Coinbase $500m crypto buy, Fractional raises $7.9mil - The Daily Gwei Refuel #191 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel where recap the latest news in ethereum ecosystem i'm your host anthony cesano and today's the 28th of august 2021 right everyone let's get right into it so just a reminder here that there is going to be a daily gray ama tomorrow in the discord channel at the usual times you can see here on your screen for those who can't see it's going to be at 11 p.m australian eastern time at 3 p.m central uh eastern time at 9 a.m uh uh eastern daylight time and 6 a.m pacific daylight time of course so this will be recorded you'll be able to kind of watch this on youtube once uh the ama is done but if you have any questions you want me to answer please drop them in the ama series channel on discord and i hope to

see as many of you there tomorrow all right so i think the biggest news over the last 24 hours came from brian armstrong the co-founder and ceo at coinbase where he basically announced that the coinbase board had approved a purchase of over 500 million dollars of crypto on coinbase's balance sheet uh to add to their existing holdings which is actually comparatively quite small compared to i guess like how involved coinbase is with crypto and on top of this they'll also be investing 10 of all profit going forward into crypto and then brian goes on to say i expect this percentage to keep growing over time as the crypto economy matures now this was huge news and this was market moving news i mean 500 million dollars is no small sum they did uh kind of like

i clarify as you can see from frank tweets here that uh the 500 million dollars includes defy tokens uh eth as well as bitcoin and staking assets in general so it seems like they're taking a big bet on staking assets which is really cool to see and of course ethereum and eth and d5 they've got a pretty close relationship there and they've been supporting ethereum and d5 for quite a while now um but what i wanted to focus on was not not the 500 million number per se but the 10 of all profits going forward into crypto and they're going to be doing this i think once a quarter so obviously four quarters in a year um so you know each quarter they'll they'll put toward 10 of all their profits uh uh towards buying crypto now there aren't like too many details about i guess you

know we know which crypto they're going to be buying uh but we don't know any kind of like what percentages and what allotments like are they going to buy 80 bitcoin because it's you know perceived as a safer asset or they're going to do like a 50 50 split between uh bitcoin and eighth you know 25 25 there and then 50 on like d5 tokens you know or they're just going to do a straight market cap weighted thing which would probably be easiest but it depends like i'm sure they have um people managing their treasury managing their funds i'm sure they have like you know people on the payroll kind of like employed to do this so uh it's gonna be interesting to see if they ever kind of reveal that i mean they are a public company now so it would make sense to be transparent about

what they're buying um and it's gonna be interesting to see if they actually say the numbers because you know what happens if they buy more eth than btc right does that signal to the market wow okay you know ethys is um is a bigger is a bet that um combats is taking over btc and i mean they're already buying d5 tokens as well which defrag tokens are they buying you know in what allotments if it's just market cap weighted that's probably an easier way to do it and also an easier way to kind of like not move the market because i think you know if they just do market cap weight and people see that they'll be like okay well you know they didn't just pick and choose what they like they just did it you know purely based on market gap and it's just easier i guess

from a maybe even a regulatory standpoint as well but yeah i guess like the 500 million number itself is is huge right like that is i mean i put out a tweet i quoted this and said thanks for saving the market brian sailor in kind of like connection to michael sayler right like michael sailor bought a lot of bitcoin i mean he still continues to buy bitcoin over time in smaller amounts but he's bought billions of dollars worth and essentially uh you know 500 million dollars is that an absolutely huge bet from just one exchange here and this is like public crypto this isn't part of their coinbase ventures arm uh which is basically their investment arm in private deals and stuff like that so i think this is what reignited i guess the markets over the last uh 24 hours because they were looking a little

bit shaky there people were you know eighth went under 3k btc was looking a bit weak but generally it seems to have reignited it here and i do think i mean i put out a tweet today that i do think we have started wave 2 of the super cycle now i've said before i don't think the super cycle necessarily has to do with price it also has to do with adoption but i think that the markets have been going sideways for quite a while there is more and more just coming into kind of like um uh into the crypto markets from i guess the traditional world uh i've been seeing like tons of news uh come out of that and obviously be going over it on the refuel but also sentiment is is quite strong overall like sentiment is really really bullish so many people in

this ecosystem feel like they really are building the future of kind of like you know not only the financial system but also culture the nft space your dows are heating up like social tokens like all this stuff is heating up and you know it's just it really is hard to be bearish and and the market is is showing that like the market you know it's funny in 2018 and 2019 it was i guess it was hard to be bearish if you were really deep into the ethereum ecosystem but you were being bullish on things that were yet to be released or things that hadn't kind of like uh reached anywhere near maturity yet or hadn't kind of like been widely spread out whereas these days there's so many use cases so many things people to do no matter what the market you know the wider markets are doing it

just definitely feels very very different and i've said this before on the refuel plenty of times but i do think that we have now kind of like kicked off the next phase of this bull market and i'm expecting a strong you know third and fourth quarter to end out the year um very nicely there especially as summer is coming to an end in i guess like the northern hemisphere and usually like the middle of the year is not a great time for financial markets and that is something that is attributed to it the fact that people are outside you know they're not trading they're not paying too much attention to financial markets it's just like a different time it's like the holiday kind of like season so to speak right because it's it's sunny everyone wants to be outside and things like that so yeah it definitely plays a big part uh

but i'm going to leave that one at that for now i think frank's tweet yeah it was just like a link to the uh to a kind of like an article on the block here which you can read as well which i'll link in the youtube description i think it goes into a little bit more detail not much else there but uh and then frank also put out a tweet here saying you know it's been a big week for d5 multi-billion dollar hedge funds are tapping into d5 yields through metamasks institutional products that was a podcast that i spoke about yesterday you can go listen to um on the scoop which is the the blocks podcast uh coinbase is adding d5 towards balance sheet as i just discussed bloomberg launched a d5 index with galaxy um galaxy's been around for quite a while on the crypto

space headed up by mike novogratz and gary genzler said that defray projects aren't immune to regulation and then he goes on to say wait maybe ignore the last one but i actually think the fourth one is is uh he's still bullish here like the fact that they're paying attention to us and they're trying to fight us means that the fight is a threat so i actually think that's quite bullish but anyway yeah this could kick off d5 season 2.0 you know that fabled defy season that everyone wants and everyone's kind of like clamoring for this could be the thing that kicks it off the fact that there's just i guess like a lot more attention on d5 from the institutional and traditional finance side uh and you know many many possibly billions of dollars going into this d5 ecosystem especially on ethereum because you know ethereum is obviously

the furthest ahead but it's going to be interesting to see how that all plays out but anyway enough on the market side of things i wanted to talk about uh a bobber network which is basically a new i guess layer 2 protocol and a rebranding of a mesego omg network so essentially they've announced their main beta of boba network which is a optimistic roll-up i believe um and you can basically i guess go build on it right now and kind of go play around with it now uh i remember omg sorry i should say uh teased that they were coming out with something in my uh in my mentions the other day on on twitter and this this seems to be it here so this is like a press release they put out um and essentially you know

uh from what i can see here uh it was a it's a fork of optimism i think so it's a direct fork of optimism but you know some people framing this as kind of like a little bit of a a negative i guess and saying you know i guess like omg just copied optimism blah blah but the original kind of like omisego and omg team had actually worked with the original plasma group which became optimism to kind of fund their work and work with them on plasma back then and then help them with optimistic roll-ups and of course all the code is open source and free to be used so them forking it really isn't you know uh something that's going against like the ideals of of kind of like uh crypto and and and kind of like what we stand

for in crypto but at the end of the day uh i'm going to be curious to see how that this plays out because obviously we already have two leaders in the optimistic roll-up space there is being optimism and arbitrary arbitrary is going live this month optimism just came out with news actually over the last 24 hours which i'll go over in a sec um so yeah it's going to be interesting to see how they can compete here but i mean i'm always very happy to see more scaling solutions kind of like coming online even if it is a fork i don't think it really matters uh because at the end of the day the they will either you know build something great or they will just like go to the wayside that's kind of like how this ecosystem works but they do have stiff competition that's for

sure but still good to see uh this kind of like launch tr and on the optimism note they announced today and this kind of flew under the radar but they announced today that they have a community launch whitelist criteria up now so essentially uh though the latest protocol changes are running uh stably on mainnet that's one of the updates here so now it's time to begin opening up deployment anybody who meets uh optimism's launch criteria can apply to be whitelisted on mainnet and will be approved within two weeks now obviously there was a lot of drama the other day that i went through on the refuel about the sushi swap and optimism and uni swap drama i won't rehash that you can go watch the refuel for kind of like an up from the other day for a kind of like overview of that but essentially um you

know this is really cool because this is basically optimism's open white list feature like this is what arbitrarily had about a month ago or maybe i think i think two uh six weeks six weeks i think the end of june was when they put it live there and uh you know this is just great because it means like any project that that meets the the launch criteria uh which means you know are they actually compatible with optimism's network uh which most projects are but obviously if they aren't then they're not going to be onboarded because it's just not going to work right um you know but if they are they can kind of like whitelist here and they'll be onboarded and approved within two weeks which is which is you know not not a long time at all and it's really really cool to see

now obviously this is going to be a first come first serve thing i assume uh so again like this is what the drama kind of surrounded around with sushi and uni the other day where i guess like there was an expectation that things would be onboarded uh you know quicker than what they were but essentially because it's a first-come first-served basis kind of thing uh you know people kind of like felt a little bit hard by hard done by but yeah i guess like just kind of keeping that in mind but i mean i i assume that pretty much like every project that's deploying to arbitrary is also going to deploy to optimism i don't think there's going to be any kind of like layer 2 maximalism going on here it doesn't pay to do that really at the end of the day you need to kind

of like deploy where you can especially if it's easy and then see where the users are like and you're going to follow the users too depending on like what app you're building um and also i do think there are certain teams that are just going to deploy on one solution rather than another for various reasons maybe they're not compatible with optimism maybe they're not compatible with arbitram you know for whatever reason there are some edge cases there definitely um or maybe they're just not going to deploy to these networks at all maybe they're already working with starkware or maybe they're working with zk sync or whatever or polygon you know there's obviously there's plenty of scalability solutions these days but as i've been saying for a while now it isn't a zero-sum game i expect all of these solutions to you know go on to do

really great things and we're going to have bridges between them so it's all going to be well and good there but in addition to them to optimism kind of opening up this white list they're also going to be increasing their tps limit on their layer 2 which is currently 50 000 transactions per day and they're going to double it next week to 100 000 and then they're going to keep increasing it from there and that makes sense you know when optimism actually goes live for end users to kind of like uh i guess use these new apps obviously they can use it today with uni top and synthetics but as these kind of apps get onboarded uh more of these uh kind of like apps will go live for users and obviously the transactions per second will need to be a lot higher because uh if it's not then

you know the network's just gonna get clogged and there's gonna be high fees and all that sort of stuff so yeah that's gonna be really really cool to to see play out there all right in other kind of uh scalability news uh polygon has announced an ecosystem dow which basically is going to be a uh i guess like a little bit of a a kind of like dow that works to fund a different kind of like projects within the polygon ecosystem and the money from that is going to come out of their d5 fund that they've set up so essentially i guess like they've got like um a bunch of metrics around kind of like their growth and how you know what they've done in the last few months uh daily active addresses on polygon and it's pretty pretty cool to see polygons rise over i guess like the

last few months even though this is the pos chain and not like a true l2 uh it's still good to see that we've been able to keep users within the ethereum ecosystem instead of bleeding them over to some of their competitors but i actually think now is the real battle there's the competitors are coming and they're coming in a big way they're offering massive incentives like avalanche and uh is offering these massive incentives like solana things like that so we're definitely going to need uh to be doing something similar on on on polygon and on layer twos on ethereum as well so yeah essentially what this um this dow will be uh is is basically a coordination mechanism of course so there'll be a bunch of people kind of participating in this dow to fund different things and champion proposals and all that sort of

stuff they'll be broken up into committees so you can see here um that you know but you know just because there's committees doesn't mean they don't welcome like all people they say here with this dow we welcome all active community members and d5 projects to pitch in ideas to and to chalk out this idea to bring defy to the next million users um so here's kind of like a cursory look this committee one polygon native projects committee of three of three five that helps um operationalize smaller grants of less than a hundred thousand dollars with a forum discussion and follow-up call if necessary there's a second committee here which is polygon blue chips like quick stop sushi rv and infrastructure providers like chain link and the graph to help formalize the process via forum discussion and a snapshot signaling vote from the community and then you have committee

three here which is onboarding web3 developers and building tooling to support polygon with chain link the graph uma equivalent in etc so kind of like a whole process here that's detailed throughout this blog post as well so you can go uh check this out so fractional the nft fractionalization protocol announced today a a massive raise seven point nine million dollars from paradigm uh so led by paradigm sorry with participation from a bunch of other investors and of course a bunch of angels so robot ventures delphi digital variant flamingo dao maquette mechanism cap and uh divergence ventures also um participated yeah with a bunch of angels as well now obviously this is a really cool uh kind of like round here i think

this comes shortly after their last round so it's pretty quick uh a pretty quick turnaround here on on the fundraising but i think this makes sense because uh nft is obviously heating up fractionalization of nfts is very new but a very kind of like bustling ecosystem because at the end of the day uh there are a lot of nfts that people can't afford to buy like the whole nft right they can only afford to buy a fraction of it and people just want to speculate on the value of these things maybe they don't care too much about owning a hole in ft but they definitely want to speculate on it and and kind of like um i guess like uh uh uh can i participate in in the markets without having to buy a whole one just like you can with crypto right you don't have to buy like a whole

eighth you can buy like a fraction of an eighth and you can buy a fraction of an nft using fractional and there's nftx and a bunch of other protocols and things like that as well and in these blog posts they kind of like go over their um their first month their community what they've done things like that uh and this was actually a seed round that was kind of like led by paradigm here so 7.9 million dollar uh seed round is actually quite a lot like that's usually like a series a that you see so obviously a paradigm and the rest of these investors are very bullish on fractional going forward and i mean i don't blame them like i was a bit disappointed that i didn't get the opportunity to invest in this because i would have like i really do think that uh fractionalizing of nfts

is a huge use case um but you know maybe i'll just have to buy i'm assuming they're gonna have a token eventually i'll just have to buy their token on market once it goes live maybe but yeah cool to see this and congrats to them on the fundraise here so ave posted this screenshot uh that came that came from a d5 team called 2001 d5 team and they submitted an application to build a mobile app for rv to the rv grants uh kind of like ecosystem here you can see this screenshot here of like a little uh i mean it's an early screenshot of like what an rv app would look like on mobile and i guess this the reason why i want to talk about this is because it flows into what i was talking about yesterday about crypto wallets right how i think

the competition's going to heat up dramatically they're going to get a lot better they're going to become a lot more i guess like ethereum friendly where they have like you know you can you can kind of display your nfts uh in your wallet you can have like uh tracking of your d5 positions all that sort of stuff but it's not just going to be wallets themselves it's also going to be uh dashboards so think about zappa and xerion and a bunch of others out there i mean there's so many of them now like d bank and a bunch of others these dashboards don't necessarily act as a wallet right where you store your funds but they will track your funds they'll track your positions they'll do a bunch of other different things you know zappa for example let you zap in and out of um

different opportunities uh but yeah they don't cost your custody or what uh your funds for you or they don't like store your funds for you so to speak so i expect a lot of those to come online but also if we extend even past that and to just general front ends for interacting with with ethereum and with crypto generally there's going to be a lot of these coming and i i i'm even going to say like banks are going to do this like eventually banks are going to have portals on their website for interacting with all of this infrastructure but they're of course going to brand it with their own branding they're going to call it like jp morgan you know defy experience or they might even not even use defy they might just say like jp morgan high yield savings account and offer you like two percent on your usd

or whatever um and that's high for traditional finance um but you know and then kind of like they generate that yield by uh tapping into d5 so there's gonna be a lot of this stuff going on there's gonna be choice for everyone you know whatever you wanna use to interact with with these protocols to track your portfolio whatever there's plenty of this stuff coming so yeah just really cool to see more and more of this stuff kind of like getting funded and going live here so speaking of grants the balancer grants dow is now live and accepting grants applications uh so you can basically read this blog post to learn more about this but this is uh you can now apply for development support of up to seventy five thousand dollars in funding now i guess this is just another another um grant style that's been

launched there's plenty of these right now pretty much every default app has these because as i've mentioned plenty of times these defy apps have massive treasuries uh and they need to disperse these treasuries in some way and what better way than having a grants program where people can come and be like hey i want to build this but like i need funding you know what can you do for me and you can get these grants um especially if you're building on these projects themselves there's a high chance you'll get funded here so that's been really really cool to see is that like all this money's available and i was actually talking to someone today about this um and just about how much money is available for builders these days right like i spoke about a few weeks ago um a16z's 2.2 billion dollar um new fund that they've got and they're

just like they're really putting that to work right now they have to invest that so they're basically putting that money into a bunch of different projects uh and then there's just one kind of like fun right one vc there's i if i had to estimate there'd be tens of billions of dollars up for grabs between the vcs the funds um uh things like the ethereum foundation grants programs from uh from these default apps and just like git coin and things like that as well there's there's literally tens of billions of dollars available for funding so if you have an idea and you want to build something there is a very high chance that one of these grand styles will fund you for that like as long as it makes you know some sense and as long as it actually looks like it could work then all you

have to do is submit it and try your lucky eye i mean you could do this while or while working a full-time job still you don't have to basically quit your job and then go do this you can put it together in your spare time and say hey like i'd love to quit my job and work on this and then if you get funding you know as i said balance is giving you up to 75 000 here and other grants programs you know it give you more or less there and it lets you work on it without having to worry about paying the bills and all that sort of stuff so i mean i just expect this to continue there's going to be so much more money coming into this ecosystem it's insane like it's it's essentially i think a lot of the the world is waking up to the fact

that crypto is as revolutionary as the internet and you're seeing all the early pioneers come in especially all the early funds and things like that and they really really want to be at the ground floor they don't want to miss out because if they miss out it's a potential you know multi you know tens of billions of dollars of return that they could be missing out on and money that they could be making but also they want to be the ones supporting all of these um kind of like teams and being written in the history books at the end of the day especially different vcs and things like that you know vcs sometimes get a bad rap but not all of them are the same obviously but you know there's there's a lot of them for example paradigm is is like the stellar example here that

really do act more like i guess um you know a kind of group that helps you with your project more than just like a vc that just you know gives you money and then kind of doesn't talk to you ever again all i've heard about paradigm is really good things with all the project projects that they work with but you know they're not the only one there's plenty of other funds out there that do this but also there's a lot of funds and vc's that are total crap they just give you money and they don't talk to you ever again and they're not really interested in your project they're just interested in generating a return and it's kind of like a spray and pray approach where they basically say okay well we can make 10 investments and if nine of them go to and we own a

thousand x on one of them well it makes up for the nine that we failed on that's not the kind of fund and vc that you really want to be paying attention to you're going to be paying attention to the ones that actually do help um yeah their portfolio companies and things like that of which there are there are a fair few we think crypto like delphi digital i think like um mechanism capital a bunch of ones like that spartan uh capital and things like that the the the defiance as well of course and and and i think three hours capital i mean defiance is under three hours capital and stuff like that um but you can find plenty of these and you kind of have to like judge for yourself as well if you think they're actually good actors or not but from what i've seen

you know the ones i just named are um but at the end of the day you know it's always funny because like uh these you know these vc's getting really early on these projects and if they do start selling off tokens or whatever people think they're getting dumped on and stuff it's it's kind of a little bit messy but that's generally how it kind of like works but the the faces and funds that give um i guess like feedback to teams and help teams with like hiring marketing whatever bd stuff like that are obviously um you know are taken kind of like very seriously by the industry and and that's who you want on board but anyway i guess like back to the the topic on hand again if you want to build something definitely apply to one of these grand styles um as i said balance

is not the only one doing this but it's good to see balancer kind of like spitting this up here all right on to the last thing here so there is now seven million eighth or 22.5 billion dollars being staked in the beacon chain so this i think is not technically correct i think the seven million ethan deposit contract and by the time that gets into the beacon chain maybe by the time you watch this it'll be at seven million but maybe it's a little bit lower um but essentially this is a huge amount right like this is around six percent of the total eat supply right now uh and this is locked this is locked up in staking yes there are some derivatives like st and a few others out there but the actual ether in the beacon chain is locked it cannot be withdrawn

until the merge happens um and even then it's it there's there's kind of like a lot of talk about uh withdrawals not being enabled on the merge but coming like shortly after it so there's still maybe another it could be a year before this uh before withdrawals are enabled um you know maybe maybe it doesn't take that long but it still could be a year so this seven million eight is locked there for that period of time but i also wrote uh in today's daily grade newsletter about each scarcity engines of which staking is won and you know you can go read the newsletter for a deeper dive here but the fact that we have all three of each scarcity engines unlocked right now is making me really really bullish on either more bullish than i kind of like have been in the past and i know that's

that might be hard to believe but what these scarcity engines are is one is staking two is uh is is eighth use as trustless uh collateral within d5 um and then three is obviously ip1559 burning eighth now these all come together in a very beautiful way because not only do they increase its scarcity but they also um increase the demand fee because at the end of the day right now you can get five point nine percent eighth denominated yield uh by staking it and you know if eth goes up 10x from here then that's a lot more than five point nine percent because uh because that you would get like stables for example because as i said it's 8th denominated so that's essentially um you know the ether you've got has

appreciated in value over time as well because the eath price went up which is just like driving incredible demand for each staking and it just makes basically makes each uh sorry ethereum's uh native bond essentially and then you have um if used as trust's collateral within d5 right where you can essentially use ethers as um collateral within maker or ave or whatever you can use it to provide liquidity and you can either earn a yield or you can use the borrow against to earn a yield or whatever there's plenty of stuff you can do there that's a and that obviously has a lot of demand too because of the fact that people want to do this right they want to either leverage long ether want to yield fun with stables but don't want to get up their 8th position you know this and all they want to liquidity provide there's

tons of demand there for that and then all of that defy activity and not just d5 like nft activity dow social tokens whatever it is but whatever transaction on the ethereum rack doesn't even matter what it is is burning eth as part of that third scarcity scarcity engine so that all brings it together where we're actually um having a deflationary pressure on eth from natural demand from people wanting to use the network and then we have natural demand leading to natural scarcity because people want to use eighth as that kind of like collateral or staking asset and of course they have to use eighth to pay fees of which most of it is burned and then if we look at it in a in a proof of stake a proof of work context we're currently issuing what 4.2 percent right now i think of new eth netted out

against the burn is 3.2 percent and under proof of stake if we were issuing 0.6 percent right now because that's based on the current staked amount and then we net that out based on the fee burn and kind of like annualized fee burn we get to a negative one point one percent so once that once the merge happens we drop that issuance by ninety percent and then we're we're kind of like in negative issuance territory you know that is like by the time that happens i don't know my eighth could probably be like much higher than where it is now but like that just bringing that all together the fact that we have those scarcity engines live right now and we're just kind of like waiting on the last piece of the puzzle which is the merge to get to proof-of-stake to get that kind of like issuance to that

negative is just i mean this is the reason why i buy each every day like i mean a major reason is because it's just really hard not to see the long-term view and not expect eath to be you know much higher than where it is today in the long term view of and it's not even that long long term like one two three years or whatever um you know and it's not hard to see eth getting to that you know ten thousand dollars that i've talked about before and then i you know i've mentioned a hundred thousand dollars before but i don't think that's gonna happen within three years but but still like it's it's very hard not to imagine a world like that when these kind of like supply shocks really do get felt throughout the market but anyway i'm going to leave with that i want to

like you know have some dubious speculation there about its future value obviously i believe it's going to go up but not nothing that i said is investment advice so you shouldn't listen to me um uh of whether to buy or not or whatever um but yeah i'm sure you all of you are as bullish as i am on eth but on that note i'm gonna leave it at that 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 next week thanks everyone