Hashmasks unleashed, Layer 2 DEX growth and more - The Daily Gwei Refuel #48 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel where i recap the latest news in the ethereum ecosystem i'm your host anthony sosano and today is the 2nd of february 2021 all right everyone let's jump into the news from today so i think the last 24 hours really on crypto twitter has been dominated by this thing called hash masks now for those who don't know hash masks is a new kind of digital art kind of nft collectible that was launched i think a few days ago and you could buy them for a few days in tranches so the first tranche started at 0.18 per hash mask and there was like a limited number you can buy at that then it increased and increased increase until i got to the end and i think the last few were i think there was three available for 108th

at the last tranche and when you bought them you didn't know which kind of one you got you didn't know how rare it was or anything like that you wouldn't know until they were all bought so uh yesterday they all ended up being bought uh and and kind of the the uh the sale completed and everyone's hash mask got revealed and their rarity and everything got revealed as well so the way it works is that you get you know these unique hash masks and they have unique traits very similar to crypto punks and obviously uh there's rarer traits or more common traits and you know people bought like one two three you know maybe a hundred of these hash masks and you know the rarer ones you got the more that it's theoretically kind of valued at and i and i made this meme here that uh i mean i bought some i

got one good one that's kind of semi-rare but not really like one of the rarest or anything like that and the rest of them are kind of kind of garbage but i put out this meme here as you can see on the screen uh that it just reminded me of the simpsons when homer's trying to build a barbecue and he you know he looks at the box and he says yeah that's one fine looking barbecue pit and then you know he puts the box down and you can see that it's it's kind of uh it's kind of a trashy heap but basically what i really liked about the hash mask was that the art is really cool so if you know if i actually bring up their twitter account here you can see the art here they're like posting a bunch of pictures of the different hash masks and

you know the different rare ones and stuff like that and you know originally i actually thought hash mask was just like an opportunistic ripoff of crypto punks because it kind of came out of nowhere and obviously followed the crypto punk's hype but it's it's it's quite unique i really like it you can actually name your your hash masks as well and every one of them can have a unique name too so if you manage to snap up a a a name that was kind of like uh still available then that adds even more rarity to your hash masks and the way that you change the name is with the name change token so there's any rc20 token that is tradable and you know your hash marks hash masks accrue this token uh you know every day at a certain rate so

there's that aspect to it as well but yeah i mean i'm just scrolling through here you can see there's like you know a bunch of different designs here each one has like a different hat like a different mask a different item that's holding skin color i think um type as well and like i think the rarest out there is called a mystical uh kind of uh hash mask and and that's like 0.1 percent chance to get it so it's extremely rare but yeah what i really liked about this was that the art uh not just the art being really cool but you know i think the the reason i mean the art's cool but i think what the what the art of being cool does is it brings in newer people into the ecosystem right you know crypto punks wasn't everyone's cup of tea you know it didn't really

have any i mean they look cool but it's more about i think than the nostalgia factor with crypto punks in that people that have been around for a while i've been following the nft space for a while you know that's the first nft so obviously you want to buy it and it kind of appeals to a different crowd whereas the hash masks you know there's very different designs um and and they're very different to crypto punks and i think there's 16 000 of them uh or a bit over 16 000 of them and you can see here there's like robots that i mean i guess this this this person says it looks like c3po um you know and i thought the robots were really cool and i think i remember dc investor actually um if i go to dc investors profile here he actually got a really cool one you

can see here this was actually i looked at this i'm like that's awesome he's got like a little shadow monkey on his shoulder here um which is uh i think incredibly rare as well so yeah it was just really cool to see the community showing off that what they had right what they what they got it's like when i guess you used to buy trading card packs right as a kid and then you'd open them and then you'd be at school or something and then you'd show off the cards that you got to your friends that you you open the you know from opening the pack and i think that's kind of the same experience that that happened with hash masks here so i'm really excited to see this expanded and this this kind of like taken further than what it has i think this can actually be expanded

and extended to so many different use cases like you can create i mean not every one of them is going to succeed just like every not like like every trading card succeeded or trading card game succeeded but i think this can be extended to a bunch of different things where you can do different art different implementations of it i mean the design space here is insane and we've literally just scratched the surface it's not even i guess for me it's not even just about like the value tied to it or anything like that that just supercharges it i think it's also about you know the community aspect right collecting these things as part of a community and getting back that feeling that you had when you were kind of a kid collecting these kind of things together right that's something that hasn't been around like when you're an

adult because you know it's usually regarded as a toy or it's just not something that you it's worth spending your time on but now that you know this is happening within the ethereum ecosystem and there's a bunch of different things happening you know the potential is there to make money as well um and you know there's no kind of like um you know bias against or anything like that like some people don't understand the value of nfts but even they said that the art was cool right they actually thought it was it was cool the art and and also how it was done with the reveals and things like that so yeah i'm i think we're going to see a lot more of this i don't think this is it i think the nft space is going to get wild there's going to be so many

experiments happening here and what i really like about it as well is it's less prone to quote-unquote rug pools than um i think like d5 yield farms are right where you know you get you know you you know you know you're getting something tangible for the money you put in right even if you're using it as an investment vehicle um i think it's less you know kind of i guess speculative than just buying a bunch of tokens and using them as investment vehicles because even if you buy an nft and maybe you know you like the way it looks and you think it looks cool and you want to own it and you want to kind of display it on you know in you know decentraland or something like that it still has value whereas if you buy a token that turns out to be a scam or something

you know that token goes to zero so if an nft project turns out to be you know maybe a scam or a rug pool i guess you still have the nft at the end of the day so i mean that's trying to put a positive spin on something that's that's very negative but i think uh still from that point of view even if the project fails right even if it's just like a not even a scam but just something that people just weren't interested in you still have your nft on chain no one can take that away from you i guess if it's set up in the in the correct order so yeah i'm really excited to see that uh play out over i guess the next few months and years but we're just getting started here uh there's a i mean personally i haven't

paid as much attention to the nft space as i would have liked to because so there's just too much happening in d5 but i think you know it's worth spending your time kind of paying attention to it learning about it there's tons of resources out there now um that you can find just going on on twitter there's a bunch of people you can follow i don't know all of them off the top of my head but you you can you can find them they're not hard to to find so i mean i'm sure if you just google nft newsletter there'll be a bunch of things that pop up as well so i think that you know giving that kind of some of your time is is worthwhile at this point so layer 2 is a big topic right now within ethereum and actually on that

note i think nfts are being priced out unfortunately of the ethereum main chain because they're because it's very costly to do anything on ethereum right now it makes sense for d5 but for nfts you know it doesn't make sense to trade a one dollar item for ten dollars in gas fees and it's probably much more than that in gas fees considering how high the fees are so i'm curious to see what kind of i guess layer two ecosystem the that develops in the nft space which i'm actually going to talk about in a sec actually infinity is working on this but what i wanted to focus on focus on first was this uh trading bot that i follow or this bot that i follow on twitter that basically tweets out every 24 hours the layer 2 decentralized exchange trading volume now you look at this right you look at

number one it's loopering with 10 million dollars of trading volume over the last 24 hours which i actually think is an all-time high for loop ring trading volume uh maybe not but it's definitely one of the higher days here but this caught my attention because when i look at this i get flashbacks to another bot which used to track the oh it still does track the layer one trading volume on ethereum right uh like uni swap and things like that now i went back and checked and i've written about this in the daily newsletter today um but i went back and checked and in may of 2020 right nine months ago uni swap was only doing 10 million dollars a volume every 24 hours yep yep that's right only 10 million dollars of 24 hour trading volume nine months ago

and for any of you kind of keeping track of this today unisop is doing one billion dollars on average of 24 hour trading volume which is a 100 times increase in nine months now do you maybe you see what i'm trying to draw here and the kind of like the dots i'm trying to connect here what i'm saying is that i think loopering and other layer 2 kind of decks this year even though their trading volumes may seem low relative to their layer 1 counterparts i think we're going to see a very very quick growth here over the next few months because it only took 9 months for uni swap to grow to a billion dollars in trading volume so i think it's actually going to be faster because we know how unisop grew right we know kind of like uh you know a lot of unisof's growth can be attributed

to d5 summer of course but what happened in d5 summer to drive that growth liquidity mining right yield farming all these d5 products entering the mainstream consciousness we have more uh people using dfi now we don't have to kind of like bootstrap that community base anymore we have it and we know how to bootstrap liquidity loopring is doing liquidity mining on their layer 2 exchange they know what they're doing we have users who are already used to using metamask which you can use metamask with loot bring you don't have to download a new wallet you don't have to do anything else you don't have to change your rpc connection on metamask you can just use it and migrate to it and and kind of deposit and withdraw out of it very simply right they have like a whole process for this so and and i was actually super

surprised by the fact that unisop was only doing 10 million nine months ago uh that i mean obviously crypto time it feels like forever ago right nine months is literally decades in traditional finance if we're comparing the two but still i think that people you know i get some people messaging me sometimes like you know layer two growth seems slow you know what's happening here the fees are killing us like and i'm like to them i basically say like it's it's pretty quickly for what it is right we're already at 10 million dollars of 24 hour trading volume over the last i think month loopering has really grown into this um on their layer 2 exchange and there's a bunch of others here it's not just loot bring but they're obviously a lot smaller but you know then i i had to go back and

look for the piece that i wrote today and i was just shocked that in may of 2020 i actually went back and looked in 2019 and the trading volumes were obviously a lot less back then but towards the end of 2019 i think it was like three or four million for uni swap which i expected because 2019 was a completely different time but i did not expect to see only 10 million dollars on uni swap in may of 2020 just nine months ago and a 100x increase in a year or sorry in nine months is incredible growth so for all the reasons i just outlined i think that layer two is gonna grow as fast if not faster which makes me incredibly bullish i mean how can you not be bullish on layer 2 when you when you kind of look back and see that i

i mean it's not guaranteed that it's going to grow like this but i mean i don't see a reason why it won't the gas fees are persistently high i don't see them ever coming down to a reasonable level to where you know retail traders or or traders who just want to do a couple hundred dollars of swaps you know it cost 50 to do that on uni swap or i guess like 30 40 50 whatever it is right now layer two it costs like i think two cents or something on blueprints exchange and it's obviously like much faster and instant and you get the same security guarantees as ethereum's main net or at least similar security guarantees that right there is why layer two is gonna win right um so yeah very very excited to see that but i'm still like in shock i only

discovered this like a couple of hours ago that you that unicorn's volume was that low just nine months ago uh i you know i obviously spent a lot of time in dfi and monitor all the growth but if you spend every single day in the ecosystem it feels longer than nine months like it actually feels like it's been 10 years if i'm being honest especially given how crazy of a year 2020 was and you know obviously i feel like i've aged 10 years but basically yeah i think that keeping an eye on this and following this account is going to be really great i think we're going to see much more growth in in the coming months not just for loop ring but other layer 2 exchanges and you know unit stops going to layer 2 as well so it's just i mean just uni swap going to layer 2 alone is

going to blow out these volumes to hundreds of millions of dollars over 24 hours pretty much like maybe within like a week or two of uni swap launching on layer 2. i just i don't see a world in in which layer 2 doesn't get to billions of dollars of trading volume um over 24 hours this year like i think it's actually going to surpass layer one um by the end of this year um i guess like i wouldn't say it's like 100 chance but you know maybe like a 50 to 70 chance of having to put a number on it uh just because you know layer one's gonna grow as well right so you know maybe i should say that the layer two volume is gonna surpass layer one's volume today right so we'll see how that plays out but yeah just something to to keep in

mind and i wrote a little bit more about this in the delegate newsletter but i guess i just gave you guys like a summary there so yeah um i guess like yeah layer two paying attention to it is gonna be the best use of your time uh for over the next few months and i mean on that topic as well you can see here that another layer two app called zk sync which a lot of you may be familiar with from git coin so zk sync is integrated into git coin it's like a payments uh layer 2 app and you can donate to to uh two uh different git coin grants on there during the matching rounds and it's much cheaper i think it's like ninety percent cheaper than main net which is crazy because i think it costs over a hundred dollars if you donate to a bunch of projects on

layer one uh whereas obviously that's bad because a lot of the donations are small right they're like one five ten die donations so you obviously need layer two for that um and that's what zk sink is and they just crossed one million zksync transactions which i thought was awesome right and i think we're gonna get more much more than that because uh you know the next bitcoin grants round i expect to be massive which is happening in a few weeks i expect that to be the biggest round ever because of the fact that i guess the ecosystem has made a lot of money lately and there's a lot of money to give away and to donate and we've got a lot a lot more people in the ecosystem now so i expect that to be quite large um so yeah that's just going to grow as well

um i spoke before about nfts being unfortunately priced out of layer 1 or at least not all of them but but but most of them uh and you know actually infinity i think is one where axe infinity is this pokemon like game where you can battle with your little axes and collect them and kind of earn rewards and stuff like that so what they've been working on over the last few months is a scalability solution for the the the axia infinity game uh called ronin now ronin is a side chain uh to ethereum but their plan is to basically make it so that the side chain check points to ethereum for its security now i i'll do a little bit of a job explaining what i mean by checkpointing here because i've talked about layer 2 before

and how i sorry scalability solutions on ethereum before and how there's a very key difference between layer two and side chains so layer two is inherently secured by the ethereum main net right that's that's the the definition of layer two whereas side chains are secured by their own validator set now what this means is that the ethereum miners for example do not secure the sidechain the sidechain is secured by their own miners which are usually um proof-of-stake kind of validators uh because no one uses proof-of-work mining uh for for these new new networks um anymore so but what these side chains can do is they can actually checkpoint to the ethereum main chain so they can save their state essentially the state of their side chain to the ethereum main chain and then that

becomes secured by the ethereum network so that if there's a malicious thing that happens on the side chain you know say the validators take it over or something really bad happens you can always go back to that checkpoint and kind of reboot from that now the frequency of the checkpointing uh i think would depend on the gas fees because i i'm assuming here that checkpoint isn't going to be cheap to the ethereum main chain so you obviously don't you obviously can't be doing it like every second or whatever or even every minute maybe not even every hour depending how expensive it is but maybe you're doing it once a day maybe you're doing it once a week right and obviously you know that that becomes an attack vector i guess where you checkpoint on a monday and then

someone says i'm going to wait till sunday to attack this you know ronin side chain and mess everything up so that they have to checkpoint back to to monday and lose all that progress so i think there might be some ways to randomize that as well where you can do a you know a randomized shuffle of checkpointing so that no one actually knows when the checkpoint is going to be taken there's probably some zero knowledge magic you can work into this so that no one actually knows when the checkpoint's taken at all right you know that it happened but you don't know when it happened and that's actually possible with zero knowledge um technology uh from what i understand so that's another really cool thing there and bringing it back to rowan and i think that's what their long-term plan is and i think that's what pla uh what um

other side change solutions like matic and extern network want to do as well so i think we're just to have this very very nice ecosystem of of side chains and layer 2 solutions that are going to scale ethereum to billions of users and you know maybe the other blockchains play into that as well you know i can see that other layer 1 blockchains when they bridge into ethereum just to be side chains to ethereum but at the end of the day ethereum in my view is always going to be the most secure settlement layer on the planet right it's going to be where everyone goes for their assets all the assets are going to live there any assets that aren't on the ethereum main chain are going to be wrapped and put on the ethereum main chain everything's going to settle there even i can imagine a world where even like

other blockchains might try and settle their state to to eth1 or sorry to the ethereum main chain that might be way too expensive and might not even be possible but if it is you know maybe they they they decide to do that i guess depending on how expensive it is so yeah i am just like super pumped to see this happening because i you know i mean typically actually in the past before i dug more into side chains i kind of thought they were a mess solution i thought that layer twos would be better but there are trade-offs to each each kind of thing here you know layer twos are awesome but you don't need that extreme security for everything now side chains fill uh niches in that regard where say you want to do like a decentralized twitter for example a layer 2

unfortunately even in eth2 with sharding is probably not going to get you to the scale of a decentralized twitter at this point in time it's probably gonna take a while before we get there but a side chain might right you know a side chain that has only a handful of validators which probably centralizes it a bit but you know it's still better than just like a fully centralized kind of party that can you know host a decentralized twitter and then you can checkpoint to it the ethereum main chain and checkpoint user balances checkpoint user you know points and and stuff like that and use a state that is the future that i see happening and i'm looking forward to you know seeing which projects kind of win here i think the leaders right now are exti matic ronan's very new so i don't know

if they're i wouldn't say they're a leader yet but axiomfinity is definitely a leader in the nft space so yeah i'm really looking forward to seeing how that all plays out over the coming months so alpha hemorrha v2 has officially launched so i think i've spoken about this before and just full disclosure here i own alpha tokens but basically what alpha hamara is it's a yield farming uh app that lets you do leverage yield farming and it's one of the i guess for me i mean the reason i hold alpha is because it's actually one of the best products in d5 right now uh it came out of nowhere right um but it came in and it's like a top 10 d5 project now and with the launch of v2 they're basically i guess

upgrading their entire system adding a bunch of new features but the most exciting feature that they're doing is that they added a bunch of these new uh four leveraged pools uh from curve finance from balancer sushi swap and uni swap and in particular the curve finance one is a is the three pool so the usdt usdc dive pool and that's very safe for yield firing because it's stable coins only and you can see here andre put out a tweet today that the three pool was actually doing by using leveraged yield farming was paying 346 on your stable coins and the last time i checked i think it was more than that when i checked a few hours ago it was 500 percent on your stable coins obviously this is going to come down

but the reason that they can do this is because of uh leveraged yield farming right basically leveling up and and getting a bonus here you can see here that on the picture on the image for the curve 3 pool they've crossed out 18.45 which is the normal yield you would get just farming with curve and they put like 346 percent there which is the kind of apy that you get for uh for kind of doing this leverage guild farming with this three pool that's just awesome and and this is actually enabled by the iron bank so i've spoken about the iron bank from cream before where there are protocols that can become white listed to basically uh do under collateralized lending from the different platforms because you know

that they're going to pay back the collateral right you can trust that they're going to pay back the borrow that they've done and because of this you can see this tweet here from sam sam priestly he says that you know alpha homo v2 launched and immediately ate up all of the available stable coin liquidity in the iron bank um which is obviously huge for alpha and cream and also wi-fi or urine because your own has different vaults as well for this sort of stuff so this is a huge kind of narrative that i'm taking that i'm kind of um or use case that i'm paying attention to is this idea of protocol to protocol i guess not just like under collateralize or zero collateral lending but protocols working with each other and trusting each other um because it scales a lot better like trying to trust like users isn't

inherently scalable because you have to trust like potentially millions of users right and it's very very hard to trust them to you know not run away with the money if you do zero collateral lending but this can be extended right because what they're doing now is we're trusting protocols but what you can actually do is extend this where the protocol can trust the user um with with you know a borrow or an under clarifies or a zero card or borrow because they can put limits on what the user can do with those funds so if you say go to the app and you say okay i'm going to use these funds to yield farm and you know if at any time i need that these funds need to be kind of paid back to you know pay back my my kind of loan or to re-collateralize

the system you can take them right the protocol has the permission to take those funds now obviously there's security kind of um implications here and it needs to be done in a certain way to preserve that and preserve user kind of security but that is really really awesome as well i think so guaranteeing on chain that the protocol can access this liquidity when it needs to to pay back loans or to reclaralize itself so that it doesn't just become a kind of thing where the funds are lost sort of thing so i think that's really cool as well and that's a different kind of way and scalable way to do it from from like protocol to user but we're going to start with this protocol to protocol stuff that happens and then once we kind of do that right and we get

comfortable with that it can be extended to users which i'm really looking forward to and on that note another project that i wanted to talk about that published their blog post today about why they're building maple is is maple finance so full disclosure i'm an investor in maple finance i actually uh met the guys the founders of this in in melbourne um where i live a couple years ago or maybe a year and a half ago or something like that early 2019 or i think it was early 2019 yeah back when i wasn't even working in crypto i was working at my old job so it's been a while but they've been building this for quite a while and so what they're building is a i guess a defined lending protocol for kind of more of the corporate and institutional side of things um to bring credit to them so if you

kind of see i guess like lending platforms or money markets today on ethereum they don't have a concept of credit you know i was just talking about zero collateral loans to different protocols but right now users can't take out zero collateral loans on ethereum on these money markets they need to over collateralize you know on pretty much all the money markets now you know you might draw a corollary here and say okay well why don't we have to over-claralize in real life why can we do zero collateral kind of loans in real life with a bank or whatever and i mean technically you're not doing zero collateral the collateral that you're using in real life is your identity right is is is the fact that you know if you don't pay back this loan the bank could pursue you for this they could get kind of um

uh you know the law enforcement on you they can get regulators on you they can get uh debt collectors on you right because they know where you are and you know the the legal system kicks in then right even if you like i guess try to flee the country you know if it gets to that point right you're probably like going to be put on a no-fly list or something or or like track down i mean it just becomes a mess right so your collateral is your identity is the fact that they know who you are and the legal system is there to protect the the lenders in in real life right so from that point of view uh the money markets on ethereum don't have credit they just have like over collateralized lending and borrowing so what maple is trying to do is they're trying to bring this concept

of credit to ethereum um through various different ways i won't explain you know now how it all works but i suggest going to check out this project if that's something you're interested in but this blog post is really interesting as well they just basically give a kind of tldrs as to why they're building this um you know kind of talks to what i just spoke about as well but i think you know the reason i invested in this company is because i believe this is going to be you know a huge kind of market a huge tool for a lot of i guess the traditional folk to get into this sort of stuff they don't want to over collateralize loans like that that doesn't map to the reality of what they're or what they're currently doing um and it's just such a waste of capital

right the capital efficiency is just out the window and you do have over clarorealized loans because you can think about for example think about like i mean all the eats sitting in make a dao right now all that eighth is backing up die for example um but it's it's just a waste right there's so much capital there that it's just wasted it's just sitting there doing nothing so the capital efficiency is just really bad and i guess that's what alpha finance and either iron bank and kind of all those things are trying to do with the protocol to protocol zero collateral lending is make sure that it's not just wasted right is that the capital that doesn't just sit there and do nothing it's actually used in a safe and scalable way within d5 so you know that's what maple's trying to bring i guess to the traditional finance

system to corporates the institutions who obviously have you know uh the hunger to get involved with this stuff but they're not going to over claralize things they're probably not going to use a lot of the money markets that are live today at least in their current iterations they're probably going to want you know a human to kind of interface with so that's what kind of maple's building here so yeah i won't show it too much i should just going to check it out because it's a really awesome project they're not live yet they're currently building but they should be alive sometime soon um but yeah i'm very i'm looking forward to seeing how this kind of plays and and and kind of like what the reaction is within the community to it if we see you know this expanded out to the community and see how the the regular

community interacts with it you know rather than just the traditional finance folk which i think is actually gonna be quite cool to see but yeah go check it out if you haven't yet and uh i guess that's it for me today so yes thank you everyone again for watching and listening subscribe to the youtube channel if you haven't yet give that video a thumbs up join the discord channel and subscribe to the ethub beef hub the daily grade newsletter i also do an ether newsletter for those who don't know you can check that out too if you want but yeah subscribe to the daily grade newsletter and i will catch you all tomorrow thanks everyone