Sustainable demand, 2fa for transactions and more - The Daily Gwei Refuel #526 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of daily great review where I kept the latest news in ethereum ecosystem I'm your host the internet is the 18th of January 2023. all right everyone let's get into it so kicking us off today is another thread from Terence here talking about the latest eip48 for 4844 call and notes Here in the usual Twitter thread that he does so uh the Highlight from this thread was basically that eip-4844 devno devnet 4 planning is uh is is happening right now so Terence says here devnet 4 will be rebased on top of the capella devnet3 test net uh sorry devnet which includes all the consensus spec engine API and Shanghai EIP changes the target launch date is next week and there's a link here to

point that out as well but you know it's funny because this is the 12th call I mean they're having these calls very regularly and things are progressing really really quickly I think the entire I guess set of people working on 4844 really don't want to miss the next upgrade after Shanghai because obvious obviously they didn't have it done in time and it wasn't ready in time for Shanghai but they really don't want to miss uh Cancun which is the next update coming hopefully in Q3 Q4 and I don't blame them I mean 4844 is an absolutely huge deal there is a lot of vested interest in getting in seeing this get done both at the ethereum core protocol there but also obviously for layer 2's because they'll be taking advantage of that but if we can get it done this year uh as I've said before I think that's

perfect because I don't expect there to be any kind of Raging Bull Market this year or anything like that but I'm definitely uh looking forward to seeing this go live so we're prepared for when that happens and the layer twos have these really cheap fees so users aren't forced to go and play around on these other Old Town ones and there's less ones and going through the bridges and potentially losing money they can stay within the ethereum ecosystem which obviously we all want to see happen there but I'll link terence's thread in the YouTube description below for you to check out now speaking of I guess demand for crypto for Block space for ethereum generally I've spoken about this uh here and there on the refuel lately but I really wanted to have a focused discussion today about this because I came across this uh tweet thread or

sorry I should say tweet from halpress where he says there is not a single one-time thing on this list structural deflation is here you love to see it and the list that he's looking at is the burn leaderboard over the last seven days from the ultrasound money website and you can see here that none of this is actually a Ponzi at um a token or a scam or anything got to do with unsustainable demand this is literally just the top apps on ethereum that are pretty much like always there but they've they've gotten to the point now where that all of these apps or I guess like they count for the majority of the heath burned are what's causing eth to go net deflationary so we have sustainable deflationary uh pressure on eth rather than it being influenced uh by something like you know a scam token

or a pony token or a ridiculous nft mint and I've talked about this before and I basically said that as long as we can go above that Ultra sound barrier which is around 16 gray today and do it in a sustainable manner we get sustainable uh deflation which is obviously really really cool now if we go to the actual ultrasound money website and check out this chart for ourselves we can kind of sort by the different times here so if we saw it by the seven days you can actually see and you can scroll down even more from that than what how screenshot shows uh and you can see what a bunch of tokens in here A bunch of l2s different D5 apps all that sort of stuff but the the biggest burners by far are open C unisop V3 uh eighth transfers tether and unusual V2 they're the top

five eth burners and then there is a bunch underneath that that all add up obviously to the total amount of Youth burn now this is the last seven days if we go the last 30 days it looks quite similar but there's also two uh things in the top 10 here which are not necessarily sustainable so Zen torrent here uh it's tagged as nfts I'm not even sure what that is but I don't think that is something that was gonna that's gonna lead to sustainable demand because if we go back to the the seven days you can see here the Zen tone of the last seven days is only 211 each burned but in the last 30 days it was 1400 each so obviously it had a very short-lived time where it did a lot of eath burning and now it's not really doing anything if we

saw it over in the last day um I wonder if it even registers yeah yeah I guess it registers here in two instances for about 40 eighth of the last day so compared to the 200 each that open C does uh did has done over the last day and then we go the last 30 days uh sorry and then we go since Genesis since oh I guess like since Erp 1559 was activated sorry not Genesis and you can see it's all of the the similar characters here you have eth transfers Open Sea uni swap tether but then you also have down here the other deed or the other side mint which is that big mint that happened as part of the board ape Yacht Club ecosystem that burned a crap ton of eth but this was a one-time event this is not something that's going

to be repeated uh for this project maybe it gets repeated by other projects but that's not what we talk about when we're talking about sustainable burn what we're talking about is the things that constantly rank in the top 10 that aren't uh you know a Ponzi a scam or a one-off right the actual sustainable things that people get value out of and the best way to look at that is look at the trends over time I think and see what's actually remained in the top 10 and as I said if we go to seven days you can see it's it's the same seven days 30 days and all time is very very similar there's always eth transfers in there there's always open sea unisop tether uh metamask you swap router and other stable coins as well are in there but we see that openc unusual definitely and I

guess tether tether and Eve transfers are definitely the most uh dominant thing here now what is this going to look like over time like how is this going to evolve I get this question all the time from people who ask you know is all if all the activity moves to layer twos isn't it going to mean that layer twos are going to be the ones burning the ethrites uh and the I guess like this this activity on open scene uni stop just all moves to to um Layer Two and none of it happens on layer one so that won't burn in teeth anymore I I don't think that's going to be true and I've said this before I don't think that layer one is going to become a ghost chain or a wasteland just because just because layer 2 has a lot of traction and has a lot of activity on it I think

that all that layer 2 is really doing at the core of it is is giving us more ethereum block space to play with that doesn't mean that people are going to migrate off of layer one to layer 2 and just stop using layer one altogether there are plenty of reasons to use layer one one the biggest being that it is still the most secure way to interact with ethereum by far all the layer 2 is currently a very early stages still have training wheels on them very centralized so you know there's obviously a very um a very different risk analysis there between layer one and Layer Two And depending on which layer 2 you use as well but on top of that the network effect of layer one is ginormous it was built up since Genesis Rider took like seven years worth of building it up

before we actually had functional layer twos live in a real capacity for people to use and at the end of the day as I've mentioned in plenty of times before as well the whales don't give a about paying higher fees they really really don't right the Mev Bots don't care if they're making a profit from it even if they're only inching out a small profit they don't care there are plenty of people that are still going to be using layer one into the future but how far into the future am I talking about well I can actually see layer 1 remaining uh very much used and above the ultrasound barrier for many years to come I I would even say for up to like decades to come is that to say that layer twos aren't going to gain traction not at all layer 2's are going to gain an enormous amount

of traction there already are they're going to be where the majority of activity happens but that doesn't mean that layer 1 is going to lose the activity that it has today it's actually uh it's still a bear market right the we have a little bit of demand coming back but not really um all the tourists are still gone there's no retail investors there's no massive ponzes going on there's no crazy yields going on and we are consist have consistently been above the ultrasound barrier for a little while now uh and as you can see from the deflation chart here it never really gets very inflationary at all and then it very quickly goes back into deflationary territory because of that demand so what is this going to look like when more and more demand keeps coming back well obviously it's going to keep going up

and up we have the layer twos as well and the layer twos are actually in this list uh I mean if I go the last seven days you can actually see that optimism and arbitrim are both here basically neck and neck I don't know what position they are but I think they're in the top 20 and that's going to keep happening post 4844 they're going to be having fees that are much cheaper because it's a separate fee market with the blob transactions then uh than it is with the current fair market that they use for call data but that doesn't mean that they're not going to burn Ethan as they get more traction as they use more gas or as they use more blob space they're going to be burning more eat that way as well so it's kind of hard to tell but as

I said these are only in the top 20 they're not even in the top 10 and they don't even burn that much either the last seven days combined optimism and arbitrim burns 268th whereas openc burned uh oh sorry I should say open scene uni swap burned 3 000 eighth right it's almost 3 000 e so obviously it's a pretty big order of magnitude difference there between the top two apps on ethereum and the top two layer twos on you know settling to ethereum there that's what they say that layer twos won't keep going I think they will even post 4844 there'll be a kind of reset and then they'll keep going from there uh but what we're really caring about is that sustainable demand coming from things that aren't ponzis or scams or flash in the pan and if T mints we want it to be those apps that are obviously

uh driving a lot of value to people like open C and uni swap so that's basically what I wanted to discuss in the context of this I don't want to really get dive too much into you know is this bullish or bearish for eth I've done that plenty of times you guys obviously know the trdr is that I think this is incredibly bullish for ethos and asset but that's outside of the scope of what I want to talk about today and I did talk about yesterday how I thought that over indexing on a deflationary eat is just a waste of time whether it's slightly inflationary or deflationary doesn't really matter at the end of the day eth is an incredibly scarce asset we've already seen the effects of of the merge play out on the East BTC ratio where it's basically flat and I've just I've

discussed that before on the refill of course and I think we're going to see those effects continue to play out as demand Chuckles back in and you know even in the same context of that he's staking we haven't even scratched the surface of that and not just heat staking but like the lsds uh things like opal network uh which I actually forgot to get the um the Tweet up here but opal Network I'll get this up actually later I'll segue into that but things like opal Network DVD technology more lsds uh eigen layer obviously for restaking yes you know different parts of this will add more risk but they will also add more yield to compensate for that risk and then I'll be up to people what they want to do there but I think that the eighth staking industry is really just getting started it's going to grow very

much very big from here I reckon and not just with the amount of each staked but obviously as the USD price of it goes up so does the amount of uh of um I guess a dollar Economic Security that ethereum has and that is going to be very attractive on a number of different fronts especially for things like restaking in my mind but yeah very very cool to see that ethereum has reached a point where we are sustainably above the ultrasound barrier which I believe is an awesome uh a kind of achievement but in saying that as well the ultrasound barrier is not a static Target it is a moving Target it goes up when there's more e-staked it goes down when there's less heat stake so if we double the amount of each staked I don't think it's

one to one mapped here but in terms of doubling but if we double the amount of each stake then that ultrasound barrier is going to be a lot higher than where it is today uh as I said it's around 16.3 gray today and it goes up as more 80 staked because of the fact that more eth is being issued Network wide which means that we need more burn to offset that additional issuance right and then the opposite is true when less eth is staked there but anyway thanks to Hell press for because prompting this discussion today it was uh very uh important I think to cover that now I did say I wanted to cover something thing got to do with oval Network which is right here so they announced today that they have raised 12.5 million dollars series a led by a Pantera capital and archetype archetype VC here

now I've spoken about opal a bunch of times on the refill before disclosure I am a seed investor in opal a lot of you will know that already but uh I think as I said before opal building DVT technology is going to lead to the next era of ethereum staking not just them obviously but their technology is going to be I I think used by a lot of the major staking providers out there and even people like solo stickers might want to use that in order to better decentralize and distribute their staking operation but also to to allow it to scale more and allow it to be more secure because DVT or distributed validated technology is a really really cool thing which you can read about on opal labs's website of course they've

got explainers for all of that uh and the reason why it's not live yet is because as I've said before I believe that it requires withdrawals to be enabled in order for it to to go live which isn't too far away now you know end of end of kind of March possibly early April where we'll get withdrawals enabled and then things are really going to kick into high gear guys on the ethereum staking side I can't even begin to imagine how crazy it's going to get but it's definitely going to get crazy especially as the man comes back and the yields for each state can go up because of the uh tips and Mev Revenue going up that's going to be crazy to see what that looks like as well and it basically acts as a very positive feedback mechanism where the higher the yield the

more each staked right the more it's locked up the potentially higher ethusd price goes and then people look at that and like oh my God you know I Gotta Buy eighth now and the higher it goes and it's going to get crazy I reckon out of the next few years it's definitely going to get pretty crazy but anyway outside of that just congrats to opal on this race here great to see them continuing to uh to be the pioneer of DVT technology and I can't wait to play around with it on mainnet when it comes out all right so the Bitcoin program Alpha round is now live it's a quadratic funding round that will support 200 grantees working on open source ethereum infrastructure and climate Solutions with a one million dollar total matching pool now I've discussed this round before uh I'd be I believe a few days

ago and I said it was starting on January 17th and running to the 31st so if you are interested in donating you can go here to the uh the donation page uh sorry you can visit this link here and see how to donate there's uh it's a bit different to what you're used to with Bitcoin grants rounds there are links here so there's a link to the climate Solutions around the open source open source software round and the ethereum infrastructure rounds all of this will obviously be linked in the YouTube description for you below to to donate here but once again donating to public goods is something that I think that every ethereum should do at least once it is basically part of being in ethereum it's the way I think about it is you know when you go to a certain country as uh as a tourist and you want

to I guess become more in sync with the culture there you do something like you eat some of their cultural food right their their native food uh you go visit a monument that is very popular in that uh in that country uh or you go do something uh like visit uh not just visit a monument but you go into an activity that's that you you know you have to do group to get amongst the culture and you experience the cultural events I think the same is true for donating to public goods or participating in a Bitcoin grants around here in ethereum because that is what it's like even if you're not a tourist even if you consider yourself a citizen of ethereum doing this is uh donating to open source learning to public goods is a core part of the ethereum culture in my mind but anyway I'll link these in

the YouTube description below for you to check out all right so Aztec announced today that they have issued an Aztec Grant to mean Finance to build a generalizable dollar cost averaging integration on Aztec connect now I've covered mean Finance before I believe they first deployed optimism as a way to DCA into basically any asset that was supported on uniswap I believe or amm's generally uh which I thought was really cool at the time especially because it was deployed to you to optimism where they were getting cheaper fees there but now if you want to be able to DCA in using Aztec connect and and obviously doing it privately on the Aztec network uh that's what the grant is meant to do it's meant to be given to mean Finance to build their I guess protocol build their

infrastructure on top of Aztec to enable people to privately DCA into their favorite assets yeah which I think is really really cool you know it's funny uh when I'm buying eth I do it in multiple different ways sometimes I'll buy it on a centralized exchange sometimes I'll buy it on on chain uh whether it be on layer one or Layer Two that it depends where I am at the time right but the one thing that I think I do across all of those chains regardless of where I'm buying it is that I do DCA in now it's not an automated thing it's definitely a manual process for me but I've always wanted to be able to do it in a more automated way and potentially in a more private way on chain like I hate on chain when I buy things if I make one mistake and leak one of my you

know connect one of my addresses that I'm trying to keep private uh from another address that uh that is linked to me uh it just basically doctors that entire address's history which which is kind of shitty right so being able to use Aztec connect to do this and not have to worry about that would be very very cool and have it having it automated through mean Finance would also be very very cool so I'm gonna be keeping on on top of this keeping tabs on this seeing how this uh this goes but uh great to see Aztec giving a grant to mean financer to play this on their network uh it's a good use of money I believe all right so Andy Guzman here put out a blog post today and he tweeted saying the state of zero knowledge applications in ethereum part one introduction is now

out this series is a non-technical walkthrough of ZK daps projects and problem spaces in ZK ethereum and contain some of my learnings after joining the uh privacy and scaling Explorations team at the ethereum foundation so highly recommend giving this a read it's not very long and it's a great little overview of uh the I guess like ZK to apps and things like that and as I said it's only part one so there's just a brief intro and what's going to be discussed in this blog post series but it's coming from the horse's mouth so to speak I mean the uh privacy and scaling Explorations team at the ethereum foundation is producing a lot of amazing work the researchers that they have there are working on the bleeding edge of privacy and scaling which as you know guys know a tool might basically key things that I'm paying

attention attention to in the ethereum ecosystem and keeping on top of this uh blog series is a must that's for sure and you can actually subscribe here on the top right too if you want to keep on top of that and and you can collect this blog post as an nft because it's on the mirror platform but yeah I just wanted to highlight this for you guys I'll link the blog post in the YouTube description below especially because of the fact that zero knowledge stuff obviously is getting more traction as time goes on and we'll continue to get more traction I think at this point it's become a little bit saturated because there's been so much talk about ZK and I saw a meme the other day uh that uh if you talk about something just normally on ethereum people will be like oh yeah

that's cool blah blah and act kind of semi-interested but as soon as you start talking about DK stuff everyone crowds you around you're like oh my God DK did you say ZK app what's going on here ZK ZK right and that's what tends to happen with new and exciting Technologies people will obviously get more excited about them pay more attention to them uh because they're new and exciting but eventually they will lose I guess like interest there and they'll move on to the next shiny thing which is totally fine uh because that means that Tech has relatively matured it happened to defy uh very quite I mean not not that early on but I think for the ethereum community and the core ethereum ecosystem really the big parts of D5 started happening in late 2018 into 2019 and then obviously we had D5 summer in

2020 but then after that D5 took a back seat to nfts uh the altel ones of course but it only took a backseat in terms of Interest they still kept growing people kept using it people kept getting value out of it so don't think that just because some you know the narrative changes or people lose interest in something uh doesn't mean it doesn't mean it's necessarily dead it just means that the newness has worn off and obviously people love I guess especially people in crypto love chasing new things um but uh but yeah definitely not any indication that something has failed or anything like that but yeah anyway on that note as I said this blog post will be linked in the YouTube description below for you to check out all right hoppy has a great tweet thread today about uh basically protecting your

ethereum transactions so I've talked about Harpy before how they are the on-chain uh firewall for ethereum uh being able to essentially protect you from malicious contracts well they start off this tweet through by saying what if the transaction that rugged your wallet never actually happened today uh they have launched something called Eagle which is two-factor authentication that plugs into your existing wallets now you can read this thread to know what this is all about and I should say that this isn't live yet for everyone it's in a closed beta but the rate that they are achieving this and that the way that they're going to be protecting you from uh basically um uh submitting this transaction or submitting a malicious transaction or signing something that's malicious is by changing your RPC to the eagle RP oh sorry I should say to the harpy RPC and

then uh Harpy's Advanced detection algorithms will run a security scan of your transactions before they are sent on chain which I think is a really cool feature now of course switching to the harpy RPC also come comes with potentially some downsides those downsides being Harpy has full visibility over that mempool and can potentially manipulate it as they want for either Mev purposes or or if they want to censor you they could but it's not that big of a deal because you could just change back to a different RPC if you notice that they were censoring you or something like that but yeah this is definitely for I guess probably the people that are more security conscious and definitely want to be as protected as possible I think this is a great solution uh there for that and I've

spoken about happy plenty of times on the refuel before um but I the the launch of this thing called Eagle I think is very very smart and I think it's going to help a lot of people uh as long as people are educated about this because really when you think about it a lot of the time the people getting hacked and and and signing malicious transactions and stuff like that are the the newbies so to speak and for them to change their RPC it's not exactly something that they do so they can still get the normal protection from Happy on on I guess like uh using just whatever RPC they want but if they want this Advanced protection then they'll change their RPC but uh it needs education for them to do that they're not just going to do that because uh uh you know they've come to their

conclusion automatically it's going to require education here which I'm sure Harpy is going to be doing more of and people will talk about this more and suggest this to people as time goes on but generally yeah if it's targeted towards newer people you definitely have to educate them here and you know this is where I guess services like centralized exchanges can help a lot I know it's not exactly in their best interest to encourage people to go on chain and go off you know we throw their assets from the centralized exchange and go and use D5 I totally get that from an incentive's point of view but them suggesting to users that these uh or at least telling users about these tools and that they exist I think is worthwhile and there should be a way for I think centralized exchanges to gauge how advanced their users are so to speak

and and they can do this because they have all the data on their users so they can basically have a thing where they run a an algorithm that says okay well if this user falls into the Advanced group then don't suggest to them these tools because they're more likely and uh not to get much value out of them but if they fall into like the Newbie group then maybe suggest these tools to them and this could apply to anything not just happy it could basically apply to any uh on-chain tool or any I guess like infrastructure or whatever it is uh which I think is is pretty important but as I said there's not really much incentives there for the centralized exchanges to do this but if they did it would be very cool and I actually think that coinbase might be a good testing

ground for this because they're very good at supporting uh The Wider crypto ecosystem especially the on-chain industry uh and because they've got things like coinbase wallet and they're some and they're one of the um exchanges that supports layer two off-boarding and onboarding you know directly to optimism and arbitrim and stuff like that so yeah this may be might be something that they're interested in doing but we'll have to see anyway I'll link This Thread from Harpy in the YouTube description below for you to check out all right finally here I just wanted to give a quick notice that I'll be on a Twitter spaces with Rhino Finance tomorrow at 8am UTC which is 7 P.M my time my time being Australian eastern daylight time uh I don't know what time that is uh and actually I think it's

really late U.S time uh I think it's 11 A.M potentially or maybe 9 A.M uh Europe time I mean it depends where you are in Europe right um but yeah it'll be morning for Europe uh obviously evening for Australia and parts of Asia and then I think really late night in going into like 1am 2 A.M for the us but of course it being a Twitter Spaceman that's recorded and you'll be able to go back and listen to the recording and what I'll be talking about I should have mentioned this before but what I'll be talking about is what's next for defy in 2023 um you know defy isn't something that gets spoken about too much anymore as I was explaining before it's it's no longer the new and flashy thing out there but I've said plenty of times before that defy still chugging along

really well it's still going to in my mind replace the existing Financial system or at least greatly improve it to the point where it becomes indistinguishable right it just basically becomes integrated with the existing system so I'm excited to talk about this on uh the rhino Finance space which you can go and set a reminder for it'll be linked in the YouTube description below all right last few minutes here one thing I wanted to talk about with regards to just something when I was talking about the um sustainable demand in the ethereum ecosystem before I wanted to also compare this because this just kind of came to me just then I wanted to quickly compare this to the other ecosystems in the I guess crypto crypto economy so to speak when looking at sustainability of

layer ones I think the most important thing to look at is fair revenue and it is fear of a new from the apps on the layer one chain and where that you know theory of new is actually coming from and what quality of those apps are and how sustainable it has it been over time now obviously a lot of these l1s aren't very old uh a lot of them are only two to three years old so you're not going to get the same amount of data that you can get from ethereum but you really need to look at it and see how sustainable it has been maybe against ethereum since 2020 because I I think 2020 is real where on chain stuff really took off with D5 summer so if you compare ethereum say let's say the first of Jan 2020 to today and compare

ethereum to all the other layer ones yes ethereum obviously had a big head start and obviously ethereum has layer twos now but if you're just comparing layer one to these other layer one you'll see very quickly that ethereum really is the only sustainable layer one that exists today from a theory of A New Perspective the rest of them don't generate nearly any fees basically right uh and they some of them do burning but it's not enough to make them deflationary because they pay out high amounts of inflation of their native token in order to secure their chain So and I've seen a lot of I guess like fight about this on Twitter lately people saying how can eth be deflationary but also pay a yield to stakers well I mean it's not very hard to explain that I did explain yesterday about where the um staking yield comes

from and all that all that is is like all the places that the staking yield comes from the protocol issuance the tips uh which is the the unburned fair Revenue and the Mev all of that is offset by the burn that's as simple as that it's offset by the amount of fees that are being burned each day and on top of that the uh protocol issuance the reason why it's very different and the reason why it is quite High uh as opposed to something like proof of work is that the issuance is measured in how much is being paid to staked eat so right now the 16 million if staked so that's the percentage that goes to the 16 million estate and that's the one that's often quoted but then there is the network issuance right the network

issuance is very very different uh and this is uh not including the burn so like just the vanilla Network issuance not including uh the burn I believe is 0.6 or something like that off the top of my head uh and that's the total Network issuance whereas the issuance to uh to stake is as you can see down here on the ultrasound money website in percentage terms is 4.1 percent so you have to look at it as 4.1 percent going to only leave a 16 million eighth that's staked and then there is a 0.6 network-wide inflation which covers all existing ether at the 120.5 million existing eighth then we simply add up the issuance add up the tips add up the

Mev estimate we get to 7.5 yield here uh but the only uh but the only thing that we need to offset is the issuance right we don't need to offset the the tips and the um the Mev because the tips in the Mev are not newly issued eth they are existing eat that's being used by users in the network so we only need to offset the 4.1 percent uh sorry not the 4.1 percent I'm getting a little bit confused they're getting ahead of myself we only need to offset that 0.6 which is the network-wide issuance because that is the true inflation rate of ethereum right of the entire network the 4.1 percent is only what goes to stakers the 0.6 percent is what goes to to basically uh the whole network what is the the

inflation rate of the whole network so that's what the burn needs to offset and that's what we're doing today or a deflationary that means the burn is simply more than the uh protocol issuance across the entire network not that 4.1 number that's only going to stake is but the 0.6 number of the entire network and that's what trips a lot of people up is that they think that ethereum has a 7.5 percent inflation rate and that we have enough burn to offset that when that's not the case at all obviously because as I said the issuance rate listed here is the issuance rate to stakers only not Network wide and then tips and Mev are not new issued eth they are existing eth

just changing hands so to speak right so yeah that's the way to explain it to people when they um they ask you about that 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