Layer 2 chat, LRT risks and more - The Daily Gwei Refuel #752 - Ethereum Updates

Transcript

hello everyone welcome to another episode of the great refuel up latest news etherum ecosystem I'm your host and this 25th of March 2024 right everyone let's get into it so kicking off today's episode with some positive news I guess you could call it so I was checking over the stats for the Refuel on YouTube and the podcast and I noticed that we're now up to around 5,000 people that tune in to this show every well almost every weekday so I just wanted to give a shout out to each and every one of you to thank you again for tuning in and to welcome all of the new people I mean I I remember saying that it was 4,500 people that tuned in maybe a couple months ago now we're up to 5,000 hopefully it continues growing obviously I love seeing the growth here but it's great

because for me when I see this it means that the growth is happening very naturally and very organically as you guys know I don't do any clickbait for the videos I mean the thumbnails are very innocent on my videos there's no clickbait there there's no clickbait in the titles I don't really kind of go out of my way to try and grow this thing and I've done that on purpose and I've done that since day one I mean I've been doing these videos since late 2020 and I've been purposeful about not attracting the I wouldn't say like wrong people but not attracting the the crowd that I didn't want to consume the content and to be part of the community because there are always those kind of fair weather crypto fans that come in and all they really care about is making money they don't care about the tech and

that's fine like there's no issue with that but the community that I wanted to build around the daily gay has always been around people who are actually interested in the tech as well as the money aspect to it obviously the money aspect is a huge part of crypto there's nothing wrong with that uh and there's a lot of people in the daily way Discord channel that are discussing different ways to make money you know sharing Alpha airdrop hunting all that sorts of stuff and I love seeing that stuff but what I really wanted to do was cultivate a community that was really bullish on eth really bullish on E the asset uh and really bullish on just the technology behind all the stuff that we're building here rather than just coming in and being like total and complete degens and not caring about what we're building and I feel like I've

been able to grow that uh and as I said that's why I've been very very kind of concerted about the efforts that I've made not to kind of Turn The Daily guay into any sort of like shill Channel or anything like that uh especially because I don't monetize it too and that's another kind of uh thing that I did on purpose is I don't monetize anything because I don't want the incentives to be warped there at all I just want to be able to educate you guys about ethereum each and every weekday well most weekdays you know some days there are rug fuels of course but yeah once again I just wanted to say thank you to all of you and welcome to the new people hopefully you've been enjoying the show and I hope you stick with us here but on that note going to move on to the news

from the last uh 48 hours or over the weekend so there was a tweet here that was put out by Walter Bloomberg who basically covers a bunch of media related stuff within the um within the global markets where he kind of quote tweeted I think a coindesk article that was a bit of a mwe here misquote here but he said black rock is seeing only a little bit of demand for ethereum from clients says head of digital assets the asset management giant black rocks clients have a little bit of interest in ethereum compared to bitcoin um which the head of digital assets Robert Robert mitchnick said um I think that there was a bit of a misquote here where uh if you actually read the the quote itself it wasn't exactly this but I quote tweeted this and I basically said you know

there's two possibilities here the Black Rock rep is downplaying how much demand there is for eth because they don't have a product to sell yet right they don't have the eth ETFs yet so why would they talk about how much demand there is I mean it's that age-old thing of like you don't shill something before you buy it yourself like anytime you see someone Shilling a coin on Twitter they're not doing it because they don't own any they bought it and then they started Shilling it and and it doesn't matter that this is Black Rock and not just some random Twitter djen it's the same thing like you're not going to Shield something if you don't have a if you you know you didn't buy it or you don't have a product to sell there's no point that black rock talking up eth if they can't

sell a product to to people they're talking it up to or clients they're talking it up to so of course they want to downplay the demand here until they have a product and then they're going to you know shill it as if it's the best thing ever of course and the other possibility is that the demand for ether is actually small right now uh which means there is lots of room for growth and either way this is bullish to me um and I know that some people might look at this and they might say oh well that's just you know hopium or copium whatever you want to call it because you're obviously an eth maxing you want there to be a lot of demand for eth but I don't really think it is I mean I think the first point that I made makes a lot of sense but even if there isn't

that much Demand right right now that's actually what you want when you're investing in something because unless you believe that the demand is not going to go up for one reason or another that is really your only bare case because if you do believe that the demand is going to go up for whatever reason then that is in of itself a bull case like the only bad case is that the demand is not going to go up and then e is not going to be in demand it's going to fizzle out but how could that be uh you know how could that be true when Once Black Rock and other in these these other tradire firms have a product to sell like the E ETF and then in the future the Stak eth ETF then why wouldn't they try everything they can to sell that to

their clients especially because with the state eth ETF they're going to get a yield but even with a normal eth ETF they can say to their clients that they're still getting a yield because eth is deflationary and people would debate this have been debating this for for decades around stocks you know BuyBacks versus dividends um but essentially it's it's net the same thing and essentially what eth has is par is basically a buyback and burn where you know 70 to 80% of the fee revenue is burnt which makes eth deflationary which is a yield you know the net result is still the same here so I think that they're going to be selling that product to people uh like that so I just wanted to to cover that and kind of give a bit more context around that but I will say one thing here is that we haven't seen

any updates around the ETF since Friday obviously it's the weekend so there's not really going to be any updates there I I'm got like a bit of a gut feeling that we may see some movements around the E ETF this week I feel like it I mean I feel like we have to start seeing movements I I think I mentioned this in the da grade Discord Channel where I said that if we don't see movements over the next two to three weeks at all from like the SEC and the issuers of the ETFs then I'm going to say it's basically a 0% chance of the ETF being approved on May 23rd simply based on the uh the fact that the paperwork wouldn't be able to be done done in time so the logistics work wouldn't be able to be done in time it's got nothing to do with the SEC

wanting to deny eth it would basically have to do with the fact that they wouldn't be able to get it over the line even if they wanted to because there just wouldn't be enough time to do that at least that's from my understanding there maybe they could do it if they pulled like all nighters and they worked you know weekends and stuff like that but as far as I know that's not necessarily how it works and it it would depend on the S you know the SEC actually wanting to engage and wanting to do this stuff and wanting to to to speed it up here so really the next 3 weeks is absolutely critical if we don't see any movement at all then it becomes like basically a 0% chance that these things are going to get approved in May and then we start the circus of once

they get the night in May the ACC gets sued and then we have months and months of just headlines and rumors and crap just continuing until eventually the E ETFs just get approved anyway and among all of that we also have the presidential election which is going to be very very noisy and it's going to play to crypto of course because there's a lot of crypto people who are obviously in the US and so on and so forth so it's just going to like not that great it's not going to be a fun time for anyone so yeah but no no other updates besides that on the uh the ETF front there so moving on from that to some uh eth core Dev related news or core protocol related news here so you can see here that Tony has put out another visualization for us all to Marvel at

where he said blobs now constitute a significant portion of the data that validators are handling as the US usage of blobs began to increase the trending call data usage start started to decline so just another visualization of how all of the the Roll-Ups or most of the Roll-Ups have changed from using C data to blobs and how blobs now uh take up a large part of the kind of load that validators are handling when it comes to the um the data and the bandwidth that they're handling here and this is a reason I I mean a major reason or basically the main reason why blobs started off so conservatively where we started with like a target of three and a Max of six blobs instead of you know a target of of nine with the max of 18 blobs or something like that and why the

blob sizes were relatively small is because we didn't want to put too much pressure on the network and make it so that solo stakers would fall off the network you know for example I you guys know that I run one of my solo staking boxes using a rock 5B board which is a very low powered device it's been handling this just fine I still it's basically the same as it was before Denon went live and I haven't made any changes to that box and on that box right now I'm running Nimbus and gu actually on there um you know don't don't shoot me for running gu but I'm running gu on that box right now I mean I run nethermind as well and and other execution layer clients on my other boxers but yeah I'm running and Nimbus on there and it's working just fine like

as I said it's working as well as it was before and then on one of my other boxes I'm actually storing the blobs longterm as well on my Nas which I discussed the other day so yeah all of that going on of course uh there and I haven't fallen off the network but I feel like that maybe if the blob sizes were increased here and the blob count was increased then maybe it would fall off in this current world because as I've discussed before with Max EB up going in pectra we're going to be able to reduce the load on the network uh from the attestation load from the validators and that will allow us to basically essentially replace that load with more blobs but right now we don't need blobs I mean as you guys have seen the main bottleneck for l2s is on the execution

side now where essentially they're not even uh uh they're not even making the most of the blobs like I don't even think we're at the the the um the capacity of blobs because they're getting bottlenecked on the execution side so once they fix the execution side of things once they scale that up which I'm going to talk about a little bit uh more um later in the episode then that's going to move to data again so we're going to have this as I said like this Balancing Act between blobs and the execution side of l2s and how they're going to handle that and how they're going to scale uh with both of those things considered there which is awesome we actually have breathing room now on the L1 side because the L1 side is not a capacity and then there is also the optionality at least until call data um

uh call data cost is increased of the l2s or of the rollups actually switching back to call data if blobs get too expensive and I've spoken about this before how there could be this Arbitrage opportunity between call data and blobs but that will go away I think once they increase the cost of call data there is an EIP to increase the cost of call data by a lot which basically makes it economically unfeasible for cold data to you compete with blobs at all really because right now it can compete with compete with blobs as long as the gas price is low enough and it has been relatively low over the last couple of days I think it got to like 10 to 15 gay but I mean obviously given the market that we're in right now where I mean the market can just Spike up randomly and

then the gas goes about up with it uh and given that blobs are separate from that that normal L1 fee Market it doesn't really seem that feasible right now but it still is more feasible than it could potentially be uh in the future there so that's one thing to to keep an eye on uh on that front all right moving on so there was a lot of talk about how the reog rate went up post denune so essentially there is a percentage of the network or percentage of blocks that get Reed each day and I think it you can see here on the chart that it trended up a little bit I think the this this chart is not showing the percentage of blocks I think it's showing or slots I should say it's actually showing the number of blocks and Slots each day that were reared um

and it went up post denune for multiple different reasons I think the two main reasons are the clients um needed to fix some things on their end in terms of optimizations um we know with in this new blob world that we're in and two I think a lot of it also had to do with me boost and the builders and relays as part of that Network and them having to upgrade their infrastructure as well so those two things uh uh you know I think have been fixed or at least at least have improved since denin went live and we can see this played out in in this chart here and I feel like that this is a chart that the cord devs pay very close attention to because obviously RS are not something that we want to see happening on the network they happen just naturally and there's always going

to be a smaller number of of blocks or slots that get Reed each day just for a number of different factors but we don't want to see this like increasing and we don't want to see this going really really high like if it went to like 10% of slots that's really really bad that would constitute basically an emergency situation from my understanding because uh it means that the network is becoming very unstable and this is uh something that the cevs pay a lot of attention to because it means that if the network is becoming unstable then that is not an equilibrium that you want to be at because we have to identify that issue and then if that issue is something inherent like let's say we did you know this is why we started with blobs being conservative let's say that we put we made the blobs too big we made we we had

too many blobs and now the network is getting spammed with too much um uh too much traffic and the network can't keep up with it because there's too many validators on the network and there's too many attestations going on still and there's too many kind of too much communication going on and then we have people falling off the network and then reals start going up like it just becomes I wouldn't say it's like a death spiral but it becomes a thing where it's like oh like we need to do something about this so that's why things are always very conservative when it comes to the core protocol because uh the network reliability and stability is the most important thing especially because there are a bunch of different moving Parts here there are moving parts that are actually part of the protocol like meev boost exists outside of the

protocol but 95% of the validators use meev boost so essentially it is part of the protocol but as a side car and that is something that the cevs are trying to address and the core researchers are trying to address because having it be you know not an enshrined part of the protocol makes it more difficult to reason about and it makes it harder to pinpoint where these RS were coming from because the cevs only have insight into uh mostly only have insight into what they're working on which is the clients that they work on right whereas um for something like meev boost they will have understanding of it they will have oversight of it but they're not part of the development of meev burst that's a separate team you know that's flash Bots right so they may have some understanding of it and they may be able

to pinpoint issues in it but their their ability to I guess like fix it is diminished compared to the ability to fix things within their own clients so there is a kind of concern there with that that you know that given that it's a sidecar software and if it was if it was SAR software that was only used by like 10% of the network then it wouldn't really be a big deal but it is literally used by 95% or something last time I checked of the network and that's what makes it a bigger deal here and that's what makes it harder to to reason about when it comes to this but yeah anyway great to see that the RS have come down means we've kind of alleviated that issue there because obviously anytime we see Rog spiking we want to make sure that it's not going to be a permanent

thing all right speaking of risks and stability and all that in between Ian leer posted a great blog post over the weekend titled on liquid reaking risks and consideration now of course liquid reaking is a very new primitive it's only been around over the last few months there are a bunch of projects doing liquid reaking such as eifi swell and puffer of which I am an adviser to all of them just to disclose there but there are plenty of others out there that I'm not involved with such as Renzo I think Mantle's doing their own thing with their hybrid L2 you know I think blast is working on something like that you know there's all these protocols that are doing this now obviously reaking comes with a bunch of its own risks and considerations and inherent things that you have to think about but then you kind of lay lay on liquid risk

taking on top of that then it becomes even more risky I mean there's always risk whenever you layer like a new primitive on top of something else there's always risk I mean obviously the lowest way to get lowest risk way to get exposure to eth is to own eth but then you can stake the eth okay then your risk just went up a little bit okay then you can liquid stake it or your risk went up a bit more then you can uh restake just vanilla eth your risk goes up more you could liquid or you could restake that Alis now you can like get a liquid reaking token on top of that and then you can go put that into Defi and then you can borrow against it and go do something else or you can put it into something like Pendle and run a strategy

on it there are all these different things that you can layer on top of each other and yes you'll get more reward for doing this you'll get more yield but you're taking on a lot more risk so it's good to keep in mind what these risks are it's good to consider what these risks are and it's also good to realize that these risks aren't only on the person on the individual doing these things the risks also apply to the protocols themselves as has been discussed at length about IG layer or about reaking generally and about staking generally as well because there is a cascading effect that can happen here especially in mtic leveraging events as we saw uh last time this happened I think it was May 2022 we had a mass Del leveraging event because Terror was collapsing and all this St was U being sold into the market now at

the time there wasn't staking withdrawal so you could only essentially sell into the market you couldn't actually withdraw St from the beacon chain uh sorry you couldn't actually withdraw E from the bacon chain using st8 so we saw what happened eth dumped really hard St went off its fair value it went to like 0.9 so you could essentially Buy St for 0.98 even though it was backed up by a full eth in the beacon chain uh and that led to a pretty you know substantial cascading effect there on the eth price now of course in a post- withdrawals world this effect can become even more exacerbated by the fact that we can now Arbitrage the beacon chain itself so we can withdraw assets from the beacon chain itself using these lsts in a deleveraging event and then on top of that there is an exit as well and then

there all then everything um on top of that that's got to do with reaking it's like there's there's this this this kind of string of risks that are put together that can Cascade and can cause issues if not properly managed and considered here so I just I guess like more context around this post here and why I can they posted this but you should definitely go check this out the main two risks they kind of talk about is the financialization of liquid reaking tokens as I discussed about putting them into defi protocols and so on and so forth and then lack of liquidity as well because at the end of the day if you want to quickly sell an LRT but there's not much liquidity for it uh then and and and everyone's trying to do the same thing then these things can still trade

at a discount to their fair value they're not a peg like people like to think okay well it's a peg it can't trade below that Peg I mean yes it can we've already seen this happen with uh you know stable coins like uh tether has traded below its Peg before usdc has traded below its Peg before and even add a premium to its Peg so it's more I I think that we shouldn't really refer to these things as pegs and should really refer to them as kind of like what their fair value is because the fair value of usdc is $1 the fair value of usdt is $1 if you believe that there is 100% of um usdc and usdt backed by dollars or dollar equivalents right because then it would obviously match one to one your liabilities and your kind of assets

match one to one there U whereas with Stak e it's a very similar thing here where essentially nothing is pegged to you know to to uh to eth the asset but you know that there is eth in the beacon chain that is backing up that asset but then there are some more complications here with LST lsts and lrts in that some of them are reaking uh sorry uh rebalancing or uh what's what's the word I'm looking for here not rebalancing some of them are uh there's ones that kind of acre to the Token itself so the token price goes up over time and then there are ones that basically pay you out more tokens to uh represent the yield essentially rebasing that's what I'm looking for so they're rebasing tokens um so there are different ways here but the principle of it the fact that it's still worth what the beacon

chain plus the rewards are worth in in in in in the kind of Beacon chain here um depending on how the rewards are Meed is is still true and that means that the secondary markets should trade at that value but it doesn't necessarily mean they will due to liquidity issues due to the leveraging events and so on and so forth and because of that exit Q it means that even if you want to Arbitrage to the beacon chain there are still going to be times where the fair value of these assets is uh is not at par with what it should be and is at a trading at a discount because of the fact that there is that exit queue there so it's a good thing to keep in mind when playing around with these assets on etherium all right moving on to some Layer Two stuff oh just a quick shout

out here that I wanted to to kind of talk about was that you guys know that I an advisor to the ethereum uh in or the eth investors Club here and you know that uh I'm an unpaid advisor all of the um Shares are going to the protocol Guild here but what was really cool is that base uh that does this onchain daily thing with they basically have an nft that they feature each and every day uh as as part of this collection and it's on Zora and as you can see here that uh the eth investors Club Edition one was featured in this this is the winter 2024 digital Edition and you could mint this and a lot of people minted this and uh I think over 13,500 people minted this and and the Creator earned 6 e which is you know six times whatever the eth price is today

$3,400 that's over $20,000 and that's going a lot of that is going to uh go to go to the the protocol Guild here you can see here that 50% of the credit earnings from this mint will be donated to the protocol Guild uh which is a collective obviously for ethereum core contributors as you guys know so this is just I guess going into what I I've been saying for a long time about kind of like turning degens into Regens because there are definitely a lot of people who meant these nfts for uh dgen purposes where maybe they think they're going to get an airdrop or something but also there a lot of people who get to to Mint it to collect it to be part of kind of ethereum History here to get to read the report which as I've said to you guys before this report is awesome you should

definitely go read it uh but then also getting to kind of donate over 3 eth right now to the core to the protocol Guild which is just an amazing outcome so I just wanted to give a shout out there you can still go mint this for yourself the mint price uh isn't is uh is not too expensive here I think that's what is the mint price I can't actually see it in front of my screen right now unless I'm unless I'm blind here but yeah you can go mint it and oh actually I should say that there is um the unique Ms are over 11,000 so there's 13,500 that have been minted obviously people minted more than one here and this is on bass as well so the cool thing about this is that uh it being on bass means that it's basically free to Mint because

bass is so cheap to use right now but yeah anyway you can go check this out for yourself I'll link in the YouTube description below for you to do so all right speaking of bass I think bass has been the hardest hit in terms of like new activities since Denon went live it seems that everyone has just aligned on moving to base or like rotating into base I know there was a lot of like coins popping off on bass and so on and so forth but yeah I mean it seems like bass is the place to be right now and now because of that as I've discussed on other episodes it means that B's uh transaction fees have gone up even though blobs are underutilized on L1 and this is because of the execution side of things and and I've talked about this as well on previous episodes but Jesse

Pollak the lead lead of Base here basically put out a tweet saying that the base team aligned on their medium-term scaling goal which is to hit a target of 1 uh gigas a second on base so the current Target is only 2.5 megas per second so this is going to be a 400x increase with a long-term goal of pushing even further past 1,000x X so this is what I mean by these L2 scaling on the execution side of things where essentially they can scale up their gas limits or their kind of like gas usage to huge amounts because the whole beautiful thing about l2s and about rollups I guess specifically here is that you get these really cool uh kind of trust guarantees in that you can

scale this thing to be the beefiest machine ever to run this L2 beia sequencer to run this L2 but you still get the verification properties of L1 ethereum so for example and someone asked me this this question on farcaster this is just my understanding of it I may be wrong here but this is my understanding of how this would work essentially when these l2s are kind of doing this uh doing these sequences and and sequencing these transactions they obvously post these down to L1 right they post the data down or in in the um for for both an optimistic roll up and a ZK roll up and then they also post the ZK proof down if a ZK roll up to L1 now the beauty of this is that if you want to verify the Integrity of an L2 of an

of a rollup I should say all you need to do is run an ethereum full node on layer one you don't need to run a node on um on these l2s you don't need to run a full no you don't need to kind of like replay everything that that they've done all the beefy stuff that they've done and also from my understanding on these l2s if you run a full node for the L2 you can actually use the last proof that they've posted down or the last bit of data that they've posted down to L1 as your checkpoint to sync to because you know everything up until then was uh verified you know verified completely and was actually the correct uh correct way to do things or the actual truth I should say uh because ethereum is a trust anchor for these l2s this is

really a superpower of l2s that I'm going to talk about more in a sec Alex G from matal laabs had a really great tweet about this but that is really one of the superpowers here so you can make the uh signature as beefy as you want uh you know as b as you can get it while still retaining the verification properties of uh of L1 and and of course I think that from my understanding ZK uh rollups uh and you know ZK proofs uh give you even better guarantees than optimistic Roll-Ups give you but they're still more expensive because of the proving costs and so on and so forth and they're still a little bit less scalable because of that but the the end game really is ZK as we like to say within the ecosystem here but great to see that bass has aligned on scaling up here this

means that the I guess if they do this it means that the scaling bottleneck is once again going to fall uh to blobs because essentially what's going to happen is that even if they scale Bas up 10x from here it means that they're going to be able to fit 10x more transactions into their their blocks so to speak right and I know it's not like one to one but like just for illustrative purposes here it means that yeah they could fit 10x more transactions which means they're going to be using more data which means they're going to be using more blobs which means that the blob blobs are going to reach Max Capacity and then the blob price goes up which means that now we've moved from the execution side being the bottleneck to the data being the bottleneck again so this is what I've been saying you know for a few

weeks now where we kind of like having this game of back and forth between the uh L1 costs and the L2 costs uh themselves here so yeah just great to see Jesse tweet that out there and another tweet from Jesse as well was just showing how fast bass has been growing and know it took 203 days for Bas to get to $1 billion of tvl and now it only took 23 days for B to get to $2 billion of tvl and it's not just tvl that bass is killing it at if you go to L2 beat.com you can actually see that not just Bass But like all the l2s on the activity front are at like a 10x scaling factor which is all-time highs right now for them and you can scroll down and see what their activity has looked like it's just up only across the

board on all of these rollups right now which is great to see because it basically means that our thesis of you know induced demand is coming true essentially where where there is demand there but it was too expensive before but now that fees are dramatically cheaper we've induced this new demand that is coming and that we'll actually hit these scaling limits and then we'll just keep doing it so I feel like we're going to be doing this game of chasing or like this cat Mouse game of like chasing the scalability kind of kind of mouse for a long time now as as the cat to use the loose analogy there because of the fact that there's just just so much demand that is going to be met by having cheaper ways to meet it and there's going to be so many more apps that can be built so many more kind of

experiments that can be run so many more different uh kind of programming langu that people can build stuff in and that's all going to be happening at the l2c so just great to see the growth happening and our thesis for I guess like induced demand playing out there all right speaking of uh L2 scalability R Jordan from offchain Labs who obviously works on uh both the prism client and arbitrum 1 here posted a tweet thread where he said we're always thinking about how to push the envelope on scaling rollups at offchain uh now that posting transactions to the chain is much cheaper due to data cost being reduced a key question is how can we pack more power per gas and we've had an answer for a long time so this is basically R illustrating what Jesse was illustrating about essentially cranking

up the gas on these l2s in order to use more to get gas to get more transaction capacities for users and to essentially make it so that the bottleneck of execution doesn't become a b you know is no longer a bottleneck until we kind of switch back to data being the bottleneck and then we play again that cat and mouse game so you can go check that out for yourself I'll link it in the YouTube description below for you to do so now the last thing I wanted to talk about was this absolutely awesome tweet from Alex G who is the founder of ZK sync works at mat uh founder of matal laabs as well here but I didn't want to read the whole tweet out um because it's it's it's pretty long but I'll link it in the YouTube description below but I wanted

to focus on one sentence that he kind of said here and he said verifiability is what turns a database into a blockchain this single sentence basically describes the key value prop of a block blockchain and the only thing that turns a blockchain uh sorry a database into a blockchain if you do not have verifiability then you do not have a blockchain because verifiability is critically important for censorship resistance which I've got said before that it is the only way uh is it is the only kind of like core value prop of a blockchain over a database because everything falls off of that if you don't have sensorship resistance then there is no point having a blockchain there is no point to decentralization

there is no point to this extra cost of running a distributed system in order to uh achieve something if you don't have censorship resistance and and what falls off of that is the verifiability now Alex was talking about verifiability in the context of l2s where essentially you can verify that an L2 has or a rollup has behaved correctly because they have posted a ZK proof to L1 or they've posted their data to L1 and then you can challenge that in the optimistic rollup sense with fraud proofs or with ZK proofs you don't need to challenge it because you have this you know the ZK proof that it was done in a uh you know in a proper way it was done in a truthful way in and as I said before etherum is this trust anchor but what's really key here is that you can put l2s

or you can settle rollups I I should just say rollups for now you can settle rollups to other l1s right because there's been a lot of discussion recently about uh putting rollups on salana for example which is hilarious for a bunch of different reasons but I just want to focus on on this part of it for now I don't want to I don't want to go on a tangent the other part of it but the reason why this doesn't really make much sense is because within ethereum L1 everyone with consumer Hardware around the world can sink a full node and verify that the L1 chain is correct and truthful and verify that the l2s or the rollups are correct and truthful here whereas on these other chains that have maybe sacrificed the ability to do this at L1 in order to achieve scale but it's

not just salana it's other chains as well um and I think salana is actually a lot better in this regard to a bunch of other chains out there that are that are the monolithic chains but essentially if you can't actually verify the chain on consumer Hardware yourself then you're not actually building a blockchain like it's not really a blockchain it's it's it's really more akin to a database because verifiability is as Alex G said here what turns a database into a blockchain it is the entire point of what we're building because we want to be able to verify the rules of the game we we want to be able to verify that you know someone's not printing unlimited ethar we want to be able to verify that censorship isn't going on we want to be able to verify that no one's changed the rules of the game you know uh Willy

nearly or or or or we haven't been attacked by something or something fishy hasn't gone on because if you don't have that then really you just have a database where traditionally centralized databases can be changed at the whim like they're not controlled by you it's not decentralized by nature and anything can be edited I mean for example like uh uh if you're playing like an online game and the list of items in uh that your character owns is is in a centralized database at any time anyone with access to that database anyone with read and write access to that database can now edit that and basically take those items away from you at any time and you have no kind of uh I guess like recourse there whereas within ethereum you don't need recourse because ethereum blockchain is decentralized no one can

take your eth away from you your eth is secured by the decentralized blockchain that is ethereum so your eth in your wallet cannot be taken away from you by the network obviously you can get fished but that's a different thing obviously um you know someone can for you to you know with a wrench attack to send send um your eth to them but the network itself cannot take your eth a person randomly can't just come in edit the ethereum blockchain protocol to say hey we're going to take your eth away from you and give it to to this person now of course people will think oh well you know we did this with the Dow in 2016 we took the eth away from the the attacker and gave it back to the people that were hacked I I will say that there's two major things here one uh that was a

network wide thing where everyone had to opt into that so that was not just one person that was like everyone at that was running noes at the time was like okay you know this is the good of this is for the good of the network this is for the good of ethereum if we don't do this then it's going to be really bad for a number of different reasons and there was verifiability still of where the funds were going you could see that the funds were going from this address to this address and it was just returned we were basically just doing what was called an regular State transition where we made it so that the attack never happened essentially but since then none that hasn't happened at all like in any fashion there has not been anything like that that's happened since then but

again that took the whole network coming together to do that so it's not like I can go on there right now and go into my full node and say hey okay I mean actually I can so I can technically do this I can go to my full node and basically say okay well I want to move you know this balance to this balance and guess what happens when I do that it Forks me off the chain because I'm no longer in consensus with everyone else I'm on my own chain where I've basically modified it by my rules but that's not ethereum anymore that's like Anthony ethereum or sassle ethereum no one cares about that and and the only way that people care about that is if I was to get people to care about it just like how Bitcoin cash fed off of Bitcoin and

it became economically relevant relevant because people cared about it and exchanges listed the Bitcoin cash asset but Bitcoin cash wasn't Bitcoin it was a different asset it was a different blockchain it from the point that it fored it was completely different it was no longer part of the Bitcoin consensus rules so the same is true for uh you know anything that I was to do locally on my node it would not be part of the ethereum protocol would not be part of the ethereum consensus rules so that is what makes you know turns the data into a blockchain that verifiability aspect which then feeds up into decentralization and all that other stuff but you can read Alex's full tweet I'll link in the YouTube description below but I think that's going to be it for today I've gone on long enough so thank everyone for listening and

watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone