ETH ETF updates, Pay on Warpcast and more - The Daily Gwei Refuel #789 - Ethereum Updates

Transcript

hello everyone welcome to another episode of delway reuel where C latest news in ethereum EOS system I'm your host anthy s say the 1st of July 2024 all right everyone let's get into it so today Begins the new Cadence of the daily way refuel episodes as you guys know I announced last week that I will only be doing episodes on Mondays Wednesdays and Fridays going forward so it's going to be like the semi daily guay or the every other daily guay right it's not going to be the daily gay for the foreseeable future as I said last week though I will proba at some point in the future bring it back every day um every weekday I should say sorry but for now it's going to be Monday Wednesdays and and Fridays but without further Ado let's jump into the news so a lot happened over the weekend

actually uh and a lot with regards to regulatory stuff uh and there's some really exciting stuff and some kind of stuff that I was thinking about over the weekend I was like I should be excited about this but I'm not and I'll get into that in a sec but first off I want to kick off with some e ETF news so nothing groundbreaking here just more news around timelines of when these ETFs are actually going to start trading so Nate jassi here basically said we got some additional detail on the approval timeline issuers have been asked to submit s-1 amendments by July 8th there would still be one more round of filings after that before ETFs can start trading so it seems like the ETFs will probably not be going live uh early in early July as I originally predicted certainly not

on July 8th here at least it seems like unless something changes unless they want to I guess uh I guess uh what's the word I'm looking for Speed track these things or speed up these things uh and I think that that's probably a low probab probability of happening because of the fact that they've just been dragging their feet on this for quite a while now but I've seen some people say that maybe it happens in kind of late July as I've said to you guys before I don't think it really matters I actually would prefer Late July because I think that the later it happens the better because of the fact that the market is just generally in a slump right now like it' probably be more bullish if the E atfs launched when the Market was hot again and E price was like over 4K and people were

beginning to really fomo back in like that would be a more bullish period of time to launch the E ETFs into but as I've said plenty of times in the past I don't think it really matters over the long term the ETFs generally are a long-term passive vehicle it's not going to be something that is going to do or die based on the first few weeks of trading or anything like that and the first few weeks of trading are probably going to be very volatile anyway because we don't know what those outflows look like from eth E and that's the big question you know the grayscale eth truck that's a big question right now what what those outflows are going to look like but in terms of inflows Nate actually had another tweet here where he said that the spot e ETFs will be second

the second most successful debut in ETF history only behind spot BTC ETFs which is a pretty big call because obviously the spot BC atfs were was the biggest uh ATF debut in history and for eth to be the second most successful debut or the second biggest um in and for him to say this in the face of so many people thinking that E's not going to get many flows it's going to be quite bearish for eth so on and so forth uh is a pretty good and pretty bullish signal and for those of you who don't know Nate is involved in the entire ETF ecosystem he was one of the only ETF pundits calling for the ET ETF to be approved using the same logic that I was using for months so I really like his takes on on things and I really like following his tweets

here um but there is an episode that bankless actually did with Matt from bitwise and Alex I believe from Galaxy all about this and I think it's probably still available for Early Access I mean they had in their Early Access for subscribers but I think it's actually probably available for everyone to listen to right now uh and that's a really bullish episode because it basically breaks down what the inflows to the E ETFs are probably going to look like and I mean the tldr is that they're going to look like uh market cap weighted so essentially you can expect 30% of BTC inflows uh in in eth so if BTC got 10 billion inflows within like the first month or something you can expect $3 billion for each sort of thing so essentially market cap weighted here

which is pretty obvious that it's going to look like that and uh Matt and Alex give their reasoning as to why it's going to look like that so I highly recommend listening to the episode but I don't see the flows being bearish like even if for the first few weeks the net flows are essentially zero because you have a lot of flows coming in but you also have things passing out because of e e selling off and people just redeeming that because maybe the fee is still too high and so on and so forth but I think that if you look at a few months out from here these ETFs are going to bring eth to alltime high and Beyond I really don't have any doubt in my mind about that especially as we enter Q3 and Q4 where I believe that oh me we're already in Q3 right July August

and September are Q3 October November December is Q4 um but especially as we kind of enter the later stages of Q3 into Q4 I do expect the market overall to be picking up and to be very hot and eth obviously is the only asset besides BTC that's going to have a live ETF trading so that's going to be interesting to see what the flows look like there but as I said definitely go recom recommend listening to that episode on Bank list with Matt and Alex uh you can go find that on Bank List's YouTube channel uh it got me quite bullish I I usually uh don't listen to too many podcasts these days but I do try to make time for ones that I think are going to be unique and insightful and it definitely was so definitely uh go check that one out there now in terms

of my own speculation around what the flows are going to look like and the timing around the ETF launch at this point in time the the launch timing I think is mostly irrelevant it's going to happen in the next few weeks you know when the exact date is doesn't really matter in terms of flows I totally agree with the analysis of it's just going to be market cap weighted like if you think about how trfy or how people like to generally structure their Investments especially investments into things or allocations into things that they may not have deep knowledge of it's usually market cap weighted like if you're a crypto investor or sorry if you're an investor and you're thinking okay well I'm going to put 5% of my total total portfolio which is probably on the higher end but just for the sake of argument I'm going to put 5% of my total

portfolio into crypto ETF F okay what's available to me well Ethan BTC okay well how do I actually structure this like I don't know what Ethan BTC are like in depth I've heard of ethereum I've heard of Bitcoin but how do I actually structure the allocation here well market cap weighted 7030 as it stands today maybe that changes to 6040 in the future or 50-50 depending on the market cap changing when when the rebalancing happens there but that is the way that most investors look at this you just do a market cap weighted thing because it's the easiest way to do it and it's the safest way to do it you it requires very little thought to be put into it um for those passive investors which is what the ETFs are for that's you know that's a product made for people who just want

a low-risk conservative you know easily managed passive investment vehicle that they canow grow their wealth over time and they can chop and change where they want to put their allocations into uh but generally they're playing it rather safe here so yeah we're going to see what the inflows look like as a percentage of BTC is probably going to take a few months to get an accurate picture here but I do think that's going to be the case and as well there's going to be ETFs launched that are going to be baskets of just BTC and eth and they're going to be market cap waited there's no other way to wait it like unless you're some Bitcoin Maxi who for some reason launches a BTC e e ETF and then your allocation is like 100% BTC 0% eth it just doesn't make any sense like if

you're launching a product like that you're just going to do it as a market cap waiting because that's just the easiest path of lease resistance waiting to do it and then you're going to rebalance at some period of time depending on what the market Cap's look like at that period of time that's that's as simple as that so I fully expect that to happen fully expect that after a few months it's going to level out to a 30 to 70 split and we're going to see changes in that split as the market caps change so if eth goes up against BTC it could become a 60% BTC 40% e split there and then eventually maybe it's 50/50 I in an Ideal World I would like it to to to be 50/50 or at least I would like to see it be 50/50 but at the same time I would also like

it to see it be you know he heavy uh in eats favor like for example imagine if it becomes 7030 but in e e's favor you know 70% e 30% BTC uh that would be really cool to see but I really do think it's going to be a market cap weighted thing for these vehicles uh there all right moving on so unfortunately I think I mentioned this last week where I basically corrected myself and said that consensus beat the SEC with regards to the SEC going up to consensus uh in relation to ethereum 2.0 or eth uh becoming a security because it moved to proof of stake they withdrew that case against um uh or sorry they didn't withdraw the case against consensus they basically said they weren't going to pursue that uh case more um against consensus now there was

another separate thing that they filed that well was noticed towards consensus for and this was for uh a bunch of different things in particular it was for metamask as a wallet but also for the staking service that metamask has which actually uses Rocka poool and Lio in the background now in the lawsuit that the SEC lobbied at consensus over the weekend with regards to this they actually specifically called out um Rocka poool they called out Lio and it was really weird because the whole law suit made very little sense and I'm not going to go into detail about it but some of the really weird stuff was that apparently the S was making it out as if you got audits on your smart contracts that makes it uh so that you what you're doing is more likely to be a Securities offering which was bizarre logic and I

saw that I was like okay that makes no sense and they were also arguing that Rocka poool wasn't uh you know was a I don't know if they were saying it was a custodial staking service but they were essentially saying that staking through Rocka pool was like a security or some kind of secuity transaction or something like that they listed a bunch of tokens in there that metam allows people to swap using the metamask swaps feature and saying that those tokens are securities you know nothing new here from the SEC them just doing what they do best which is not really much they don't really do anything best but you know what they do best I guess is bullying if you can call it that but yeah that was a lawsuit lobbied at consensus over the weekend here now my tweet that I put out with relation to

this was that you know I thought I already hated the SEC as much as I possibly could but hey I found a little bit more hate for them when I saw the consensus lawsuit uh especially because it just seems like the continuing this scattershot approach where it makes no sense what they're doing they're not protecting anyone they're not helping anyone no one like I I very much doubt there is anyone literally anyone any I should say any good faith person that has gone to the SEC and said to them hey consensus is doing this bad thing via metamask I feel grieved by it or I feel hurt by it can you please do something about this like I highly doubt there's anyone that's doing that at least any good faith actor that's doing that so at the end of the day the SEC is not

protecting anyone and is just being a bully like go after the actual scammers go after the actual grifters there's so many of them within crypto literally all the SEC has to do is go to Zack xt's Twitter profile and there is a laundry list of scammers on there with proof like he's already doing their job for them all they have to do is enforce against these people enforce fines against them make them pay back the money that they've scammed put them in jail if you have to like the the thing is is Zach doesn't have these enforcement uh Powers right he's just a freelance um guy who calls out scammers and and does an amazing job of it I'm not trying to water down what he does but he doesn't have the power to do enforcement he can report these people to law enforcement but he doesn't have

the power in him to do this he can't arrest people he can't send them to jail he can't force them to pay back the money he can't find them but he's doing a much better job than the SEC and the SEC has billions of dollars in funding mind you uh to do this whereas Zach doesn't he relies on donations to continue this work so from that perspective the SEC should just be going after those people like go to Zach's profile and there you go right and you'll get crypto on side by doing this but I guess that that's not that that's not their goal right their goal is to bully their goal is to be a mafia and that's exactly what they're doing here but as I said with all these other cases that the SEC has gone at are gone at crypto companies with I really don't

think they're going to win any of these cases or at least most of the case as I've said in the past they may win on staking in some scenarios like for example coinbase's staking offering as I've argued before it can using certain arguments meet the four meet the four prongs of the the hoe test but I really don't understand how you could say that that was the same case for something like rocker pool especially but even Lio you know most of the LI not operators aren't even in the US either so it's just a very weird thing that the SEC has done here but not really surprised by this either but in other regulatory news and in I guess more more positive regulatory news is that there was actually a big win for clarity over secondary market sales of digital assets so El Elanor says here District Judge

Amy Burman Jackson has just dismissed the sec's claim that secondary sales of binance's B&B token qualify as Securities under the Hoy test citing Ripple's judge and Alisa torres's opinion that the economic reality of the tokens transactions mattered when applying Howie so essentially the reason why this is a big win is because you'll remember obviously that Ripple won this part of their case against the SEC where the secondary transactions that uh were happening for the xrp token and in this case for the B&B token aren't considered uh securities transactions now the reason why that's that's an even bigger win is because this is the second judge to say this like this is a different judge to the one that was in the Ripple case and the way it works at least in

the US I don't know what it works like everywhere everywhere else and I'm not a lawyer so this is just my understanding here but the way it works is that essentially the more judges that rule in a in a certain favor with the same facts and circumstances the stronger that case is and the more precedent against btia so that's why it's a big win for clarity because now and future cases the judge will reference these two different judges ruling on the same thing and most likely go in this direction rather than the other direction because there is now case law built up here there is now precedent built up here that the judge can point to and going against that means that that judge would go against two other judges and obviously that would not be a very I you know I guess like pragmatic thing to do here so a

huge win uh there overall and as I said just before the sec's cases against these crypto companies like coinbase and binance and Kraken I really do think and consensus now on unisoft Labs I really do think they're going to lose most of what they're trying to go after them for but they'll win on some things here and there they'll be they'll be some concessions on some things and I think that maybe their overall goal is just to slow these things down slow these companies down get them bogged down in in you know in court get them spending money on this where the SEC has B is essentially like free funding from the government they don't have to worry about these these sorts of things here and it seems like Gary G no matter what he does is completely protected by his party I mean the only hope we have at

this stage of gendler being replaced is if a change in administration happens if the Republicans win the presidential election it's not far now we've got November happening here you know obviously we had the debate last week the US presidential debate I'm not going to make any comments about that but you will have seen everyone's comments on Twitter about this and what that's looking like right now so really there may be a real chance of the administration changing here but as I've said in the past I don't think that that should be something that we necessarily rely on we should definitely build up our wins across not just the you know the um Congress side of things and in the Senate and the legislative side of things but also in the courts and also with The Regulators we should definitely just try it from all angles we shouldn't

just rely on one thing and and you know pray pray that that thing is what saves us I don't think that's the best path forward here but yeah that was a big win there um on that front but then also there was another big regulatory win over uh the weekend and Justin Slaughter here has a really great thread on this he's the policy director at Paradigm I'll link his thread in the YouTube description below for to check out but this isn't directly related to crypto this was a pretty big change within all regulations in the US so essentially what happened was that there was this um uh Chevron Defence case that was a 40-year-old Supreme Court case that I literally just heard about over the weekend so I'm not an expert on this but this was overturned by the Supreme Court in a I believe a 6 to3 Vote or um

something like that but regardless of the the vote it was it was overturned now from my understanding what this basically means is that the or I guess Regulators generally not just the SEC but Regulators generally is is basically much more constrained in what they can do and as they typically have been in the past now what does that actually mean in practice well essentially what this means in practice is that these Regulators can't have their own little Insider court systems or their kind of like inside uh uh you know inside the agency court systems where they decide on things or decide how things are going to go and basically make up their for all intents and purposes their own regulations and their own laws and their own interpretations of these things um they can't do that anymore what it now happens is that essentially the courts have that power

the actual uh you know the actual courts the lower courts the Supreme Court whatever Court it is they have that power instead of The Regulators so the reason why I said this is big news is because it does constrain The Regulators does constrain the regulatory regime from taking advantage and of their power and power creeping but it does shift this power to the courts so essentially in the I guess like most pessimistic case is the courts now dictate everything now of course the courts have been relatively good with crypto if we're if we're talking about crypto here relatively good with crypto um up until this point they've definitely cited in favor of crypto most of the time uh which has been good to see but again like when it comes to where power lies

and interpretations of laws and where um enforcement happens and things like that I would rather not see just one side of the government be given all the power and the other sides Be constrained even if those other sides have been negative towards a crypto in the past I would rather there be like a separation of powers here I'd rather there be a balancing of powers here and I know that this is wishful thinking I know that things just do not work out like this in reality but when I look at this all I can see is that okay well the courts are in our favor now but what if in the future the courts aren't in our favor anymore and now they have all the power so essentially it's like a hot potato of um of power here now that's my very educated very naive assessment of of the

situation as I said I highly recommend giving Justin's thread to read here but this goes beyond crypto this applies to all regulations in the US to all regulatory bodies in the US far and you know far more important than than crypto I think like if you want to talk about things like Aviation regulations or food regulations or uh you know far pharmaceutical regulations right this applies to all of that as well so this is going to be something that I think results in change over the coming years across the entire regulatory apparatus we're going to see how the courts treat things versus how The Regulators treated them but I do think it is a big win for crypto at least for the foreseeable future because as I said the courts have generally been in crypto's favor or generally been much nicer much less

hostile towards crypto whereas The Regulators have not especially the SEC obviously the SEC has been incredibly hostile towards crypto Now by overturning this they are constrained in what they can do it's not going to happen overnight maybe it's not going to happen over the next few months but over years this this kind of pays dividends here but it's a definitely a big uh a big announcement here a big thing that happened in the US but you can go give Justin's threat a read I'll link it in the YouTube description below for you to do so all right moving on from the regulatory stuff uh for now we got some tech stuff to go over now georgeos who works at Paradigm you guys will know he works on the re ethereum client execution layer client but he works on a bunch of other things he put out this

really great tweet that I thought was really timely so he basically said I started off this tweet by saying guys the rollup road map is simple L1 maxes out data availability that's it from the L1 perspective I've been saying for a while we've effectively done with the research on scaling Beyond data availability or da and the progress on pias as such viid makes me think that is also a solved problem let's code something for production and cut the alpha research so that's it you know don't overthink it that's it this is what al1 is for uh the rollup road map L1 is maximizing da it's not supposed to be doing anything else for the rollup road map here yes there are things like based Roll-Ups yes there are things like pre-confirmation that's orthogonal to this the L1 itself is Maxim is is being

optimized for da for rollups now of course there are things outside of this that the L1 needs to optimize for outside of just rollups such as making sure that we can strain meev as much as possible making sure that we improve the proof of stake mechanism on ethereum to enable certain things like single slot finality and so on and so forth but when it comes to the rollups it's just da that's what L1 is is trying to be it's trying to be the best da layer for rollups through blobs through pust through things like uh like vid as well viid here and that's it and I think that what's happened lately for some reason at least on crypto Twitter is that people just don't understand this and they seem to be thinking that ethereum is in dire straights and is in dire need

of like an intervention when that couldn't be further from the truth ethereum is thriving it's firing on all cylinders L1 is thriving it's in its best place ever been in from protocol development perspective right we have like all the clients just working in sync Just beautifully we have the biggest upgrade coming with Petra early next year hopefully and then of course I don't even have to say anything about the l2s they're thriving in all in their own right like not just on the development side of things but also on the adoption side of things and they got a huge boost through blobs and that's they're going to keep getting these boosts through potentially increasing the size and count of blobs doing things like Pi Dash and and and basically everything related to to Da generally right data data availability generally on eth L1 in conjunction with all the

other upgrades coming like veral trees uh you know like PBS stuff like that right like single slot finality within proof of stake and so on and so forth here so yeah I just really like this tweet from Georgio it really just hit home exactly what L1 is trying to be for rollups it's just trying to maxing max out the da the data availability because the bottleneck is Da really at the end of the day for the um for the the rollups that that use L1 they're not using L1 anything but da essentially and putting their proofs on there which is just extremely cheap to begin with but da is their main bottleneck and once we solve that which we pretty much have at this point until it hits the limit obviously uh the bottleneck then Falls to execution which is also being solved by the l2s themselves so don't over

complicate it that's it that's been part of the road map for like four years now this is not new ethereum is executing on its road map this is not bearish if you don't believe in the ethereum road map or the rollup Centric road map there are plenty of other l1s out there that you can go uh you know you can can go be in and you know what this is actually the positive case of other l1's existing because if you want to be into crypto and you don't like ethereum's R map and you don't like Bitcoin right I'm not going to say bitcoin's roow map because I don't really have one but you don't like Bitcoin you don't like ethereum you don't like ethereum's roow map you don't like the rollup Centric roow map you can go to salana salana is doing the monolithic approach right or you can go

to another L1 that's doing a different approach such as polka dot they're doing uh their relay chain approach I think there's been a bunch of changes there I haven't really followed too closely with that you can go with Nia that's still trying to do sharding on on L1 right like execution sharting but I think they pivoted recently to to Da as well being a data availability layer but generally there are other ecosystems that you can go to if you don't care for the roll-up Centric road map on ethereum if you want to be in ethereum then this is the road map guys like this as I said it's not new this is four years at least of what ethereum is trying to be with this road map here and that's what we've been delivering on and executing on for that time now so at this point in time if you

no longer buy into the ethereum vision then yeah that you you basically have to go to some go somewhere else ethereum is not changing what it is it's not going to stop being a rollup Centric Network it's not going to stop trying to be a settlement layer e is not going to stop trying to be the best money and store of value on the planet like it's going to keep doing those things that's what you buy into when you buy eth that's what you buy into when you're part of the ethereum ecosystem and that might be a bit appe pill to swallow for some but that's what it is at the end of the day and it's not trying to hide that either it's not making any attempt at hiding that at all um it's it it is what it is it it wears its heart on its sleeve and

and and that's basically it but yeah um I just wanted to to point out that there but there is a related tweet to this that comes from Dan Robinson who works at Paradigm here where he said ethereum researchers get a lot of unfair process criticism when they publish ideas in progress uh people say the road map is constantly changing when they try to iterate iterate on it before publishing people say protocol development is happening in secret and I quote tweeted this and I said you know this is simply the consequence of everything being built out in the open everything ethereum does is being built out in the open yes there are private conversations that happen between researchers but once they get to a point where they feel comfortable sharing their research they share it and it's just research it's not an EIP it's not something that's going

to go into the network it's not something that anyone's going to adopt it's just research that they're putting out there and it's all done out in the open ethereum's road map is defined for the next 10 years completely out in the open open to be scrutinized and criticized but imagine how much fud would be thrown at Apple Microsoft Nvidia and all those other companies if their 10 plus year road map was being researched and executed on out in the complete open right and we don't even need to imagine this because I remember back in the uh the early iPhone days there were leaks everywhere about the iPhone and everyone was criticizing it being like Oh it's not going to have this it's not going to have that or what if it does this what if it does that this makes no sense so on and so forth

right it just gets criticized because it's out in the open it's being iterated on and people don't don't understand that now on on top of this as well these companies they are R&D departments are usually their most secretive departments where it's completely locked down they use code names for everything any leaks are dealt with with the full force of the law everyone signs an NDA it and and it's usually for many years like game companies do this all the time like for example uh one of the most hly anticipated games of all time is Grand Theft Auto 6 there was a leak I believe last year that um someone someone hacked in and basically leaked the uh some of the files and show people what what it was and basically confirmed that it was in development but no one knew for sure if it was in development no one even

knew what was going on with it for like eight or nine years before this leak happened since GTA 5 uh came out now that's the level of secrecy that you're dealing with here when it comes to the R&D Departments of these companies ethereum hasn't none of that ethereum is the complete opposite of that there is literally none of that going on within ethereum no one is sitting on something for eight years I well let alone like a month let alone 8 years right and then publishing it and being like this is what we're doing now that that's not that's not happening at all everything is iterated on everything is researched out in the open everything is developed out in the open and that is how it is supposed to be that is ethereum of superpower but it also brings fud it also brings distractors it also brings

stupid takes from people who are just not informed but they want to have their opinion anyway you know it's kind of a sad fact of life that the people that are the least informed seem to have the seem to have the loudest loudest voices uh but hey that's just the fact of life that we have to deal with and if you're listening to the refuel you're more informed than I believe 99% of people on ethereum but that's my my kind of take on that one there now to finish up today's episode have something related to foraster so Dan Romero tweeted out funny it's always ironic when he tweets out something about farcaster right because he's obviously building a competitor here but there is something uh that he that has been introduced on farcast well technically on the warcast client called pay on warcast so you can

pay someone with usdc in under 10 seconds it's mobile first with your existing wallet no having to look up or remember an address close instant confirmations and zero fees on base so essentially there is a video here showing what this looks like you bring up the interface here and basically you type in what you want to pay it goes to your coinbase wallet you confirm it or any other wallet that you have you confirm it and then you pay the account that you were on in usdc that this literally took 8 seconds for him to do and this is all done on base with zero fees using usdc natively through warcast this is again stuff that leads to mass adoption guys this is the kind of stuff that I love seeing integrated into things like social networks where essentially because it's it's built on a

onchain social network you can just do this natively there is no need to essentially you know bolt on things or to to require the user to install anything or anything like that it's done natively here with what the user already has a wallet and the warp cast client so very very cool to see this and once again that is something that I think is ining us closer and closer towards the adoption that we want to see of real use cases on ethereum and within crypto generally obviously stable coins are the biggest product I think within crypto so anything revolving stable coins always gets me excited even though I you can't speculate on it right you can't buy a stable coin and um hope that it goes to like $2 or something oh I mean you can but like it's highly unlikely that it's going to happen it usually happens the

other way where essentially you buy a stable coin then it goes down um obviously we all probably know about what happened with uh with Luna stable coin right us that that went to zero but even usdc went to 90 cents there was a dpeg stuff like that but hey that that's why I think a lot of people don't talk about stable coin is because there's not really any way to speculate on it besides maybe buying e as like a kind of ecosystem bet on stable coins continuing to grow especially on l2s but yeah anyway enough rambling about that 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 it a thumbs up subbe to newsletter join the Discord Channel and I'll catch you all on Wednesday thanks

everyone