Beacon Chain finality issue, Bullish ETH chat & more - The Daily Gwei Refuel #584 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The Daily refuel where recap the latest news in ethereum ecosystem I'm your host and this is honor it has the 12th of May 2023 alright everyone let's get into it so the biggest piece of news I guess or events that happened over the last 24 hours was an unfortunate debug in the beacon chain or I guess like in one or more of the consensus layer clients that power the beacon chain now the tldr of this bug uh firstly is that there is no root cause that's been identified yet there are still teams doing their investigations into this but the network basically didn't finalize I believe for uh I think I think it missed like one finalization period I was asleep when this all happened so I don't remember it exactly

because I woke up and everything was fine um and then I think there was at like 30 or 40 participation for a couple of of epochs there which obviously isn't ideal now as I said we don't know the root cause of this yet people suspect it was an issue with prism but if it was just prism then that we wouldn't have had as long as participation as like 40 because prism only accounts for around uh what was that the last time I looked 37.7 of the network so yeah the math doesn't add up there uh but yeah we'll get we'll we'll we'll probably get a uh postmortem uh sooner rather than later on this one but there's there's not been any kind of root cause identified here now Network wide we saw some people missing at a station some people not missing out of

stations I went back and checked all of my validators um individually when I woke up it took a while but I did it uh and I didn't seem to miss any any attestations that that I could see I I checked on the beacon chain website to see if I missed any and it looked like my setup was all good you guys know I run Lighthouse uh and I so I run a few different combos I run Lighthouse and Geth and uh Nimbus and never mind so those uh didn't have any issues and I run multiple um CL and Els on my network and doesn't seem that I had any issues there uh but I don't run prism currently so yeah I don't know as I said don't know if prism is actually the root cause or not but it seems like they they may be uh but we'll have to see uh wait and

see if um when the post-mortem comes out now of course I've talked about client diversity a lot on the refuel and I think this is the perfect time to talk about it again this is why ethereum has client diversity could you imagine if the ethereum network was only one client uh this would have taken the network offline and there has been multiple instances of this over the years of one client or something happening with one client or two clients and the Network's still chugging along and I think I need to to be clear on that as well for a lot of people is that the ethereum network did not go offline it just was not finalizing the chain now what this meant is that transactions were still being processed and I saw a lot of people obviously out of the Solana Community uh hitting back because obviously whenever

Solana goes down everyone makes fun of them but they were saying look ethereum went down as well I was like no that's that's actually not what happened if the ethereum network favors liveness which means that it it can it can stay online even if a very even if a small portion of the network is only a available during that period of time so yeah I just wanted to be clear on that the ethereum network did not go offline it was still processing transactions and blocks and the whole kind of I guess low participation and non-finality lasted around 25 minutes so it wasn't actually very long we've seen you know the the outages on Solana for example last I think the longest one was almost 20 hours or something like that and there had to be an off chain coordination done in the Discord channel in order to get

the chain started again so those two things are completely different and I normally don't bring up these things but I thought it was worth bringing up because I just saw a lot of misinformation being spread and I wanted to to be clear on that one there so yeah the chain did not go offline even though we don't have a root cause uh uh uh identification yet for for how this happened the network is back to where it was before the issue happened and everything seems to be chugging along just fine but yeah this is the importance of client diversity now super Fizz of course was all over this today he has our he is our client diversity champion and he put out a tweet where he said if a consensus layer client caused the loss of finale that we saw uh we would we averted a fork by not having a

super majority client and we we could have avoided the loss of finality entirely if no client had more than 33 percent and he continues I'm proud of our diversity work but we're not done now you'll often hear me saying that I wish no consensus layer clients or execution layer client was over 33 of the network here and that's not just like an arbitrary number that I've pulled out of my behind right it is based on the fact that if no client has 33 percent uh then we would uh not lose finality if one of them was to go offline for whatever reason or have a bug in it so that's why we want to hit that number now obviously I'm trying to live it on an Ideal World here in my head when I but I understand that reality is reality so we may not ever

get to that in state but that is the whole point of of of kind of like making sure or at least trying our best to get to that uh to get to that state there uh and I also think it's worth explaining exactly what finality is here and why it's important to ethereum so essentially in ethereum proof of stake and a lot of proof of stake networks uh because there is something at stake you have something to slash right you have something to I guess like punish if if something goes wrong and in the case of finality what it prevents or what it tries to prevent is reorgs so a reorg or a reorganization of the chain basically means that let's just say there was a five block reorgan ethereum that means that there were five blocks that happened that have been erased from the

chain history and were replaced by five different blocks now reorgs are relatively normal they happen on both proof of work and proof of stake chains but I'm talking realgs of like one block on bitcoin two block realgs are very rare but we saw one the other day and on ethereum under proof of work realgs were a lot more um a lot more common but in proof of stake they're a lot less common because with uh previous take ethereum we have deterministic block times which are called slots with every 12 seconds but where finality comes in is that past a certain point in ethereum's case it's two epochs which is around 13 minutes uh uh if I'm remembering correctly there uh there is uh one third of the total stake basically saying you cannot revert past this point you cannot reorg past this

point right so you cannot reorg uh you know after 30 minutes without one-third I believe it's at least one third of the network standing to get slashed and that is a lot of eighth right that is a lot of heat that would get slashed if uh at a riog was attempted here so it is put in place for real protection now of course 13 minutes uh it can be an eternity right we want to get that down as much as possible well that's where single slot finality comes in which single slot meaning every 12 seconds every every ethereum block we have finality and this would mean from my understanding that the maximum real that you could do would be one block because you have one block finality right which I mean one block realg is kind of useless pretty much like I mean it's not

useless but a lot of the time it's not worth it uh and people do real works for different reasons but but yeah that's that's kind of like a future thing that we want to uh we want to do in ethereum we want to upgrade the chain to be able to do single slot finality but right now we have that finality that kicks in after two epochs which is which is around 13 minutes and uh yeah we want finality to prevent real Orcs because riogs are not great uh they're definitely not great long real orgs are really bad um and I think that an analogy for proof of work here is a real can happen all the way back to block zero basically all the way back to Genesis but in the proof of work's case you would need to have the majority of the hash power and you

would need to re- kind of um compute that re I guess like remind that so to speak right maybe I'm using the wrong terminology here in order to get there but what's really scary about proof of work having no finality is that you could technically if you had the majority hash power you what you could do is that so say you have 51 of the hash power you could mine another Fork of Bitcoin or I'm using Bitcoin as an example because it's the biggest whiff of work chain obviously by far but what you could do is you could mine a fork of Bitcoin with 51 of the of the um the hash power for like a month first let's say and then you decide well I am done doing this now I want this chain to join the uh to to become like the main

Bitcoin Network and what you do is essentially you override the network that everyone thought was Bitcoin with your chain because Bitcoin uh consensus follows the heaviest chain and your chain is the heaviest because you've accumulated more proof of work uh because you had more hash power than the um than than the uh I guess like original Bitcoin chain did and what this would mean technically is that you would reorg a month's worth of bitcoin blocks and that would be catastrophic right that would be absolutely disastrous if that happened uh that is basically something that could I don't know if it would kill Bitcoin but it would damage it very very severely because what this would mean mean is that the attacker that has all that hash power could literally do anything with their own chain that they wanted right and by

reorging the chain even if they did nothing uh malicious and all they did was replace the chain with empty blocks essentially uh because there were no transactions because it was a a fork of Bitcoin they would basically wipe out one month's worth of transactions uh from my understanding at least someone cracked me if I'm wrong but this is my understanding of how this would work um and what that would mean is that let's say you sent Bitcoin to an exchange like 29 days ago and you sold it for Fiat and the exchange has that BTC on their balance sheet well no in this new chain that just replaced A month's worth of uh of um of of Bitcoin blocks that exchange wouldn't have that anymore right uh because you never sent it technically according to the chain you never sent that Bitcoin to uh uh to

that exchange so you have it and the exchange is on the hook for that so yeah reals are scary they're not good that's why we have finality and that's why we want to progress towards single slot finality um at least that's the major reason there are a couple of other benefits um for finality there but yeah I've spent enough time I think on this topic here so I just want to quickly move to one other tweet around this topic today which came from Gayton semp.ethia who said Gaspar is truly an amazing consensus algorithm for those so for those of you who don't know Gaslight is the name given to the consensus algorithm that powers the beacon chain it is a combination of two things which is Caspar the Friendly finality Gadget which is the finality uh part of the um of the uh uh of the consensus mechanism

and the G oh the name is eluding me right now but the G stands for uh for something here um I believe it's uh oh no I've lost the terminology right now but the G stands for something right here and two of those things make Gaspar which Powers the ethereum uh Beacon chain here uh and uh I I believe Gasper is the fork sorry I believe the G is the is the fork Choice rule um yeah it is it's it's something that's ghost that's right it's lmd ghost think ghost g-h-o-s-t stands for something it's a greedy heaviest something something I don't remember exactly what it stands for but that is the the fork Choice Rule and um Casper this is the finality Gadget and those two things make the ethereum uh uh begin chain consensus oh here it is it says here lmd ghost and then yeah it Gates

and continues and says you know lose the 30 the 66 threshold for the validators and Casper the finality Gadget the epoch won't finalize but blocks keep being validated by lmd ghost uh most bft chains such as tender mint change which is something like Cosmos uh and Solana halt when they lose 66 so that's what I mean when ethereum favors liveness it favors being online over uh just kind of I guess like having all the validators online just to stay online right so it can even operate with a low amount of active validators there but uh yeah hopefully that explains that for you obviously I will cover the post-mortem uh when we get one hopefully it is out by the time I do Monday's refuel all right onto some other ethereum core

uh news here so Tim baiko put together another ethereum all call Deb's call Twitter thread the court focused on 4844 with some brief discussion of L2 eips and overall overall Cancun planning so obviously things have moved right into planning for Cancun and all the erps that are going along with that I've mentioned before how 4844 is the driver of the upgrade with a bunch of Passenger eips coming along for the ride that on aren't finalized yet some of them are already included some of them are considered for inclusion we won't know exactly which eips are going to be going into the upgrade until maybe I think like two to three months before it goes live on mainnet um and even before then even after then some could drop from

from the list yard but yeah you can read Tim baiko's thread for a recap of the latest call uh it's not too long you know but it's great as usual so I'll link that in the YouTube description below for you to check out all right so another tweet from Super fears that I actually maybe should have talked about before but I'll talk about it now just very quickly um he tweeted out let's do a history lesson when prison was a super majority client uh Michael Sproul from the uh Sigma Prime team uh developed a tool to fingerprint blocks uh which is uh Xerox invis develop data to know what client services are running and honey a developed client diversity.org to get the data out they're Heroes and basically what they did was they showed just how I guess like bad client

diversity was on ethereum and that led to that big social post push that you um that you saw led by super fears quite a while ago now uh that got people to switch from Prism to a a minority client and that's why the client diversity on ethereum looks a lot better today so yeah you have these people to thank for the client diversity.org websites and the data that feeds into that website all right so the beacon chain Twitter account shared today that a Visa has taken a dive into ethereum staking uh and hasn't said that they rely on the beacon chain website as a trusted source so there's an article here that they kind of highlighted talking all about ethereum um ethereum staking which is very cool to see it on Visa's official

website here and they break down how it all works and why this is cool to see is because it might not be cool for something someone like us who or people that watch the review obviously who know a lot about ethereum staking already but this is really great for existing Visa customers whether they be uh consumers I don't I think it's less on the consumer side and more on I guess like the institutions and and Enterprise and business side of things that can read this post and be like okay what is what is this ethereum staking thing and then once they read this they'll get a good understanding of it obviously they're not going to become experts just from running one blog post but it really does break this stuff down and I've mentioned before how I believe ethereum staking is just going to get so stupidly big

especially amongst like institutions and big I guess uh custody providers as well because if you're a custody provider and you have a lot of customer eth you're not going to just let that Eve sit there because you're going to think to yourself wow okay I can actually stake this I'm going to offer this product to my customers I'm going to take a fee because there are already big staking providers that take massive fees I believe coinbase's fees like 25 or something and they haven't exactly lost any market share they've been gaining market share so people seem to be happy to pay that fee but their fee is quite high now uh could you imagine like a company seeing this and they're costing a lot of eth and they're like well wait okay maybe I can take like a 15 fee and just offer this product to my customers

uh and then they'll get like a yield or maybe they can even take a higher fee because their customers aren't even going to know they should be like oh I have eth oh it's it's staking now and I get like two to three percent or something like that and then and then the provider takes the rest for themselves right so that that's what these posts I think are good for for just getting the word out there about how amazing Eve staking is and how like uh it is a real yield here especially with um the fees and the Mev rewards that you can earn that is a real yield being paid by real users obviously when it comes to the consensus layer rewards people will say it's not a real yield because it's just it's just issuance right it's just inflation but even that I mean that is so low right that is so

low uh in terms of like network-wide inflation and network-wide issuance that it really shouldn't even factor into the way you think about this because it's under one percent right like that is such a tiny portion um and if you if you believe that there's less than one percent net demand for eighth each year right then you're not bullish eighth so I think that uh when you look at it and you look at the real yield that you get the you know the literal real yield that you get from the fees uh and from the Mev I guess from tips and Mev and then on top of that you get the consensus layer rewards which are offset by the burn by the fee burn anyway because I mean if you really think and talk about the issuance you have to talk about how it's offset by

that it gets very bullish once you once you understand all that and I and I hope that these posts can get people that may not have been interested in this stuff before not aware of it before to dive deeper and potentially stake any eat that they may be holding all right so Google has integrated ethereum address searching into their I guess like a search bar here so you can paste in any ethereum address and it will show you the balance of that address as the top results on Google here so I pasted in my subtle.eth address here and you can see my ethereum balance at sasol.heath with a link to etherscan now of course this leaves a lot to be desired as cool as it is I would like to see uh my token balances I would like to be able to use my ANS on

as a name instead of just like my whole ethereum address because I actually initially searched sasol.e just out of kind of habit and out of intuition there but it didn't display anything except The Ether scan results um the easy scan web page result right not the actual kind of a little information box that it has here so uh yeah I'd love for them to integrate that token balances uh maybe nft Holdings as well displayed them since Google results can be rich as well that that stuff would be very cool but it's very cool to see that they've taken this leap and they've done this here and it's just great to be able to visualize this really quickly in saying that I mean we have etherscan right this is more of a quality of life thing because you can just go and eat the scan and search this

and it'll give you all the details anyway but I think it's great to just have more options when looking at balances on chain all right so uh there is a Twitter account called meta law man that I come across from time to time who breaks down various different things happening in the I guess like crypto slash regulatory uh space here so he put out a tweet today saying uh the U.S Chamber of Commerce has just filed a brief in the coinbase v uh SEC case calling out the SEC for acting unlawfully in the digital asset space this is the the U.S Chamber of Commerce not the Chamber of digital Commerce and this is a big deal and he explains why here so basically what seems to be happening right now is that

the people whose voice can actually matter for like real change are starting to call out the SEC on their and not just like of okay not providing a framework for uh people to register uh the script of Securities and not providing guidance to exchanges like coinbase but also for literally doing things uh in an unlawful way which which means they're literally not following the law that they they have to follow especially because they're a government agent agency right so I'm glad to see this I'm glad to see it being called out as I said coinbase fighting the SEC in uh in in court is not something that the SEC wants I think I really do think that they that they thought coinbase would just fold and and pay the fine or kind of shut down whatever products that they

were that the SSC said were invite violation here but that's not what they are doing they are fighting on crypto's behalf they are fighting on behalf of us and it's great to see movement happening here as I've said before I do think that a lot of the concerns around regulations are overblown I do think that it it moves slow but over time it's going to get a lot better we have people in our in our side of the court now there are a lot of um crypto sorry a lot of politicians that are crypto friendly it just seems to be right now that the Democratic I guess like leaders or party leaders are the ones that are mostly anti-crypto there are a lot of Democrats that are actually pro-crypto obviously a lot of Republicans are also pro-crypto in the US I really hate that it became

such a divisive issue to be honest I I hate that uh the you know this can't just be something that is uh that is bipartisan and and people can't just uh uh sorry these people just can't agree to provide Clarity on these sort of things and let this industry flourish um but yeah I mean they are kind of reaping what they sow because I saw uh Brian Armstrong the CEO of coinbase taking pictures with leaders uh in um foreign countries like the United Arab Emirates and imagine you are a us uh kind of Senator or a politician you see that you see that one of the biggest companies um or the biggest us-based company in the crypto space that has generated billions of dollars of economic activity for the US economy is uh you know their CEO is now in other nations and moving his operations

offshore with that new exchanger they launched the other day and you imagine you seeing that and thinking that was positive and then your voters see that and they like and they and they kind of write to and they say dude what the hell like what's going on here uh why why um is coinbase going to you know going offshore doing this or doing that so it all counts I think it all adds up and I do think it's going to get better over time I don't think it's actually going to get much worse from here I don't think there's going to be like an outright ban on crypto or anything like that in at least in the US or like most places in the world um I don't think that there's going to be any sanctions on like the blockchains themselves I'd be very surprised if that

happened like if for example if ofac sanctioned the ethereum chain or sanctioned the Bitcoin chain there there is a chance that that happens I would be very surprised but at the same time it's not something that could kill any of these chains and it would hurt a lot of individuals and a lot of businesses that it just wouldn't really uh it would really go forward it wouldn't really stand here so yeah anyway you can read meta Lawman's thread here I'll link it in the YouTube description below all right so I don't know if I covered this a while ago I don't know if this was teased a while ago um but uh you can now buy uh I guess a crypto via metamask uh with PayPal so metamask and PayPal have a teamed up to allow us users to buy eth uh using their

PayPal account so there is a guide here on this blog post of how to get started and everything like that this may not be something that's interesting to you because you probably already know how to buy crypto in the cheapest way without paying like you know High fees or anything like that through centralized exchanges like uh like coinbase and Kraken and all those uh and any other one depending where you are in the world so yeah but this is cool because I think that it gets a lot of people that may trust PayPal uh into crypto and they may not trust like coinbase for example or maybe they just want an easier way to buy into crypto well this is one way to do it but yeah you can maybe send this blog post to people that you know are on the fence and want an easy way to buy

crypto I'll link it in the YouTube description below for you to do that all right finally here we have a couple of tweets a couple of bullish tweets from yours truly to round out this week of ethereum news so my first tweet was that I love I said I love how the entire Market has been bleeding non-stop for like a week now and crypto Twitter is pretty much dead silent about it this is the clearest sign I've seen so far that we're now firmly in the time-based capitulation part of the bear market now I had someone ask me in the comments you know what what do I mean by time based capitulation well there are two types of capitulation here there is price based where the price bottoms out now obviously that happened for eth back in June of 2022 where it went to 880 and

for BTC it happened in November of 2022 where it went to fifteen thousand four hundred dollars now these are the bottoms so far I'm not saying that it's 100 not going to go below that but those seem to be the bottoms uh that have been carved out as part of this this cycle so far so that is price based capitulation now the second uh second type is time-based capitulation where the time bottom is set now this basically means that the price of eth or BTC or whatever hangs around in a somewhat wide defined range for 12 plus months but it doesn't set a new bottom so in 2019 this was when eth was ranging between like 100 and 360 dollars and you can go look at

the chart for that yeah and that's exactly what eth did it did not set a new bottom then in 2020 obviously the bull market started again and we were Off to the Races the covert dump I usually ignore because that was like a one-off Black Swan and if you actually remove the covert dump from the chart you can actually see how it just as much of an anomaly it is so I usually ignore that but even then eth did not set a new bottom so I think that was that was quite interesting too but that's time based capitulation and the reason why it happens like that is because you have a lot of apathy after the market nukes you have a lot of people that got wrecked you have a lot of people that left the ecosystem the people that are in the ecosystem are the ones that are already

you know holding a lot of crypto they're probably already all in and the only extra crypto that they can buy now is with income that they get from you know their job or from from wherever else and that happens over time right they don't have any more Capital to buy the dips because they already bought the dips that's what we have with price based capitulation time base takes time because you need to wait for more people to get more money and you need to wait for them to to spend that money to have confidence in buying crypto with that money and then slowly slowly the price goes up again and then we have the bull market right and that's exactly what what happens uh and what has happened for for a long time now and not just crypto but I think all markets generally but I think crypto it's especially uh uh

it's especially um obvious and especially kind of um what's the word I'm looking for yeah I've forgotten the word but it's it it's it's very uh it's very strong it's a very strong kind of thing in crypto because it's so retail driven so retail heavy so that's what I meant by by that there and now this is a segue into another tweet that I put out which is a reply here to to Marseille where I said the feeling I get right now about eth is the same feeling I got in 2019 price was doing nothing good but the ecosystem was thriving with many upgrades on the way such as erp1559 and the merge uh which were meant to improve eth as an asset and the core D5 infrastructure was also being built out then D5 summer happened and the rest is history so the reason I'm getting the

same feeling is because right now we're in the middle of having a time-based capitulation for Ethan BTC they are just stuck in this kind of wide range for eth right now it seems to be like 1 000 to 2200 for BTC I think it would be like I don't know 17 or 18 000 or something like that and 30k right um so we're stuck in that range right now but on the ethereum side of things there is so much kind of being built so much uh being um uh being developed so much happening across all kind of things like the core protocol layer 2's the apps that it really does give me the same feeling because if you look at e there's an asset right now I think either as an

asset is incredibly undervalued right now it's not showing up in the price of eth all the developments that have happened the merge has still not shown up in the price of it I don't think the burn has I don't think the fact that eth is such a strong uh internet Bond uh that people have been calling it with with staking I just don't and I don't think it's future growth is priced in either so I don't think any of this stuff is showing up right now and that's simply because we have to go through our time-based capitulation now eventually when this does show up it will be because it will it will all this stuff has been built all this stuff has been delivered all this stuff has been happening in the background and I do think that the next bull market is definitely going to be a huge um thing

for layer twos I do think that uh bass which which coinbase is going to launch hopefully soon will play a big part as well but layer 2's generally will and I do think we're going to get like a similar I guess like layer 2 summer as we got to like defy summer like an actual one but also on top of that I think that each staking is going to just keep getting bigger and bigger and bigger I become become a much more vibrant and potentially DJ and ecosystem and that will lead to like an e-staking summer so I think that I'm very confident in like there being an L2 summer and an e-staking summer uh at some point where I guess there's a lot of new money coming in and there's a lot of new money to be made that things just go absolutely bonkers

but that's going to take a while to play out it's gonna it's gonna happen I guess probably towards the tail end of the time-based capitulation uh and it's going to happen when things start heating up again but once it gets going it gets going guys like bear markets are brutal don't get me wrong they're brutal they can be boring they can be depressing but bull markets uh I believe are more crazy than bear markets are brutal that's for sure so yeah just a bit of bullish uh kind of um talk to round out this week's episode of refuels uh but that's going to be it for today uh 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 next week thanks everyone