Web2 vs Web3, Zero knowledge talk and much more - The Daily Gwei Refuel #285 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel where you cap the latest news in the ethereum ecosystem i'm your host anthony sosano and today's the 4th of january 2022. right on let's get into it so david hoffman put out a really great meme today that i think pretty much summarizes the kind of i guess i guess hostility between web 2 and web 3 people you know we've been seeing a lot of this lately of kind of like the web 2 people saying that web 3 is kind of pointless why are we reinventing the wheel you know it's all scams blah blah right we've all seen the criticisms of it but david hoffman put together this meme where basically you can see here that there's kind of like a a pipe with water and it's labeled web 2 and most of the water is

going to silicon valley vcs which are the ones who you know most of the time back these kind of like massive web 2 companies have huge stakes in them and then you know even when they exit through ipos uh they just get sold to like these big financial institutions and you can see underneath that uh is retail like retail investors um but the thing is with retail investors they don't get kind of like any air drops or anything like that they don't even get like scraps they they can buy the stock when it's when it's when it um ipos or when it goes public but uh what they get is a trickle of likes and hearts and engagement on social media and i think it just this meme just captured the the whole dynamic pretty well but i wanted to kind of like give my own

thoughts on this especially around the like button now this may seem like something that's like pretty harmless and something that i don't even kind of like have a second thought about but i think the like button the heart button whatever it is right whatever kind of like positive i guess button it is it can be a heart it can be a a thumbs up it can be just the word like whatever it is i think it's done you know a tremendous amount of damage to society in that people want to engage engagement farm the algorithms reward them for this and this like button is kind of like the way the algorithms basically or at least one of the ways they're able to reward people for producing content that gets a lot of eyeballs which obviously sells ads and that's what these social media platforms want to do

and that's what they optimize for i mean there's no there's there's no secret here i mean mark zuckerberg said this to congress he said you know we sell ads i mean that's what they do they're not hiring this at all they're billion dollar companies and they sell ads to make those billions of dollars so and and you know what retail is left with or what i guess like everyday people are left with when it comes to web two is the kind of like starvation of uh not starvation but like they they they they're hungry for like these likes and this engagement and this feedback whenever they post something now not everyone is but a lot of people are and that's what dominates these these websites like if you post something on social media and no one engages with it well you're gonna feel pretty shitty right it's like walking

into a room and you're trying to you know you shout something out to everyone in that room and everyone just totally ignores you no one comes up and talks to you no one engages with you it feels pretty shitty and social media loves to to kind of like harp on about this because they know people will try to create content that will generate kind of like likes and engagement and it's usually clickbait content right there's plenty of that stuff out there i mean this isn't anything new to social media this has been used for for decades in in print media uh headlines being you know clickbaity just got progressively worse over time and that's exactly what kind of like the everyday people get through web 2 they don't get any kind of like ownership they don't get any sovereignty they don't get to keep their own data

everything that they get is basically you know sold to uh to advertisers um and then that the the profits from that flow to shareholders and the major shareholders are obviously silicon valley vcs or just vcs in general and these large financial institutions so that's kind of like my spin on it david had another i had a blog post today that he put out for bankless um titled what jack dorsey doesn't get about web3 and you can give that a read it will be linked in the youtube description uh below uh but basically i mean i thought it was a pretty good read it basically goes over a bunch of kind of like the arguments about why web3 special kind of like why we need it why jackie's like really wrong about it i mean if you click through here you can kind of like see it's quite a

lengthy article has a bunch of examples in here of how um how kind of like things are playing out uh and and how things are going to play out going forward but i also want to take the other kind of side here and say that we have to be careful right because you can see david added another meme here on the right hand side where he's got web 3 right instead of web 2 being on the pipe of water it's web 3 and and kind of like a lot's going to silicon valley vcs but then some is coming to retail as well and then it's basically a theorem feeding this in we have to be careful here because i'm not going to say that there's not vcs in a lot of the protocols that are built on ethereum and other blockchains right a lot of these things and i participate in

these these rounds like have seed rounds have series a rounds they have big name vcs on board they they definitely do sell their tokens or their equity to to insiders right um so i'm not going to sit here and basically say that ethereum and web 3 are perfect that they're basically the cure to this but i think the main difference is a few different things one is that generally the investor allocation for a web 3 product is much lower at least these days than it is for a web 2 product there's air drops before kind of like things go public i mean i guess tokenizing is a form of going public so but still people get like an airdrop they get kind of a stake in the protocol and they get to from basically day one be involved in the development of the project as a

open project right at least for for a lot of things not everything but for a lot of things within the crypto space and i think some of the most successful products within crypto are the ones that have been developed out and totally in the open right where everyone can have a say everyone can have a stake in it and these grassroots ones as i talked about yesterday i think are very very powerful so there's that dynamic but then obviously there's a lot of projects that work i mean i wouldn't say in a closed environment but uh don't work that you know that openly even community darlings like something like uni swap they don't really work out in the open right units of v1 v2 and v3 we're all developed pretty closed pretty much behind closed doors yes it gets released into the community and it's and unisop ends up

being a fully decentralized protocol open source everything like that on ethereum but while it's in its development phases there's not much community input there it is better than today than it than it was in the past but in reaction to that we had sushi swap come along right and there's been a bunch of other amms come along that basically say well you know unisop isn't the amm for the people they have vcs they're you know they develop behind closed doors we're going to build a product that's open and we're going to form a grassroots community now obviously you know sushi swap is still around it's still you know it's still it's still doing well but it's not doing anywhere near as well as uni swap and that's an example of a grassroots movement that didn't exactly work out as as planned i think like obviously sushi

swap wanted to be a lot bigger than what they are today they wanted to basically be a real challenger to uni swap and they just haven't been over the longer term um but in saying that i do believe unisop is still kind of like a grassroots effort as well it's not i wouldn't call it like a centralized web 2f or anything like that but my point is that even kind of like the big community darlings have been developed behind closed doors until they're ready to kind of release out into the public which is totally fine as long as once it's released out into the public it's all open source people can kind of like review the code it's decentralized and obviously unisop has governance now with the uni token and you know obviously unisop did their massive airdrop to people which kind of i got to give a mistake in

the uni swap protocol but that's just an example of a couple there that you know where grassroots movements don't particularly work out they're not going to work out for everything i mean i think what people kind of like mistake about a lot of these applications within crypto not just the applications but the protocols the layer ones layers whatever you want to call them they think that they're all going to succeed uh and they think that uh because a lot of these things can have short-term positive price movement right like if you go back to the darlings of i guess 2021 maybe the second half of 2021 and in the first half the darling projects back then that everyone was hyping up and everyone was like oh my god this is going to take over the world it's going to be awesome their tokens are down massively and i've

discussed this before of course but i think that crypto gives people a false sense of security because you have that active trading and you have these markets that really haven't haven't traditionally existed like if you're a um product an early stage product most of the time you're not going public until you've got like a successful product market fit you've done like a series d or e or whatever it is then you go public and and from there it's all well and good whereas a lot of the time uh these days projects are started from basically you know maybe a seed raise or kind of like a pre-seed race and they do a token and they don't have product market fit yet but the token will go up based on hype and speculation and people will think that the products are super successful and everything like that but it turns out

it's really not right um so from that point of view i think that uh there's various different ways to kind of develop things but at the end of the day like most businesses fail most crypto projects will fail they're not all going to succeed and it becomes very dangerous for the everyday investor especially the ones that are new to the ecosystem because they get suckered into these narratives they get sucked into the short termism especially during bull markets and that's why we have these periods of kind of like long sideways or quiet markets because the markets get so ahead of themselves so quickly and then they come down again and all the people there i mean most of the new people end up getting wiped out guys like truth be told most of the new people they come in towards the end of the um

uh the the the bull cycle there when it's already run really hot they're literally just here for the money and they get wiped out first and then it takes a long time for them to want to come back into uh into the ecosystem and to put money back in because they've been burnt before uh and i think that's just got to do with the fact that hype and speculation rule this ecosystem uh and that plays out in the tokens especially if the tokens are have been released before there's any sort of product market fit which seems to be a trend that keeps getting i mean it's been a trend for a while but it seems to be more and more common these days which i don't really like because it means that there's just so much money wasted on this stuff that uh i think i feel

like projects should definitely have like product market fit before tokenizing um at least some form of product market feeds um but uh you know it it the market definitely um weighs all these kind of like things together over the longer term and sorts it out but in the shorter term it becomes a kind of game of speculation for sure so yeah anyway go give this re uh go give this blog post from david hoffman to read it was it was a really great one and kind of like expands on his meme here all right so i put out a tweet today uh where i said ethereum is being built to survive the next 1 000 years it's being designed to be a decentralized universal sediment layer for humans and machines that acts as a source of truth with heavy economic consequences for

attackers the value this brings to humanity is immeasurable now there was another comment on there was a comment on my tweet which basically uh said where was it down here where they said 1 000 years must be a religion those are the only things that last that long and then i mentioned i replied yes the crypto networks that last for 1000 years or more will look basically identical to organize religion now i am not a religious person at all i don't follow any sort of sort of religion i don't have any kind of like faith or anything like that but i think what we can learn from religion or at least the takeaway i have from religion is that humans organizing around a common kind of like deity is very very powerful and it can last a very very long time now i'm not going to go all metaphysical

on you guys and say that ethereum is a deity we should all worship it or whatever or anything like that but i think that when you have networks such as ethereum where they're both technological and economical networks that are trying to be you know settlement infrastructure for the world like global i mean universal sermon infrastructure could even extend beyond earth one day right especially if it's going to survive the next 1000 years when you're talking about stuff like that for anything to survive that long it needs to have a religious fervor about it which it all does already like there's plenty of people who are religious about all these crypto networks especially in the bitcoin community i mean you could say that bitcoin maximalists are pretty much you know just uh zealots for for bitcoin which i mean i'm not gonna argue whether that's a positive or negative but i

actually think if the goal of bitcoin is just to survive as literally it's only got only goal is to survive then i think it's a positive i think ethereum has a similar dynamic where there are zealots in the community there are adherence i mean i would consider myself pretty close to being zealous about ethereum i wouldn't say that i worship ethereum or anything like that but when you kind of like look at these things and if you're building something to last that long it really needs to take the form of of um a religion maybe not in the literal sense as i mentioned about having a deity and all that but in terms of like organizing around a kind of common thing um that you cannot protect for a very long time and you know i went on to say you know it's being designed to be a

decentralized universal sediment layer for humans and machines so humans be being obviously you know you and i but machines being all the bots that run on the ethereum network all the layer twos that are gonna run on the ethereum network all the other things that bridge in and out and honestly bots and machines already dominate like they already account for more of the activity on these networks than humans do obviously humans create them but um it's not just being designed for humans it's been designed for for machines and bots to communicate to settle on um and you know them having like strong sentiment guarantees is is very very important and that's when i said and that's when i said my second half of the sentence here that acts as a source of truth with heavy economic consequences for attackers so those heavy economic consequences post-merge will come in the

form of actual true finality where two-thirds of the earth being staked as part of the beacon chain every 12 minutes a test to everything that happened before that on the chain saying if anything changes in this history if anything tries to revert then two thirds of the ether er estate will be in danger of being slashed and and basically people lose a lot of money like that so the concept of finality is is very very important here especially for networks that want to last hundreds if not thousands of years they need to have a way to kind of like incentivize them to continue going on no matter what and the best incentive we have is the economic ones because money has been around for a very very long time it is probably going to be around for a very very very long time to come

and money is just a representation of value so if you have something that you value if the ethereum network is something that people value very very highly because it it it has so much kind of activity on it it uh secures so much kind of of people's belongings and and people's kind of like assets and stuff like that then it's going to be worth a lot and by by kind of like extension 8 is going to be worth a lot and that's why i said the value this brings to humanity is immeasurable you cannot measure the value that a truly global decentralized settlement layer is going to have because we've never had that before we've never had that before in any kind of fashion the closest thing we have to something that is truly global and that humans and machines interact with is the internet and even that is

still not as global as i believe crypto is going to become i think the internet is obviously huge but i think crypto has like an actual or web 3 has a bigger total adjustable market than the internet does and it piggybacks off the internet it's like a superset of the internet essentially right because it needs the internet to survive but from from that point of view you cannot measure the value i don't even think you can measure the value that the internet has brought like if you were to attach a token to the internet say it's like the internet token or a tcp token or whatever you want to call it what would that be worth it would obviously be worth a lot but like could you actually accurately measure it could you accurately measure how explosive the internet was going to be over the last

20 years how explosive it's going to be in the next 20 years i don't think so and that's the same thing for crypto no one no one um saw crypto getting as big as it has been to this point and i believe that a lot of people are still underestimating how big equipped they can get from here and how eye-watering a lot of these valuations can get for these uh for these tokens and and from that perspective especially when it comes to ethereum uh i just think it's definitely immeasurable and it's not just about the eighth token value but just the value that a decentralized universal settlement layer brings to humanity so yeah i mean i as i said i didn't want to get too metaphysical there with you guys but i do think this is very important because at the end of the day these networks are run by humans

right yes machines interact with them but it's all it's humans at the bottom right we run the nodes we run the infrastructure we decide what upgrades go into it we build the software maybe that changes in the future maybe ethereum becomes a network that is controlled by artificial intelligences instead of core developers being humans their ais don't know but for now it's it's pretty much all humans and humans are the ones who keep these kind of networks running so yeah just wanted to expand on that tweet there as i thought it was something pretty interesting to think about so apov from zappa put out a tweet thread today about a new extension that will supercharge your ether scan so you can now right click on any address link and instantly open it on popular dashboards and tools like zappa nansen and openc so you can see a screenshot

here that if you right click on an etherscan address you can go etherdress explorers and then you've got a drop down list or i guess like a list here of um of different tools uh such as nance and opencm zapper so there's a little video of it in action as well and then you can go to the github page to basically have uh basically install it so there's a code and tutorial on there as well i just thought this was really cool because i commonly find myself putting addresses from ether scanning to other tools to kind of like dig down deeper into them and this just makes it this is obviously just a huge quality of life improvement here i haven't installed it just yet because i just saw this before i um before i uh i started recording this video uh but definitely go go check

this out it looks really really cool um and just another tool to kind of like help you in your ethereum journey here so speaking of tools uh philippia from horizon games put out a tweet where he said this will be a game changer for nft trading vaportrade allows you to connect with other people to chat bada and negotiate in real time can trade nfts and tokens or without using a centralized server and the interface basically looks like the curve interface or i guess the windows 98 interface which i actually like guys like maybe i don't know if it's nostalgia or if it's just i like the art style i just really like it i know a lot of people have an issue with it but i i find it really cool but i think the more nft training tools we have the better because openstack still dominates i

think they have like 96 of the nft trading volume and i i mean i've gone over why i don't think that's a positive before uh you know open seas contracts aren't open source they're a very centralized service they apparently aren't planning to do a token they want to do a an ipo they just don't seem very web 3 friendly um but on top of that i just don't think that anything should have 96 dominance in its category like we should definitely have more competition out there yes open c is you know a pretty cool website there's obviously a lot missing from it but it works pretty well but it doesn't matter i think the competition always breeds innovation always breeds better products and and if airport c remains dominant and remains basically a monopoly you're going to get slower innovation you're going to get

worse user experience and worse customer service than you would otherwise so i'm always up for for um checking out new nft trading tools obviously something like this with an interface like that isn't going to appeal to the same customers that openc has it's going to appeal to a very small subset but i think that um there will be an actual openc competitor sooner rather than later the i mean i'm surprised it hasn't been already because the opportunity is so large i mean the amount of money openc makes even during quiet periods for nfts is pretty crazy and i don't think we've even kind of like scratched the surface of how big nfts are going to get so i'm actually surprised there hasn't been a concerted effort to compete with openc just yet but i'm sure it's coming i'm sure it's going to come in a really big

way and blindside a lot of people that's actually one of my 2022 kind of like outlooks that i hadn't mentioned yet is that i think when it comes to nfts there's going to be disruption across the board i mean think back to the beginning of 2021 nfts weren't even really on people's radars and now it's now it's the only thing most people completely talk about right it's everywhere and nft seems to be heading back up again as i mentioned the other day so i think that we're actually going to see some good open sea competitors come to market but in the meantime if you're a power user you can try this vaportrade.net out and kind of like have a play around with it i'll link it in the youtube description for you to do so so by economy announced that zed run which is a horse racing game built on

polygon is trying hyphen for an instant and seamless in-game bridging experience so this hyphen gives them faster transfers with lower fees without leaving the zed run ui so this is really cool as i've mentioned before i think that all this infrastructure that basically abstracts away kind of like cross-chain transfers and um and fees anything that abstracts that away and allows people to do it with kind of like just what they've got in their wallet or just like one to two clicks is a welcome improvement a huge improvement over the status quo uh obviously i've been talking about arjun a lot lately how they have their kind of like couple of clicks to to get started with various things like eat staking and i think that having things like in-game where you can basically pay for the fees in any asset is very very important

um being able to transfer across change really really quickly is obviously very important so it's really cool to see zed run here taking advantage of of uh of the hyphen product from uh by economy so if you want to read more about this there'll be a link in the youtube description for you to do so and this news is from actually a couple of weeks ago i i missed it so i was actually putting my radar by someone and uh i thought it was cool because i i really like what bikonomy is doing um and i and obviously this is built on polygon so i'm way i'm always curious to see stuff around nuts and it's funny because like a horse racing game built on playground maybe i need to look deeper into this but um i wonder how they're doing that because obviously horse racing in real

life like it depends on the horse's kind of like physical physical um uh uh uh properties whereas as a digital kind of like horse racing game i'm sure there's kind of like digital properties that are attached to each horse and things like that but i have to dive deeper into that um horse racing for those who don't know is actually extremely big in australia particularly in melbourne um i don't really follow it at all i mean i'm not really much of a sports guy anyway um but it's a very very big thing in melbourne so maybe some of the fellow aussies listening into this will be able to highlight uh or at least tell me more about zed right in the discord channel feel free to do so there but yeah cool to see this uh from bi economy and zed run so investor finance uh which i've

covered i think a few weeks ago and explained to uh to you guys what they are announcing today their small c a small strategic fundraiser i should say from key members of the dfi community led by tetranode and dcf god who are two anons that are pretty popular on twitter uh disclosure here i participated in this round alongside a bunch of other chads here like fiscantis uh who a lot of you will know from uh what's his what's his fund called i think z prime um not three layer capital which is the the loud brothers there um and then you have zero x monster i've talked about before eric connor my co-founder mario and conte a bunch of other other people here as well so i'm really excited to back these guys on what they're building here and for just a quick refresher of what they're

building essentially what they uh kind of like advertise themselves as is a high capital efficiency lending protocol so essentially trying to get more bang for your buck right like i remember i said i think maybe a few months ago in 2021 that the theme of d5 2.0 was basically about capital efficiency like that's one of the main themes making use of all of the kind of like capital in the system and not just having it sit there idly i idly buy and that's where we saw a lot of their protocols come out with their v2s and v3s and even v4s which focused a lot on on capital efficiency obviously we saw with unisof v3 with the concentrated liquidity we've seen it with the money markets adopting using non-standard collateral types such as lp tokens and other things like that and i do think that that theme

is going to continue into 2022 and especially you know as as time goes on simply because what dfi's kind of killer use case is is basically having everything composable with each other and when you have that you can have increased capital efficiency and right now there is so much kind of like capital out there that's just being wasted sitting in vaults not doing anything yes there's more risk if you use it but there's a lot more capital efficiency to be had so you can go check out this blog post which i'll also link in the youtube description for an intro to investor finance in case you guys haven't seen what this is yet but yeah i'm very very excited to back them as part of their small um strategic fundraise here um and definitely go check out the uh the blog post yeah i'll link it in the youtube

description so uh just a quick shout out here to naylan who has a blog post that they put together called a succinct story of zero knowledge which is basically a deep dive on the theory of zero knowledge proofs and how to build up zk snarks from their theoretical roots in computational uh complexity theory obviously this is going to be very very technical it is a paper i mean i can already tell you right now if you are not into cryptography if you are not a technical person you will not understand this at all i know i don't i pretty much understood the introduction and i was like okay that's enough for me but i wanted to highlight it because obviously zk stuff is becoming more and more prevalent it's going to be like the main theme well one of the main themes going

forward for both blockchain scalability privacy and just everything else going on in a kind of zk space there so if you're someone who follows this more closely and more of a technical person you can definitely go check out this paper here for uh for a bit of an overview which i thought was was really cool from naylan nail in here um and on that note as well if you're a developer austin griffith have put together uh some zk starter kits in the scaffold.ethap so you can go to github there's a membership app and a voting app so these are kind of like um templates for you for you to use as part of your kind of like a zk journey so if you're a developer just learning how to do zk stuff this is definitely something that you should go go check out here and

obviously austin griffith has a lot of other tools as well not just zk tools you can check out his github for all that sort of stuff as part of the scaffold.eth um kind of like effort here uh there's documentation everything like that as well really really cool to see now i have about five minutes left there's another thing i wanted to talk about which is related to this and it's basically the general theme of zk or zero knowledge stuff i've said it before and i'll say it again everyone is underestimating how big zk stuff's going to get and as i said not just for scalability not just for privacy but enabling new applications that you cannot do without zero knowledge proofs now some of these applications are kind of like esoteric some of them don't have any practical applications some of them

are just really cool to do in theory but there are going to be lots of practical applications that can only be born of zk technology that that take the scalability benefits take the privacy benefits take the um the efficiency benefits roll them all together and create uh such a a really cool environment for for experimentation for example starkware is doing this already and i remember a few weeks ago there was a blog post they put out about l3 scaling now i'm kind of torn on the alfredo layer 3 terminology i can see this getting crazy where everyone's just going to go like l4 l5 l6 and it's just going to be a mess i don't really know how that's going to go i'm going to tell people kind of like stick to people start kind of like using layer 3 terminology commonly i'll start using it as well but basically their

layer 3 blog press was was essentially achieving more scalability um by kind of like putting pushing things or pushing start net to or not starting that i think it was stark x uh to a different layer and doing and kind of like separating concerns there um with with their zk stack so you have like layer three which is much more scalable than they're like the layer two and which is much more scalable than the layer one and then the costs get um by more scalable and the costs come down over time the higher the layers that you go there now obviously there's going to be different trade-offs to take into account here in terms of security and decentralization data availability all that sort of stuff there but i still think this is i mean i generally think this is the way the industry is going to go you're going to

have that global settlement layer that universal kind of sentiment layer in ethereum you're going to have a delayed approach for execution and layer 2 and then you can push it up to other layers for more execution or the separation of concerns between kind of like uh where to store the data and where to do the execution and how to do it how to do it recursively with zk proofs all that sort of stuff that you've probably heard about at this point so i think that if you're interested in doing anything in this industry and you feel like you're uh you know you feel like getting your um your hands dirty and getting really into the weight of stuff doing anything in the zk space is probably going to pay the most dividends both career-wise and kind of like investment wise for the foreseeable future i think that uh

you know people are sleeping on the zk stuff still because they're too too um preoccupied with a bunch of other things like the layer one stuff and maybe some of the d5 stuff which will obviously be enhanced by by zeke tech but i really think that no matter how many times i say it i'm just going to keep saying it the zk stuff uh is going to be the main theme or believe this is one of the main themes of the next few years and you should definitely get at least a high level grasp over it and if you want to dive deeper if you want to be going to work within that industry just um you know definitely do so because it's going to pay a lot of dividends going forward but uh yeah i think that's going to be it for today everyone so thank you 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