ETH stake flippening, Polygon governance and more - The Daily Gwei Refuel #575 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily way refuel Murray cup latest news in ethereum ecosystem I'm your host and this is the 27th of April 2023. all right everyone let's get into it so first off here we have a tweet from Uncle rewards who said that new deposits just flipped withdrawals in the uh staking deposit queue on ethereum now of course this screenshot comes from the beacon chain website where you can see here pending validators uh 14 100 to enter the queue and 12 500 to exit the cube which means that there are more validators waiting to enter into ethereum staking than are waiting to exit now I believe this is definitely due to that great reshuffling that we're seeing of the different staging

providers obviously I spoke yesterday about how Kraken was forced to withdraw a lot of their eat steak and a lot of users got that um eat over the last few days and now they're restaking it yeah as uh with other services or solo staking it or going with a decentralized staking service or anything like that right uh they're coming back in to stay making and it's kind of shitty that for these users they're going to miss out on a bit of rewards because they were basically forced out to to um exit the active validator set with Kraken and then have to go through the queue again to get in and as I said yesterday I believe the queue is like 18 days or something so they're going to miss out on uh 18 day plus days of of rewards if they want to restate here which is

unfortunate and really the SEC is protected no one uh Gary ganza is protected no one it's just caused unnecessary pain uh and and kind of like annoyance for a lot of Eve stakers but what it's done is it's distributed stake away from a centralized player and into more decentralized hands obviously not all of that eighth has gone into decentralized hands and and services and Solace taking but still it's Distributing it out which is always a good thing to see uh yeah it's kind of funny that it was the cause of the US government that that's the reason why that happened still would have preferred that it didn't happen um I I think uh just generally we shouldn't be relying on these other entities to decentralize the ethereum beacon chain we should definitely view

all these entities as rather hostile to be honest all these governments and nation states as as hostile and and you know work to defend against them work to defend against not just centralization but other kind of security risks that fall into that now I did speak yesterday a bit about ethereum staking and this is pretty much one of the only things I'm going to be speaking about uh to it today so I wanted to I wanted to speak a bit more about the great reshuffling that I've been talking about for months now and kind of an analogy that I came up with today so you can imagine the eighth stake right the current set of the eve staking kind of distribution or the eat steak Distribution on the network we all know what it what it kind of like looks like by now I showed it

yesterday but just for a refresh I'll bring up the raider.network website here so you can see here that the top staking providers A Lido coinbase binance Kraken rocker pool uh and I mean they're their providers and then Bitcoin swedes and then after that there's a lot of other smaller ones now these top providers are obviously have a lot of e-staked and obviously are pretty vulnerable to eth going to other services whether it gets withdrawn from Lido next month then goes to like even if it goes to one of the other kind of centralized Services here maybe it goes to rockapool maybe it goes to solid staking or one of these other smaller services and they're definitely all vulnerable to this now because of the deposit and withdrawal queue or I guess in this case the withdrawal queue

the great reshuffling is more like the Titanic trying to turn around than it is a small sailboat trying to turn around right and what I mean by that is that the ethereum staking ecosystem is so big and there are so many validators and it takes so long to get through the withdrawal q and then to get back into the deposit queue it takes months to do that at this point and obviously it's not always going to be like that but in terms of seeing that reshuffling play out that's why I keep saying it's taking months and years it really is like turning a huge ship around found like the Titanic or an even bigger ship than it is a small little sailboat right and I I just thought that was a I was an apt analogy for how big of an ecosystem he's

taking is and how hard it is to actually uh move it now that's not to say that it can't move rather quickly when it wants to as we've seen with Kraken uh well when it wants to or doesn't want to but I was the same with Kraken they've lost a 2.8 percent of the the market share here or 2.7 whatever it was of the market share uh because they were forced to now this has only taken what two weeks so far for that to go down um but the thing is that's two weeks to exit now to get back in it's like almost three weeks right to for these stakers to get back in So a total round trip of five weeks here so that is a long ass time right whereas if only like one person if the execute was was empty and one person wanted to enter an exit it

would only take like a couple of days to do that right or maybe uh I don't know the exact numbers off the top of my head but it might take you know two to three days or something like that rather than five weeks so you can see the the order of magnitude difference here depending on those cues and that's why if we're talking about a great reshuffling we're not just talking about like a you know a small reshuffling where where maybe like a hundred people decide oh I'm going to change my validators over from uh coinbase to solo stacking or something like that we're talking about tens of thousands of validators being uh swapped around here which is uh obviously an order of magnitude High our couple orders of magnitude higher than uh than 100 uh people 100 validators I should say actually so yeah that I just thought

that was an apt analogy that you might want to use uh when explaining these things to people and another thing I also wanted to just clarify as well I've seen a lot of people not in the ethereum ecosystem but like outside of it fighting the deposit and withdrawal queue saying that it's like artificial um which is just bizarre to me because pretty much like all the other layer ones that are proof of stake also have this kind of like uh withdrawal Q I mean it's not really a queue it's a withdrawal period make a lot like an unbonding period where it depends on the Chain but it can vary from like three days to two weeks it just depends on on how the change set up and how it works on on that chain and essentially what that means is that if you've bonded or I guess like delegated

your state because all of these other systems are delegated proof of stake systems if you've delegated your stake to a validator and you want to basically undelegate or unbond it can take quite a while right so basically uh you know once you do that your funds aren't available until that unbonding period is done uh so as I said it can stretch up to two weeks here where ethereum differs is that the the withdrawal queue is not kind of like an unbonding thing it's actual validators being withdrawn here and that queue can actually get quite large depending on how many uh validators want to withdraw at a time but it is a completely different system to distribute sorry delegated proof of stake but the I just found it funny that people were kind of saying that oh oh

look at ethereum trying to keep people staked by limiting how many people could exit we all know that's done for security reasons but it's also ironic because every other layer one or proof of Stack layer one that I know of uh whether they're Depots or otherwise has an unbonding period or has some kind of like waiting period from when you want to unstake they don't have a waiting period I think for staking but that's only because as I said they delegate a proof of stake systems where it's actually to me it's not real staking when you delegate your stake you're basically there's no new validators being spun up or anything like that you're basically just delegating your tokens to an existing validator that's why there's no entry queue there and you can start earning rewards immediately I I obviously with ethereum proof of stake

you have to spin up a new validator every time like sorry every time a validator goes to the the deposit cure 328 goes to the deposit queue uh that's spinning up a new new validator here even if and the funny thing is you there's like a pseudo delegated portion of ethereum proof of stake right now where essentially if you go and stake with like an LSD for example if you buy Ste throw R8 or whatever are you get instant access to to the rewards that's because the validators already exist in the chain and then the more is added over time depending on the mechanisms here with rocketball more mini pools are spun up when there's more demand for our wreath obviously if either reef is trading at a premium then there is an Arbitrage opportunity there so people can spin up many pools and and and make

basically free eighth essentially uh from that I did that a few times with speeding up my mini pools so there are different mechanisms there but I just felt that was a point worth clarifying because I've seen a fair few people talking about that uh since chappella went live especially all right an interesting tweet thread here from Dano Ferron who has been involved with ethereum core development for quite a while now so this thread is about how kind of eips get included in the different upgrades on ethereum and this concept of drivers and passengers when it comes to eips so Dano starts off the thread by saying Thursday is the big or call devs call where we do one of the rituals that helps us Define the future of ethereum starting to pick what erps

go into the next Fork it's always been a messy process but I think we've organically found a process that works and he's calling this process drivers and passengers so essentially in every Network upgrade there is a driver EIP and what that means is that there's like a really popular big EIP that's kind of the headline of the upgrade uh Dana gives some examples here with London it was erp1559 with uh Paris it was the merge and with Shanghai or Chapala it was withdrawals right and with Cancun it looks it looks to be uh Erp 4844 as the driver but those there's not only one EIP that goes through with most upgrades there are multiple ones there's obviously one headline one a lot of the time but there are other eips that come

along with it a lot of the time and those things are passengers here so essentially what Dano is saying here is that the the driver will uh sorry the passengers are not essential to the driver but the driver generally goes into the fork and the passengers can either come along for the ride or get dropped and they can get dropped all the way up to even like a month or so or two before it goes live on on mainnet for one reason or another uh and then Dano says you know so what does this mean for Cancun which is the next ethereum upgrade uh my perspective is we get 4844 squared away and get a reasonable schedule then we can consider passengers once the passengers list is set then then no new passengers can get on the passengers can always disembark that's an important Point as well uh as we get

closer and closer to the main net date of Cancun it'll be harder and harder and then impossible for new erps to get included in that upgrade but uh yeah peace these passengers I should say can always disembark and always get off the ride here it usually the case that the headline Erp won't get off the ride uh in this case it'll be 48-44 uh because it's the driver right all the passengers can get off the driver can just drive the bus around with no passengers on it but but the drive is still there and then Dano says I think the standby list of potential passengers is larger than the capacity that 4844 work will leave in Cancun so some really good ideas we'll be slipping into 2024. so all a lot of the erps that you're seeing floating around for possible inclusion

in Cancun um you know some of them if not powerful most of them may not make it in it just depends on the kind of work that gets done it depends if they're able to get these things included in time but definitely 4844 will be included that is the headline that is the thing driving the Cancun upgrade and then other things may get pushed to the next upgrades which will go live in 2024 but anyway you can check out Dano's thread for yourself I'll link it in the YouTube description below hello speaking of upgrades coming to ethereum in the future Terence uh shared that he had the pleasure of presenting the ethereum foundation robust presenting to the ethereum foundation robust incentive group on epbs design spaces from the

client implementer's perspective he focused on areas like attesta duties folk Choice rules gossip networks and more and there's a hack MD document here for you to check out that's that's quite um quite brief basically it includes uh just a bunch of questions and and things that that Terence spoke to as well as links to PBS reading generally right you can single slot PBS using a testers as distributed availability Oracle which is a rather I mean not Old Post but it was a post from January 2022 from vitalik and then two slot proposal Builder separation from October of 2021 so if you are interested in reading some of the earlier thinking around PBS and and kind of How It's evolved since then definitely check out both of these

articles which are linked in this hack MD document which I'll link in the YouTube description below but you can also read through the things that Terence has written down here uh and get a feel for that now I don't know if you shared in his presentation maybe there'll be a video of it uh or maybe there won't be but there's still some really interesting resources in here for you to check out if you haven't yet all right so yesterday I spoke about the new eat steak uh staking kind of knowledge base that was put together by a bunch of community members and I highlighted it on other on the refill yesterday but e-staker also announced today that they have a brand new website as well so it's at eastaker.cc it looks very fancy very flashy here you can actually donate it to them to their git

coin Grant round right now if you would like to it pops up in the bottom right here um it's got uh you know links to everything that you would need to pretty much get started with taking us questions about staking as usual I highly recommend um joining the Discord channel for eatstaker which I believe will be linked down the bottom yep and following them on Twitter they are the best and kind of like I guess quintessential Community when it comes to ethereum staking I have never had someone go into that Discord channel that I've uh kind of kind of tried to help with staking and come out with their question unanswered so if you're interested in any doing any staking at all doesn't matter if it's solo sticking or rockable or whatever else if you're just interested in learning about staking then e-staker is definitely the place to be so you can go

check out the website aidsdecker.cc and you can join their Discord Channel as well and uh which is on the website down the bottom in the footer all right so Mahalo here from a polygon has shared that Franklin Templeton which is a 1.4 trillion dollar uh traditional Finance giant expands its money market fund on polygons so they will be joining the likes of Hamilton Lane and a number of other institutional players that already leverage polygons technology here now I believe this is the polygon POS chain for now I'm sure that there are plans to eventually uh kind of use the polygon ZK VM when that becomes more mature and you can see here that the details were shared in this a coindesk article just another I guess sign that

the Trad fire Market or the institutional Market is still got a big big appetite for crypto I think that if you look outside of the crypto ecosystem right now the World At Large doesn't really like us too much but I don't think that that really applies to these traditional Finance players I think for them it's like okay well we know something's here with crypto we know there's a lot of money here you know the crypto total market cap is wide so it's a trillion dollars right now or something like that I don't even look at it very often but it's over a trillion dollars like 1.2 trillion dollars right now so they know there's a lot of money involved here they know that um crypto has traditionally kind of gone through these Bull and Bear cycles and they know that there is no reason right now to

think that crypto won't continue to grow or won't go through another bull market or anything like that so for them it's a question of okay do we miss that train do we kind of miss the Innovation here do we uh bleed market share to these other Solutions or do we get involved ourselves and basically Embrace this new technology and that's what I think a lot of these traditional institutional big tradify players are trying to do now of course they move very slowly uh very carefully the analogy of the Titanic and the sailboat probably works here a D5 protocol is a sailboat a traditional Finance giant like uh Franklin Templeton here is the Titanic they're not going to move fast they're going to be very slow very methodically they're going to play it very safely but over time that'll compound and you'll start seeing a lot

more stuff happening from not just them but other had fire institutional players and I've always said that I don't think Defy is here to disrupt all of Trad fire I think what it what D5 is going to do is it's going to provide much better rails than what is available to the Trad fire players today like when I say Trad fire I'm talking about the companies and the players within that system the actual rails themselves are really old outdated broken and need to be updated to the modern day and I think that's exactly what the D5 rails do on ethereum on layer twos and the tradify players are definitely going to be interested in stuff like that especially the auditability side of it being able to see transactions as they happen end to end which is not something that a lot of

uh try to fight players around the world get full visibility over there's usually a lot of Band-Aid Solutions in place usually a lot of it is abstracted away and and very opaque there are long settlement times so for them this technology stands the chance of basically improving their systems by like 100x like I've gone through the example through the examples before but the the difference between like an international wire transfer and a international I mean it's not even it doesn't make sense to call it an international thing but the difference between an international wire transfer and an on-chain ethereum transaction of just USD you know usdc and USD is literally night and day difference like it is not even worth comparing the two

because with a traditional International wire transfer you have basically no visibility over over that you basically and this is a meme you basically say to the money uh Jesus Take the Wheel that's it's a meme it basically says you're just hoping to guard that it's going to get to where you want it to go right because you don't have much visibility there uh and it takes a lot longer right it can take two to three days and even longer depending where you're sending the money to and you don't have auditability yourself the bank may have some audibility over it but even they don't have full auditability and traceability whereas with an ethereum transaction with usdc you have full auditability at all times no matter where you are in the world and the transaction can confirm if you pay the

right fee which most of the time you will do thanks to 1559 confirm within one ethereum block which is 12 seconds at most right so you're going from two to three days with basically hardly any auditability or traceability and hoping that the money gets to where it's where it's going um to basically both parties on either end of the transaction being able to have full auditability over the transaction being able to see that it actually was confirmed on chain and being able to confirm it uh trustlessly and being able to do that that at many orders of magnitude faster than they would have in the tradfite system and I think that alone is such a step up for these systems that even though these players are slow moving this is going to

be something that is going to be very very appealing to them uh once they understand the broader implications so once it gets more adoption because at the end of the day it's all well and good for this stuff to be much better but it needs the adoption of these different entities like you need all these Banks to use ethereum as a settlement layer rather than the Swift system for example for it to actually work because at the end of the day two Banks sending money to each other is is cool but it's not going to serve us the tens of thousands of other banks around the world so they all need to sign up to this they all need to integrate with it and it's not even hard to do that right it's actually very easy because you don't need anyone's permission you can just get started straight away and you

can just go to one of these other centralized exchange players that already have all the experience and just work with them go work with coinbase right go work with Kraken go work with circle you can do that and you can get started relatively quickly because it's already live and running there for you uh I just I don't know I whenever I talk about this stuff it just seems so obvious to me and as I said before the the reason why it's going to take a while for this to be adopted and and used within the real world or the Chad fire world I I guess I should say is because Chad fight is a Titanic not a sailboat we're us as individuals uh our sailboats you know we can do things nimbly very quickly it doesn't really matter uh but these big financial institutions are going to take time but

they'll get there eventually I I strongly believe that all right another update from polygon which has more to do with the polygon technology itself so Mahalo shared this and said polygon has come a long way it is now one of the industry's leading projects this introduces the need to redefine how it is governed here is an invite to the community to engage in this important conversation and shape a new governance model uh and then Mahalo says the post defines three governance pillars explains the status quo and how we can think about them moving forward and the three pillars are protocol governance system smart contracts governance and public good funding and there is a post here that you can read it's uh it's not too long and and at least the contributors that are helping here but it is really really great to

see this I think that there has been an open question among the community for quite a while about how polygon is going to be governed not just their POS chain but the ZK VM and specifically the the ZK VM really um because uh I think that's definitely the you know where they want to end up so that's definitely more important to to have a decentralized governance process around that and there is already a token right with medic so that can play a part in this as well and there are already a lot of people using the polygon networking and a lot of holders of magic that could get involved with governance so it's probably a really great time to be discussing this now if you have uh I guess like um uh thoughts and you want to kind of read through it and reply you

can it's it's linkedia sorry it'll be linked in the YouTube description below and you can go check all that out there's also a framework that was uh that was recently introduced called the PIP framework uh which is similar to the you know Erp process and this is on GitHub for you to check out so yeah this can basically become your new Bible for polygon governance generally and something that I think a lot of people maybe may be interested in because I've seen people saying before you know what's the use of the manic token right what you know is it just like a fee token or is it actually going to be used in governance is it going to be used for staking on the zkvm stuff like that well this is the processes that are happening in the background to make that all a reality and you guys know I'm an advisor

to polygon I should just disclose that there I I normally don't get involved in discussions around kind of like Matic as a token itself like it's price and and what drives value dramatic or any of that sort of stuff there but generally when I look at tokens I I obviously look at governance as a value driver I I don't think it's like a huge value driver but when you do governance right it can actually uh change the token to have other value drivers to it so for example Matic token is a fee token on the POS chain but in a staking token on there but it can become a staking token on the ZK VM chain it can do governance it can it it can do um Revenue sharing and fee sharing and things like that right so there are things that can be done here uh but yeah if you want to

have a say in that you can I'll link this in the YouTube description below for you to go check out all right so a project called alt Leia has announced uh it is the first roll-up as a service provider to support arbitrim orb orbit users can now soon spin up any L3 applications Tethered to the arbitrim chain in men's via in minutes via their no code tool scalability will be a problem of the past so this is really cool you guys may have forgotten about arbitrim orbit but it's basically arbitrim's solution to Roll-Ups as a service or essentially kind of like a layer 3 service that sits on top of of arbitrim1 and I believe possibly arbitrim Nova as as well um while this project alt layer allows

people to spin up a roll up essentially on top of this within five minutes uh with just a few simple clicks very very cool just another project that's building on uh this kind of like roll up as a service uh thing that I have been covering for quite a while there are a lot of other teams doing this I mean there's Sovereign there's um stacker Network alt layer obviously uh there's a bunch of others out there I'm forgetting the names of all of them but uh yeah this is going to be a big thing going for I mean obviously uh optimism has the op stack as well I think this is going to be a huge theme uh going forward for the space for the L2 space as I've said before I think there's going to be a lot of these things launched and not a lot

of them are going to succeed but that's generally what happens with a new technology right you have like a Cambrian explosion of all these different things we have all these experiments running in parallel and then you have a few big winners at the end of the day you're never going to get those big Winners unless you have a lot of experiments playing out so I'm just very happy to see that something like old layer and stacker Network and op stack and Sovereign I'm very happy to see that these things exist because they're going to push the space for they're going to push Innovation forward uh and this L3 narrative is actually heating up now which I think you guys should probably get more accustomed with I have said before that I I never really liked the terminology because it's it's very easy to fund the L3 terminology because

people can be like l3s I thought l2s were the solution but at the end of the day that doesn't really matter what matters is what can get built and what's providing value to users in a secure and safe way and I think L3 is building on top of l2s which settle down to ethereum L1 uh are fine I think they're secure from what I've seen there is no kind of um uh there is no kind of major red flags or negatives with them or anything like that so yeah I'm happy to see more of these things go live just wish that we had better terminology than we do anyway you can go check this out I'll link it in the YouTube description below and last up here we have another L3 related announcement from lens protocol so they've introduced something called Bonsai which is an optimistic L3 scaling

solution that will process transactions at hyperscale and is designed to support the next generation of web 3 social users so this was confusing to me today I tried to find some answers on this I'm not fully across this generally right now but basically from what I can tell this isn't really a real kind of like L3 solution because I believe it is on like the polygon POS chain it's not on the polygon ZK VM and it's kind of storing its data off chain it's it's a weird kind of construction and I believe DC Builder actually called this out and said you know what tech stack will this use L3 on Watts um and then this person David here from polygon lab zkvm said

are we for data availability and proof of stake for execution and then DC Builder says you know what do you mean proof of stake for execution that's not execution environment all through also an L3 is a chain that settles on a roll-up and L2 data availability can be elsewhere but preferably on the L2 in order to call it an L3 uh Josh who I believe is is building this said uh we call it an optimistic L3 because we are using bits of both um uh L3 and l2s and then DC Builder says but this is not an L3 whatsoever it's really bad naming the polygon POS is a commit chain and you need to have data availability on an actual roll-up in order to call it an L3 it's ignoring all the terminology the rest of the scalability users uh users which I hate to be a not going to lie and then Josh

said you know we're really not hung up or attached to the official name it's beta and our first step at scaling we care more about the solution we're happy to take feedback of official naming and adopted as keep and keep building it appreciate the feedback uh I'm kind of lukewarm on this discussion generally and I'll link this in the YouTube description below for you to check out I I think that terminology is pretty important um and I know that it's not always the case that everyone is across whatever each piece of piece of terminology means and there is a lot of confusing terminology at times and this is another reason why I hated that we started using the L3 terminology but I think that generally uh we shouldn't be I mean I don't think what DC Builder did here was wrong he was asking the right questions

but I don't think we generally should be kind of like putting down or or kind of like hurling insults at people for building things especially if they're taking feedback on board like like joshia has and engaging in an honest discussion I think you can make fun of people and you can kind of call them out if they're not being honest about if they're not being positive about it if for example they're saying you know what you're saying is wrong I'm right when in reality that you know that you're actually wrong I think that's when it gets to a point where you're like okay well I'm gonna call out this right um but yeah I saw all that I just wanted to point it out because as I said it's not really an L3 scaling solution as DC Builder says an L3 scaling solution would settle onto a roll-up in L2 and

then preferably settle down to uh to a to an L1 with all its data uh either ethereum L1 or another one here so yeah I think that the naming is going to change around here but other than that it's cool to see that lens protocol is trying to build on more scalable Solutions here and not just obviously on the polygon POS chain trying to Branch out uh so uh part of the pun so I uh I'm happy to see that but I will revisit this when I think it's more clear exactly what it is and what it's trying to be uh but great to see that they've taken the feedback on board it seems and they're going to evolve this as time goes on but 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 the video a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone