Lawsuit over TC sanctions, PoW vs PoS and more - The Daily Gwei Refuel #444 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delegate refuel where i cap the latest news and ethereum ecosystem i'm your host the anthony and says the 9th of september 2022 all right everyone let's get into it so the biggest news of the last 24 hours is that a lawsuit has been brought against the treasury department in the u.s over the tornado cash sanctions and the lawsuit is being funded by coinbase themselves now there are i believe six or seven plaintiffs on this lawsuit and uh three of them i hear preston van loon who you guys will know as one of the co-founders of prismatic labs building the prism eth2 client uh i guess consensus layer client um uh blast easy here or his name real name's kevin uh who is working at grid plus and has been a long time ethereum

community member and alexander fisher here who is also a long time ethereum community member and he's also very interested in space lately i follow him so i see his tweets of course but uh this is a big deal guys i mean coinbase bankrolling a lawsuit against the treasury department of the us government over tornado cash sanctions that's a mouthful is a huge deal for obvious reasons now the fact that they've got actual ethereans on here as plaintiffs against uh the government and these people have actually stood up to do this is amazing i mean i put out a tweet uh yesterday where i said uh ethereums are so based like this is just so amazing that these people are putting putting their necks out and doing this and fighting for this especially

coinbase as well i know you know there's coinbase gets a lot of flack for a lot of things and they're not perfect they're but they're a big company right no big company's perfect but i think that they're doing an amazing thing here honestly i think this is one of the best things coinbase has done uh recently and i actually i don't know if i mentioned it on the refill but i was talking to friends about this saying that if we don't have these people in the industry or these companies uh standing up for the uh the principles of crypto then what are they even doing you know these companies make so much money from this industry they should be standing up for uh things such as tornado cash right and that if i guess like for privacy that's exactly what they're doing here now if you

missed that you can read brian armstrong's thread here and the blog post from coinbase themselves they're not trying to uh i guess remove the sanctions so to speak i think what they're trying to do is show the treasury department that they overstepped here by sanctioning code instead of just sanctioning an entity or individuals because by sanctioning code this is the first time it's ever been done they are possibly in um in violation of the us constitution and if this kind of lawsuit goes the way of coinbase and the plaintiffs here then we could essentially see potentially see these sanctions being changed and being ruled unconstitutional so i don't know what form that will take obviously i'm not a legal expert here but it could mean and i'm just speculating it could mean that the sanctions themselves the

the sanctions against the tornado cash contracts themselves are removed and they just put on certain entities and and and and um individuals i don't know like i said i'm not a legal expert we'll have to see how that plays out there uh but yeah i mean just to kind of like catch you up to speed on tornado cash as well the dev is still arrested i mean i i mentioned that he was arrested by dutch authorities and he's still under arrest for i think up to 120 days before they're going to charge him with something i'm assuming they're going to drag this out as long as possible probably to the last day and then charge him with something that probably isn't even related to what they arrested him for to begin with that's obviously a shitty situation there i there hasn't been any updates on that front this is

just the only update that i've seen recently but this is a big deal you know i know that the crypto news cycle moves really quickly and people and people and the com people die down the conversations about tornado cash and about the sanctions but just because people stop talking about it in the day-to-day news cycle doesn't mean that it's still not an important issue that needs to be addressed and i'm just as i said before i'm very very glad to see coinbase funding this lawsuit uh and i'm glad to see these plaintiffs stepping up to the plate here and on the tornado cache uh subject as well peter van volkenberg from coin centre put out an interesting kind of tidbit here saying fun fact the us government can still use tornado cash because there is a provision here that says official business of the united states government

all transactions prohibited by this part that are for the conduct of the official business of the united states government by employees grantees or contractors contractors therefore are authorized uh as can all of these fine folks as well that can basically still use tornado cache and not be in breach of the sanctions because there are exceptions here now obviously this applies to many parts of the law this is nothing new but the irony in the fun fact is at the end of the day these sanctions are put on i guess u.s citizens law abiding u.s citizens and the government of course is exempt from this for reasons that they're you know i guess like you can imagine the reasons of why they're exempt from this is this a bad thing is a good thing i don't have an opinion on that but it really just speaks to the

the fact that this sort of stuff really is unconstitutional in in my eyes as i said like i'm going to say it again i'm not a legal expert but from all the experts that i've read on this topic there is a consensus around that fact so i'm really really hanging out to see how this lawsuit goes i don't know how long it's going to take for us to get a resolution here it's probably going to be drawn out quite a bit this is not something that should be taken lightly this is you know going against the office going against sanctions right like sanctions are one of the i guess like only tools nation states have to other other nation states especially nuclear-enabled ones as you've been seeing play out with the ukraine russia conflict i mean if russia didn't have nukes it would probably be going very

differently right they would they wouldn't just be sanctions i i i would imagine there'd be maybe even more than what the us is doing by giving weapons to ukraine they would probably be mobilizing uh themselves right because we've seen this play out before uh within conflicts around the world but because they are a nuclear state uh because obviously putting troops in there wouldn't uh would probably kind of um not end very well uh there's the sanctions right and the sanctions are a very effective tool at least the u.s government believes there are well governments around the world believe they're a very effective tool so uh going against those things is going against the national interest right or at least the national interest as the us government sees it so this lawsuit is definitely doing that but this lawsuit is really to show the

treasury department that what they've done here is not right by sanctioning code they should only sanction individuals and entities and sanctioning code is taking it a step too far so i'll keep you guys updated on this i'm sure you're going to see it all over twitter anyway there's no no need for me to update you guys on it but i still like talking about it on the refill because i think it's very topical obviously i spoke about the tornado cache stuff a lot when it first happened but as i said just because the conversations have died down over the last few weeks doesn't mean stuff isn't happening in the background the wheels of the law and justice move slowly but they do move i know it's frustrating because we're in crypto everything moves really quickly and then when something kind of meets the the law meets the the

political process it can move very very slowly but that's just the way it works in that world so once again very very proud as an ethereum to be among people who will put their neck out to fight for this sort of stuff and be plaintiffs against this this sort of stuff and i'm very excited to see how this shakes out all right so uh stateful works has a new blog post out here called the merge manual which is a collection of perspectives from 60 plus core devs collected over the last month and this is on mirror which means you can collect this post as an nft on the optimism network which i already did of course i i was the first one to collect this i always love doing that i messaged trent i'm like hey i'm the first one to collect your uh your nft

you can see here the delegate logo i collected it on sassel.eth and he's like man like i can't thank you enough for your support look it's the least i can do the work that statefulworks has been putting out has been nothing short of amazing and the merge manual fits that description perfectly now you can go give this manual a read for yourself it is quite lengthy but basically what it is as described here is a collection of perspectives from the 60 plus core devs collected over the last month around the merge around the work that it's taken to get the merge here and it's perspectives from you know diff obviously all the different teams all the different core developers within the ethereum effort on both execution layer and the consensus layer side of things which will just become one ethereum in around you know five or six days here which of course is

awesome but yeah i'll link this in the youtube description for you to go um go read it and you can collect the nft as well if the nft is free it just costs gas and because it's on optimism it's a negligible cost anyway so you can definitely go click that if you haven't yet and go give the post a read i'll link that in the youtube description all right so speaking of things related to the merge obviously we've all been hearing about these proof-of-work forks that are potentially happening uh after the merge or you know maybe like at time of the merge and there's been two or three of them and there's really been one that has made a lot of noise and that's this one called eth power or ethereum powell right and as you can see here frankie from paradigm has uh put

out a post our tweet where he said we've reached the point in the eighth power saga where the coinbase protocol team themselves are submitting prs to the repo to get the chain id issue solved and still no response from the team so as i've explained before the chain id issue is the fact that the ethereum main network the one we all know and love is chain id one now if you're a fork the ethereum network you should change your chain id because if you don't there's a risk of replay attack now if the eth power chain does not change the chain id and stays as chain id one what can end up happening or what potentially does will end up happening for a lot of people is that if you do a transaction on the ethereum proof of work chain say for example you sell all the 8th power

tokens on the ethereum work chain that were in your wallet that transaction can be replayed by anyone on the main ethereum chain which means potentially your real eat could get sold without you even doing anything because you did already do that transaction on the eighth grip of work fork that's why changing the chain id is so important to prevent this now obviously if you don't touch the eth power fork at all then it won't actually affect you at all on the ethereum machine you don't have to worry about this at all that's why i've said before i don't think it's a good idea to touch this chain even if you think you're going to get some money out of it it's probably not worth it because you could potentially lose things on the main chain now another way to protect yourself from this is to basically do

what's not what's called nuns grinding which basically means do a lot of transactions on on main net uh to get your nuns up of the account after the fork happens and then you'll have a different nuns on the eighth uh proof of work um chain so you won't be able to be replayed there until you caught up again uh but yeah i mean by that point you'd probably sell everything you wanted to sell anyway but in general i feel at this point in time pretty safe to say that this is a scam this fork like i already thought it was a money grab it was an opportunistic thing but it's a straight out scam if they don't actually change the chain id then it is a scam it is a grift it is uh very dangerous it is very um very dangerous to users because

of those replay attacks and at the end of the day i don't want to to support this at all and i won't support this at all and i i'm talking about it because i want to warn you guys about it but if i see anyone actually promoting this i'm going to think very uh very less of them very less of them probably not not the term there but i'm not going to think uh very good of them right and we all saw i mean i'm sure a lot of you saw this account on twitter called galloway's capital promoting this like when i see big accounts like that promoting this garbage it really makes me question like these people's morals and what they're actually in it for like if even if you're a prophet maxi this could lead to harm for lots of users so you shouldn't actually be promoting this

stuff at all so as i said i think this this particular ethereum power eth power fork is pretty much a scam i advise against touching it at all but it's up to you if you want to i've outlined the risks for you have outlined ways to protect yourself but the easiest way to protect yourself is literally not to use it at all and just use the main ethereum chain that's proof of stake that that you you know we all know and love don't bother with with the eighth power chain even if uh there's a lot of money i shouldn't say a lot of money they're waiting for you potential money they're waiting for you because as i said it could lead to you uh losing things on the main chain if the chain id remains the same uh and uh it's obviously not good if that happens now i know it's

hard like sometimes and i and i get this from from users point of view that let's just say you have you know i don't i'm just gonna throw out random numbers here let's say you have a few thousand dollars worth of eighth on main net right that's your stash you've been stacking you're all happy with it you're happy with how much you you're stacking but you want to keep stacking more and then let's say the ethereum proof of work fork or eighth power tokens for some reason you know are worth ten percent of what real eat is worth so that means that if you have ten thousand dollars of real eat you would have a thousand dollars of eighth power tokens i totally understand you wanting to go and sell those things for a thousand dollars and then buy eth with it right like i i i'm not going to argue against

that at all but what i'm trying to say is that is like to question is the risk worth it like is you is the risk of replay attacks on you if the on your main account if the chain id isn't changed worth it and to me it's not worth it at all like zero percent worth it uh even if that was my situation where that was my stash and that's how much i'd stand to gain because you stand to lose everything if you do it wrong right so i i think that it's just really not worth it but again if you want to do it just be wary of the risks and uh yeah you can go do it i'm not i can't stop you right i'm not trying to stop you i'm just trying to outline the risks here but uh that's the latest on that it really does seem like

a a a a basically a mess this eighth power fork it's done by a bunch of amateurs i don't really think there's going to be any value here at all after maybe the first few days because people will probably try to pump it and shield some narratives or whatever but in all in all it's completely pointless it's gonna die nothing's gonna work on it it's best just to ignore it as much as possible and i will only bring it up when i think that users should be informed about the risks and this is one of those the chain id thing is a huge deal because of those replay attack risks but if you don't touch it at all then you don't have to worry about it all right so speaking of proof of work versus proof of stake i put out a tweet yesterday where i said for what it's

worth i like ethereum proof of stake more than proof of work but i don't want nor will i advocate for any government to ban proof of work heavily regulating energy use is a slippery slippery slope that leads to nowhere good let the free market do its thing now this was i don't think this was an unpopular opinion but it was a bit divisive and i want to expand on this so the reason i put this tweet out was because yesterday the um there's kind of like been a study done by bodies in the us government around proof of work and one of the suggestions was or around crypto should say and one of the suggestions was was to heavily regulate or outright ban proof-of-work mining i don't want this to happen at all i don't think that regulating energy use like this is actually going to lead to anywhere good

because then you you go down this slippery slope of okay well uh you know this is a subjective kind of ban or suggest subjective regulation on proof-of-work mining what's to say that they don't go down that slope and say oh well you know such-and-such uses too much energy we're going to ban that or such-and-such uses too much energy we're going to ban that right like that's what i mean by the slippery slope here so i don't really want to see this i'm not going to advocate for it but if it does happen i'm not going to be surprised i've said on the refill countless times that the proof of work thing especially for bitcoin obviously because we don't have to worry about it in a few days with the merge is going to be their biggest headwind it doesn't matter if they're right or wrong about proof of

work being good for the environment or whatever narrative that they're kind of like pushing these days because we've seen it play out already over the last few months there europe is in an energy crisis right now right uh not and not just europe like a very various parts of the world are in energy crisis right now so if that continues if the energy prices keep skyrocketing public opinion on proof-of-work mining is you're just going to get even more even worse than what it is now and if the market heats back up again it's going to be in the news cycle so you may not see outright banning of proof of work in the us for example we already sell it in china but you may not see it in the us but you probably will see heavy regulation follow this and it's just all it's got to do with is the fact

that public perception of mining is extremely extremely negative and it's just going to get worse with time so i'm obviously very happy that ethereum does not have to deal with this but i do not like proof of stake ethereum more than proof of work because of the energy usage stuff like that's actually not even in my you know top few reasons as to why i like ethereum proof of stake more and that might may be an unpopular opinion because there's a lot of people in the ethereum community who like proof of stake for that reason and look i like it for that reason too but not as a as a main reason for me honestly if i had to give one main reason it's because as in my top reason it's because i think we get better bang for your buck security under a proof of

stake than we do on the proof of work and the second reason would be that i think it's easier to thwart attackers under proof of stake than it is under a proof of work system and i've explained why before but the better bank for your buck security has got to do with the fact that we own we have to issue way less to proof of two stakes than we do to mine is to secure the network and also we uh we leak a lot less value because stakers don't have to sell like miners do in order to cover costs so we keep that value in the network it's better for the value of eth and obviously as the price of eth goes up the more secure the chain becomes because eath is the asset that's being staked so it adds more economic security there so those are my top two

reasons as to why i like proof of stake uh over proof of work obviously there's a there's a there's other reasons as well the energy use one as i just mentioned but i don't hate proof of work i don't want governments to ban it but i do think that ethereum proof of mistake is the superior solution and it's going to be better is going to lead it's going to be the major factor why eath flips btc at the end of the day so that's a little rant there that i just wanted to go on about because i think it's important and i think that none of us in ethereum should be advocating for banning of proof of work or or heavy heavy regulation of it but in saying that it's going to happen anyway in my mind i don't think a proof of work is

going to be able to remain uh untouched by heavy regulation or remain as it is today it's definitely going to become more regulated and there's definitely going to be a lot of noise around it but we shouldn't be advocating for it at least that's my view all right so and i guess like the other tweet that i put out was that ethereum couldn't have picked a better time to be transitioning to the proof of stake because of everything i just said uh and then metallic replied and he said the best time to move your cryptocurrency to proof of stake was three years ago the second best time is now and he's making a joke obviously because the theorem proof of stake has been coming for such a long time that uh you know we should have done it three years ago but you know we're doing

it now uh so yeah it's just a funny kind of little joke there all right so our rocketpool node operators should be aware of this so version 1.6.3 of the smart node stack is out now which includes the latest highly recommended version versions of nimbus prism baysu and nethermind and has a few relays for mev boost on mainnet built-in so i discussed this before on the refill where i said that obviously the flashbots mav boost relay is going to be censoring there are two other relays out there at the moment blocks route which is live and then manifold which is going to be live soon you'll be able to select from those i think blocks route has an optional flag for censorship of um of uh uh uh ofac transactions or the tornado cache stuff uh and i think that manifolder said

they're not gonna be censoring at all but yeah those options are there for you and you'll be able to use them with rocker pool here uh and you know it's it's funny the rocker pool uh has been growing very nicely lately i've mentioned their incentives uh i think yesterday the incentives thread that jasper put out and there was also someone in the daily grade discord channel today they got their rocker pool node up and running they have a nice grafana dashboard so it's good to see this continuous growth happening here on on rocketpool i mean i think they're really coming into their own now they have something live obviously i've talked about how they've been building for a long time but they've had something live for quite a while now it's becoming more and more battle tested people are becoming more and more comfortable with it they are making it

much easier for people to get involved as operators i actually set up the smart node stack on my own hardware on the test net recently and it was pretty straightforward i had a couple of issues with it but i was able to get those resolved relatively quickly um and there were more issues with me just not doing stuff correctly and not the software itself uh and it was just really cool to use it and to get it all spun up i'm hoping to get one on maynet soon i remember i mentioned to you guys that i'm hoping to do this it hopefully will happen before the merge but i mean it's not a big deal if it happens it happens after it there uh but yeah good to see that the new version is out which comes with it uh all of these exciting features

all right so aztec has put out a reminder tweet to today about aztec connect which obviously lets you use layer one liquidity on layer two so once you acquire aztec zkeith you still trade in the layer one eighth pools and not zk earth pulls on layer two so no more liquidity fragmentation uh but how and they explain it in this thread here now i've just obviously discussed with you guys before that i think what aztec protocol is doing here is extremely promising and extremely exciting being able to get around liquidity fragmentation and also have privacy that to me is like the holy grail of scaling you know you guys know that my two main themes in crypto are scaling in privacy that i pay attention to and aztec is doing both they're scaling via layer 2 and they're giving people

privacy by layer 2 while also just tapping into layer 1 liquidity as well which which is obviously amazing so just wanted to highlight this thread you can go check it out i'll link it in youtube description below but the next thing i want to talk about is a much broader discussion that'll finish out today's episode but first of all i want to give a shout out to david milholz git coin grant here this david mihale runs the crypto crypto fees.info website that i have shown on the refuel countless times i've talked about this so much i use it pretty much every single day this is a non-for-profit website there is no ads or anything on it so if you want to support him you can add his git coin grant which i'll link in the youtube description below for you to do so definitely go donate to him i

know i mentioned yesterday about get coin grants that i want to highlight more of this is one that i can't highlight enough like as i said this website and these these websites that he's created i have used so so much you've seen them all over twitter so many people have getting gotten value value out of them and this is something that should be supported monetarily so if you haven't donated yet be sure to do so i'll link that in the youtube description below now on to the other discussion related to this so there's not just crypto fees.info there are a bunch of different sites here which are very very useful so obviously on crypto fees dot info you can see the fee fee um fees generated on various different protocols whether they be layer ones layer twos d5 apps whatever else right you can see it all here you

can go into more details and and break and do do breakdowns of things you can filter there's a lot of different stuff you can do here very very cool then he has the open orgs.info website what this shows you is the value of uh treasuries uh within crypto so you can see here the uni swap treasury is valued at in total at 2.8 million with the liquid treasury being at 1.8 million because the remainder is still vesting and then the same is true for all of these different protocols here then he has i should go back here the money printer dot info website which i talked about yesterday in my bullish rant and it shows basically all the issuance rate of different protocols and diff apps and all that stuff with their dollar daily issuance as well so that's another really cool website then he also

has ethburn.info which tracks the one five five nine burn of course nice little info site here and tracks ether burned per block as well and then on top of this he's got even more here stakers.info which is uh which shows staking related things which i think is still live maybe it's just not loading right now oh there we go yeah so this shows a number of validators on popular chain so you can see the different validators on different chains here uh and then if i go back there's another one called ethereumnodes.com which is extremely useful it's basically a bunch of different rpcs that you can use on the ethereum main nets and if they are working or if they are down so if you uh don't want to use inferior or if you don't want to use alchemy you can go to any of these rpcs just plug them into

your metamask and use them on ethereum mainnet so obviously a very important website then on top of this he also has l2 fees.info which shows you the fees being paid on l2 if it wants to load up here yeah there we go so it shows you the different fees being paid on l2 networks uh generally for sending ethan swapping tokens it'll also show you the total l1 security cost so the total amount of dollars that l2s are paying l1 for their security so there is so much here and this is all done by david miehaul that's why i say that you should definitely go make a donation to his git coin grant because these are very very valuable websites especially the crypto fees website which is i believe the og one uh because you've seen it everywhere on

on twitter uh no i mean every every i've seen it everywhere i've seen it on crypto media publications i've seen it on twitter i've seen it in people's youtube videos it's just such an amazing resource and i think that david should be rewarded for his work now in saying all of that um i think you know it's funny whenever looking at these kind of websites i've mentioned it before you should never take them in a vacuum right and i've explained why look looking at the phase one for an example you can't compare ethereum and unisop in my mind because they sell different products ethereum sells block space unit swap sells liquidity right union stop fee revenue here is basically the lp fair revenue so it's not even going to the product to the token holders right it is only going to liquidity providers

because the fee switch isn't turned on whereas with ethereum most of this fear revenue is actually being burnt which means it is a pseudo dividend to each token holders so there's already lots of differences here uh and then the same is true for basically everything on this list there are differences of how these things are paid out where the source of revenue is coming from all that good stuff there so when looking at websites like this i'd obviously not look at it in a vacuum i look at it with nuance and explain to people the differences here but it's still a great website to just get a snapshot look of of things same is true for something like the open orgs.info website which shows the treasuries now there is a post from hazu that you should go read about treasuries you can probably just search google

search hazu d phi treasuries which discusses the fact that most of these treasuries are made up by their own native token and that's not really a great treasury asset because it means that the belief protocol itself is reliant on its own token as part of its treasury and that's extremely volatile and it's it leads to reverse incentives and things like that as well so there are other ones that don't just hold their own token but they hold different kinds of tokens so you can see here that bitdell holds eth it holds usdc it holds usdt as well it's his own token i know cisdeo holds different things as well as gno so yeah that's another nuanced thing that you should definitely look at same is true for money printer.info i don't think this takes into account the burn uh this issuance right here on ethereum

right and it won't take into account other things such as lost coins and stuff like that and a lot of the time it may not even be accurate because on the proof of work it's hard to get an exact accurate issuance rate unless you average it out over a year so again another thing that you should be wary of but i mean i guess the picture of what i'm trying to explain here is becoming clear that all of these websites are amazing they show amazing uh metrics but you should always look at these metrics and then add new ones to it you shouldn't just look at them in a vacuum and say okay well such-and-such is this such such as that because if you looked at the crypto fees.info website uh i think a month ago unisop actually was generating more fair revenue than ethereum but what does that mean does

that mean anything no it's meaningless because of the fact of the matter is they sell different products right we don't compare uh companies that sell different products in real life to each other and judge them based on that like i'm not going to judge my local supermarket against apple because that doesn't make any sense i can't say okay well apple's earning more fear revenue than my local supermarket chain is that means apple is better than them no i mean they're totally different industries it makes no sense to compare the two so the same is true for things like um fair revenue and even going further than that as i said there is fair revenue that goes to token holders then there is fair revenue that only goes to the supply side of things the liquidity providers in unisop's case right so yeah just wanted to give a breakdown

of that to end out today's episode but once again definitely go donate to david's get coin grant it is one of the more deserving ones out there i'll link that in the description below for you to do so but that's it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give me a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all next week thanks everyone