Base L2 madness, Market chat and more - The Daily Gwei Refuel #632 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The Daily way refuel where he kept the latest news in ethereum ecosystem I'm your host Anthony is the first of August 2023. all right everyone let's get into it all right first off starting off here today we have a tweet thread from POTUS I think that's how you say their name here talking about how the girly test net actually underwent and Epoch or epic long reorg uh so basically what this means is that the the test net not mainnet the girly test net uh reorged um you know uh through through an epic which is around I guess like six minutes on on ethereum proof of stake here and this happened um for I guess like a variety of reasons and you can check out this thread for a breakdown of that but the tldr is that there was barely enough participation uh

so validated participation above 66 and early block justifying everything else uh was missing that block was 30 seconds late uh as well and then there was a um uh there was a kind of an investigation into this done and there was a tweet thread put out here but uh the reason why this can't happen on mainnet was also kind of included in here I believe I think that it's because of this EIP maybe 7045 if I'm looking at this correctly here which is a two-line change that increased the max attestation in inclusion slot here but you can read the thread for full details uh on that one now if this was to happen on mainnet Just for whatever reason it would be ugly because we all know how real orgs work right and just to recap people how reorgs work they're pretty

common I guess well they were much more common under ethereum uh proof of work uh but they happen because the chain basically sees two competing blocks to advance the chain and then it has to choose which one of those blocks they're similar blocks but as to choose which one of those blocks is the canonical one and then Advance the chain from there that's what we call the fork Choice Rule and so that well the thing that does that is called the fork Choice Rule and ethereum proof mistake and I've spoken about that before but uh if the real lasted for more than a block so blocks like well a slot technically which is 12 seconds uh if it lasted for the whole Epoch it's like six minutes worth of blocks right now that would be essentially reversed and then you would have you could possibly have

transactions that happen with in those um I think it's 6.4 minutes exactly uh that that basically got erased from the history of the chain and either replaced by other transactions or just dropped altogether which would have Downstream effects you could imagine how this would play out for things like defy uh if those kind of transactions got real there and and realgs are a concern when it comes to Mev generally there's something called a Time Bandit attack which I believe takes advantage of reorgs and can be done if you control enough validators they're basically do kind of multi-block Mev where essentially you reorg the chain or you reorg another validators um they're capturing and you kind of um give it to yourself essentially so let's just say a

for example a block was proposed by a validator um and then it was a massive Mev reward paid out to them if you control and have validators technically I'm not showing the on the on the deep end because of how this would work but technically you could re-org the chain for that kind of one slot in order to basically uh make it so that your validator is the one proposing that block and then you get the payment for that Mev transaction right now there are some uh ways that the the core developers are looking at to mitigate this uh I mean as I said it is a very kind of far-fetched attack Vector but it exists one of those is single slot finality and that's the big one basically you have finality within those 12 seconds so I believe it makes real looks like that basically

impossible uh don't quote me on that um but yeah it makes it like just stupidly expensive to do which basically um as far as I understand makes nearly impossible to do there so and then there was also the secret single leader election or single secret leader election which basically makes it so that you don't know who the proposer of the block is ahead of time um which I don't know exactly if that would help with this kind of attack scenario but that's another upgrade that happening there but anyway you can read this tweet thread I'll link it in the YouTube description below all right I did mention I think maybe a few weeks ago now that the rocker pool oh Dow was having its rewards reduced in a gradual fashion now the first reduction has actually gone through so

uh of the total RPL inflation that's paid out uh so there is a total inflation that's paid out to three different groups the node operators get 70 protocol dial uh we've got 15 and the Oracle deal got 15 but now that's been rejigged as of today the protocol doubt has 22 percent of the share and the Oracle deal now has eight percent so it's basically cut the rewards of the Oracle doubt by about 50 here now this will continue to come down over time of course um as I explained the other day about the Oracle DL I think it's going to finish up at like four or or two percent or something like that by the time it's been cut there but this is a pretty substantial pay cut for Oda members and a pretty substantial uh reward I kind of um redirection to the protocol down here

or the p-dow as I've discussed before and I've also said before that once the Odell rewards got low enough I I would um you know forego donating them to the protocol Guild and and and just kind of take them uh for myself uh for operating costs of course but also because I think that it's a lot fairer at this level just to give you an idea from my rough napkin math and based on the current price of RPL I think it's currently uh with this reduction eight thousand dollars worth of RPL at current prices per month to Oda members but as I said this is going to keep reducing every month from here until it gets to a certain percentage I can't remember the exact percentage it's going to get to but I think it's at least again half of this so again at current price of RPL

that would be around four thousand dollars which is obviously much more reasonable than what it has been traditionally right especially when RPL was worth a lot more at like 50 or something like that and I have explained in the past how I think that because it's paid out in RPL the dollar uh I guess like fluctuations in the RPL price is going to greatly affect this like rpr could double from here and then in terms of dollar terms we would be back to where we were you know I guess I guess today before this change happened but at the end of the day because it's paid an RPL there's actually no way to essentially do this based on dollar value you have to keep looking at it as time goes on and you could basically uh do you could you could do it programmatically but it wasn't included

in this but essentially what you could do is if the dollar price reaches a certain amount then you cut the Rewards or you redirect the rewards in a programmatic way and then if it goes down maybe you give the rewards back you could do it but it's a lot more complex I think to do it like that so the community just agreed on this and pushed this upgrade through or up this update through and this is what it looks like uh right now so yeah just wanted to update you guys on that one all right so I think the Talk of the Town over the last couple days has been around base so the L2 from coinbase that launched uh in for developers I think you know a week or two weeks ago and is launching for the public early August so within the next I guess week or so but

there was a kind of meme coin that deployed onto Base called bold now this was a meme coin that was birthed out of the meme that Jen Spartan has been pushing on Twitter for a while that uh the reason he bought the coin stock was because Brian Armstrong coinbase's founder and CEO is Bolt so that's the whole meme right there for those of you who didn't know now this meme coin basically started at zero and it went to I think like 100 million dollar market cup or something like that uh people were making a lot of paper gains or posting it on Twitter there was a lot of fanfare going on everyone was bridging into base even though it wasn't open to the public yet you could still bridge in um there were a couple of ways to bridge out but it was messy and it was uh it

was obviously not uh open for the public yet it was open for Developers but um it was still open for people to bridge in and they did this and they kind of bet on these meme coins and there were derivatives of this I think there was like a hair meme coin or something else like it was just crazy right and it spurred on a lot of activity there was like 60 million dollars worth of trading volume on an amm called lead swap that had been deployed to base which ended up being exploited and they paused the contracts as well so it's been a mess right it's been a whole mess here but today uh there there is a kind of like a bunch of I guess circumstantial evidence that came out that uh pointed to SPF being behind the Bold meme coin because Bolden ended up rugging or guess like soft

rugging where the biggest liquidity provider pulled liquidity so the token price just crashed to basically zero with you know such as life and these meme coins right um but there's a thread here from Mac who I'll link in the YouTube which I'll link in the YouTube description below that goes over why people believe that SBF or someone at Alameda was behind the deployment of this meme coin now as I said circumstantial evidence I don't know if this you know it's kind of hard to prove stuff like this it is known that SBF has access to the internet he apparently has access to approved websites but it's really easy to get around that you're probably just using a VPN right I'm sure he has um addresses stashed somewhere where he has money on them so he can do stuff like this and honestly he's that

mentally deranged that I wouldn't put it past him to do this and it could as was stated here is that could just be another person from Alameda as well but crazy right this is just this is stuff that you see happening and it reminds me of D5 summer because crazy stuff like this happened pretty much every other day in defy summer in 2020 and people are saying oh you know now it's worse than and then D5 summer this doesn't even make sense anymore this is like someone some people said and I'm just like okay well it's a it's a it's it's kind of like funny language there but uh I mean it when you look at that and you look at kind of like the culture that that forms around these meme coins you can't help but say that you know this stuff's just really stupid it just

really doesn't make much sense and then some people complaining they were saying oh you know the the first thing that launched on Bay launched on base and got I guess traction was a meme coin uh this is a bad look okay like let's step back for a sec bass is being developed as a public open permissionless protocol right yes it's not live for the public just yet but that's what it's being built as it is not being built as a regulated kyc chain that controls what can be deployed there and who can use it it's being built in a similar way as every other L2 is being built out and because of that it means that this stuff is going to happen and at the end of the day um people are kidding themselves if they don't uh realize that this stuff happens

everywhere and this is one of the main draws for on-chain activities is gambling it's his speculation and in my mind there's nothing wrong with that I think that at the end of the day people are going to use these platforms as they wish and obviously people love to gamble they love to speculate and just because it's done in such a transparent way doesn't it mean uh in crypto doesn't mean doesn't exist in other Industries I mean the whole capital of society is built on speculation there is this sort of stuff going on everywhere I mean casinos alone in in I guess like the off chain casinos not on chain casinos and gambling is a huge industry right people love to do these sorts of stuff it is not um inherently a scam it is not inherently something that is dodgy or gross obviously if people abuse it and

become gambling addicts then you look at it and you're like you know feel sorry for them and they fall into this trap and it can be uh pretty dangerous and I have said before on the refill that I think that generally um uh kind of like straight up casino gambling um is um a net negative like slot machines and stuff like that but that doesn't mean I don't think that they should exist and people should be able to do what um uh what that what they want with their money and should be able to to gamble as they want uh my personal views don't come into this especially when we have these systems which as I said are permissionless public protocols they're not trying to control what you can and can't do they're not trying to moralize what you can and can't do um and and that's why I kind of took

issue with people complaining about that in saying that obviously we want to see these kind of on-chain ecosystems go beyond speculation and gambling and stuff like that but at the end of the day this speculation brings in liquidity right it brings in liquidity to the chain it brings in activity it means that people feel confident deploying their uh you know non-gambling products on there because there's already users there there's already people interested there's already liquidity so it does have positive effects it's not all just kind of like gambling for the sake of gambling and speculating for the sake of of speculating here but as I said you can check out this uh this Twitter thread from Mac about this um and I I put out this tweet where I said you know the funniest thing about the launch of bass is that as I said it

was only meant for developers but djen's Apes anyway because they were so starved for volatility but this is what happens right people hear about these mean coins they're like oh my God someone made like a million dollars by putting 500 bucks into this thing because they got in early and then everyone thinks they're going to get in early and they think they're going to get into the next uh I guess like meme coin that does that but what really happens is that it's like that euthanasia roller coaster where it just Spirals and it death Spirals and like every meme coin that comes after every other one uh just gets you know less and less mud cap everyone knows the game and eventually people just lose all their money and get wrecked right whether it gets rugged or not they get wrecked because everyone knows the game

at that point there now because of all of this um I guess like activity happening on base we had a new new all-time high activity for ethereum l2s uh that combined reached around 5.3 million transactions settled on the day now you can see this on L2 beat here uh on the website itself but also the screenshot that was posted by Alvaro HK here which I'll link in the YouTube description below but we've just well and truly like in terms of TPS uh just smashed layer one right and that's only natural as I've said before you know not all TB TPS is created equal but at the same time ethereum L1 is strictly limited by how much a TPS it can do in theory it can do a lot more than what it's currently doing if everything on

ethereum layer one was just an eth transfer but in practice on average 8 TPS or transactions per second you know I guess like hover between what 10 and and 12 or something like that uh 10 and 15 I mean depending on the day right uh whereas on l2s you can see here that this TPS is at 50 on average um uh right now and it's been growing as you can see this is the year chart it's been growing uh pretty steadily and pretty healthily yeah which is amazing to see now if we drill into base we can actually see here the bases TPS and and daily transactions uh have gone you know skyrocketed mainly because of bold of course but as I said it's not live for the public yet so imagine when it goes live for the public and all that liquidity is there people are raring to

go they want to get they want to um play on the Chain they want to do stuff on the chain and that's exactly what's going to going to happen I believe so yeah just been a really positive I think last few days for bass as an ecosystem given that they're not live yet but they still have that liquidity coming online because of of the Bold token yes it's a meme yes it's silly yes it's gambling but hey there's a lot of positive externalities here from that there all right so Bread on Twitter has put out an updated little graphic here uh trying to cover the current L2 landscape but doing it in a different way than sites like L2 Beats does it so you can see here that they've grouped these things into at their respective ecosystem so you can see on the left

hand side the Stark X ecosystem so things built using the Stark X technology such as immutable X so rare Rhino finance and more then you've got uh ZK stack which from uh from the ZK sync project so you've got ZK sync error and other projects on there the op stack of course which has op mainnet base public goods Network and more Loop ring with loopering and D Gates uh there's a scheduled l2s on the right hand side here that aren't live yet such as scroll and Tycho and then at the top you have l2s that don't have a shared code base such as a starknet Aztec connect um linear and polygon ZK VM uh but uh I think one of the guys from arbitrim here

yeah AJ commented that arbitrim Nova should be put in uh as part of like the kind of arbitrim Stack here with arbitrim1 so they kind of share most of the code base there so obviously it's not a complete comprehensive overview of the L2 landscape but it is a really good attempt and a really nice way to visualize it because as I've said before I think what all these L2 teams or the generalized teams are kind of doing now is they realize that there's only going to be a handful of generalized winners so they need to create the software and the ability for people to basically use that software to build their own app chains because there is going to be hundreds if not thousands if not tens of thousands of these up chain and you obviously want those app chains building

with your technology technology for various different reasons yeah it depends on what the developers decide to go with obviously op stack has a pretty big head start because they came first and there's a lot of teams currently building an OP stack they want to be part of that super chain Vision uh but Stark X actually came before op stack I should say sorry op State came first in the sense that I think they made it a lot easier than traditionally star cakes had made it because stockx uh with um uh they had dydx building as one of the first with immutable X Dy Dex has since kept their Stark X implementation live but they kind of pivoted to Cosmos I wonder if they're going to Pivot back to be honest uh to l2s uh immutable X still has their stockings implementation but also have a polygon implementation I

believe Rhino has was formally Diversified they've been with Stark X for a while and a few and something's so rare I don't actually know of these four other ones Apex Maria uh canvas connect and brine uh so I can't give any color on that but op stack has obviously been pretty successful because also the polygon stack that got announced recently uh they're building uh so yeah I think that the L2 the generalized L2 teams are definitely all are targeting that and it's going to be cool to see how that all plays out but yeah thanks to bread for visualizing this for us I'll link this tweet in the YouTube description below for you to check out all right uh so yeah I discussed this was bases L2 activity here uh just this tweet which I'll link in the YouTube

description below so I won't discuss that again moving on to connect so connects has a tweet thread uh out today I'm talking about something called watches which are the silent added layer of production protection in the connects network no they are not external validators avoiding the security flaws present in proof of stake Bridges so they are something different here so as they kind of recap here connects is a hate is the HTTP of web3 the secure execution layer for cross chain operations that outsources the verification process to Native Bridges and they continue on in saying uh here's an example of L2 to L2 communication with a nice graphic and an explanation here uh and then L1 to L1 parts and then they say however the most secure

verification methods may lead to latency issues for instance ethereum to L2 could take up to 30 minutes so it connects mitigates this by having routers execute transactions via a fast path they front the cache to users and get refunded laid out by the protocol and this is a common design that's been used by other kind of bridging protocols out there and I've discussed it before and this architecture of course relies on several off-chain actors such as the relayers that execute contracts for users the sequences collects bids and assigns routers and routers provide liquidity and execute transactions with local verification in a fully trustless way but despite these precautions cross chain communication brings a potential weakness the entire cross chain ecosystem is only as secure as its

weakest link if one chain gets compromised it could put the entire ecosystem at risk which is only a kind of natural here this risk can be mitigated though if the compromise verification channel can be quickly disconnected minimizing potential damage and that's where the Watchers come into play now I think this might be something that was borrowed or has been taken from the polka dot ecosystem actually I remember in the early designs of polka dot I don't know if this is still around they had this concept of a watcher as part of I believe the relay chain uh that would kind of work to to to do stuff like this now I I've forgotten mostly basically how it worked exactly but uh that's another that's another ecosystem that I've seen the um the terminology used in before so it's

basically a a piece of software that watches for this stuff as you can see here watches continually monitor for fraudulent activity in their verification methods if they detect fraudulent activity they can sever any compromise verification channels channels similar to how fraud proof operates so yeah you've probably got reminded then or thought of fraud proofs then in optimistic roll up so very elegant design here that I think is is trying to uh and hopefully it will succeed in alleviating that major concern that if where you're bridging from kind of or bridging two can kind of become compromised because it is a weaker chain maybe it gets attack or something like that right we've seen these attacks play out before so it's a way to kind of minimize the risk therefore the connects protocol itself so yeah you can give this thread a read

for more details on that and there's also a blog post which I'll link in the YouTube description below all right actually I didn't uh have this before I came across this tweet earlier today and Twitter's just suggested it to me again so apparently the temperature check for the Sello L2 proposal passed today so um yeah I mean I it passed with 100 yes and basically zero percent no um 56 million shallow voted in favor of yes 630 uh two not million scanner 32 voted no so it looks like celery will be coming and L2 on ethereum which is obviously really great to see one of those l1's transition transitioning across I have gotten word that there are other l1s transitioning across we

obviously saw Palm Network the other day announced that they're going to be joining the polygon ecosystem uh but I have heard of a few others I haven't heard any specifics or names but I have heard that there are a few others that are going to be transitioning across I'm excited to find out what those ones are there but yeah great to see this passed by at the solo Community yeah all right last up here Bitcoin grants around 18 applications are now open so you can head to grants.gitcoin.co to to apply today so there's a note here on supported Network which is what I wanted to focus on all core rounds will be on optimism besides the core ethereum infrastructure round which will be on the public goods Network you can create your own grants in the grants get coin a Bitcoin Grant stack Builder on any network and then

apply on the appropriate Network so yeah the Bitcoin is officially multi-chain now they have their own network with Pub the public goods Network they are on optimism I think they're trying to move away from ethereum layer one uh for obviously the only I mean really the only reason is gas fees because if you're trying to donate five dollars to someone and it's costing you more in gas doesn't make much sense this really did kind of hamper Bitcoin grants adoption for a little while in the bull market because of the fact that Logos Gas fees are really high and they did try some early L2 Solutions like uh ZK sync uh I think lights it's called now so their first iteration there and that work to an extent but it was kind of like clunky and it wasn't exactly something it wasn't exactly the end game right uh and

that but that's what they're trying to do here with this kind of uh git coin grants 18 uh applications uh that are now open and deploying Bitcoin grants to these networks and especially the public goods Network which as I've discussed before is all about uh you know public goods it's not just going to be Bitcoin on there but there's going to be a bunch of other uh other protocols and apps on there as well all in the name of uh of public goods funding all right so I got a few minutes left yeah last thing I wanted to talk about today was of course the markets because not that much much has changed in probably the last couple weeks since I've talked about the markets but it's kind of funny seeing the the mood I guess of the uh the crypto ecosystem right now so what I

mean by this is that there was a few tweets put out and I I was one of those people who put out the tweets and I talked about this yesterday about how that you know I expect the rest of the year to be like a crab market I expect the new all-time highs to not happen till the second half of next year I expect the bull market to potentially happen in early next year to start early next year and I also expect the overall cycle to be shorter now there are a few making comments saying oh all the influences are suddenly getting together and saying the same stuff that means it's not going to happen or you know that means that it's going to happen differently or whatever I've had this opinion for a while now and you guys would know because I think I've talked about this on the refuel uh

quite a while ago now about this kind of uh you know the bull market will happen a lot later than people think it will because of time-based capitulation and uh the all-time highs will happen a lot later as well still in my mind at least the years out from from all-time highs yeah um but at the same time they're just predictions I think that's what I want the point of what I'm saying here they're just predict predictions I don't have any crystal ball or special Insight I have experience I have experience with crypto Market Cycles I have I have uh I'm probably a clearer head than most people around this because I think that when you're in the ecosystem and you haven't kind of made a lot of money from crypto yet I'm not trying to brag here anything I'm trying to give you context

around this but if you are like still in that phase of trying to generate wealth from crypto then you're thinking in a different way to someone who is who has already generated wealth from crypto and is rather indifferent around when the ball Market comes back people were accusing me saying you are you know you're only saying that because it's opium you want the bull market to come back blah blah I'm like okay of course I want the bull market to come back but at the same time I don't care when it comes back I'm very patient at this point in my life but other people aren't and that clouds their judgment which I totally get because it kind of my it's clouded my judgment in the past so as I said I don't have a crystal ball or anything like that but I have experience and I

have a different way of thinking about this sorts of stuff now and I'm just trying to stay as grounded as possible when saying these things I don't like to give exact predictions about things I like to give kind of broad predictions because I think the broader stuff uh is better just for a number of different reasons but also as I said like I can't tell the future so I'm not trying to promise anyone anything I'm not trying to sell anyone anything I'm not trying to say that oh yeah just you know accumulate now wait a year 18 months and you'll be rich no that's not how it works at all I mean you could fumble the bag anyone could fumble the bag for any different reasons I mean I remember in um March 2020 when we had the whole covert dump I knew multiple people who

had held the entire bear market and crab market only to Fumble the bag at that point in time and basically get wiped out and missed the whole bull market like that stuff happens guys and that stuff happens more than more more often than you would think to people that you may not think that it would happen to so that's I think the one thing you need to do you need to avoid those pitfalls you need to stay grounded stay relaxed the bull market will come when it comes but that's no guarantee that you know you're going to generate wealth from it either because at the end of the day if you don't sell if you just hold you make nothing and this is what I did in 2018 in 2017 I made a bunch of money you know I had a a decent amount of eth uh not

not as much as I would like but a decent amount of eth I wrote it up I wrote it up from basically ten dollars to 1400 and I didn't sell a single eighth I got too greedy I didn't take profits I had a fairly sizable chunk at that point and I saw that and I'm like you know what I'll just keep holding because I was just so bullish at the time I didn't have enough experience on on my belt and I held it I didn't obviously think eath was going to go to 80 in a year no one thought that but it did it did and I round tripped my you know pretty pretty much everything because I started buying more eighth at around two to three hundred dollars in the bear Market in 2018 which brought my cost basis up so really I was at Net

Zero profit for quite a while there uh and then the bull market came again and this time I said to myself I'm taking profits right I'm not round tripping this again because I had accepted the reality that it wasn't just going to be a bull market always it wasn't going to be a super cycle it there was going to be a bear Market um I obviously didn't know what the bear Market would look like I didn't know if it was going to be more brutal than the last one or you know what was going to happen to eth or anything like that but I did know that these things work in Cycles I accepted that there'd be another bear market and that's why I took profits so having a bull market is no guarantee that you're going to make money you need to stay grounded you need

to set yourself sell targets now to be honest you need to stick to them you need to not get greedy take profits um and then you'll feel a lot better about yourself because there will be another bear market after the next bull market guys I guarantee I mean I can't guarantee you anything about the markets except that that they work in Cycles there will always be another bull market there will always be another bear Market that is the I guess like soundness piece of non-investment advice that I can give you is just be aware of those Trends be aware that they are multi-year Trends as well and uh if you are then you'll have a much better chance of success than those who aren't but anyway on that note I'm going to end it there today so thank everyone for listening and watching be sure to subscribe to the channel if you

haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone