EIP-1559 recap, Huobi supports Arbitrum and more - The Daily Gwei Refuel #282 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily great refuel where recap the latest news in the ethereum ecosystem i'm your host anthony sosano and today's the 29th of december 2021 all right everyone let's get into it so another day of uh i guess like not that many updates there was a couple of big ones that i wanted to go through but i also will be at the ends here on my fourth uh fifth tab but i'll be going over uh today's topic basically i think for the refill the next few days just gonna be one or two topics that i'm gonna be talking more deeply about uh rather than project updates but before i do that i want to get started with this update from dan crad who actually i believe works at the ethereum foundation as a researcher he today has shared a new sharding design

so you know we all know that charting is on the ethereum roadmap it's coming with data sharing first and then maybe we'll get execution sharding but the whole point of data sharding is to enhance roll-ups right give ralph's more capacity make them more scalable all that good stuff there so dan crowd today has proposed a new sharding design this isn't part of like the canonical spec or anything like that right now it's just a proposed new sharding design where instead of had it having independent proposals for each shard all shard blocks in one slot i propose together with the beacon block this leads to a major simplification of the sharing design now he describes this in uh this blog post here but also in his twitter thread it does get a little bit technical if you don't understand how sharding works already and how the

beacon chain works already then you probably won't understand how you know his new design here so i suggest reading up on that but what i wanted to kind of like just talk about when it comes to sharding and the sharding design the research around data sharing is pretty much done but right now the what the research like done in in in the sense that we could kind of like develop it right now we could put it into clients and we could have it go live and it would work but would it work the you know the the best way it can no it never does right software is always improving um and there are definitely complexities to it charting uh within the um crypto blockchain space is is very different to sharing within like a centralized database obviously because you have to account for uh all different types of

things like security risks and stuff like that um so that's why the sharding kind of uh i guess paradigm is always evolving now we may get data shining in 2023 uh in kind of like one design and then the design may change later on or it might be upgraded i mean i'm pretty sure it'll be upgraded i don't think that we're gonna get like the perfect thing uh from the get-go and but the thing is ethereum's such a large network that it becomes harder and harder to change it over time so i think what the researchers want to do is get it to a point where it's as near not perfect but it's nearer as to what you know what is ideal as possible before putting it into the network because once it's actually live it becomes a lot harder to change on a live network as we've seen

you know we're in the ethereum ecosystem for for years now so if you want to learn more about this it'll be linked in the youtube description below um but i think this is great i think that we really shouldn't just like settle just because we figured it out right right when we said oh okay well we've done a shouting designer we have a spec for it the research is done that's all well and good let's just you know move on to the next thing i don't think that's the right way to go about things and that's not the ethereum way definitely the ethereum way is to keep iterating on things keep improving on things and trying to get to the best possible design that we can without you know getting to perfection because nothing in software is perfect anyone who tells you that a piece of software

is perfect is lying to you there is always improvements to be made um and perfect really is the enemy of good when it comes to software because if you're trying to aim for perfection you never ship anything at the end of the day so i think that um that's actually a hard lesson that the ethereum system learned over the last few years is that i think with proof-of-stake they always tried to kind of um get it to a point where it was like quote-unquote perfect um and then they kind of like came to the conclusion that well okay like we can improve this thing over time but we need to just ship something and they did i mean they shipped a really really awesome design mind you but it is going to be improved over time it's going to be tweaked there's going to be things that uh that

are going to change with that and that's totally fine that's exactly how ethereum works uh and that's exactly how a lot of software works obviously within ethereum it's different because it's decentralized you need community buying on things but a lot of this stuff is technical stuff and doesn't really you know it shouldn't be controversial and stuff like that so so yeah really really cool to see this new uh sharding design from dan crad as i said this isn't kind of like uh guaranteed to go in as part of the canonical spec this isn't you know the the design that we're going to be going with that will be decided probably next year uh in terms of like what design we're actually going to go with what clients client teams will actually build but yeah for now it's just an idea that dan crowd is put

together so definitely go check this out so hobby um the massive centralized exchange announced arbitrary one based deposits and withdrawals for eth are now available on their exchange awesome you know i was just ranting about this i think yesterday or or the day before about how the centralized exchanges are dragging their feet here it's great to see hobby finally uh step up to the plate and do this they're not a small exchange hobby is quite large um they're obviously not as large as a finance or a coinbase but it's still good to see more and more signaling from these centralized exchanges and more and more integrations here so if you use hobby or if you want to go set up an account and use them as a fiat on-ramp to arbitrary one you can now do so so super exciting to see that i guess um another big win

for arbitrary here uh you know on the topic of l2s i think it's funny because everyone right now is pushing for like l2 2022 right like i even made a a little bit of a joke about it on twitter the other day and i think the problem with that is that i i don't know if there's been like a defined set of what is l2 2022 like what do people actually expect to happen does it mean that l2s are going to explode in usage everyone's going to be able to uh to basically use them and it's gonna be super cheap and it's gonna be awesome and we're all gonna be enjoying like cheap fees and we're never gonna run into scalability issues again i don't think so i actually think some of these l2s will hit their limits uh given enough usage and people will realize

that okay well yes the l2s are awesome but they're not like infinitely uh scalable right there are still a lot of improvements that need to come there's still a lot of things that need to be done there so for me l2 2022 if i had to pick like a theme or at least an overall narrative that's going to push l2s forward in 2022 it's going to be their tokens now you may think i think you may think poorly of that you may think that i i should be looking at metrics like you know active users on these things and tbl and fees paid and stuff like that but i think that when you're talking about narratives and what people actually look at in term for for a project success it's really got to do with the token because these alt-l ones the tokens going up in value is what brings a lot

of the attention and what brings a lot of the narratives that kind of like push these things forward because as i've mentioned before a lot of them have less usage than uh uh you know then they would have you believe through their narratives on twitter like if you if you look on twitter people will have you believe that that these alt l1 have way more usage than ethereum l1 which they don't so uh but the only the reason why those narratives are so powerful and they spread so fast is because there's a token involved people are incentivized to shield the things and i think that the l2 space really needs to wake up to this and really needs to do their tokens asap because without a token they're going to struggle and as i talked about yesterday so i really do think that in terms of like an overall theme to

matched l2 2022 it's going to be the tokens it's not going to be actual usage it's not going to be the tech it's not going to be anything else i think if you were to look at one success metric it's going to be the tokens and how well they perform how well they do liquidity mining programs how many users they get because of that because you know the funny thing is is that there are plenty of people who who hold tokens of the alt-l1 for example and i guarantee you many of them haven't actually used the ltl1 they haven't even used ethereum they just kind of like know the narratives know the kind of stories of okay ethereum has high fees these old l1s claim to you know have i have lower fees uh so i'm gonna buy these tokens i'm gonna ride this narrative up and

they you know they rarely use the actual the actual network um and i think the same thing is going to happen with the l2s like it's not going to be anything different here but at least with the l2s we're going to be able to get a lot of people who are using ethereum today a lot of people who are on chain today to experience a cheaper version of ethereum while still inheriting the um you know security and decentralization there so that's what i'm going to be looking for as i said i expect all the l2s um that are kind of like here today to do a token within the next three to six months uh i expect like pretty much any of the new ones that pop online whether they be forks or kind of like new initiatives they're going to have tokens from the get-go because otherwise they

won't be able to compete and i think that the l2 teams are waking up to this and that doesn't matter how good your tech is or how cool it is how well it works if there's no incentive for people to kind of onboard onto it if there's no marketing if there's no business development then you're going to be left in the dust even if it's objectively better technology and objectively better experience build it and they will come as a meme i don't think you can just build something and then just sit there on your you know on your hands sitting on your hands and being like oh you know i built this awesome thing everyone's going to come use it that's just not how it works and that's not how it works for anything not just um you know crypto products it's literally anything if no

one knows about it then no one's going to use it so i think that the marketing and business development um of these l2s needs to ramp up and the fastest way to ramp that up is just to issue a token and you know the funny thing is it doesn't even make sense if the uh sorry it doesn't even matter if the if if the token doesn't make sense you can make it make sense later the token really at the end of the day i think the the token's most powerful thing is regardless of the fundamental value drivers regardless of its actual utility it's most powerful uh thing is it is being a shelling point for people to kind of like uh rally around and to kind of have skin in the game for them to you know go and be your marketing and bd departments essentially so so yeah

anyway a little bit off track there but great to see hobby uh be supporting arbitrary deposits and withdrawals here next up is just the teaser video from argent teasing their l2 wallet uh with the integration with zk sync so you can invest in yeons lido curve vault which used to be five transactions with just one now using argent i think arjun and paulie now has actually been saying uh uh this a lot lately i think argent is is a sleeper because what arjun does is it not only does it support these l2s and have like a nice interface uh to to kind of interact with these things but they simplify the experience down to as i said one click here from five clicks because this is what um web 2 does really well they've kind of simplified

the user experience down so much that anything you need to access as part of your everyday use of an app is literally one to two clicks away anything more than two three clicks it's too much for people like if you if you'll notice when you go and do online shopping for example on amazon or ebay you know it's one to two clicks to buy something it doesn't they don't make you go through all these hoops just to buy something like 10 different hoops just to buy because they know that the more clicks there are the higher chance that people will kind of like click off or not actually buy the product or get annoyed and you know and leave the same is true for crypto there's no way in hell we're going to onboard the world to ethereum layer one where not only do they have to pay the gas fees the

transactions are slow be you know obviously not as slow as bitcoins 10 minute blocks but they're still slow you know 15 30 sorry 13 second blocks or or whatever um you have multiple clicks for like approving tokens to trade and stuff like that like all that sort of stuff i'm sorry but like that's not how we're gonna get mass adoption we're not going to it's not even going to not even massage i'm not getting any adoption like that like and this isn't something that the all-tel ones have solved either this isn't something that anyone has solved really i think arjun is the closest in terms of solving these um you know user experience complexity issues here but we have to get to what where web 2 is today one to two clicks to do anything and we have to do it safely because when it comes to web 2 i

mean there is obviously safety stuff that needs to be done there for variety different reasons but a lot of the time it doesn't involve money like on social media it doesn't involve money and you know if it's if it's one to two clicks and you're giving up some a little bit of security that's okay but with crypto you need to take into account security all the time because if you don't people stand to lose real money so i think that doing it safely while still providing a really really great ux for people should be the goal and that's exactly what arjun's doing so i'm super excited to see them continuing to roll out these integrations because i think that they're going to be at the forefront next year they're actually going to be a big winner i think in 2022 as as the l2's ramp up especially as the tokens

ramp up like if zk synced to a token i mean when zika synced or token they've already announced they're doing one uh and you know arjun has the integration with them uh it's gonna be really easy for people to kind of like farm the zk sync token if there is liquidity mining incentives on there using argent so i think arjun's going to be a great beneficiary here and you know they're going to be supporting stark net arbitrary optimism polygon all that sort of stuff as well and they could actually capture a large part of the market by doing that and they're marketing and bd games on point two so they've got that down pat as well so i'm excited to see how how they go next year especially so an update here at gnosis guild they've released something called the zodiac bridge module which allows dows

to now have cross-chain control by equipping this module a dow on one chain can control the assets and interact with systems like a nurse's safe on an entirely different evm chain so this is basically cross chain dowels cross l2 dowels this is really cool because what the way it kind of like happens now is that all the governance for these um apps that kind of deploy to other chains is done on ethereum right it's like their home base and you can't really do any sort of governance on other on on l2s or other chains you have to come back to home base to do that now of course that kind of like is exclusionary like the people that can't afford the gas fees on ethereum aren't i'm going to be able to participate in governance and on top of that in the future the fees

are just going to keep going up so it's going to even it's going to kind of like centralize governance just through the the fee cost so allowing people to do kind of like governance things allowing people to be part of dows on the l2s on other chains uh is is obviously hugely beneficial for people so really cool to see this from the gnosis guild here definitely go check it out um i'll link this in the youtube description i think there's uh there's a bit more information about it here on their github uh but yeah really really cool to see this uh this this module be released here all right so this is today's topic that i'm going to talk about for i guess the next 15 minutes so there was a token today that was released called the gas dow token which basically gave you a

token called gas depending on how much uh how much money you spent on fees i think the air drop was kind of bulk or maybe i didn't read it pretty that closely they said i spent a lot less on fees than what i've done what i've spent and i was like i'm pretty sure i spent much more than that on fees but yeah you can go to um i don't have the link handy but you can go to the gastow website and claim the token and then you know sell it or liquidity provided on on uni swap or whatever um but that's not what i wanted to talk about on this topic here what i wanted to talk about is the eth burning eip1559 the ethbone leader board i wrote about this in the newsletter today as well but essentially as you can see here

when i took this screenshot over the last hour the gas dao contract that was actually the top burner of ethan had burned almost 200 eighth within an hour from people just claiming their token you know sending it um you know transferring it all that good stuff there uh trading it on unisop and things like that that's why unisop's number two um but yeah if you've been to the ultrasound.money website you'll have seen this leaderboard before i have talked about it a lot on on the refill i believe i used to have it sitting next to me on my ipad but as i don't have internet at this house yet i can't have it running just yet um i you know going off my hotspot and take up too much data but uh what i wanted to talk about was basically where we are today in terms of

like eip1559 what the burn has done for ethereum in terms of like fundamentally and narrative wise what it's going to look like leading into 2022 with the merge and basically what the leaderboard can actually tell us about the ethereum network itself so let's start with a recap one five five nine went live while august fifth sixth uh this year obviously less than five months ago we've burned one point three million eighth so far which is about five billion dollars unless the eth price is crashing as i'm making this video it's about five billion dollars last time i kind of worked it out i think i worked it out at 3800 per eighth there that's a lot of ether five billion dollars of potential cell pressure just gone that deleted like it's not locked or anything it's gone forever

that's that ate is not coming back we've had deflationary days we've had deflationary hours we haven't had deflationary weeks i believe or maybe we've had one deflationary week during like the height of the uh nft mania maybe i think the net reduction is at about 70 percent so we've basically yeah or or 67 70 so we've effectively had more than a hardening with one five five nine which is pretty cool uh and i've talked about it i've talked about all that stuff before of course um but but you know in terms of kind of like its impact on the eighth price obviously the eighth price hasn't really done much over the last few months i i i've said before that i think that one five five nine's impact is more of a long term thing in terms of just constantly taking eighth supply off of the active active market and then

over time it would generally lead to an eighth price rise uh just you know just as time goes on there but the other side to it rather than the kind of like fundamental side is the narrative side of it now we all remember that tweet from from suzu who criticized the ethereum community for abandoning its users and only caring about how much eath was being burned i talked about that on the refuel few weeks ago i'm not going to rehash that here but in terms of the narrative i think one five five nine has been quite polarizing um more polarizing than i thought it would be obviously it's really positive for ethereans we all really love it and for those of us who understand it and understand why it's necessary um we you know we don't have this issue of thinking of it as something that is

controversial now the reason why it's controversial is because of that that suzu toyo people kind of like think that some people at least from what i've seen think that the ethereum ecosystem has over optimized for accruing value to eth and under-optimized on actually making the platform usable for everyday users i obviously think that is false because we're working harder on scaling than we ever have before but the narrative remain remains and as i've said before you can't win a narrative war based on kind of like words alone you know you have to win that war by building so essentially what we have to do to uh get rid of this shitty narrative is basically get these l2s adopted and as i mentioned before they need to have tokens i i've said this so many times but as soon as these l2 zf tokens the

narrative will shift completely but it's been kind of funny to see that play out because i didn't expect that at all i didn't think to myself before 1559 went live that people would kind of look at this and be like oh well you know ethereum's over optimized for pumping eth and now they don't really care about end users they don't care about usability of the chain that's obviously false but it's a narrative that has persisted and i i always find it interesting how many of these narratives people can come up with and how many stories they can tell obviously there are some people kind of like spreading that to essentially pump their other bags on their old towel one bag so that's been a big thing over the last few months another thing that i didn't really see coming when you know though in hindsight it was

obvious due to ethereum's high fees that these other l1 would kind of play on that and also uh do liquidity mining because that playbook is just so well refined at this point like it just works wonders obviously because like who doesn't like free money right um so i underestimated a lot of that but in terms of that that narrative around ethereum's only caring about pumping eight i think it's like completely wrong like any time i mentioned how much eat was being burned i was just celebrating it because for me i mean i've been waiting for one 559 for so long since like early 2019 so long through the bear market it was a huge accomplishment for the ethereum ecosystem to get these done and it wasn't just about uh uh burning eighth it it has actually helped the network in

in being uh you know a better fee market where transactions are more reliable the fees are flattened out it's actually led to a six to seven percent reduction net reduction overall in fees even though it wasn't you know meant to reduce fees at all so that's been really cool it's introduced uh you know a few other things like uh allowing um sorry sorry uh forcing people to actually pay the ethereum network instead of going around it for transactions so for example you know with mav people can go directly to miners to get their transactions included pre one five five nine they didn't have to pay each fees they could have paid fees in anything and there was a zero way fee paid to um the ethereum blockchain because the miners just just took money out of band and put the transactions in now they can't do that

they can take money out of band but they still have to pay that base fee in east to the network which is then burned so that's a huge benefit and to me that is not actually about pumping eath that is about preserving the economic utility of eth and ensuring that the network stability and health can keep you know keep chugging along because when i look at people saying you know you know they're saying oh you only want to pump eighth look to be honest i want each to go up for many different reasons not just because i hold it but eat going up directly translates to ethereum's security and decentralization the higher the eighth price the more economic security has especially under a proof-of-stake system ethereum or eighth at four thousand dollars versus ether forty thousand dollars it's not a ten

times increase in security it's it because that's just not how it works but it is a very very big difference like it costs much much more to attack the ethereum network under proof of stake at forty thousand dollars than it does at four thousand dollars so from that point of view um i care about the eighth price uh because i want the network to be more secure i want the network to to be able to resist nation states that's what we're building this stuff for and even under proof of work it's the same thing like the higher the uh the market cap the more miners come online and because they're mining a valuable eight the more profitable it becomes if it keeps going up in value and then one five five nine just basically recaptures all the value that was leaking out to miners who would just sell it right that

would it's always funny like mine miners are for sellers uh uh but but by selling they're basically suppressing the eighth price which uh essentially is is bad for them as well obviously because they're mining eighth and they wanna they wanna make a profit there too but they're for sellers so from that point of view um these this kind of like bad narrative that's being spread around is just silly i don't think there's any merit to it i don't think people are actually thinking too deeply about it it's just something people like to hop on about to you know pump their other investments or pump another narrative up or whatever anything like that so that's that's the other thing when it comes to one five five nine um in terms of like looking forward to 2022 and how the merge is going to come into this i mean you guys all know the merge

is going to lead to an 80 to 90 issuance reduction instantly and then coupled with the burn it means a deflationary eighth i still don't think most people understand the implications of that at all really like at all um and i've mentioned that plenty of times in the past but what i think people don't understand the implications of is just how powerful that narrative is going to be not just on the merge front but also one five five nine because when you're a traditional kind of like finance investor when you're like uh someone that's just coming into crypto from that that ecosystem you're going to look at things like price to earnings and price to sales ratios to to judge things on now obviously eth as an asset cannot be judged on price of sales price to earnings yeah you know it's money it's a

story of value it has a lot more value in it than just kind of like it's it's revenue generated from the burn but the thing is is that investors are going to look at this and they're going to do a pe or ps or whatever on price to earnings price of sales on each they're going to see okay well the ethereum network is generating this many this much in fees at per day this much is actually getting burned which is like like an earnings because you're basically getting a pseudo dividend because as an eath holder as it gets burned that kind of gets redistributed to the rest of the holders because of the deflation um and from there then they're going to kind of look at okay well it's deflationary as well right uh this kind of like asset is becoming incredibly scarce uh and and this is kind of like

the current issuance of it and then people are going to compare it to bitcoin they're going to be like okay well bitcoin has this meme of being supply capped and it's only gets scarcer over time and then there's going to be a lot of kind of like comparisons between bitcoin and ethereum in terms of issuance because people are going to be like okay well it's net deflationary whereas bitcoin won't be deflationary uh for a very long time and i think that's going to be very very powerful i think that's what's actually going to lead to the flipping either leading up to the merge or after the merge it's going to be interesting to see i know there are some people who don't think the flipping is going to happen in 2022 but to me if it doesn't happen in 2022 like it doesn't i don't know it just kind of feels like

it has to like the merge is the biggest kind of like catalyst for each price i can think of you know as i've said before it's bigger than staking one five five nine anything else that's happened with with eth um but then we have like all these things coming together and then after the merge you know a few months after we have the withdrawals being enabled now a lot of people think that withdrawals being enabled is going to lead to a mass sell-off but that's not how it works there's only a limited amount of eight that can be withdrawn per day from the active validator set uh and and because and because of that kind of like withdrawal queue there's a limited amount that can be dumped on the market i just don't think a lot of people are going to just withdraw i mean i don't plan to other

people i know don't plan to just because we're up a lot on our eight doesn't really mean anything they may withdraw their rewards for example like that they've earned but not their actual stake because if you withdraw your actual stake you're no longer a validator and you're not earning rewards anymore and then what you're going to go i mean some people will obviously people go take profits because they're up massively and all that sort of stuff there but um i think a lot of people will just sell off the rewards which isn't that much and the market can handle that so we might have some turbulence there i know we will have some turbulence there there'll be a lot of kind of like narratives being spread about that um bears trying to get like a better price on ethan all that sort of stuff there but i think the next couple

of years is going to be phenomenal for for eth um i know the price action since may has actually been pretty shitty right it's gone up and down like so much like a yo-yo and then leading into the end of the year now it's just kind of like really shitty price action but i am uh steadfast about q1 being really really big for the ethereum ecosystem for eighth january even i think is going to be a pretty good month i think right now from what i've noticed across the board i i would say like at least 50 of the people that are usually around are like just not online at all and that's just on the low end i'm sure it's much higher than that uh the markets are definitely obviously very very quiet there's lower liquidity um you know the people that are sticking around right now are just

kind of like opportunistic they're trying to to selling to low liquidity trying to cause dumps all that sort of stuff there i do think that uh january is going to basically completely reverse that and we're going to have like a really big a really really um fun time then but as as you guys know i don't have a crystal crystal ball or anything like that but i'm cautiously optimistic for 2022. i might do a kind of like reflections video on one of the refuels what is it today it's the 29th today 31st is new year's eve so oh okay tomorrow then because i won't be doing um a refuel on friday so yeah tomorrow i'm going to do a bit of reflections about about this year and about kind of like what's happened this year because i was thinking about it today 2021 has been

probably the weirdest year for crypto ever i would have to say just thinking back and thinking back through all the years um and the number one reason i think that is because it basically invalidated everyone's predictions like there were very few people who actually saw what was coming in 2021 and played it correctly but i'm going to cover that tomorrow on tomorrow's referral it's going to be like a little bit of a recap of the year i think that'll be interesting to go over but i think that's going to be it for today's episode so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give the video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone