Threats to Ethereum, Deflationary ETH and more - The Daily Gwei Refuel #345 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delegate refuel where recap the latest news in the ethereum ecosystem i'm your host stan that is honor and today's the 31st of march 2022 all right everyone let's get into it so you guys will know all about the client diversity stuff that i've been chatting about with the beacon chain i've talked about this for the last few months at least and you guys will know that super fizz has been an absolutely massive champion of this effort now you can see here superfiz put out a tweet today thanking all the other people that were involved in this effort well you know as many people that um that he could think of including evan van ness ben um edgington from uh what uh the what's new in e2 newsletter uh michael sproul uh myself prior labs a bunch of others

look i mean i don't think this would have happened without this really nice concerted effort from superfiz and others around increasing client diversity on the beacon chain i mean norm was really talking about it in any big way before superfiz started making a lot of noise about it uh obviously you know it was it wasn't just him it was a lot of us kind of coming together and doing this and amplifying the message and all that sort of stuff and i've talked about it a lot as i said but i think that it always takes kind of like it you know it's always funny people are like oh you know how can a human be decentralized if there's if if there are there are people out there who kind of like have more power than others or have more kind of clout than others or more more uh i

guess racial than others well i i push back on that and i say well this is the perfect example of a decentralized ecosystem coming together right superfears does not work for the ethereum foundation he does not work for any of the core client teams he does not work for anything ethereum related at all um from from what i can see he spends a lot of time uh as part of like the eatstager community the rockerpool community does a lot in the um ethereum community specifically on the staking side of things but it you know he wasn't paid to do this he just basically said well there's a problem right the client diversity thing is a problem i'm going to make noise about it i'm going to get other people bought in i'm going to speak to the right people that i need to speak to and we're going to make some

noise we're going to make this happen and it worked i mean like i i am so like uh impressed that it worked so quickly as well i mean i say quickly it did take a take a bit of time here but you know the fact that we got below 66 percent uh on uh we got prison below 66 so quickly is is awesome and i mean it really really speaks to just how amazing the ethereum community is that anyone can come in and do this i mean as you know as i said like super fizz i mean he's a prominent person within the staking community um so he's not just some random off the street right but uh he's not vitalik right for example or he's not uh you know danny ryan or tim baiko the um the coordinators or he's not a core dev he's

a community member who is really passionate about client diversity and he came and he he did this amazing thing and got everyone on board got us all to kind of like start making noise about it and it was really really good and you know i i think this isn't obviously the end obviously client diversity is an ongoing thing we need to kind of like keep this up we need to make sure that it stays this way and we keep on top of it and it gets better over time and we also need to focus our efforts on not just the beacon chain but also the execution kind of layer as well so sorry not just the consensus layer but the execution layer so next step would be to get people to stop running geth and run a minority client such as nether mind or aragon so if you're running an

eighth one node or an execution layer node today uh and it's geth you can consider changing to another mind or aragon or um or something else there uh because at the end of the day as i said yesterday guest is still 80 of the network and that it you know it's not i mean it's not it's an issue but it's not like a huge issue currently but post-merge it's definitely not going to be something that we want to see we definitely want to see um similar kind of client diversity on both the consensus lane execution layers so so that's just a shout out there from me but i'm sure either superficial someone else is going to come especially post merge and say hey guys like you know the client diversity and execution layer is not good enough let's do better here so yeah just an appreciation post appreciation

shout out from superficial and to all of you as well i'm sure at least some of you would have either changed your client from the super majority client being prism do something else or if you've spun up a validator recently you would have you would have basically spun up something else or you've just made noise about it right i mean just talking about it is enough because you just make more noise about it you get good at top of people's minds uh and things happen in the background things definitely have been happening the wheels have been turning and the proof is in the pudding and that's what we saw when we visited the invis website uh yesterday the one that i um or not yesterday um uh where where is it yeah paul's not invisible.cloud here uh i think it was just the other day before we saw that

prism usage is well below 66 right now um and hopefully getting better over time so just a cool little appreciation tweet from superfiz there all right so following on from tim biker's tweet yesterday uh where he asked what are the most important things to get right in the next two to three years for ethereum to thrive danny ryan has said uh always tweeted out what are the biggest systemic threats to ethereum in the next two to three years now this got a bunch of good replies here uh one of my favorite ones is from hudson jameson who says a major bug in a majority client that requires manual intervention post merge we have a lot of work and experience dealing with proof of work bugs and how to recover proof of stake recovery is less tested and the safety net of client diversity may be

difficult if clients aren't diversified enough and then he continues on to say this is not to imply that a ton of work hasn't been done in both testing recovery and proof of stake and client diversity i believe it is getting better at time goes on and have full confidence in the merge i do however see it as a huge risk i mean i agree with this obviously uh the proof of work chain has been around a lot longer than the proof of stake chain has and we we've had the beacon chain live for over 12 months now uh uh you know that's like 14 or 15 months something like that and that's all well and good but it's really hasn't been doing much it hasn't been validating transactions on the execution layer side which is a whole another kettle of fish so there's definitely a big risk there i

don't know if i'd call it a systemic kind of like threat look you know it's always funny when i when i see something like a systemic threat like when i when i think of that i think of something that sets ethereum back by a lot right by maybe years like if something happened then we had to kind of like fix it but that set confidence in ethereum backed by by years and it took a lot of time for us to kind of like get back to where we where we were uh it depends on the bug i guess if it was like a really really bad bug where maybe a lot of people lost their ether and because of some some slashing event that happened when it shouldn't have happened and then people came together and couldn't decide on how to you know fix the issue that could set ethereum

back definitely so i guess it depends on it depends on the severity there for sure so that was a good little reply from from hudson um you know a bunch of other replies in the in the in the tweets here i think uh around i guess like bugs primarily obviously as a big systemic risk uh ease of use of layer twos um was it was it was something that commented on a few times like if we don't make layer twos just dead simple simple for people to use then they're gonna use something simpler and that might be an alternative l1 so that's definitely a risk there and i would actually say that's more of a systemic threat because if people decide to use these alt l1s instead of the l2's like if l2's just totally fail to gain traction and everyone's just using these other l1s well that's a systemic threat

to ethereum because it means ethereum is not going to uh succeed in the long term right so so that's definitely a something to i guess keep in mind i wouldn't i mean i'm not worried about it like i have as i said you guys before i think it's basically a zero percent chance that layer two's fail there's just like no way in my in my kind of like eyes uh but there's always the kind of like chance there now if i was to give my own kind of like i guess opinion and what the biggest systemic threat to ethereum would be honestly i would go big here guys i would say that nation states are really the only thing i worry about because a concerted effort from a nation-state to take down ethereum look they could do a lot of damage don't get me wrong and i've talked about how

with it with something that's truly decentralized it's actually hard to kind of like kill it dead and what i mean by that is that they can attack the network they can split the network off they can do a bunch of different things but for them to actually completely take over ethereum as not just a network but as a community would be impossible right like the ethereum community can come together and say well this this chain keeps getting attacked or this chain is basically dead um let's move on to this one and this you know we'll all agree this is the canonical chain that can happen easily on the social consensus side of things and i mean i say easily it wouldn't obviously be an easy thing it would be quite a mess but it could happen right so i guess like you know from that perspective i would

say that nation states are the only thing that i worry about and that's why i hop on so much about the importance of decentralization because you the only way the only way you can resist nation states is with decentralization if you are centralized they're going to shut you down instantly if you have a uh maybe on the technical layer you were decentralized to an extent but on the social layer you are not i mean it'd be very hard to do that but if that was the case again you're basically very susceptible to nation state attacks and don't get me wrong guys like or don't don't think these attacks aren't coming they are like i i just i i don't think we've seen them yet because it hasn't been kind of like i mean i don't think the nation states take crypto or take blockchains as a

serious systemic threat to themselves yet but they will in the future and some of them will play nice some of them won't you know i could imagine uh you know china's already been pretty strict on crypto i could imagine china being like well we don't want ethereum to succeed we want our own thing to succeed and they kind of like attack ethereum with all their resources all these sorts of things uh you know it can happen right that to me is the biggest systemic threat i still put a low percent chance on that happening i feel like you know yes they they could do it relatively easily but i don't really see the benefit to be honest i mean they it's more beneficial for them to actually be uh to get involved with crypto to fund it to put tax money towards it to actually um generate and

stimulate the economy in order to earn more tax money from it and in order to grow their country's economy and keep their voters happy and get voted back in like and i'm talking about a democracy here obviously that you know china's not a democracy so that could be a different thing there and and i mean not really russia i mean russia at this point in time seems to be uh in their own kind of little predicament there i have to say the least so but i i just think in general you know the nature state doesn't have to be a superpower either like and they just have to have enough of enough resources to to go after these things and obviously attacking bitcoin and ethereum right now is extremely expensive but these other networks are not these other networks are very cheap to attack i mean

some of them that that basically require data centers to run the network they're extremely easy to attack guys like you could literally i mean i'm not going to pick on any one chain but any of these chains if you just go to some of the top data centers in the world they most likely hold uh or are hosting all of these nodes and validators just tell them to shut it down and that's it these you know aws uh and google cloud and whoever else are not going to basically say no to the us government right they're going to do it especially if they're ordered to do it so that to me is the biggest systemic threat to ethereum and crypto in general but at the same time i don't view it as something that's likely to happen i view there will be regulations there will be

laws that that suck in some countries for crypto there will be probably more tax reform around this sort of stuff but i don't really think that we're going to see a nation a concerted nation like big nation state attack against one of these networks but in saying that i think that just because i don't expect to see it and just because it's a low chance doesn't mean we shouldn't build these systems to resist that because not only are we building these systems to resist nation states but we're also building them to resist any type of attacker like we need to make sure that it can resist not not just an attacker with the uh the monetary resources but also with the technical resources for example if they're an attacker who can find a critical bug in the network we need to make sure that it's either very

hard for them to exploit that bug or have a culture of recovering from that bike and being able to patch it or just making sure that there's no none of those bugs to begin with so there's a whole lot that goes into this this is not a simple thing uh and that's why you'll always always hear me go on about decentralization being the most important thing because at the end of the day for me if if blockchain is not actually like maximally decentralized then you don't need a blockchain especially as we go into the modular blockchain paradigm where you're going to get more scale the more decentralized you are it makes zero sense to me why you would sacrifice decentralization to achieve scale if you don't need to do that anymore and if you're just giving up uh so much security in order to do

that so that's why that's basically i mean the tldr of why i go on about this stuff a lot but i think it's critically important so let me know what systemic threats you say to ethereum either in the discord channel or the youtube comments i i don't reply to a lot of the comments but i do read them guys uh uh it's just not enough time to reply them part of them all but i do read them i do i do try to try to digest all that and i do read your comments about what's on this beanbag here guys it's all clothes it's nothing it's nothing conspicuous it's like my tracksuit pants there then that i wore tonight when i uh when i went out before and yeah i mean that's a bit off topic there but as i said i do read the comments that's just

to prove to you that i really read the comments there but anyway moving on from that to an interesting tweet here from data always who tweeted out with decreasing gas fees and lower burn i've naturally been getting questions about whether post merge eth will still be deflationary to date there hasn't been a single day since erp 1559 where staking rewards have been larger than the token burn amazing right guys i i think i've mentioned this to you guys before but even at the lower gas prices that we had like 10 uh 10 gwei or 20 way we were still burning more than was being issued in in proof of stake now obviously we weren't burning more taking into account staking and mining uh uh kind of like being issued but like how amazing is this because we're getting

rid of the mining issuance uh in a few months right with the merge and then even at 20 way we're still going to be deflationary uh and this you know we're still going to be burning more ethan we're issuing and a lot of and as i've said to you guys before there is a six month or at least a six-month dead period where no new eat is being issued into into the market so i i i i don't know like guys i don't want to get too bullish here but like i don't know how many times i have to repeat myself about how stupidly bullish this is not only is the triple harvening extremely bullish with the 90 80 to 90 issuance reduction but we still have one five five nine going i mean i i i i put out a tweet the other day where i said

no one talks about it anymore but yeah p1559 is still burning millions of dollars worth of eat per day guys like it's not a small amount it's millions of dollars per i just imagine eip159 is a person that goes out there and buys millions of millions of dollars worth of eat every single day and burns it removes it from the supply forever and and i i don't know i don't want to go on too much about it because i'm repeating myself so much here but i love seeing stuff like this because it just reaffirms that and and look at how much like ether were burning during kind of like um the hype i guess the bull market cycles like once we go back to that we're going to be straight back there gray's going to be 100 again i mean it already doubled the average i mean it's been at 40 grade for

the past few days it was 20 grey last week like the gas price moves up so quickly when the market gets hot and the market really is heating up guys i mean atheis you know hanging around 3 400 i don't know how much of you guys kind of like pay attention to technical analysis but that is like the level everyone's looking at but when i look at things i look at momentum shifts the momentum has shifted bullish that's for sure guys like yes the price can still go down from here but i have felt that momentum shift and i think uh leading up to the merge is going to get more and more shifted there there's tons of eth going into staking everyone's talking about staking everyone's talking about the yield that will happen once the merge goes through it will spike to like 10

plus probably and that's another thing that i've been talking about on the refill for a very long time but just now people are clueing into it so it's always fun to see like how long i've been talking about this stuff and then watching on twitter as everyone clues into this and b's like and he's like holy like what i can get 10 risk-free on my eighth uh post-merge because the unburnt fair revenue is going to be going to uh stakers and oh there's a 89 insurance reduction coming and oh we have a six month dead period of new issuance all they have to do is watch or listen to the refuel half an hour of their day but they don't that's where you guys get the alpha and that's what i love about the about doing this sort of stuff is that like i can say this stuff so far in the

in um you know in the past and the people who actually care enough to to to listen to me every day will get that alpha and the ones who don't have to come later and you may think oh you know the market's super efficient because of this this and this and everyone knows about this i remember saying probably over a year ago at this point to you guys on here that if you think people understand all of this or if you think you know hundreds of thousands of people the you know everyone that's in crypto understands all of this you're sorely mistaken i still think i mean there's probably a lot more people that understand it now but i still think up until the last maybe month or so there was probably less than a few thousand people who actually understood all of this sort of stuff that i talk

about to you guys every day and i i'm gonna say that most of them would probably be refuel watchers and listeners so i'm pretty proud of that like i the most proud thing i am with with the refuel so the most the thing that i'm most proud of with the refuel is basically being able to say these things so early on and then see them watch it watch them play out later uh it's not like an ego thing it's just i'm kind of like proud i'm proud that i'm able to kind of like spot that information early and pass it on to you guys and i don't charge for any of this right everything's free and just watch it all play out uh because it's it's just awesome to see kind of like that i was um you know that that i kind of got this stuff right and i kind

of like had a thesis and it played out and that's what i felt like for my entire time in crypto i had you know i've had a thesis on ethereum for a very long time and i've kind of watched that play out and then now these days i'm just like like it's just insane the information asymmetry how many i still took the other day someone's thought ethereum was already proof of stake and look guys it's just crazy i'm i'm rambling here but yeah this is all the stuff sort of stuff i like to think about a lot and kind of like where i where i kind of like see my most value in um in crypto here uh but yeah no one's bullish enough on each i don't even think i'm bullish enough on eight to be honest uh and i don't think uh you know

anyone's gonna have enough going to the merge as i said in my tweet the other day because it's just crazy like you try to catch it and you try to buy more but the price just gets away from you because so many people just clue in and they're like holy crap like i gotta buy now and i know everyone like a lot of you guys are trying to dca in unfortunately price gets ahead of us guys like i've been trying to dca in like in the 2000s for a long time as well like you guys know i buy as much either as i can and even me like right now i'm like damn it i knew i knew it was going to go up but like i i didn't have you know the money at the time i wanted to buy and yeah i'm sure

you guys were in the same boat uh boat there uh but i'm hopefully you were able to to to buy a bin hopefully you know you're happy with your entry your entries there your dca strategy um and i you know i hope that uh it can keep appreciating into the future i can't promise that it will but i've given you guys all the information you need to know to kind of like have conviction on ethereum and an aethers and asset there all right so speaking of uh staking so alex stokes who's working on validated withdrawals which is coming in the shanghai update after the merge put together a thread uh you know basically of um of things that he's going to be covering in his uh peeping eip discussion with eath cat herders which is going to go over the erp for enabling validated withdrawal so if you want a

sneak peek of what he is going to be talking about and everything you can read this twitter thread here or you can kind of like wait till the eth cat herders kind of episode that will be out on their youtube channel there this is cool because i think technically it's a really interesting thing uh how the validated withdrawals are gonna work um i can't tell dr for you you're just gonna you're gonna have to read this because it's actually quite uh intricate and quite technical uh but yeah i'm looking forward to this you know obviously as i said this isn't going to happen for at le until at least six months after the merge i would say q1 2023 is most likely it could even push into q2 it just depends um but yeah that's when the kind of be enabled so at least six months of no validated

withdrawals means none of the staked ether none of the kind of um block rewards can be withdrawn but at the same time uh it could be as long as nine months or it could be even like 12 months you know we don't know it's it's too hard to tell at this stage but but yeah give definitely check out this thread from alex stokes here all right so a new project got announced today on twitter uh called verse which uh which kieran here is calling the hyper exchange protocol and the tldr is the ability for digital object objects to be their own medium of exchange enables a paradigm shift for media culture infrastructure and identity on the internet so this is basically got a lot to do with the creator economy and nfts and basically financializing a lot of um a lot of this sort of stuff and what

verse she's trying to do is uh and i'll just read out what they say here the verse protocol enables every digital object to have an embedded autonomous exchange structurally this means that every rc 721 nft created through verse is natively backed by an underlying erc20 market uh which is i mean pretty cool right like when you think about the implications of this and there's a nice little graphic here that explains this it it is trying to solve the liquidity problem for nft which obviously as you guys know is a pretty big problem they've been other attempts around this where it's like you know breaking up the nfts into smaller bits or or kind of like um indexing them you know putting them to indexes and stuff like that like either breaking them up or bundling to get them together whereas this approach seems to be a bit

different where basically you you have like an nft that is actually backed by an erc20 that is kind of like in an amm so you have uh you know instant liquidity there for that kind of like nft or object as they're calling them here if you want a full breakdown of how this works definitely check out the blog post from verse here i'm still digesting this i'm still trying to wrap my head around it i only just saw this before so i haven't haven't even read the pro i've read the post yet but i read the tldr i kind of looked at the diagrams i was like okay i see how this could work i see you know the value proper obviously um but i need to digest it more so definitely go give this post a read to learn about this new protocol i'll link

it in the description all right so i just wanted to highlight this thread from 100y.eth uh which is a polygon 101 thread so in this thread they jump into everything about i guess kind of like modular block chains how polygon fits into that what they're building you know all that kind of like solutions they've got going as i mentioned yesterday they have a new solution called polygon id that has just come out but on top of that they have all their other things like the pos chain the zk teams uh polygon nightfall all that sort of stuff so if you want to refresh if you want more context around all of that definitely check out this thread from 100y.eth it was very very good it's only 22 tweets so it's not that long uh but it's a lot of alpha packed in this thread and as you guys know i'm a

polygon advisor just a disclosure there but i mean at this point like i don't even know why i have to disclose that anymore you guys know that plus i mean polygons doing so much amazing work for ethereum that even if i wasn't an advisor i'd still be talking about them all the time so you know but anyway go give this thread a read it's it'll be linked in the new description right so an update out of defy saver where they've introduced automated stop loss and take profit options for make a day make a dial vaults uh these new automated strategies allow users to set threshold prices below or above which their cdps will be automatically closed securely and trustlessly this is pretty cool obviously a lot of people use maker cdps or vaults as they're called these days uh in order to leverage up on each

so you put eth in you borrow die you buy some more eth you may do this recursively a couple of times and you have a liquidation price that you monitor now what if you could automate stop losses and take profits which basically means that if it gets to a point where you're like oh crap like i got to close this position because you know the market's getting dicey and i don't want to get liquidated well you can automate that and on the flip side take profit you know what if you've you've kind of like gone long on eth uh through a throw maker vault ethan's doubled in price you're like okay okay i should pay down somebody's debt i've made a bunch of money let's pay down this debt and this could be automated through d5 saver as well so if you are someone who uses you know cdp's and you

have to do this manually look at d5 savers see what's uh see what's going on there they may be able to help you with their automated strategies here which i think are pretty cool because look i mean dfi saver came about i think originally because uh to protect people from getting liquidated in general with with maker cdp's and vaults because a lot of the time people would get liquidated because they were either away from their computer and they couldn't access their computer or their ledger or they were sleeping and you needed an automated way to save your positions and they've just kind of grown from there they're trying to do like uh kind of like automated strategies for all kinds of defy things and i think this is pretty cool like i would use this i mean i don't typically use my makeup vaults for leverage i don't

typically trade on leverage at all like if i don't have the money to buy the eighth i just won't buy eight that day um but uh if i did do that i would use something like this because i'd be too concerned that i'd either be away from my computer didn't have my ledger on me or didn't have my lattice on me or was asleep and the market just tanked 20 overnight or something because it can i mean heath can go down 20 while you're sleeping guys like this is not a unprecedented thing this has happened multiple times in the past you know a few years even so i think you know if you're into this sort of stuff uh and you're happy with kind of like um uh kind of like risking stuff and doing leveraged trading and stuff like that definitely check out d5 savers tools to

kind of like lower your risk and automate this this whole process here all right so final shout out here to get pope who says that if you ever contributed to one of these projects listed below uh you're getting a pop on april 7th that you can claim at getpop.io so the projects include things like truffle git coin the part project itself ethereum dot org the bigger chain website opens up line i mean there's a bunch here so if you've contributed to them in any way on get coin uh then sorry on github and on their on their platforms themselves then you'll be getting a pop i know a lot of you guys love these pops so definitely um you know check this out on on april 7th get pop dot io because you'll be able to get one there so i just wanted to give a shout out on

that now i have a few minutes left here i did want to talk about something uh rather important i think uh today so look the markets are getting like i've talked about the markets a little bit recently the markets are getting you know heated again right it's going back up we we could be at all-time high before the merge you know who knows maybe we are maybe we won't be what i want to talk about and what i've seen too much of lately is people get greedy really quickly like really quickly the market moves up you know even moves up from 3000 to 3400 and all of a sudden everyone gets super greedy and they're like oh my god we're going back to all-time high everything's gonna be great i'm gonna be rich i'm gonna buy a lambo blah blah i'm not talking about specifically any you know

any of you guys i don't really see this happening in the discord channel but just more broader you know in crypto and and i think this is extremely dangerous because when people get greedy and people get fomo they tend to do things or act irrationally and especially with leverage trading as i was just talking about and i think that i just want to warn you guys against these sort of things leverage trading so basically uh borrowing against your existing assets to go long on that same asset potentially is very very risky it's very easy to get liquidated if you're not careful and a lot of the time it's not worth the risk now this is not investment advice but this is me trying to kind of like warn you guys because i've seen too many of my friends blow themselves up like this and there is absolutely nothing worse

than blowing yourself up because for some reason the markets just kind of like moved against you uh even though it's in a in a bull market and then missing the entire move because you have no more money left to buy back in or what you're left with is very very small compared to what you have or because you were chasing maybe another 10 or 20 on top of your stack which is not worth that extreme amount of risk and i've seen this happen to multiple people guys it is terrible like i mean mentally it is terrible like the stress the anxiety the you basically these people don't want to even be involved with crypto anymore because they're like why would i even care what's happening anymore i lost everything i don't even get to share in the excitement anymore every time they see the price of their of 8th going up

for example they get really pissed off because they're like you know i could have had this i could have had that i just want to implore you guys to be very careful if you're if your level is trading and if you want to do it you can do it with a small part of your stack i've seen people do it with their whole stack and it is just insane to me as i said to you guys i don't do leverage trading um because of the fact that it's just way too risky for me and if i did do it it would be a small part of my stack and i would make sure that i had like all these automations in place to protect myself so so yeah as i said not investment advice just advice in general because i don't want to see you guys

blow yourselves up i don't want any of you that have built an eighth position that are along for the ride that are really excited about ethereum to lose that spark because you blew yourself up trying to increase your stack by a little bit more that's simple as that i've seen too many people do it i don't want to see it happen to you guys and i think on that note i'm going to end this episode there so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give the video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone