five five nine to go ahead and it is going ahead this week uh and you know even if they they kind of tried to fork off and basically fork

their own version of ethereum without one five five nine they know that no one would use it and in doing that the d5 ecosystem on that cha on that chain will also fall apart because as i said circle the issue of usdc for example is only gonna honor the usdc on the chain with one five five nine on it because that is the chain that most of the ecosystem is backing so forking ethereum is actually really hard because you have this thing where essentially um if your uh the minority chain blows itself up because of of things like d5 where none of that stuff will work if you're on the minority chain it's not like with bitcoin where it's just just that btc or like the bch asset or things like that with ethereum your fork is only as good as the apps on it because

ethereum's use case and ethereum's kind of appeal is the apps at the end of the day like if ethereum was just eighth right and that's it like it was just like an alternative to bitcoin it just had like a different monetary policy or whatever say it was similar to something like litecoin because litecoin really is just a fork of bitcoin with a couple of parameters changed well look at litecoin's valuation compared to bitcoin it is worth way way way less than bitcoin whereas a bitcoin compared to ethereum is a there's a much smaller gap there so from that perspective you can kind of like see how this has played out in the past how it will play out into the future and why any kind of like minority chain or at least like a chain that's forked off in a controversial fork that becomes the minority

um based on the whole ecosystem um coming together and deciding on this will basically quickly die out because no one will use it it just doesn't mean anything and you can see this with ethereum classic for example even though ethereum classic was um you know born out of uh i guess like a much more controversial thing that i think we're going to see going forward within ethereum it's just we have so much precedent for this we have so many so much evidence of what's happened kind of like uh in the past and we can kind of like gauge what would happen in the future in a scenario like this so yeah i just wanted to kind of like cover that because i've been seeing a bit of debate about this on twitter recently and i think that it's a lot more nuanced than just saying that oh because usdc is

so ingrained in d5 it makes circle the king maker well i don't think that's the case because you could make the same argument for centralized exchanges by saying because they're so ingrained in onboarding people onto ethereum that uh you know decentralized exchanges could pick which ethereum was the real one and you know maybe if they wanted to they could if they were if they wanted to go against the consensus of everyone else that's their prerogative they can do that but the thing is the game theory holds that if they do that well they're just shooting themselves in the foot because they are on the minority chain and they basically lose the customer base and then it kind of becomes a game of chicken of which exchange uh caves first to the community and then you have like they all fall like dominoes in the end and i actually think

that centralized exchanges really don't want to take in a position on any of this sort of stuff they usually stay out of the governance stuff that's happening and i think that's a really good good idea for them to do and the same thing with these stablecoin issuers i think that they know that um if they try if they try to work against the ecosystem they're going to quickly learn what centralized governance means that's for sure but yeah anyway i wrote a little bit more about that in the newsletter today but basically i recap what i wrote in the newsletter um but i think it's um it's really important just to keep in mind about how the governance process in ethereum works and why there is no king makers within ethereum so hayden adams posted this tweet on twitter today uh basically saying how it started and there's this picture on the

left here this meme for those of you listening in um the meme is like the four people the the three uh three guys and and one woman here um standing in like uh uh standing in a row here uh with someone in a pink shirt on the left and then white and then blue and then um and then you know kind of like a wacky kind of shirt on the right here uh with bill murray um i don't know all the actors names here i only know bill murray so uh if you know which kind of meme i'm talking about if you're only listening to it then you know what i'm talking about um but then uh hayden adams posted on the right here a picture of himself on the left in in kind of like a pink or a pink kind of shirt here

uh kane next to him in a white shirt uh this this person in on on the kind of like uh uh next to kane in the blue is actually uh yeah i don't actually know his name unfortunately um but he's basically i think like the head of pleaser dao essentially here and then on the right you have uh you have robert lesnar from compound so they were kind of like recreating this and why i thought this was funny was that not only did they recreate this picture here but they also did something else on crypto twitter today where they all bought and changed their profile pictures to these uh wild kind of like white-haired punks now what's really funny about this and this is the what i really wanted to talk about was that these white head punks weren't anything special uh before

the these kind of like uh uh people bought them because they were just like uh i don't i don't think they were rare i think they were just kind of like and then you know they're not necessarily kind of like appealing either like you look at this and you're just kind of like okay like wild white hair who cares kind of thing um but because the like kane and hayden and robert bought these uh white head punks the other white head punk started catching bids and started going for a lot more and all of a sudden became rare and it's just really funny when you look at this from like a cultural perspective because that's what these nfts and specifically crypto punks are is that it's the culture now the culture is basically hey these really popular d5 founders changed their profile pictures and bought like white-haired punks which are

worth like 200 000 or something like that uh you know now whitehead punks are valuable uh which i thought was was just really funny uh and the other thing that was funny about this was that earlier in the day robert lesnar put out a tweet who said who is in crypto in new york city this second and wearing blue need you for a mission and that mission was obviously this and it's amazing that they found someone that was actually um you know playing a big part in the ethereum community uh yeah i think his name is jamie's the the kind of like head of pleaser dao uh to and and like he just dressed the part perfectly right like you can see from the two images here he just he just dressed the pop everybody but this is like hilarious this is what i love about the ethereum

community and the ethereum ecosystem is that not only did they recreate this picture like perfectly i reckon this is hilarious because like in the original meme everyone was saying that the person on the left looked exactly like hayden adams from uni swap which i thought was really funny um but only they did that did they do that but they also bought like all these punks um simultaneously and they kind of started a movement behind a punk that wasn't necessarily rare before but is now considered rare so it's just pretty funny when you look at these sorts of things and this is kind of like what i talk about when i talk about like nfts and culture and how the culture sets the value of these things and maybe that gives you a bit more insight into why people are covered in punk so much i just yeah i just think this is

wild and this is only the first kind of thing we've seen of this there's going to be plenty of like celebrities much bigger than the these d5 founders that are going to be doing uh changing their profile pictures to punks and other nfts we've already seen some of them doing it and i think this is going to be like a massive cultural shift not just within crypto but outside of it as well so i'm really looking forward to seeing how that all plays out so ben defrancesco put out an interesting little tweet thread here today where he says my bet the avm stack is locked in it's past the point of critical mass nothing is going to catch it every layer 2 side chain and alternate l1 will it will add either evm compatibility or fade to obscurity and then he can continue on a little bit

in this thread here but essentially this is what i've been saying and i've written about this in the newsletter before where the evm really is the moat at the moment because if you look at all the chains that have gained traction uh site whether they be side chains or other l1s they've been evm compatible and that's because uh that evm compatibility lends itself to all the apps that are already existing on ethereum just being able to be cloned onto these chains we saw that happen with bsc we've seen that happen with polygon we've seen that happen with some of the l2s like um you know optimism even though optimism requires a little bit of changes there um but things like arbitrim so it means that the developers don't need to re rewrite their smart contracts they don't need to get them audited again they don't need to kind of like fragment

their code base or anything like that they can essentially just deploy the same thing and upgrade the same thing on either kind of chains here now you know he ben goes on to say but and then he puts out the second suite here where he quotes you know someone saying but there's this thing that's wrong with the evm and this other thing is better and then ben says you might be right but it doesn't change what i said c uh you know c javascript et cetera this is how low-level technology adoption works and he's right i mean there's plenty of examples of technology that is probably inferior to kind of like better technology but went on to become the dominant thing because of the fact that they had early network effects and those network effects are very hard to break once they've developed out and i think that uh you know if the avm

is in that kind of point and not just evm but solidity as a smart contracting language and all the tooling built around that so you know i think that's uh that's just gonna be true going forward and i i think that any other chain that doesn't do avm compatibility is gonna have a very very hard time getting any sorts of adoption but even still like it's there's going to be diminishing returns not every chain that has evm compatibility is going to be able to get any kind of like market share or have any kind of usage it really just depends on a variety of factors and the more chains that do it the more diminishing returns there are there um and like kind of like finally here um ben says in short don't listen to udi and udi put out a tweet back in on jan 5

2019 so this is two years ago or two and a half years ago now where he said the worst time to learn solidity was a year ago the second worst time is now well if you learned solidity in january of 2019 you probably joined an early d5 project and probably sitting on a lot of money right now because that d5 project probably tokenized you've got to share in that and um you know you could use those solidity skills for whatever else as well so yeah don't listen to trolls like udi that's for sure um but yeah i thought this was just interesting from ben uh i mean as i said i wrote about this in the delegate newsletter if you want you can google that it's just called the evm is the moat and you can google the way after that and it'll come up with that with that blog post there

so uh risk harbor a project that's offering uh i guess like risk management management marketplace for defy aka like you could think of it like smart contract insurance and things like that they launched the first ever automated risk management hack simulator that they're calling it so what this tool does is it basically enables users or allows users to simulate a protocol hack file a claim and then receive a payout in under 45 seconds all on live contracts so i thought this was really cool because what we've seen play out i think with a lot of these um uh smart contract uh kind of like insurance protocols is that you don't know if you're going to get a payout you don't know what that payout is going to look like you don't know if it's gonna apply to such and such smart contract you don't know if it's gonna apply to

the exact exploit that happened on there um and you know you may not know that with risk harbor either but i think what this does is it gives you a better idea because it lets you simulate it basically you know what you could do is you could say okay well i'm putting a thousand dollars into yearn what happens if this urine vault is exploited and then you can kind of simulate that with using this tool so yeah if you haven't checked out this tool be sure to do so it's at this url here simulator.riskcarbo.com um but yeah we i think we need more of this i think risk and like smart contract just um you know exploitability in general is still something that's overlooked by a lot of people and a lot of people think oh no it can't happen to me even though we've seen

plenty of exploits and rug pulls and hacks that have happened in the past um and i think a lot of people still aren't taking out kind of um coverage or smart or insurance on their positions and i i think actually to get there we do need it to be integrated into these apps so it's one click so you can imagine going to um yearn and say okay well i'm gonna go in this vault and then having like a little checkbox that says okay you know uh would you like uh insurance would you like coverage on this and you just tick it and you get coverage on it sort of like when you go to kind of i guess um post something at like the post office or whatever and you kind of fill out the option yes i would like insurance on this package just in case something happens to it

that's the only way you're going to kind of get mass adoption there i believe because people aren't going to go out of their way to basically say okay well i open this position now i take this position to risk harbor or nexus mutual whatever and then i insure it over there you kind of need that one-click thing uh to make it easier for people and make people's lives easier when you know getting smart contract support and things like that so yeah going to be really excited to see how that plays out across all the smart contract insurance and coverage protocols as time goes on all right finally argent has introduced their layer 2 wait list so it's not their layer 2 kind of implementation yet but essentially you can sign up on their waitlist at flash.argent.xyz and you can go in the running to win a

270 000 crypto suite sweepstake to celebrate now they've been teasing this l2 uh kind of integration for a while they're going to be using zk sync for this which i think is really cool um but essentially i'm imagining they're basically going to enable uh i guess people through the argument mobile wallet app to use l2 um to do a variety of things or basically anything that's on zk sync and i'm sure that they're going to be adding other l2s as well like optimism and arbitrary and this is really how we get mass adoption on these l2s because as i said i i've said many times there's three key kind of like uh adoption or at least onboarding vehicles that need to be in place for l2 to see mass adoption one of them is centralized exchange with uh onboarding the second one is batched on boarding from l1 uh the

third one is direct fiat on ramps um which i think the third one can account is direct fit on-ramps and mobile wallet op-ramps it kind of like one in the same because argent has direct fiat onboarding onto that so essentially what you could do is you can go from like your bank account to argent to an l2 and and that's how we're going to get those that mass adoption happening because at the end of the day people if you still have to pay a lay one fee to get onto layer 2 that's going to scare a lot of people away especially if that fee is like fifty dollars um because and you have to do it for like each asset as well and you know i mean seller networks uh has a product out there layer two finance which allows you to batch things together which is working really well

um but on top of that we also need like something for new users because that would be for more existing users i think we need something for new users and that means mobile wallet apps having direct and native integration with l2s and fiat on ramping through that as well so yeah if you haven't signed up for this weightless jet be sure to do so it'll be linked in the youtube description uh but on that note that is it for today so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give that video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone