Coinbase launches new exchange, ETH is money & more - The Daily Gwei Refuel #578 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily refuel where we cut the latest news in ethereum ecosystem I'm your host Dan this assign us has the 3rd of May 2023 alright everyone let's get into it so apologies for the mess behind me actually before we get into it I have a new display cabinet coming or being delivered tomorrow so the room that I'm in my usual study is a mess right now so apologies for that but it'll be all good by tomorrow anyway moving on from that to the news of the last 24 hours so a big piece of news out from coinbase and we knew this was coming but they've officially announced it now so they've launched something called The coinbase International Exchange which is based out of Bermuda and we'll Begin by offering BTC and Eve Perpetual Futures settled in usdc with

up to five times leverage to institutional clients ineligible jurisdictions outside of the US now launching a you know Futures platform deliveries platform is nothing new in crypto there are plenty of exchanges that offer that and have offered that in the past some are still around some have gone bust some have lost a lot a market share due to various different reasons and the thing about a derivatives exchange is that they're normally quite heavily regulated right in Trad fire they are very heavily regulated but within crypto there is no real guidance on it and I don't know of any us-based uh derivative crypto exchanges that offer uh derivatives to us investors there are definitely Trad fire platforms

that offer crypto derivatives to investors but not uh crypto companies from what I can tell I'm someone please correct me on that but the reason why is because there's no clear guidance right there's no clear guidance on what regulations they have to abide by what rules they have to buy by what laws uh and that goes back to everything that I've been saying and that you've been seeing around the SEC and other regulatory bodies in the US so of course coinbase wasn't just going to sit on its Laurels and let its competition continue to eat its lunch it said well let's look into launching our International or our kind of like futures or derivatives exchange uh in on an offshore entity as an offshore entity which is what they've done they are based on out of this is based out of Bermuda and is also not

available to uh people in the US which is just kind of insane right land of the free home of the brave as they say uh not really anymore especially not for crypto which is just very unfortunate you know I I talk about the US a lot on the on the podcast yes the US isn't a major part or sorry is a is a major part of crypto but it's not the only uh uh kind of um a part of crypto obviously there are huge uh swags of people in other countries around the world that are involved in crypto but I think within the us we're not seeing something except maybe China but even China's got a lot better with this but we're not seeing this kind of like uh regulatory harshness that we've seen in the US in any other jurisdictions that I can think

of or at least any of the other popular jurisdictions right Europe is being a lot friendlier um the UK is being a lot friendlier Australia is definitely being friendly at least for now things can change of course but from what I've seen for now uh you know it's all well and good uh right now and even as I said China particularly Hong Kong seems to be embracing crypto as well whereas in the US there really does seem to be this I I struggled to call it like a war on crypto it feels like there are a select few people in positions of great power uh particularly politicians and unelected bureaucrats that just don't want to see crypto succeed for in the US for one reason or another and of course due to this they are pushing this stuff offshore and to see coinbase launch

their International Exchange out of Bermuda oh sorry it's launched the derivatives exchange out of Bermuda instead of the US is a complete and utter failure on the US's part to keep that economic activity within the US and what's funny is that coinbase is a U.S publicly traded company it is home uh it is homegrown in the US by Brian Armstrong and his co-founders and obviously his team over the years it was the first crypto company in the US or at least one of the first and I believe it's the only one that survived since back in when it was founded and it served Services Millions if not tens of millions of us-based customers I believe it's it could be potentially in the hundreds of millions of total customers uh and this is just an absolute uh

failure on the part of the US Regulators CR but it's I guess like an opportunity that coinbase has taken to launch it elsewhere so you can get full details on what this is uh and how it may or may not apply to as I said it is only open to institutional clients right now so I'm going to assume like pretty much almost all of you are not an Institutional client I'm definitely not obviously but I think they're going to be opening this up to more of a retail audience as time goes on and sorry to my uh friends in the US this is not something that you'll probably be ever be able to access unfortunately uh just the way it is and I say ever uh with the assumption that things don't change in the US around crypto I'm still quite hopeful that over time the regulatory uh

kind of regime around crypto will change I I do think it will get a lot friendlier but as I've mentioned before the wheels turn very slowly when it comes to regulations and laws and obviously it follows a lot a lot of things like the elections like for example if the Republicans were to win next year at the presidential election I reckon things would change pretty dramatically uh with crypto I I reckon that Gary Gensler would instantly be fired right it would be replaced with someone that the Republican president would choose and uh I I you know from what I've seen from the Republicans so far in the US they seem to be a lot friendlier towards crypto than the Democrats are at least from the you know higher positions of power there are definitely a lot of Democrats uh that are friendly to crypto but they are not

in those huge positions of power that people like Gary Gensler and Jeanette Yellen and and Elizabeth Warren are and that's just the unfortunate uh kind of um position that we find ourselves in or that the U.S uh finds itself in right now but even if Democrats were to win again next year even if there wasn't a kind of regime change uh I do think it's still going to get better over time it's just going to be a slow-moving Beast uh here but anyway you can check out coinbase's full blog post for details on this I'll link it in the YouTube description below all right so I'm going to talk a little bit about staking again today I know it's something I never talk about right eat staking who would have guessed Anthony sassano talking about he's taking again well I'm going to talk about it again because superfizz put out

an interesting tweet today about staking particularly rockable so he said you can say what you want about rockapool but I'll Stand uh on a few truths and there's three truths here rockapool brings more decentralized nodes to ethereum than any other service rocker pull empowers individuals by allowing staking with less than 32 each and rockapool has organized a community committed to decentralization now I want to break down each of these points and not only focus on rocker pool but focus on the staking ecosystem more broadly here so his first point that rocker pool brings more decentralized nodes to ethereum than any other service this is definitely True by now right now by far I mean every time a new mini pool operator uh joins they're spinning up a a a kind of like full node right

spinning up a census layer client an execution layer client along with a mini pool which is a which is a validator and they are adding to the decentralization of ethereum now this is not true for other providers such as let's take Lido for example they have 30 or so node operators and these node operators may or may not be running one or sorry more than one execution uh sorry one-on-one ethereum full node some of them probably running multiple for redundancy but when you think about it look at the rocket pool node operators yeah there's over 2500 note operators there's 30 uh lighter operators so let's say each lighter operator is running 10 full nodes for whatever reason right they're all independently running 10 full nodes which is kind of not needed but like and

it would be kind of silly I don't think any of them are doing this but let's for the sake of arguments say that right so you you dirty node operators are doing 30 right uh sorry running um 10 full nodes would equal 300 full nodes across those 30 node operators okay that's nowhere close to the 2500 nerd operators that rockable has where each one of them is uh you know almost certainly running there are at least one full node here and some of them are running definitely more than one I mean I'm a rocketball not operator and I'm running like four full nodes on on my network right now as you guys know so from that perspective rocker pool by far out of anything except maybe solo staking uh brings more full nodes to the ethereum network than any other sticking service at least right now obviously there are other

services spinning up and going to come to Market that may or may not uh beat rockable's nerd operator sets but all in all as long as it's it's it's um adding more full notes to the network and is a decentralized operator I don't think it even matters who it is I think what matters is bringing more of those four nodes to the network now supervisor's second point is that rocketpool empowers individuals by allowing staking with less than 32 each so there is a key difference here between staking with less than 32 each on a uh on a centralized exchange or staking with lighter or something like that when you're doing that you're not actually running the validators yourself you're literally I mean not not literally because it doesn't actually happen like this but you are a full

intents and purposes delegating your state delegating your eat to someone else to run the validator for you now this can be done in rocket pool as well right you can buy re if you don't need to spin up a mini pool um and with but with Lido you buy steth and that's all you can or you deposit stf into them sorry deposit eth and mint steth but that's all you can do you can't actually join as a not open node operator you can't actually run a Lido operate at least right now maybe in the future you can but you can't become a lighter operator in a permissionless fashion right now whereas The Rocker pool you can anyone can become a nerd operator you don't need permission from anyone and it's actually very very easy to do and there are multiple ways to do it there's lots of documentation there

is a Discord to get you get you started with it and help you with it so so um when you have less than 30 tweet you can stick with rocket pool and spin off a mini pool for eight eighth with a 2.4 eighth Bond uh worth of RPL tokens um and and that means you're actually running the software and you are an actual nerd operator rather than just buying the LSD which is totally fine there's nothing wrong with that but uh the whole point here is that you're able to actually run a staking setup a proper staking setup without having to have 32 which I think is incredibly powerful and uh incredibly awesome and as I said rocker poison the only one a server is going to be doing this but they are right now the the biggest right and the one that's obviously the most well known

now the third Point supervised talks about is rockapol has organized the community committed to decentralization now I think this is the strength of rockapol over its competitors there is no other community maybe besides the ethereum community that cares about decentralization as much as the rocketpool community does at least that's my take I'm not going to say that as an objective truth but that's from what I've seen happening across the ecosystem every time I look at the rocketbook community every time I talk to them I really gel with them and I really feel like they care about decentralization now of course if you were to draw the Venn diagram of rocketpool uh the rockable community and the ethereum community it will probably be a circle because they're pretty much the same people but that alone is

incredibly valuable and and an incredible mode for rockapool because it means it has a committed Community not just to decentralization but also to The Rocker pull protocol itself now again this doesn't mean that other projects and other protocols uh can't get their own communities and can't get their own communities that are like rockapool but this is the hardest thing to build right it's all well and good to build a staking service and you can either Fork the contracts of rockapaw or you can build your own that's the easy part building a lasting community of missionaries who actually care about what you're building Beyond speculative gains from a pure kind of like mission-driven perspective that is incredibly difficult and it applies to every project in crypto not just decentralized taking providers or any

kind of staking provider that it applies to every single project and is really at the heart of my ball case for ethereum generally is that ethereum has been able to actually attract that Community whereas a lot of other pretty much all other layer ones have not been able to do that at this uh to this point right now so yeah hopefully that that kind of gives some more context around how I think about supervisor's tweet there and I also just wanted to quickly showcase the raider.network website again this the website is something that I use uh as kind of like a Bible um right now to watch the differences in percentage of uh kind of like Network penetration here as I said watching it day-to-day is kind of useless even week to week it doesn't isn't really going to give you much signal because it won't

change very much on on that front but when you look at things like uh the share of the network of Provider of different providers over the long term it can give you a nice picture here now what I want to what I want to kind of look at here is is Kraken so kraken's Network penetration I've spoken about this before was at 7.1 percent before they started unwinding all the validators that they were forced to by the SEC now an important Point here is that the SEC only required Kraken to unwind validators that belong to us-based retail investors I am 99 certain I may be wrong on this one but I'm pretty certain that this didn't apply to us-based institutional or accredited investors and it does not

apply uh to people outside of the us that are sticking with Kraken so this for Now kraken has gone from 7.1 to 4.46 percent uh that is less than half of the kraken's valid uh validated share that they've gone down here and when I look at this I'm like okay uh it hasn't actually changed in a few days so is Kraken done unwinding their validators I don't actually know if they are but if they are done it means that more than half of the stake that was that was taken with Kraken did not belong to us retail investors so that actually gives you an idea of what it looks like on other centralized exchanges as well you can assume that binance and coinbase you know chromat says 13 market share buying it to 5.1 percent you can assume it's a similar makeup there where their clients

are kind of very heavily skewed towards the uh kind of like whales and accredited investors which honestly if you were to look at how it plays out with the on-chain stacking Services isn't a surprise here so I think that's a pretty clear signal of what the staking makeup looks like and what it probably will continue to look like but I'm going to keep uh tabs on this on cracking especially and to see kind of how that number changes there and that number can obviously also change uh with the other providers gaining or losing market share but you would expect Kraken to go a lot a lot lower and a lot quicker uh if that was still unwinding validators that belong to us-based uh retail investors which I don't think is the case anymore but anyway you can monitor that for yourself if you want but I'll keep checking on it time to

time and let you guys know what I think of it all right so I spoke a lot yesterday about ethereum's credible neutrality and sensitive resistance and why if you wanted to kill ethereum you would attack that part of it uh and it was in contact the context was around redirecting the 1559 burned East to funding Public Schools or something like that now David Hoffman had a tweet which he dm'd me about and he said hey like I thought of this when I was listening to the refill yesterday you talking about the credible neutrality and all that sort of stuff so he started off this tweet by saying open Money systems are public goods the unit of account of money is a public utility when erp1559 Burns eth it's growing the value of a very widely distributed

public good efe eip1559 is a public goods mechanism so I didn't touch on this yesterday and this is actually a pretty important and critical topic but I I don't think I touched on it yesterday because I didn't think it was relevant to what I was trying to say yesterday but it definitely is relevant to uh what what David is saying here and relevant to the overall discussion so essentially what David is getting at here is that by bestowing monetary and store value properties upon eth from that that it inherits from its censorship resistance from its decentralization from its um its credible neutrality essentially what we do is we just redirect how to find public goods so a pretty easy way of thinking about this is the value of eth

itself right value of the actual asset at the heart of ethereum if eath was worth eighty dollars right um as David States yeah how much money would have been donated to public goods versus if being worth four thousand dollars or he's being worth like almost two thousand dollars as it is today the difference is pretty staggering because I remember when eth was worth eighty dollars uh the Bitcoin grants rounds for for example we're a lot smaller there was way less money to to kind of go around there was way less people um that were able to donate because they didn't have much money and the wealth was just not there right so by increasing eighth's price whether it's because of the properties I just spoke about or because of other things

like each uses a staking asset or the you know the burn itself right whatever whatever way the East price increases it also increases the funding towards public goods so this is a credible new incredibly neutral way of doing this because all of everyone who wants to hold eth can hold if you can buy either from thousands of different places around the world and get your hands on it you can then stake that Ethan earn more eth for yourself right before you know the merge you could mine ether there was there were multiple different ways to acquire eth Now by by holding just holding eth you are a beneficiary of everything that I've just spoken about in terms of value accrual to eth uh and also that wealth effect uh means that that if eighth goes up you have

more money to to play around with now of course you you can decide what you want to use that money on but maybe you think well okay maybe I'll use a little bit to fund public goods because I didn't have this money before but now I do so we're basically using eth as a conduit for all of the kind of wealth creation that happened a lot of the wealth creation that happens in the ethereum ecosystem and then the people who are holding that eighth get to redirect it to whatever they want to and a lot of people within the ethereum ecosystem like to redirect redirect it to uh public goods now in saying that as well a a good way to think about this from a pure dollars perspective is the ethereum foundation so the ethereum foundation denominates an eth they own eth that's all they

really own unless they cash it out for for Fiat which they have done a bunch of times but cashing it out to Fiat relies on the eat price so if they were to cash out ten thousand each at a hundred dollars right that would net them uh sorry ten thousand eight that 100 would net them a million dollars right if I'm doing my math correctly uh ten thousand eight hundred dollars yes it would net them a million dollars now if they were to do that now with almost at two thousand dollars that would net them way more because eighth would it is um 20 times a the price right that would net them 20 million dollars so they now have 20 times more money to go towards public goods funding to go towards those um uh grants that they give out to go towards funding the ethereum core development

and research and and all that sorts of stuff so you can see how by acting as a conduit for the credible neutrality of the ethereum network the censorship resistance 1559 staking whatever else you know each uses a collateral and story value and all that good stuff we redirect the value to public goods without having to introduce that subjectivity layer or governance layer on top of ethereum that I spoke about yesterday why that's undesirable so hopefully that gives extra context there and I thank David for putting this tweet out and and sending it to me in DMS because it is a very important and critical point to understand if you want to know why people are so uh so against I guess like redirecting things to redirecting things like the burn to public goods and rather just having eat

act as the conduit in order to redirect the funds uh Downstream from from there so yeah hopefully that's uh that gives you extra context there moving on to the next update which is a project that I actually see announced themselves today or kind of exit stealth today called Nocturne so Nocturne is a new primitive for the ethereum ecosystem uh and which they're calling private accounts so using account abstraction and zero knowledge proofs we've built a private account layer that lets users send receive and transact with their funds all without exposing their address and you can check out the docs about on how it works and you can also check out this um this graphic here in the Tweet thread guys I'm going to be honest when I saw this I was like holy this is really exciting because you guys know that the

two things that I care most about within the ethereum ecosystem or seeing or or care most about seeing flourish is scaling and privacy and a lot of the time they go hand in hand but the and this is awesome because it not only is using account abstraction it is also using zero knowledge proof Primitives to create this private accounts primitive that I think is going to if it works as advertised of course shake things up up dramatically because imagine being able to transact on ethereum whether that be layer 1 or layer 2 in a fully private manner with a private account where you don't have to reveal anything I would love that I hate having to recycle addresses and hope that I haven't co-mingled addresses and keep track of all these different addresses just to preserve my privacy and I I want to see more privacy tools go go live obviously

Toyota cache is still live and working if you're a non-us citizen you can probably use it and and it'll be fine but that's not legal advice by the way um I'm just going off what the um the sanctions stipulate um Aztec is obviously also building their Layer Two uh their fully private Layer Two uh now and there are a few other teams working on this stuff as well but Nocturne is building this private account primitive using account obstruction so you get all the benefits of that and also using zero knowledge proofs now I'm not sure what the costs were would be associated with this on layer one it feels like it would be quite expensive to do this because not only are you creating a smart contract account I'm using account abstraction which is already costly using zero knowledge proofs which is pretty costly

um and then and then anything else behind the scenes yeah I can imagine the cost ramping up here so this is a perfect candidate for Layer Two of course now the test net is coming soon with mainnet in the following months they're currently or they being Nocturne are currently looking to collaborate with apps in institutions interested in leveraging composable privacy as new primitive so you can DM them on that and you can also join the Discord Channel and read the uh worth um read the uh the whole blog post here for you to check out I'll link this in the YouTube description below uh but yeah very very excited to see another privacy project on ethereum especially one that has such a broad scope as Nocturne does here all right so speaking of privacy the

privacy and scaling Explorations team at the ethereum foundation has introduced something called zkml by uh Kathy here so Ezekiel ml is a platform uniting Ai and machine learning and web3 to offer a privacy preserving solution using zero knowledge proofs so you can explore exactly what this is here this may be something that will be worth reading either before or after the uh Nocturne blog post to learn more about how uh to learn more about uh privacy and with zero knowledge proofs in general but that's why I basically highlighting this because I think it just goes hand in hand very well with Nocturne so yeah I'll just link the blog post in the YouTube description below for you to check out uh and then and then yeah you can uh kind of um check that out for yourself there uh I think I did shout

this out yesterday or the day before uh eigenlayers form that you can sign up to in order to indicate your early interest for uh for restaking so they only launched this form yeah one day ago and they've received almost 9 000 submissions so far uh with indicators of interest from individuals and institutions ranging from 0.1 East to 30 000 eighth that's pretty promising so far pretty awesome to see so just another shout out here that you can fill out the form for yourself which will be linked in the YouTube description below um uh yeah if you're interested in restaking early with eigen layout there all right so an update here or a thread here from Xerox beans who talks about ERC ERC not eip6551 uh where they say it's probably

one of the most interesting application Level erp's IMO it allows nfts to own an ethereum account essentially your nft is the access key to a wallet a lot of interesting properties arise such as tradable accounts this is pretty cool uh I don't know much about this like I'm still learning about this I'm still kind of rubbing my head around that but there is a thread here as I said from Xerox beans and there's also a graphic here that you can check out about how this works but it gives an example here where he says rather than owning a wallet imagine azuki number 4282 owns the wall and all assets associated with it not only can you start trading full accounts and have rfv backing the nft you could start to have full on-chain identities represented as NF as nfts uh this is pretty cool uh I think as I said this is

an ERC so it doesn't require a protocol level change it just requires people on um to use this ERC and to adopt it on the Chain but I think this is something that can be quite promising especially because nfts obviously are quite popular as I've spoke about the other day people tie their identity to it they get very excited about those and being able to trade your accounts without the person that uh has traded it away still retaining access to it is a pretty big deal because traditionally you can't really trade accounts because you have no guarantee that the person has destroyed the private key or the seed phrase that would be uh be able to recreate that account so it really is a non-starter you can't just say oh I'm gonna I'm gonna sell you my account here um uh you know once you buy it it's

yours no that's not how it works because you could just easily keep the private key to yourself keep access to the wallet yourself and the other person has no guarantee or no way to verify that you've that you've destroyed a private care receipt phrase even if you say you have right so that that is very interesting there but anyway I'll link this straight in the YouTube description below for you to check out but just something that I figured was uh was was interesting and and worth checking out there all right so Robbie Ferguson from the immutable team has announced that they've just launched the the beta of immutable passports and I've spoken about immutable passport before um they're calling it a completely self-custodial email based onboarding uh with shared liquidity across all games you can try it at hub.amutable.com so it's basically an all-in-one solution

for allowing people to create accounts and and have accounts with the immutable ecosystem uh without the fragmentation that comes uh with kind of a changing between games and things like that so essentially you can think about it like maybe a little bit like a an epic game store or a steam where you sign in with your steam account or you sign in with your epic games account you have access to this library of games you have access to social features and other things on Steam like mods and stuff like that uh that's what the immutable passport is trying to be uh and obviously it's very important for it to be composable across the ecosystems because of the assets that you have within these games and you want to be able to access uh The Wider ethereum ecosystem as well so yeah as I said you

can try it yourself at hub.mutable.com it is currently in beta so just keep that in mind as well all right finally here there is a app called yup yep that's right it's actually called yup y-u-p um but this app introduced something today called cross posting which allows people to post to firecast Star lens and Twitter with one click and it's now live in yup mobile so I believe uh yup is still in Early Access and you have to have it's only invite only right now and I don't think I have I mean I have access to it but I don't think I have any invites to to give out there and also I don't have any fire Caster invites left unfortunately I was given another 20 last time I asked and that was really it so I have none left so um

uh unfortunately for those of you who are left hanging I apologize for that uh but hopefully I get more invites at some point in the future and I'll definitely keep you guys in in mind and let you guys know so I can send through more invites there but anyway if you are on firecast Star and lens and Twitter and you have access to Yap well now you can do cross-posting which I think is pretty cool because the main main issue I think people have is uh is kind of like deciding where to post they say okay should I post this on Twitter should I post this on fire Castle should I post this on lens or when really a lot of them probably think I wish I could just post this everywhere at once uh which I think is a pretty cool feature so definitely go check this out if you've

got access to yup but I think on that note that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone