Layer 3's, Infura to decentralize and more - The Daily Gwei Refuel #450 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delegate refuel where we kept the latest news in the theme ecosystem i'm your host the anthony sosano it's the 19th september 2022 all right everyone let's get into it so uh break after the merge uh basically a new week uh you know i know the price action hasn't been great over the last few days it's kind of funny watching all the reactions to that people being like oh it was a sell the news event oh the merge means nothing uh the minor cell pressure was just a meme it's not ultrasound money and all just like this this weird stuff just kind of being posted and i guess like it's just the state of the market right like we're in a pretty deep bear market just generally uh i don't think i mean at least i never

expected us to just like pump straight away after the merge right like it just doesn't work like that fundamentals don't get priced in over the short term it's it's normally over the longer term and i think that all of you would be aware of that so i'm not gonna kind of comment on the price too much there but i do think that just generally there's so much noise right now on on especially on crypto twitter that's probably just worth ignoring a lot of it maybe just spend some time in the discord channel in the daily grade discord channel where there's a lot of nice discussions going on uh or maybe just take a break for a bit i mean they're really at the end of the day like if you just listen to the review you'll probably get like most of what's happening in the industry anyway

so you probably can just go in outside and do something different to crypto for a little bit because it's going to be quiet i think for a while here the demand is basically non-existent right now i mean on-chain demand is very low demand for buying assets is also very low and i think that's just a function of the the way the kind of wider world is right now people are trying to just get by uh inflation's still still quite high in the macro environment and you know he's not great and the media obviously is putting like a lot of fear into people's uh hearts and minds but at the same time out of play out of times like this comes opportunity so i mean i forged my kind of i guess audience and and and my positions in the bear market and it ended up really well for me and there's

no guarantees that it'll end up you know the same as as it was for me if you kind of get involved now but i think that generally like as long as you're getting involved with things as long as you're having fun doing things as long as you're not blowing yourself up then there's not really anything to worry about but that's all i'm going to say about i guess market related things want to get into a bunch of the news from the weekend so beacon chain participation rate is back above 99 again and steadily as well it's not just the once off thing it's pretty steady as you can see in my screenshot here and then also on beacon chain you can see that it's pretty much back to pre-merge levels which is amazing right absolutely awesome and i also appended to my tweet here i said you know i'm

still in a bit of disbelief over how well the merge actually went it speaks to the incredible talent we have working on the ethereum core protocol feeling more bullish than ever on ethereum so i think people are still underestimating how monumental of a feat the merge actually was and the fact that it went uh through so smoothly is just like the cherry on top like the merge itself i mean we all know i've talked about it for so long was a monumentally complex software upgrade at the end of the day right and it wasn't just your regular software upgrade it was one done on a decentralized network that has distributed actors all over the world there was no top-down kind of i guess centralization there was no ceo telling uh telling anyone what to do there was just the community coming together to build something amazing and to

transition to proof-of-stake from proof-of-work and we did it and we did it with no disruption to users it's just absolutely incredible right but i think because the price went down most people are just like making fun of it now and just saying oh look the mergers to sell the news event haha ultrasound money blah blah all that stuff that i just said before and i think that's clouding their judgment to the i guess like and clouding their longer term thinking around what that actually means and to me what it means is that ethereum researchers and developers have proven to both the market and just crypto in general that they can ship really complex upgrades with no disruption to users and do it and i know it you know it wasn't done in a quote-unquote timely

manner there were i guess you could call them delays along the way and it took longer than we expected but it got done it wasn't something that never happened it did happen and the network has continued running just fine so that's going to play into all the other upgrades that are coming obviously we have shanghai that's coming next depends you know we don't know exactly what's going to be in shanghai hopefully beacon chain withdrawals and erp 4844 slash proto-dang sharding but just generally i don't think there's i don't think ethereum's execution risk is uh is very great anymore i think the merge was obviously the biggest bit of execution risk but the road map is clear uh people are energized people are very confident about what we're building uh and it seems because of the merge going

through so smoothly the people in the know the people that look look past the short-term price action are definitely not underestimating it but still i think the wider market definitely is and it's just the function of what people are in this industry for obviously a lot of people are always in this industry to make money and everyone feels better when the price is going up than when it's going down i mean even if you're in it for the tech you obviously still feel better when the price is going up rather than down right just natural human feeling i mean i don't blame anyone for feeling like that but i think looking past that and looking to the the fact that yeah it was a monumental achievement is the better use of of time so i guess kudos again to everyone who made it happen just as i said still in

disbelief over how well it went i honestly expected five to ten percent of the network to fall off at least we didn't even get that we got like two or three percent i think it was and now we're you know back above 99 uh and everything's going smoothly we obviously finalized straight after the merge on that first uh epoch there so there wasn't really any issues at all i mean i recapped this last week i'm not gonna go into it again now uh but uh i think it shouldn't be underestimated that's for sure uh and in in kind of like real related news i spoke about how the staking apr would go up post-merge there was a lot of speculation around what this would be during the bull market and during the bear market now obviously because fear revenue was much higher during the bull

market and mev was also much higher the staking apr was and i guess like the the spreadsheets that were floating around kind of guesstimating what the apr would be were much higher than what it ended up being in reality so i saw estimates of up to 15 apr now if the fear revenue was the same as it was we would have had that but obviously the fear revenue is nowhere near what it was it's down like 90 plus percent and so the yield is going to be down so buddha here from beacon chain put out this this tweet saying the ethereum network apr for the past 24 hours which was over the weekend was 5.8 percent so i think from what i've seen the apr is ranging from about 5.5 to 6 right now which is still amazing it's an 8th denominated

yield right still amazing but i think that it's obviously a far cry from what people felt like they were promised during the bull market and people did get ahead of themselves quoting those really high numbers but i think because the high affair and you revenue went on for so long it wasn't that wild of an assumption to kind of say that it would continue because it went on since basically i guess like you could say early to mid 2020 until maybe earlier this year those high gas fees persisted and everyone was just in disbelief about it but obviously that's come down and now the apr has come down as well because or at least the real apr that ended up being is not anywhere near what the i guess speculative apr before we merge which is totally fine because as i said

when inferior new kind of picks up again obviously mav picks up with it and the apr will go up and then more people will stake and it's kind of like a balancing act especially when we have withdrawals enabled you know maybe 5.5 to 6 isn't enough for people but they can't withdraw from staking right now so they'll wait and we'll see maybe the the staked ether amount will go down and then the apr will go up because of that but i don't know i don't really think so i think a lot of people right now can exit their stake if they want to for example if you're sticking with coinbase you can exit right now but obviously you take a bit of a haircut on your staked each because of the fact that there's a discount of the cb token but you can still exit if you really wanted to uh

you can exit out of lido at any time obviously because you have the st token you can exit out of rocket pool anything that has a liquid token like a staking derivative token you can exit out of so anyone who wants to exit staking can do so right now but you will probably take that that hit depending on what the i guess like lsd is trading at on the market but i think you know obviously post withdrawals we're going to see a big reshuffling a great reshuffling as i've discussed before and it's going to be interesting to see where the stake lands like i actually you know for all the people who say that steak right now is relatively centralized i actually think we're in a pretty good position because like lido we just got the biggest share 30 percent like i've been through this

before obviously it's not ideal but at least lido isn't like one monolithic entity right it obviously is at 20 28 different entities so at least that's that um and then coinbase and kraken and binance their share of the network isn't actually that high relatively right um obviously we would like better distribution and i i would like to see it as well i would like to see in my ideal world i would like to see no one uh entity controlling more than ten percent of the stake on ethereum and i don't think that's actually a big ask some people will say well steak is just going to naturally centralize over time i don't think so i think we have enough incentives both technically and socially to stop steak from centralizing but uh to you know more than ten percent in one entity but

right now it's hard because of the fact that there's no withdrawals it's very hard for anyone to like even if they exit their position uh it's impossible for that east to not be staked with coinbase or with lido with whoever because you can't actually withdraw it from there all you can do is exit that position but the eighth is still in the beacon chain right it's still staking so from that perspective we're just gonna have to wait till withdrawals are enabled we're gonna have we'll obviously keep promoting the competition because at the end of the day even if like uh it's centralized entities that have 10 or less it's still better than one centralized entity having 30 right or 40 of the network we obviously want to try and keep it as distributed as possible and also it's not just state distribution it's geogra geographic distribution as well and

there was a tweet last week that i don't think i have up right now maybe i i i did i talked about it last week that's why i don't have it up here but there was that tweet last week about how 90 of operators of lido actually aren't in the us and this obviously doesn't just apply to lighter it applies to every single staking service provider the the more distributed they are geographically the better because if one geogra geographic um location such as the us decides hey you know staking is illegal for some reason right they're not obviously not i don't think they're going to do that but maybe you know gary gensler had made comments about how he thinks taking derivatives are securities well if that happens then these centralized providers can't actually offer snaking anymore well wouldn't it be better that it was

geographically distributed so it wouldn't disrupt anything on the network and it wouldn't disrupt people i don't think it would disrupt the network because like they would have to just shut down down their validators if they didn't want to register for i guess like securities trading and then it would just require them getting out of the network and there'd be a queue and all that i mean it'd still be i guess like overall a little bit disruptive but not really but still like if they were based in other jurisdictions then it should in theory be fine so we definitely need geographic distribution as well as our stake distribution there but uh i'm gonna end uh that one for there because i've got a bunch of other things i want to get through um yeah so i guess speaking of staking i put out a tweet i just wanted to give

people a friendly reminder here you don't need 32e to run a fully validating ethereum node it only requires consumer grade hardware to run the node software and you only need 32 to be a solo validator that earns rewards on the network aka a staker now since the merge i've seen bitcoin maximalist absolutely just like imploding just going crazy and one of the talking points they keep bringing up is the fact that you can't validate the network anymore you can't run a full node without 32 which is completely false like you can go run a full ethereum node right now you run a consensus layer client an execution layer client that is a full ethereum node with only consumer grade hardware you do not need any eth to do that and someone asked in the comments you know

are there any incentives to run an ethereum node and of course there's no direct monetary incentives just to run a node but i said there's a few soft incentives you can relay your own transactions instead of relying on a third-party rpc such as infuria or alchemy that could potentially censor you right um you can verify the state of the chain for yourself that's what we mean by fully validating ethereum node and you help the decentralization of ethereum as well by having a copy of the chain on your own hardware so there's it's kind of like difficult if not impossible to offer direct monetary incentives for running a full node because i guess the people who are awarded on the network uh and the proof of work it's the miners for actually putting in work and and actually validating and securing the

chain and then on proof of stake obviously the rewards go to stake is because they're putting in the work and they're verifying uh and securing the chain as well whereas a a fully validating node is not doing that the node is really just like monitoring the chain keep it sink keeping in sync with the chain and letting you view the chain from in a fully decentralized way but you're not doing anything directly to secure it like you're not attesting to blocks you're not proposing blocks or anything like that you're just keeping a copy of the chain on your own hardware so that you have uh a way to i guess be fully self-sovereign and running your own node and relaying your own transactions via that node is uh is extremely powerful i think in my mind and you know it's kind of funny people

often ask me why should i run a node well these are the these are the reasons at the end of the day but i just wanted to quickly debunk that fight again there um there was a tweet here from nate who works in research at coinmetric showing you know the moment of the merge going from somewhat random ethereum block times to predictable 12 second intervals i think i showed something similar last week but just another visualization of how under proof of work block times are probabilistic which means they're uh assumingly random and under proof of stake it is deterministic which is predictably 10 second intervals now obviously this introduces an issue in uh with regards to mev where people can know ahead of time who's going to propose a block uh and and because of that we have this ssle thing coming hopefully soon to

prevent any gaming around that any multi-block mev and stuff like that but still it's cool that we have you know predictable block times i think that's very cool for not just regular users but also things like l2s they can have better i guess estimations around gas fees better uh guarantees around inclusion and all that sort of stuff there so very very cool to see that uh aragon put out a blog post over the weekend i think they're working on aragon 2.0 i'm not sure if they actually said aragon 2.0 in this post but they definitely are working on a major upgrade to aragon here so uh this is the post merge release of eragon dropping alpha designation and progress of eric okay so they did call it eric on two i thought i read that somewhere yeah so they are calling it eragon too which i think is like a big

upgrade to the the existing eragon client and now i know eragon isn't it's an execution layer client they've had a bit of issues uh over the past few months with when it came to i guess like during testing around the merge and stuff like that so they're definitely working on fixing a lot of those issues and it's part of the eragon 2 effect which is very very cool to see but you can read this blog post for exactly what they're working on i'll link it in the youtube description below all right so a few tweets about mav here so tony who is an ethereum researcher i shared this updated and beautified charts of mev boost note the meboost relay api was used for the data no data of manifold yet so you can see some stats around mev and share of mev

boosted block building so right now um flashbots is dominating as you can see in the green on the top chart here and there's a few other relayers the red one here is blocks routes max profit which seems to be second uh coming in second and then i think third is tied between like blocks routes regulated one and blocks routes ethical one um but there's no tracking for manifold uh just yet there's a bunch of other stats here as well around average proposer payments uh share of total block building and builder gas used so you can go check that out i'll link it in the description for some more stats around mev now speaking of mev there is a dashboards floating around showing like the these things that three of uh i guess like okay i should

take a step back here there are not only dashboards but there's this narrative right now that only a select handful of addresses uh proposing blocks on uh the um on the beacon chain now the thing with that is that like anyone using an mev relay will be viewed as i guess like one address or one entity when in reality they're not because as bert says here the fact that the fee recipient of me boost blocks is actually the builder is going to mess up a lot of dashboards on validators you'll actually want to look at who the last transaction in the block is paying to figure out who the validator actually is so on the dashboard it's going to show you the builder so basically just this one address that is relaying that is kind of

like um taking in those mev related transactions on the mev mev boost blocks and kind of like putting pushing it out there uh whereas the individual validator that is actually uh kind of producing that block or attesting to that block or sorry not proposing that block is inside that in you have to kind of like unpack that to show that so that's why the dashboards are kind of messing up here so it's kind of funny just seeing like people not verifying the data that they're looking at and not actually bringing nuance to the argument but rather just looking at something and saying being like oh look ethereum is super centralized because of this it's it's so dumb like it really is just so dumb because like when you like look look at mining pools i mean i think seven entities on

the bitcoin network control 90 of the hash rate which means that they produce 90 of the blocks but no one says hey look bitcoin is super centralized because 90 of the blocks are produced by seven entities because we understand that mining pools are made up of many different miners and miners can switch pools whenever they want the same is true for mav boost relays it's made up of many individual many different validators and on top of that you can change the relay that you use so if the relay starts doing dodgy things or starts censoring you or starts doing whatever you can change to a different relayer just like you could change to a different mining pool it doesn't mean that things are centralized so i wanted to clarify that for people who may have seen that fudd

kind of floating around here uh and speaking of last thing speaking of mmev uh anishia from um actually he's not a paradigm anymore i think he's more of a solo guide now but he's built a dashboard to track top relays and builders at mevboost.org so if you're interested in seeing all things mev on the beacon chain this is the place to be as you can see right now only 18.6 of all blocks are built by relays right now so flashbots obviously has 81 dominance among that um but yeah it's not really that many or that much of the network right now i think people are waiting for mev boost to be more tested in a beacon chain environment and also probably waiting for these relayers to some of these other relays to come online i've actually decided against using mev boost at all

to be honest like i know i said previously that i would use the non-censoring is but honestly i'm just not going to use it at all and i wouldn't say i like i have a reason that is like a hard reason it's more of like a soft reason that i want to build my own blocks i want to propose my own blocks i don't want to be going through third parties i think mav generally is pretty toxic i think that we should be doing our best to eliminate as much mev as possible and am i leaving money on the table by not running an mev boost and um really i'm sorry mev boost sidecar to my validators oh sure i am right but to me it's it's kind of like worth it to keep the network as decentralized as possible and as time goes on we're going

to eliminate the i mean the goal would be to eliminate the need for things like this for tools like mev boost and for things like relayers so i think that'll get emitted eventually but i don't know i just feel kind of like wrong profiting from it so to speak but i don't blame anyone else for profiting from it or wanting to i mean at the end of the day like this is money that's being left on the table if you don't run these sorts of things but me personally i just don't think i'm going to run it but you can go check out the mav boost website for more data around mov on the beacon chain all right so i think the layer 3 term is going to stick because vitalik posted a blog post over the weekend called what kind of layer threes make sense i know

i've said in the past that the layer three terminology is just gonna continue to um confuse people i mean yeah i guess it will but like everything confuses people in this industry so what's another term that we can throw into the mix um but uh this blog post is well worth the read it talks all about kind of um kind of fractal scaling and things and things that layer threes can be good for it's really in line with what i guess starkware's been putting out so you can see here that i guess like you've got l1 ethereum l2 which is like public stark net l3 which are these other things built onto the public stark net such as app specific stark net and stark x and then you can even have l4 which is like a privacy stark net so it's all about i guess like abstracting away

uh infrastructure as high as you can and then just doing specialized things at different layers so i'm not going to kind of summarize this for you you can go check this out i'll link it in the blog post below but yeah i think i've lost my silent war on the layer 3 terminology i think we're just going to have that floating around from now on just especially because vitalik posted about it all right so this is pretty big news infuria have announced that they're going to launch a decentralized infrastructure network now for those of you who don't know infuria is an rpc which is basically a some node infrastructure that relays most of i think the ethereum network's transactions and the reason it does that is because it is the default rpc on metamask for the ethereum mainnet now

infuria has obviously come under scrutiny for a long time because it has been centralized and because it is centralized they can potentially censor or control what transactions they relay now i think given that we had the ofac stuff recently given that uh just generally they're aware of the power that they have uh in in you know not over the network directly but over anyone who uses them for relaying their transactions they have announced this this mission or this plan to decentralize their network now does this mean a token's coming i think so i don't think they've announced the token or anything like that but to build decentralized infrastructure like this you need some way to incentivize it and i mean what better way than a token right so i do expect this to be a new

network uh like a new infrastructure network like the graph for example uh a graph protocol where there is a token that incentivizes people to run this infrastructure honestly i don't need incentive i will run this infrastructure for free on my own hardware just to contribute to decentralization of the network but in saying that we shouldn't rely on altruism for that sort of stuff like not everyone's like me most people are not like me so i do think there's going to be a token coming with this now outside of that outside of the token i think this is a really really good thing that's happening and i think that alchemy will probably do something like this eventually as well whether like i don't know i'm not gonna make any comment about the tokens price or anything because i have no idea what

it's gonna be worth no idea what it's gonna be used for anything like that but if we can actually build successful decentralized rpc networks that are used i know there are already some out there but they're barely used infuror taking away their centralized rpc altogether and pushing everyone onto their decentralized one is the biggest win we can have on the rpc front i believe so i'm very much looking forward to them doing this i'm not sure if they've given i don't think they've given any dates or anything um but the fact that they've just kind of like uh uh publicly announced this and also they're calling on infrastructure providers to sign up here for early access is really bullish in my eyes so i'm super excited about this i think this is the best move they could have made and as i said i'm

looking forward to being one of those infrastructure providers uh once this thing is live all right so uh not going to read this out but domothy here shared a comment from eath finance talking about why it behaves much more like a commodity than a security there are so many people out there trying to say that ether is a security and it really doesn't make any sense and this post on reddit does an extremely good job of describing why it doesn't look like a security and why it looks like a commodity so go read this i just wanted to highlight it for you guys i'll link it in the youtube description but the tldr on this post is that is not a security whatever the fud flavor of the day is these days it it as it does not meet the howie test that determines what is a security it also grows smells

and tastes like corn i mean a commodity so it should be treated like a commodity from a regulatory point of view now you'll know what that tldr means if you read the whole post it's not too long but i'll link it in the youtube description for you to do so all right so another good thread here around how a scroll roll-up works now obviously you guys have heard of scroll before i've talked about them they're building a zk evm on top of ethereum as a layer 2 well under the hood there's been a few explanations a few different threads around this but this comp one comes from chris who is building the scroll zeke avm so he would know a thing or two about this but you can see here a nice little graphic of how it works and a thread with a bunch of different

graphics and explanations on everything that you kind of um need to need to uh need to to know about it so i'll link this in the youtube description for you to give a read uh but i think you know it's always like especially in times like this where the market's quiet this is the time to be researching stuff like zkvms you know layer 2s in general uh privacy all that sort of stuff because it gives you time to do it like there's not any noise right now really at the end of the day the the noise right now i've noticed is literally just dumb tribal stuff on twitter there is no price noise there's no there's not anyone really complaining that the price is going down anymore some people will ship post here and there but everyone's kind of like whatever it is what it is

let's just keep doing what we're doing and maybe you know hopefully the market comes back eventually that's what 2019 was uh which was kind of funny i mean it was actually worse in 2019 but as i said perfect time to learn educate yourselves about a bunch of the various things so i'll link this in the neutral description for you to give it a read all right so just a quick update here on ens so they've gotten a control back on of ether.link and then it's now back online their ens injunction against the domain squadro was successful and the name has been returned to them users are welcome to resume using the service or keep using the excellent community run alternative which is ethe.limo now just a quick recap here i have for those who don't know ethe.link expired because it belonged to virgil griffith and then

domain squad up brought it up i think or got access to it and then ens filed an injunction against him to stop him from being able to gain control over it and the domain was handed back to ens as and they've got control over ethe.link again which is good a good outcome i believe so very cool to see this uh if you want to keep using ethe.limo feel free to do so but you can now use ethe.link again all right last up here we have a uh something called starkboard which is a i guess like stock net data tracking dashboard so star board v1 is now live you can go to star app.stackboard.io to have a look at the stock board itself and have a look at the stark net overview so you can track things like tbl

users transactions volume fees ecosystem this is great like this is what i've been talking about where we need a fully fledged kind of overview of each of these l2 ecosystems not just tvl not just users not trans just transactions but things like volume and fees and ecosystem and then you can see validators and bridges and just everything that's happening on the network i want to see so very very cool to see this new start board here what i really liked seeing was this uh this users thing because their users are actually growing like they've got 147 000 wallets on there now now obviously uh wallets don't um map one to one to users uh but you can see your daily active wallets uh it peaked during i guess like may and june

and there must have been something happening then on on starknet but you know you can see here the the active users and what they were before uh active wallets that are all detailed here transactions volume everything so i'll link this in the youtube description you can go check it out but this is what i've been looking for i want fully fledged detailed dashboards to track all these sorts of stuff i don't just want tbl like that's just the most naive way of looking at these sorts of things uh and i think that we need better ways and better kind of i guess like um data around what's happening on these networks so very cool to see this i'll link it in the youtube description below but on that note that's going to be it for today so thank everyone for listening and watching be sure to

subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the discord channel and i'll catch you all tomorrow thanks everyone