TradFi loves tokenization, Devcon tickets and more - The Daily Gwei Refuel #793 - Ethereum Updates

Transcript

hello everyone welcome to another episode of Del refu where C latest news in E ecosystem I'm your host D 11th of July 2024 all right everyone let's get into it so it seems like the main narrative that people are going to be I guess like exposed to when it comes to ethereum is this tokenization narrative now of course I've spoken about this in the past obviously we know that the CEO of Black Rock Larry thinkink has spoken a lot about tokenization uh in the past and especially about how he's excited about and it seems like something he really wants to push uh you know as a compliment or even maybe like as the main thing uh in relation to kind of the ETFs obviously they have their BTC ETF with their e ETF going live soon but in in terms of actually using this

technology it seems like they want to uh do it via tokenization now the reason I'm bringing it up again today is because Goldman Sachs actually announced they're going to be launching three tokenization projects by the end of this year now I dug a little bit deeper into this cuz I was curious ious to see what technology they would be using apparently it's going to be on a private blockchain which I think completely defeats the purpose of what they're trying to do here but hey they got to go into the private uh realm before they go into the public realm I do think eventually they'll end up on public ethereum specifically but I think the broader Trend here and the broader thing of note here is that this tokenization thing seems to really be resonating with distributional Finance system and I'm

sure they're going to be able to package it up in such a way that it resonates with everyday people and then of course of course if you want to get exposure to this tokenization thing which hasn't happened before you know for us obviously in crypto tokenization is nothing new we've known about tokens for a very long time now it's it's literally been around in ethereum since almost day one the rc20 token standard and and other token standards as well but for the everyday person they're hearing this new word tokenization right and they're wondering you know how do I get access to this what is this all mean like how do I invest in this and well you know these tradire institutions are now going to have a to sell because they can basically say well tokenization happens on ethereum uh and you can buy eth to

get exposure to that essentially and hey look we have this nice little ETF product that you can buy and then you can have exposure to eth and then eventually when they have staking ETFs they can go and sell that product as well so this is this is super bullish I think it's not going to happen overnight of course this is going to be more of a long-term play here but I know it's been a debate within the ethereum community for quite a while now about what the narrative should be for ethereum like What's ethereum's main narrative and as I've discussed before I don't think ethereum is ever going to have like a single narrative it's not going to have something like a digital gold that Bitcoin has because ethereum is just so much more than a single kind of Monolithic thing that you can kind of

wrap into a neat package and essentially water it down to like a oneliner I don't think you can do that I think that there are different on liners you can use for ethereum such as saying you know ethereum is a platform for to tokenization or ethereum is an open source app store or ethereum is a store value uh platform or or E is as an asset is a story of value or ethereum is the new internet ethereum is the new Financial system there are many many different ways you can describe ethereum through onliners uh but I do think that this ethereum is a tokenization platform oneliner is probably going to be the one that you see the most in the trafi world just because of the fact that the big players in that world are very big on tokenization now they seem to see a

future here which I mean it's pretty obvious to us but it's good that they see this future and obviously people going to want exposure to this just like they want exposure to anything you know if you want exposure to AI people like oh how do I buy how do I invest in AI it's like well the traditional not a traditional I mean I guess like the popular way of doing that over the last couple of years has been to invest in Nvidia right invest in in Nvidia the company invest uh buy Nvidia stock because they're creating the hardware that enables this and then there are other other things as well obviously in other sectors around the world as well people like to invest in doesn't mean that the investment is going to pay off but really you always want there to be some kind of I guess like asset people

to invest in before you start building these things because it just brings more money into the ecosystem and I think that's exactly what's happening with the eth ETFs uh being you know I guess like a week away from Trading now probably hopefully less hopefully they start trading next week uh it seems like next week is going to be the week here uh and then obviously the tokenization narrative will keep picking up steam and it's not just a narrative I think it's also reality because when you think about it ethereum already has all of the scaffolding in place to do this like we've been doing as I said we've been doing tokens for so long now and it's not just the tokens that we've been doing we've got all of the as I said scaffolding and infrastructure around tokens in place where essentially uh wallets obviously support tokens and

they can import tokens for you and they can display tokens in any which way that you want there are different uh service providers out there that'll uh essentially allow you to make a token uh instantly essentially it's it's like the cookie cutter smart contract uh sorry ic20 template but then also add your own features to it if you want add things like Blacklist to it if you want like with usdc and usdt for example right so there there are various different uh kind of things in place already and there's lots of different uh uh infrastructure in place and there's a huge Network effect around the erc20 standard on ethereum it already has all of the centralized exchanges integrated with it right it already has Integrations within defi it's a Well understood standard that the traditional Finance system can just plug in now and

they can bring their assets on chain obviously when it comes to real world assets such as a house like tokenizing a deed to a house if you want to do something like that sure you can do it but the ultimate I guess settlement is not going to be on ethereum the ultimate settlement is still going to be in the legal system as um as that kind of physical paper or essentially the house exists in the real world is not secured by ethereum right but it's an IOU that you can trade just like you can trade gold IUS on on you know the stock market you're not actually trading gold physically with each other just like we have with cash today right like where essentially if you're moving money around on within bank accounts it's essentially just digital uh not not not real digital money but like digital

representations of cash somewhere in a vault right you're not trading that Vault I mean a bank is not sending you know if you send $1,000 to someone to pay for something the bank is not physically going into its Vault taking $1,000 cash out and then sending it via I don't know some snail mail to to the other person no they're just changing numbers on a database essentially that's that's essentially what ethereum does right and and Bitcoin to an extent and really any public open blockchain is essentially it's it's a database and it just changes The Ledger when when things happen on The Ledger it changes who owns what and and that's really it but because assets like eth natively live on ethereum the ultimate source of settlement for eth is the ethereum chain whereas for real world assets for

example the ultimate source of settlement is that asset itself so essentially like yeah someone could steal the house deed on chain or can hack the hack your your wallet and take your house deed from you but they don't own the house the house deed exists within the normal kind of meat space where essentially the house still belongs to you this deed is now null and void because it's just it's gotten hacked and it was just a paper I you to begin with and now you can essentially um reissue that uh and then just void the other one so there there are kind of layers here to tokenization but it's definitely going to be the big thing going forward for ethereum and I definitely think it's going to be a way that these Trad find institutions Market ethereum to to clients especially when

they're trying to get AUM into the various different ETFs out there so super exciting stuff in my opinion I know that obviously for us it is old news but this is all new to this this world here that really if you think about it most of what the I guess like regular world or World outside of crypto knows about crypto is really just Bitcoin they know that Bitcoin is a you know some kind of thing that you can invest in it goes up and down it's very volatile they know they probably heard of Bitcoin being described as digital gold they may may have heard of ethereum may not have heard of ethereum probably not heard of ethereum I'm talking about the people that are just very like casual maybe thrown some money at crypto and probably forgotten about ethereum altogether if they did hear about it

once upon a time because obviously Bitcoin dominates the headlines it is the thing that media reports on a lot um but essentially uh for the vast majority of the investable money out there and who that money belongs to they've got no idea what ethereum is what it can do they're just hearing about tokenization thing and they're going to log on one day they're going to you know they're going to check their email they're going to get a report from Black Rock from Goldman Sachs from uh bitwise from Van whoever it is that says hey this ethereum thing this is where the tokenization stuff's going to happen and ethereum can do all this other stuff and hey ether's an asset it's a really cool asset for such and such reason you can buy it right now through this ETF and we'll manage it all for you and you

don't have to worry about custody or anything like that uh it's such an easy sell at that point that's why ETF so popular because they wrap everything up into a nice little product and really all of these issues have to do is come up with marketing to get people in and it's not hard to do that guys like I I think that people over complicate how these things and think a it's so hard to come up with narratives and marketing for ethereum it's like it's not you just need to know your target market and then craft the narratives and craft the marketing towards that and you need to realize that the vast majority of the investable money out there is not dgen Gambler money it's conservative money right it's money that people have in their retirement account it's money that they don't want to lose they don't want

to gamble away it's really conservative stuff here and yeah they may only allocate a couple of percentage of their entire portfolio to crypto but that's enough guys like that's heaps that's so much money that's trillions of dollars coming into into crypto over the next uh 5 10 years or something like that but yeah it's it's definitely not crypto native money where it's just max Deen Gambler like I would actually say that most of the money in crypto today outside of BTC and eth is really dumb money like really really dumb money because it's just Gambler money right like and when you have Gambler money it can't possibly be smart money because they're gambling based on random narratives that are shielded to them on crypto Twitter or they're basically trading these things based on uh ridiculous mem lines or technical

analysis that they're doing day-to-day on charts I'm not talking about the longer term stuff just the short-term stuff so really when it comes to the ETFs and the money that they're going after it really is that conservative long-term oriented long-term mind money and I couldn't think of a better investment to make than eth in that if you want to get exposure to crypto as a whole because buying BTC does not give you exposure to tokenization it doesn't give you exposure to an onchain um you know defi onchain Finance economy doesn't give you exposure to nfts you know it doesn't give you any of that it really just gives you that digital Gold Store value which is fine I mean it's been good like obviously BTC is super valuable and will probably still go up over time but if you want the I guess store of value money you've got that

with eth as well so I just I don't see a reason to buy BTC over eth but it is on these issuers to basically uh convince their customers of this but at the same time because this is conservative money I do suspect that as I mentioned before it'll be a market cap weighted thing where it'll be like at the start 30 70 you know 70% BTC 30% eth that may change over time in either direction but I feel like that's the way it's it's going to to be there but anyway enough talk about all of that stuff but seriously exciting times for the ethereum ecosystem there all right speaking of exciting times in the ethereum ecosystem Devcon tickets are now on sale so as you guys probably know the next Devcon Devcon 7 is being held in Bangkok Thailand from November

12th to November 15th this will be the only ethereum conference that I will attend all year I definitely am going to be attending this one I've pretty much missed all of the other ones during this year I've only gone to small events here and there I haven't gone into any gone to any ethereum conferences obviously I'm not at EC right now I didn't go to eth Denver I'm not going to be at any of the others I didn't go to Dev connect or anything like that uh but I'm definitely going to be at Devcon it does help that it is relatively closer to me than somewhere like Europe obviously Bangkok in Thailand being in Asia is much closer to Australia than Europe or even uh the US uh so that's that that's nice and the time zone difference isn't too bad so hopefully my jet lag will be okay but

I'm definitely hoping to be there hopefully I can get tickets right but you can go and check out how to get tickets in the blog post that the ethereum foundation has published here there are various diff very I should say very different ways or various different ways to get tickets um and depending on who you are in the ecosystem or what you've done in the ecosystem you can potentially get tickets for a very steep discount or completely free I think cevs are getting tickets for free or at least cevs that were part of the merge I think they have like a pup that they have they'll be able to get tickets for free which is really really cool as they should honestly get tickets for free but it's really cool they're using like an onchain way to verify this um you know these power-ups that the um that the the

cevs got for making the merge happen happen essentially which is great to see there but yeah there are discounts for other people out there you can also attend uh as a Founder as a builder as a Dev anything I mean I think devcom will probably be the biggest Conference of the year to be honest it usually is the biggest Conference of the Year obviously not just ethereum people are going to be there uh it's going to be like everyone from Every ecosystem I'm sure you've seen a lot of the the ECC tweets about how there are a lot of other ecosystems there I think that Gavin wood from polka dot did like a a keynote speech uh their Aptos Founders did a speech which funny enough if you saw the meme or saw the picture on Twitter there was like three people in the audience so it's nothing

new for like these other l1s to have their I guess um their uh well their presence that's what the word I was looking for their presence at these events um but hopefully they're not given the main stage at devcom because devcom belongs to ethereum it is an ethereum conference but yeah I'm super excited for this but you can go check out all the details for yourself I'll link the blog post in the YouTube description below for you to do so all right Tony is out with some fresh research today this one is titled deep diving attestations a quantitive quantitative analysis and he basically has delved into the performance of different note operators the impact of Big Blocks best and worst validators and a test/ proposer timing strategies now

of course this is very detailed as usual from Tony and I highly recommend and reading this post for yourself but I wanted to make a few comments after reading through this so my number one comment is like why would you do an analysis like this and and I wanted to comment on this in particular there's I think two main reasons here the the the first one is that obviously we want to know what the ethereum network looks like at any given time from the not operator level for various different reasons but we want we want to have a kind of good analysis of this a deep dive analysis on this in order to see how healthy the network is because that will inform future upgrades to the network such as Max EB right obviously that is already slated for inclusion in pectra but this data gives us more

insight into what else could we be doing here to make sure that node operators are performing their duties as you know as efficiently as possible we make sure the network is healthy overall you know so on and so forth and also this is something that could inform the discussions around shortening the block times on ethereum or the slot times I did discuss this the other day where I said that there is a lot of discussion right now about essentially uh reducing ethereum slot time from 12 seconds to 2 seconds but also there are certain tradeoffs that we need to consider here and the only way to consider those is with hard data and that's exactly what uh Tony is giving us here in this post is basically hard data on how the performance of different validators are on the network uh and and the different

node operators are on the network and as I said it is very very detailed like look at this I'm I'm scrolling down and there's just so much here so I I definitely highly recommend giving it a here because and and I guess like maybe a third thing here as well that I didn't mention earlier is that it also informs things around me and the impact of me on the network in in particular the impact of me boost um and things like timing games and and and so on and Blobs of course and and so on and so forth there so yeah definitely go give this a read if you haven't yet I'll link it in the YouTube description below but this is the kind of stuff we need more of because yeah the ethereum network is definitely going to be changing uh a lot over the next few years specifically

around I think proof of stake generally is going there's going to be some major changes there but also with with regards to the blocks like I feel like there has been a real push to shorten the block times Lately from uh from from people that I consider to be honest actors and smart people but I would like to see more data more analysis and I would like to see more discussions around the tradeoffs as I mentioned the other day one of the major trade-offs is the fact that if we make block times or slot times 2 seconds that would probably kick off lot of the lower powered devices on the network today I I struggled to to imagine that my rock 5B that's currently uh solar staking um would be able to keep up with the chain in that environment because it's just not

powerful enough um and also it's not just me that runs these things there's also other devices out there as well but we need to do an analysis on this especially when it comes to bandwidth requirements too that's another big thing here but I don't think any of these changes are going to be made until definitely not until after Max EB is in place and we load come off the network via that but also we there's a lot of more work around blobs happening too and and Proto Dan sharting and dank sharting generally we just need to see how all that plays out so I would say that even though there's a lot of conversations happening around this right now I wouldn't expect slot times to be lowered for you know a couple of years at least and maybe I'm wrong on that maybe maybe it happens

faster than that but I I don't see it not given what I currently know and that my current view of the ethereum core protocol development the ethereum the ongoing research within it and also the data itself and what what it's showing us what it's showing us right now is that like in the current state we should not be adding too much more load to the network because we risk essentially kicking off node providers and then what that leads to is a degraded Network performance uh we're essentially at the stations get missed blog proposals get missed and everyone suffers from that so there's a delicate balance here but we can only have that balance I think and we can only um look at how that balance is going with hard data which is exactly what Tony put together so you can go check this out for yourself I in the

YouTube description below for you to do so all right so base has gotten a major upgrade today so Jesse tweeted out saying that they shipped their F hard Fork which improved transaction compression by 20 to 30% this means that we use 20 to 30% less blob space and every transaction is cheaper a big win for scalability and then of course Jesse has a nice little chart here that he tweeted out now I remember I mentioned this to you guys when people asked me it's like okay well now that blobs are near capacity or are going to be potentially over capacity as demand heats up won't transaction fees on L2 start creeping up again it's like yes of course they will because the data cost will start creeping up and that will

obviously onflow to users on these l2s and rollups but these l2s and rollups can do their own improvements in order to essentially reduce the footprint that they have when uh using blobs on the network and this is exactly one of those things this compression ratio so essentially this didn't need to go through the L1 government process didn't need to be done on L1 at all this is purely done at at the at the L2 level on base where essentially they were able to use 20 to 30% less blob space which is an absolutely massive improvement over what they've previously had you can see how big of an improvement it is in this chart right it's basically fallen off a of a cliff I mean obviously it did there is a bit of an outlier here but it's essentially falling off a cliff here onto the next ledge and we want to keep

getting this down but this is just one thing that can be done and but this is a big thing definitely um compressing um uh improving transaction compression across the board uh but this is how the l1s and the l2s work in tandem the L1 will essentially keep scaling out blobs we have pias potentially coming in Petra next year we have potential blob size and count increases coming as well and we're going to keep increasing the scale there and there's going to be more and more blobs for people to play with and more more blob scalability and then obviously um with with P we're going to essentially make it even more scalable by splitting up the blobs but then you've also got the l2s being de doing their own improvements not just on the transaction compression side but also on the execution layer side as well so

essentially scaling up if they're an evm or whatever whatever they are just scaling up all of that and then of course there's also the ultimate option for these l2s whereas essentially they don't have to post their data to to L1 they can post their data elsewhere and not necessarily have to worry about this but there is a trade-off there with that so I'm hoping that the bigger chains and especially the ones that have healthy depa ecosystems like Bas and Arbitron 1 always stay rollups and don't don't put their data elsewhere but that's going to rely on ethereum scaling up its data and yes I know that people will fud this and say ah it's bearish for ethereum's kind of fear Revenue because blobs are free and blobs are so cheap it's like okay well one they're not always going to be free uh and and and this cheap they as

demand kind of scales up they're going to essentially be um there's going to essentially be more usage of them and I think two eventually there's going to be a Min fee put in place I do you think the blob fee Market's going to be changed where essentially it's not going to be free to post blobs there's going to be like a floor price or something like that maybe like 1 cent or something I don't know what it's going to be I don't even know if it's going to be implemented but there's there's discussions around that because at the end of the day what you're paying for is resources on someone else's computer like when you're interacting with ethereum and you're paying the fee you're paying for the resources that someone else used to process your transaction to propose the block to attest to it right you're paying you're

essentially paying me to do that because I'm using resources I'm using electricity I'm using Hardware resources to do this I'm making sure that my note is available for you to do this on and I'm making sure that I'm keeping the network healthy by testing to blocks proposing blocks so on and so forth that's essentially what you're paying for with the fee like the fee is not going to vitalic as some um as some pop stars have said recently it's going to obviously the network here um but yeah the same is true for you know normal L1 transactions but also blobs like I'm and I'm I mean I'm storing blobs indefinitely at as as an altruistic thing that's costing me costing me money to do that but hey I'm doing it because I want to but at the same time even storing those blobs for 18 days is using

resources processing it using resources right so that's what you're essentially paying for so it shouldn't be free to do this they should I think being a Min fee here or or or or I mean I think I don't think it's like technically free but it's like pretty much free like almost free I I think there should be a flaw here but we'll see how that shakes out there's active active research uh and development happening around that and I'll keep you guys updated on all of that there all right last up here something related to what I was just talking about speaking of blobs and data costs uh ailano from conduit here has put out a new roll up. WTF section uh which is all about blobs so you can go to roll up. WTF blobs to see the current price of blobs per kilobyte uh across

different da layers so there is ethereum at the top here being the cheapest which is pretty funny right now because according to this ethereum is the cheapest da layer uh and it's it's it's free you can see here that it's basically free to to to post um e data uh sorry to post blobs to the ethereum L1 then you have Celestia AA base call data AR call data and eth call data now Bas and AR call data is at L2 it's not at like the L1 here so it's a bit different and eth cor data is at L1 but it is not blobs it's the old uh data field that was being used to that RS were using before blobs came into it but I do want to focus on the top three here so I I do find it funny that this basically shows exactly what I've been

talking about for a long time where data is a commodity it became completely commoditized as a primitive because of blobs because of these da layers being so cheap I mean really when you look at this it doesn't matter if it's free versus for Celestia and Igan da it's like 0.00002 cents or 0.00004 I should say dollars not cents yeah but it's essentially free right and remember it's not end users paying these fees it's the rollups themselves and if the fee is this cheap and they're aggregating all of their user fees into this in order to pay for it it it just becomes very negligible here so that's why I said before that da is a commodity it it is it is not something that I

think needs or will ACR a lot of value just generally across the ecosystem in saying that not all da is created equal for example a L2 or I guess um I they're specifically called or technically called Roll-Ups in this instance if they're posting everything to L1 ethereum their proofs their data everything they are as secure as they can be as a rollup but if they are posting their data elsewhere to Celestial aan da they're now sacrificing that security in order to get potentially cheaper da but as you can see right here at least for for now da is cheaper on ethereum so it doesn't really make make much sense to go to these old da layers right now and then

if we keep scaling up blobs to where we think we're going to get them like I don't know maybe it's a world where it's just it's so cheap probably it's not going to be like you know almost free it's just going to be so cheap that these other daers don't just just don't make much sense I don't know I we'll have to see how that shakes out maybe I'm underestimating just how much demand is going to come and underestimating just how quickly blob prices can get out of control I do think they can definitely but yeah it's just funny looking at this and seeing essentially what uh what what the costs are here like it's it's basically free it's basically negligible and this as I mentioned before is a dollars per kilobyte so essentially if you can put in how many kilobytes you want here uh

and how many kilobytes uh that your favorite rollup is going to be using you could probably cross reference this with I think roll up. WTF it's the normal website here if I go to the the normal website um actually bring it up on my other screen here for a sec roll up. WTF I think you'll be able to see yeah what they're using here so yeah kilobytes a second on let's say base right now is 25 kiloby per second so essentially this is dollars per kilobyte so 25 kilobytes uh uh you times this by 25 essentially or I think like actually no I think you can you can put in the size here yeah in in this field you can actually put in the size of uh what you're doing here and then see the the the cost but yeah it's essentially like very very cheap guys

very very very cheap to post this stuff uh uh and and as I said in the past and as I've said for I guess years now uh da is a commodity I think and I think people treat it that way remains to be seen how this all looks like going forward and what the costs look like going forward but yeah now we can monitor them on this new blob section of the Roll up. WTF website so you can go check that out for yourself but I think on that note it'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 newslet join the Discord Channel and I'll catch you all tomorrow thanks everyone