ETH supply dynamics, Long-term scaling and more - The Daily Gwei Refuel #252 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel worry cap the latest news new theorem ecosystem i'm your host anthony sosano and today's the 15th of november 2021 all right everyone let's get into it so i came across this uh chart on twitter the other day from data always on on twitter here showing i guess a crazy metric around eip1559 and you can see on the chart here that uh 1559 has now burned more tokens than ethereum miners hold so more ether has been burned than the eve held by miners on ethereum which is crazy you can see here in the blue um miners hold around 0.85 million eighth i would say so 850 thousand eighth and we have burned uh much more than that uh it seems that

we've burned uh 800 oh wait no no no no no we burned uh not much more than that sorry the chart kind of like threw me off there uh we burned 893 000. so i guess what a 40-ish thousand more which is crazy right like i mean miners have always been lauded as these kind of like group that needs to sell ether and put cell pressure on eth because they need to sell to cover their ongoing costs like electricity and hardware maintenance and and just other ongoing running costs and of course everyone's getting really bullish because you know you have the merge coming which reduces this which i'll talk about in a sec there's another tweet that i want to talk about um with regards to that but i think this is just like i mean it's so awesome to see kind of like this put in context because we

always say oh yeah 900 000 8 or whatever has been burned but uh and then you kind of like you can put a dollar value to that which is obviously in the billions of dollars but once you contextualize it and actually kind of like show the kind of real pressure this is having on the market in terms of like taking supply off the market and offsetting even the supply that miners have to sell i mean they they have to sell to cover cost there's no way around that um but instead of them getting kind of like all the fees now you know most of them are being burned they've only got the block reward to sell which is still kind of like quite high i mean on eth1 on the proof of work chain it's still about four point five percent new eat a year

and that's that's millions of ether yeah that's still being sold but of course we're burning you know if you annualize it out we're burning millions of eth as well so the net reduction is actually being quite quite insane so far and that's tetranode's tweet here where he kind of like points out that the net reduction has been 65 since 1559 went live and if you go to the monthly or if you click one month here on the watch the burn site and go to like 30 days uh it will show it it'll show the last 30 days we've burned 85 percent uh so we've we've got a net reduction of 85 percent which means that only 15 percent uh of our new ether has been issued from the miners because we've offset the rest of it through a burn and obviously we had those deflationary days and we had

that one deflationary week as well so absolutely crazy amounts of eth being burned here i mean if i go to the watch the burn website here once it kind of like loads up you can see what i mean hopefully you can see it i'm not sure my camera my camera's not blocking it okay if you go see one month it shows the last 30 days you can see a net reduction of 85 percent so we burned 342 000 eighth of the last 30 days and there were a hundred four hundred thousand eight worth of rewards that were paid out to miners of course as the block award uh and then net issuance is only 59 000 eighth so basically that means a net reduction of 85 which is absolutely insane considering that once we go through with the merge and that's what i said here on

tetranodes kind of um tweet i said that 1.59 is only the appetizer the merge is the main course when we go through with the merge this new issuance drops down from 4.5 percent to around 0.65 percent which is i think about 85 percent um you know the triple hardening kind of uh term was coined about it being 90 but as more it gets staked the issuance goes up uh over time as well so it's about an 85 reduction but once that goes through we're going to be negative issuance all the time which is absolutely crazy i mean and that's as i've said before that's real cell pressure from miners they have to sell there's no kind of like i mean they can stockpile eth of course anything they get as part of kind of like on top of the profit basically the profit that they get um but like they

have like this baseline running costs that they have to pay for whereas with stakers i mean not only do we get that massive issue introduction when we move to a proof of stake after the merge but stakers don't have these massive ongoing costs you know you could you could just you could say that they've got the biggest cost they've got is selling for taxes because obviously staking income or you know yield is income is taxed as income tax uh depending where you are so i mean obviously there's a lot of stakes in the u.s and europe and there's income tax there for for mining and staking uh but there are other places where it may not be taxed right depending on where you are but we can assume that the majority are going to be taxed as if it was income so we could say you can just take

a flat line maybe 30 percent because a lot of these are going to be businesses as well um so you can take like a flat line i don't know what the corporate tax rate is in the u.s actually in australia it's 30 so i'm just going to take 30 so you can safely assume that at least 30 will have to be sold to cover for taxes but then the running costs are basically non-existent so the only other reason really to sell is to take profits and really i mean how often people are going to be doing that right and even if they do the the cell pressure is going to be like way way way less than what it is today so we're really going to have this massive kind of like supply shock going on uh once the merge happens and i think we're already having it to be honest it

you know i've seen a lot of traders comment about it's recent price action on twitter saying they don't understand how eth can just like keep trending up like it has over the past i guess couple of months it's not there's no kind of like um you know i mean it's trending up of course but it's not like pumping like really really hard or something not not going up too fast it just seems to be trending up over time and i would argue that it's definitely got a lot to do with the 1559 kind of burn mechanism for for the reasons i've outlined previously but also for the simple reason that it's it's a huge narrative driver of course and also the eighth being burned is eighth being a lot of a lot of it is kind of like eighth being bought off the market as well because the people that

are playing the gas fees on ethereum right now the high gas phase they're they're probably two distinct groups there's the kind of like whales which can afford to use their network and they do a lot of things on the network and then there's there's the kind of like people extracting value out of block space via mav those would be the two distinct groups and they do overlap you know there's a venn diagram there of course but these groups are going to have to keep funding their operations by buying new eight they don't have unlimited eighth to to use right they're gonna have to buy either from the market acquire it in some way whether that's through mev or whether that's through um buying it for fear on exchanges with feared on exchanges or whatever um they're still acquiring each and then what happens to that eighth

that they're requiring it gets burned so it literally gets taken out of circulation forever so this isn't just like um a heat that's been sitting in cold storage being burned it's effectively removing active eat from the from the supply which is even more bullish because when you look at supply dynamics you can see okay well there's a circulating supply of eighth of like 100 and 16 million each or something like that but then you have to break that down like how much is locked in smart contracts how much hasn't moved for a very long period of time how much is in staking how much is in d5 how much is here how much is there obviously how much has been burned and then you can get the real kind of like uh dynamic of how much is it like an active supply and we're but i think i i think it's safe to

say that we're burning a lot of the active supply it's not just burning supply that wasn't that wasn't already active some of it will be of course there'll be some that are set in cold storage for a bit then a transaction happens and it burns some eth but i think the majority of it is definitely a lot of mev arbitrage whale transactions and that's all kind of like active eighth it's already kind of like been in the market but now we're burning it instead of kind of like just sloshing around so i mean that's just i don't know i think that explains it i think that's why traders are seeing this and being confused by it because they're looking at it from just a pure technical analysis or chart perspective they're not kind of like thinking too deeply about some of them are but but for the

majority that i've seen they're not thinking too deeply about how it's kind of like supply dynamics have drastically changed with one five five nine and they're going to change even more with the merge which a lot of people are playing a trade on right now as we approach the merge the hype uh the speculation is going to get really really crazy because you know funny enough like you guys know because i talk about it all the time but the the kind of like triple harvening or that massive issue introduction with the merge not many people know about that and and for those who do know about that most people don't actually understand how much of a reduction it is just like that most people didn't understand how much uh eat was actually going to be burned because of all the fee revenue being generated by the network so

i mean i guess the tldr of my little spiel there about one five five nine in supply dynamics in general is that uh you know buying and holding ether the long term seems like a no-brainer to me that's i mean obviously it's not investment advice but um you know that's what i do all the time it's why i'm still buying ethanol people always ask me like why are you buying eighth man like you bought like ages ago you bought it like a hundred bucks or even less than that and i'm like well that doesn't matter like it's just all relative right back then i didn't have as much money to buy as i do today because just the way it kind of like worked out i wish i could buy all the ether that i'm buying today at 100 bucks but that's just not how it works so that's why i

still buy every day and and kind of like buy those big dips as well when i can because as i've said before i truly believe eighth has a path a very clear path to a hundred thousand dollars at least uh in in kind of like the next kind of i guess five to ten years you could say um you know maybe it could happen sooner than i don't know things could get crazy with this coming supply shock uh especially because it's not just a scarcity tactic it's also a demand meeting that supply shock with the demand to use the ethereum network and you know demand to do everything on the ethereum network so so yeah i mean if that doesn't make you bullish i don't know what will but i'm sure you guys are already on this train with me but i think it's good to revisit these sorts

of things from time to time it's something that i haven't spoken about in a little while in the refuel and i think it's just something to to keep in mind as we progress through both kind of like the one you know the layer two roll out which will add even more fee pressure to layer one and then also the the kind of like merge that's happening with the issue introduction and all the other kind of like supply sinks that are that are here and you know some that are coming in the future for for each as we progress through ethereum's adoption um and one last thing on one five five nine is that uh the first contract to burn 100 each happened the other day so this is open c but i burned a hundred thousand eight i should say sorry um is the first contract ever to burn this

much eighth pretty obvious i mean openc nfts had a absolutely crazy september october it slowed down a bit in november a bit i mean i slowed down a lot in november but yeah september october pretty crazy uh but then you can see like following close behind is eighth transfer so just regular earth transfers which is a no-brainer there uh unisop v2 and v3 and tether and then i mean you can go to the leaderboard and check out uh kind of like all the gas guzzlers if i go to the leaderboard here actually i'll show you really quickly um i love this leaderboard it just it's really easy to see everything but essentially you can go all and you can see like what the top gas kind of like guzzlers are i mean it's funny seeing the metamask swap router be here because i think a lot of people i

mean even over the kind of like the last seven days a lot of people are speculating on the mask token and to get the mask token to an airdrop people are speculating that you could only do so through using metamaskers swap metamask swap feature um but you can see like how much i mean look at actually infinity's ronin bridge this is the bridge going in and out of their side chain it's crazy to see that they've burned fifteen thousand five hundred eight just from that bridge and then i mean it no the other stuff isn't surprising to me you know usdc i mean stable coins obviously uh decentralized exchanges aggregators like one inch shib i mean i spoke about this the other day strong block i have no idea what this is but that's funny new contracts being deployed 8 000 ether has been burned with just new contracts

being deployed so i mean yeah looking through this whole list here just it gives you a really really interesting glimpse into uh into kind of like how much is being burned by each party winter mute i mean winter mute is a market make a massive market maker within d5 uh they've burned 2200 eighth just on their own over all time so pretty crazy when you look at it like that um but yeah enough about 1.59 on to some other different topics today so anish from paradigm has built a new faucet uh for our test networks so roxton covangoli and optimism on covan uh now can be funded via faucet.paradigm.xyz so this faucet will drip out five eighth five we wrapped eight five thousand die and five erc2 721 nfts um no need to tweet your

address you just sign in with twitter instead to do this now this obviously just applies to developers this is not real tokens these are test net tokens they're worth nothing so don't get your hopes up you're not going to get 5e for free unfortunately um but yeah if you're a developer definitely check this out and not even just a developer if you're someone who wants to test things on a test net like maybe there's apps on there that's uh you know new releases of apps on a test net that's not a main net yet and you're a really big fan of that app then you could definitely use this as well so this is actually pretty cool because it's historically been quite hard to source test net funds in a kind of like efficient way you would have to like ask on twitter or there'd be some portals

here and there to get some but this is just kind of like putting it all in one place which is really really awesome so yeah if developer or not definitely check this out you may may find some use for it that's for sure so hayden from unisop announced that uh governance utop governance has approved a new 0.01 percent vtr for unisop v3 now i believe this is the lowest feats here in any amm i think uh curve is 0.04 or something like that for stable coin swaps so obviously this is going to be the lowest kind of like tier 4 for stable coin swaps and it's going to make it much cheaper to swap stable coins on unit top v3 rather than curve depending on the liquidity and stuff like that as well but you know the funny thing is i always thought

uh kind of like stable coin swaps were a race to the bottom in terms of fees because the reason the fees can be lower and much much lower on stable coin swaps is because you don't have impermanent loss unless one of the stable coins fails for example but in the normal case you don't have any permanent loss because they're both worth a dollar right whereas with a volatile pair such as you know how you pair with eighth usdc you will suffer in permanent loss uh over time in in in in either direction so you're compensated for that by a higher trading fees by the the fee tier being higher here now 0.01 percent on stable coin stops is fine i mean it's still profitable to especially i mean you're kind of betting on there being a lot of volume going through this sort of stuff

like you make up for the lower fees with more volume to make it worthwhile for people to put their stable coins in their in here in the first place but uh you know even still like you don't suffer in permanent loss by doing this so it's still something that's very attractive but i don't know like can it go lower than this can we get like 0.005 percent on the stable swaps can it get to literally like i don't think i don't think you can get the zero percent um but you know i think it can get like really really low and what does that mean for actual stablecoin aggregators like curve and and kind of like m stable and stuff like that maybe it means that they have to lower they lower their fees as well i don't i've always seen stable coin swaps as like a kind of race to the bottom in

terms of fees because it just doesn't make sense for them to be be high considering stable coin stops is one of the most popular things that people do on on ethereum on in crypto in general and the fact is is that the fee doesn't need to be that high for the reasons i outlined so cool to see this i'm gonna i'm gonna monitor this monitor the metrics around it we'll see what uh you know how much usage this gets over over curve curves obviously has a lot of liquidity in there curve already curve has a lot of integration network effects curve also has liquidity mining i believe it still has crv being paid out to people they have their way to lock up their token and earn extra yields yield to the gauges and stuff like that uh whereas unisof doesn't have that i mean

it could if governance voted for it but it doesn't have that right now so we'll have to see uh we'll have to see kind of like how that shakes out um you know over time all right uh so on optimism so last week last friday i believe i think i mentioned this on the refuel optimism's ovm 2.0 upgrade went live uh which means that they are now fully evm compatible not just evm equivalent and they also have a new form that projects can fill out to get on board onto the optimism optimistic ethereum network and you can see here in the discord channel uh in optimism's discord channel there is a bunch of announcement announcements being made with protocols being onboarded or being whitelisted to the protocol so you can see some of your favorites nosisafe is now on there has

been whitelisted i shouldn't say is on there yet wirelessly just means that they can deploy their contracts and get that all set up which they will do over time obviously it takes longer to do this depending on the project um but other favorites include curve you know you've got connect synapse uh uma d hedge uh uh i mean a few others there i don't know of optimistic bunnies optipunks i mean probably some forks of some nft projects uh poly network flux protocol but i mean this was taken just the other day sorry i think a couple days ago so i'm assuming there's more since then but i mean this is this is it i mean i know i said that i hope that optimism removed their white list once they did the ovm 2.0 upgrade but if they're whitelisting projects this quickly then maybe it doesn't

matter that they don't remove the white loose straight away obviously you know maybe it hasn't happened yet and we don't we actually probably won't know depending but they might i don't know if they'll do this or not like i don't know if there's actually a framework in place for them to not white list projects that they believe to be scams uh because if they do that then it gets a kind of like a bit murky but i don't know i haven't looked into that but it feels like that there are white listing projects really really quickly here and that's what you want to see i mean i want to see more projects on arbitrary optimism as the the you know the evm compatible uh uh roll-ups right now but i also want to see liquidity mining programs on here to get users to actually kind of go there right i mean

not just with the native token i'm sure there's going to be an arb and op token eventually but until that happens i i think these projects will have a you know a chance to do this and and run it through their governance or kind of like just do it in order to get more users using these sorts of things but just generally even without liquidity mining i think the more projects on there the more users we're going to see anyway and hopefully there's bridges coming from the centralized exchanges too i don't know like the thing is i was saying this in the in the discord channel today i mean i see very clearly kind of like the path towards ethereum scaling via rollups but it's going to require patience and this is the problem with a lot like the market more generally is that the market doesn't

like waiting right the market wants things to happen really quickly uh so that's why you see a lot of people kind of like latching on to these things that are ready today quote unquote ready today in terms of scaling right they have cheaper fees but they've just sacrificed decentralization and security to achieve that whereas doing it the proper way retaining decentralization retaining security scaling in a very sustainable way is a marathon it is not a sprint and it's going to take much longer than people would like but i'm i'm i you know i'm 100 confident that that's the right way to do it but it's the long game so you know if you're interested in the long game then these sorts of things uh you know you have to you just have to wait and you just have to be prepared to wait for these things

to kind of like play out i know i see some people saying sometimes uh optimus and arbitrary you know there's not much to do on there we're still waiting on like a money market on arbitrary all this sort of stuff and you know i get that i get that it's frustrating being an early adopter and stuff like that but that is the that's the kind of thing that happens when you're an early adopter that's why you get all the opportunities as an early user and and kind of like being early to the technology you get to invest early you get to be early to these things you get all the really sweet air drops and i was thinking about this the other day people want like mass adoption to happen really quickly but at the same time i don't know if people realize that means

their airdrops are going to like near zero because if you think about it say with the ens airdrop there was only like 140 000 ens names actually registered uh to an address right where it was actually tied to an address could you imagine if we had already onboarded like 100 million people and there were 100 million people with an ens address your airdrop would have been worth nothing like it wouldn't even be able to cover the gas if you don't if you did it kind of like um if you split up the uh the airdrop uh uh equally there and even if its valuation was a lot higher because there was more people in the ecosystem its valuation wouldn't match the you know that's a 1000x increase on the amount of address of the amount of kind of like airdrop recipients it wouldn't have been

a thousand exported when it opened that it opened at like oh it went to i think it went to almost 10 billion dollars fully diluted i'm sorry guys but it's not going to trillions of dollars in market cap so when you look at air drops in general i mean that's the kind of like uh reward for being super early like especially with the other protocols that have even less users than ens the ones that only have like 10 000 recipients for the airdrop that's that's like nothing that's why the airdrops are so big it's got nothing to do with the fact that kind of like crypto democratizes access to these things and kind of like uh does unique things like airdrops the reason they're worth so much per user is because of the fact there's not many users yet and you know you should say that as a blessing not a

not a curse and that's that's the way i say that's how i kind of like have all the patience that i have you know sometimes it's annoying for people that i'm so patient with things i know people sometimes get angry at me and be like come on man like this has taken way longer than we expected what you know aren't you a bit frustrated and i'm simply not i'm simply not frustrated i'm playing the long game i am not in any kind of like state where i need things to kind of like happen right now and i've always been like that i want to see even throughout all the the the bear market i never kind of like wanted things to speed up like even even waiting for like the markets to turn hot again i i don't remember ever being like i hope this i i i i want this

to happen right now god i'm being i'm really annoyed about this it was never like that for me it was like i know that the market's gonna go hot again i know it's gonna come roaring back i know that this technology is gonna kind of change the world it's just waiting uh waiting for it to happen and you know you look back and then you kind of like realize how quickly it actually happened obviously living day-to-day can feel slower but looking back you kind of see how quickly it happens relative to kind of like everything else so so yeah but anyway cool to see this uh from optimism here moving on so paulina had a great tweet now that optimism has upgraded to ovm 2.0 um you can see that they said now that we have an evm equivalent roll-up direct comparisons for a uni-swap v3 trade ethereum on

ethereum it costs 110 000 gas on optimistic ethereum it only costs 6 200 gas so that's an or that's a huge kind of like reduction in gas costs not 90 percent plus reduction in gas costs and then probably not notes notes saying that the above numbers are l1 gas and l2 gas is less than 0.01 percent and cold out of compression could potentially get this down to 600 gas which means that right now there's not much compression going on with the transactions at these roll-ups and this is what i've said before about how these roll-ups are an iterative thing it's not just like they've just launched and that's it like that's done they wash their hands with it how about it no not at all um and getting it down to 600 gas uh with core data data compression is a massive improvement that would mean that you

would get to the basically the 10 cents per transaction uh kind of like area based on current gas prices and the called outer part of the transaction is the part that can't actually be avoided that's the l1 gas part so that's why and that can't actually be um amortized it has to be compressed to get it down uh by amortized they mean that the l2 transaction fees that aren't part of the call data the kind of like sequence of fees they can be amortized and spread out across users but the call data the actual l1 gas phase cannot because obviously that has to pay 2 l1 which is very expensive um but you can compress that you can compress that down to you know potentially 600 gas and i think that uh uh calvin here from from optimistic ethereum actually

detailed about how you know they're looking into the compressing things and one of the nice things about their new fraud proof design which is still a work in progress but coming along nicely is that we can comp is that they can compress aggressively with whatever convoluted compression mechanism that you want to use and don't need to decompress on chains so that could be a reality 600 gas per per unisop trade which as i said that's like 10 cents for a unisop trade no one's kind of complaining about 10 cents that's for sure so uh yeah i mean this is just awesome to see these comparisons these these number comparisons here and awesome to see like how much more scalability is yet to come and how early we still are in the l2 ecosystem and as i was saying before patience guys it's all coming it's all

coming uh in waves we've got a lot to look forward to as ethereans there's no need to to rush i know that the market feels like uh you know and the market kind of like i guess makes you feel like there's a need to rush there is to an extent in that you may feel the need to rush because the competition is like gaining on you but at the same time as i've said before i really do think we're still like years away from mass adoption and by mass adoption i mean onboarding millions of users like a day sort of thing or like a week i really don't think we're we're um we're there yet and doesn't matter how much scalability we have right now it's actually overkill for a lot of these chains to have that much scalability some of them are hitting their limits already

like i saw the ronin side chain today which is an evm side chain that powers the axi infinity network uh that i think fell over because it reached capacity um that's because it is based on kind of like uh you know a side chain design with the evm it is not inherently very scalable uh they need to get onto a roll-up hopefully they do eventually i know it's a big ecosystem so it might be hard to do that but um as like as a kind of like a whole as like the whole crypto ecosystem we're just not there at the mass adoption phase yet there's pockets that have a lot of usage but we have time to scale i believe and we should do it right we shouldn't cut corners we shouldn't take shortcuts just for the sake of scaling now when we don't have

the demand to meet it like i know l1 ethereum has a lot of demand and people want to use these l2s but optimism and arbitrary aren't even kind of like anywhere near capacity they've still got their training wheels on because we haven't hit those limits yet so from that point of view you can see that there's just not that much demand just yet there will be i mean and you may say oh well this demand's gone to the other networks it has not it has not gone to the other nets i've checked the other networks guys like most of them have like hardly any usage and and and the uses that they do have uh i mean relative to ethereum and the usage that they do have is is all incentivized as well which isn't a bad thing but when you look at it from

that point of view you can kind of see that it's just like the same kind of money same kind of users sloshing around um and there's not many new users coming on board like don't get me wrong there are new users coming but it's more like i i don't know if i don't even know if it's a hundred thousand new users a week i would i would kind of like be skeptical of that it's probably like less than a hundred thousand new users a week onboarding when mass adoption is gonna look like millions of users kind of like onboarding a week and and it'll kind of like happen overnight we'll be blindsided by it so we've got time to scale and and i think we should do it right which is which the l2 teams are doing which i really really respect and appreciate of course

all right speaking of the l2 teams so argent has released their first uh stock net wallet uh called argent x now this is for developers to play around with you cannot um use this or anything unless you're kind of like familiar with the developer tools you have to build this locally i believe um but yeah i mean as i said before argent is going to be supporting uh stock net and zk sync and then they're going to be supporting other l2s as well they've been unfortunately hit hard by the high r1 gas cost because creating a smart contract wallet with argent is very very expensive to do on l1 it's hundreds of dollars of gas fees on l2 it's much less i think on optimism in its current state uh the cost is like 10 or something like that which obviously is still not you

know super cheap but on um stock net and on zk sync should actually be cheaper than that uh sorry i think i i don't think that was for arjun it was for gnosis so nurse's safe cost about 10 to 20 on i believe optimism or arbitrary one of the two but those costs are going to come way down over time and if we can get it to a point where it costs like less than a dollar to create like a fully fledged smart contract wallet then that's going to be awesome for users and we can probably get it cheaper than that but i'm talking you know short to medium term rather than very long term but the plan's still the same guys like very long term when we have the shards and statelessness and everything like that these costs are going to be basically negligible and they're going

to be low enough for the operators to cover them themselves and and basically it's going to be kind of like free for users i believe so massive update out of metamask and ledger over the weekend so metamask announced that they've partnered with ledger to improve the experience for customers now for those of you who have you who have been using your ledger devices with metamask for the past few months will have run into a ton of issues around connectivity uh you know but it's just not because of chrome you know because whenever chrome updates their browser they seem to break metamask and ledger integration well no more as i said metamask and ledger have worked together to fix these issues caused by browser updates on chromium browsers such as such as chrome of course um and if you update your metamask wallet extension to v

10.5.0 plus your ledger firmware then you'll all be good to go so you can see here in this blog post basically more details about this and kind of like what the partnership i mean it's a long-lived partnership as well so it's going to be basically them working together to make sure that uh this keeps working and doesn't keep breaking i mean this was obviously a thing that a lot of users kind of suffered from unfortunately um and a lot of users kind of had a hard time with and it turned users off using hardware wallets a lot of the time which is not what we want um which actually segues me perfectly into the next thing related thing i wanted to talk about was that you know the amount of people that i see playing kind of like i put this tweet out today where i said the amount

of people i see playing cowboy with large sums of crypto by storing it in a meta mask wallet is mind-blowing and i said meta redacted here because if you say metamask you get bloody spam with um kind of scam bots and then i said seriously get a hardware wallet don't wait until something bad happens to do it if there's one piece of wisdom i can impart on i kind of like all of you is that you need to get a hardware wallet keeping anything in a hot wallet where it's kind of like uh um not stored on a physical device um and you don't have to physically sign it is really really bad news guys like it i mean i'm sure you've seen the countless kind of stories on twitter about people getting their meta mask drained there's multiple ways it can happen one of the

ways that it can happen that unfortunately a harder while it wouldn't kind of um wouldn't protect you against unless you checked what you're signing is a man in the middle attack where essentially you could um um do a you could have generate a transaction right say you're doing uh kind of like a send say you're sending a to someone you generate that transaction but what can happen if there's malware on your pc uh essentially what happens is that the malware injects a different transaction into your metamask and it displays that to you and you unwillingly sign that transaction and and like process it and send it out into the world thinking that it was your transaction that you that you kind of like initiated and that is as i said what's called a man in the middle attack and that is how a lot of

people lose their funds now unfortunately a hardware wallet will only protect you against this if you actually check what you're signing so once it goes to the hardware wallet you can see on your little screen details about the transaction but a ledger nano s or x will will not really show you anything because the screen's so small and a lot of the time they'll show you a little bit but um and then some of the time that they won't show you anything so it's really really crappy from that perspective as well um but what how a hardware wallet will do is it'll basically keep your funds really safe and secure on there instead of it being kind of like on your pc where malware can get into your metamask and do other nasty stuff with it as well um and on that note of kind of like signing

transactions and being able to see it this is why i love the lattice one hardware wallet from grid plus and this is not kind of like a plug or anything i'm not i'm not getting paid to say this but this is why i love their hardware wallet because it actually gives you a full size screen which allows you to uh to basically see what you're signing on it like see the whole kind of transaction and confirm that you're actually signing the transaction that you originally intended to to sign not something that someone has injected so that's a good way to keep safe but also the number one thing that you need to do when you're setting up a metamask or a hydra wall or anything is your seed or secret phrase as it's known that needs to never ever ever touch any type of digital kind of

like thing ever like don't put it in your phone don't put it on the pc don't save it to a text file don't put it you know don't email it to yourself don't do it any don't do any of that sort of stuff write it down on a piece of paper temporarily and then and then kind of like secure it even even more than that so write it maybe if you have to write it down on on a physical kind of like piece of paper put it in a book to protect it or something like that or put it in a safe or put it in kind of like uh or split up the um the seed phrase or the secret phrase as well and make sure that that's kept safe or you can get these kind of like middle metal sheets um you can buy them online that are

basically fire resistant kind of like electrical shock resistant water resistant where you can kind of like input your seed phrase into that but once you do that those 12 or 24 words if they if an attacker gets access to those they can drain your entire wallet and not just one wallet all the wallets associated with that so that is what you need to protect at all times and and you know as i said you need to never put that on your pc or any type of digital kind of like um area and the reason why a lot of people actually get compromised is because they go to a fishing website that asks them for their seed phrase or their secret phrase and they put it in never ever ever guys never never and the thing is is that like i say this and then people ask me well

what if i have to like restore my metamask while on a fresh kind of like pc build using my existing secret and a seed phrase and i'm like well i mean i can understand that but at the same time you shouldn't be using metamask as kind of like a a kind of like what a hot wallet for anything more than like a a small amount of money all your addresses and your in your seed phrase should be tied to your harder wallet because you can do a pass-through like as i was explaining before metamask works with ledger you can basically pass through your ledger um all the wallets on your ledger device to your metamask and then do the whole kind of like transaction flow instead of generating a wallet on metamask and storing funds in there so from that perspective because the um the hardware

wallet device gives you the seed phrase on the actual device not on your computer not on anything networked you get it on there once you write it down on a physical piece of paper and that's it or and you kind of like put it into that metal sheet thing or um or secure it some other way and that's it that never ever touches anything ever again except if you want to restore into a new hardware wallet of course you can do that as well where you can input your um your c phrase into a harder wallet but never put that online or anything i can't i literally can't stress this enough guys i've seen so many people kind of like get tricked into this um that is basically the key to your kingdom that is the key to everything that you have and you won't even notice

that it's been gone by by the time it happens because it'll happen very very quickly because it's an automated process a lot of the time where they take in the seed phrase they use a piece of software to run it against the um against the thing then they'll probably have a bot set up to quickly drain all the ether and popular tokens out of it and then you might have some other tokens and nfts that they don't know about and then when the attacker goes to manually review them they'll get those as well so be very very careful out there guys uh you know you don't want to be a victim of this it's definitely it'll definitely be the shittiest thing that'll ever happen to you if you get kind of like uh attacked and your funds stolen especially if you've been stacking for quite a while i would hate for that to

happen to any of you so yeah heed my warnings um get a hardware wall if you don't have one that's like step one basically and make sure that your seat or secret phase is not on your computer or anything like that make sure it's only in on a physical piece of paper or one of those metal sheets um but yeah i think i'm going to end it on that notes for today 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