Lido enables withdrawals, MEV burn and more - The Daily Gwei Refuel #586 - Ethereum Updates

Transcript

hello everyone welcome to another episode of The Daily way refuel we recap the latest news in ethereum ecosystem I'm your host danisasana and that's the 16th of may 2023. all right everyone let's get into it so a couple of uh I guess updates on the finality issues from uh the weekend here the beacon chain finality issues now we don't have a post mortem just yet from uh the prism team or the techu team but super Fierce put out a great tweet today that I wanted to just go over so he said my summary of the loss of finality incidents as the chain grows uh as the chain grows more the validators submit attestations that are out of date this data can put strain or nodes to keep up and it caused some to choke the resolution is to be more careful about what old Atta stations are processed and

that's exactly what uh prism did with the release of their hotfix client same with teku and prism also has another release out today which contains more optimizations around that there now this is exactly why you didn't we you know we didn't see this issue pop up until over the weekend because we obviously have added a lot of new validators over the last I guess few months and uh the bacon chain is doing more I guess well sorry I should say the big and Trend clients they're doing more work since withdrawals were enabled and uh yeah that's that's why we ran into the bug with prism and uh teku where there was uh basically that uh loss of finality there so just a great summary some from Super fears that I wanted to highlight but as I said there has been no post-mortem published yet so there

aren't more details but I'm sure uh you know the prilabs team is working on it I'm sure the teku team is working on it as well and we'll probably still get it this week I don't know like if we will get it this week or next week but I'm assuming it'll be this week because uh obviously they already know the uh the root cause of the issues considering that they release uh updates for and patches for it but I think with a post-mortem you always want to be a succinct and accurate as possible and you want to make sure you cover as much detail as possible so that's what I uh I suspect they're doing on top of their other workload right these these guys aren't just sitting around doing just the post-mortem they've also got other workloads to worry about one of those being you know making sure they release

new up dates of the of the clients like what prism did today in order to further address the issues that we saw so we can minimize the risk of it happening again now in saying that that's another point that I want to I want to bring up and hit home a little bit I think I did talk about this yesterday maybe even the day before but it's really important to realize that like the way these systems are designed are not designed in such a way where it's going to be 100 foolproof and nothing's ever going to go wrong the whole point of Designing the I guess ethereum ecosystem with client diversity at the heart of it is that redundancy that I spoke about and to get that redundancy uh you basically need to have not only client diversity but you also need to have uh kind of like learnings

from incidents that have happened in order to strengthen and Harden the protocol because a lot of the times there is something in I guess like cyber security or just computer security in general or just I guess Security in general called the unknown unknowns now the unknown unknowns are the scariest thing because they are the things that you don't know that you you don't know so for example with what happened with the the prism and techu clients uh the teams and I guess like the the community was not aware that this was even going to be an issue until it actually played out but now that it has played out it becomes a known thing and we can do uh more work in the future to optimize clients to you know check for these things to test for these things that we may not have previously been doing so

even though it led to obviously the loss of finality here and it was It was kind of I think I mean it probably was the biggest bug I guess since the beacon chain had been live um even though it wasn't that big that big of a deal in my opinion it was definitely the biggest bug that I can remember but essentially uh it's actually a net positive because it means that we're actually now going to be looking for things related to this testing for these things more uh and it's no longer an unknown unknown which is which is obviously very awesome there but anyway enough on that one you can go check out prism's latest release and update it if you run the prism clients I'll link that in the YouTube description below but moving on to an EIP 4844 implementers call thread from Terence so this is the usual thread that

he puts out this is the 22nd call so the 22nd thread here uh what they talked about were spec discussions uh clients have been making uh changes that were put in the spec uh and they've been opening PRS which you can find here A bunch more information about all the different things that the client implementers have been doing testing with devnet 5 and and things like that as well so an update from that was that teams found uh P2P blobs by range response bug where insufficient blobs got returned so there was a bug found which is always very positive there and some other updates that I'll link uh that you can read where when I link the thread in the YouTube description below for you to do so but I mean that's another thing as well like the the prilabs team obviously as well as all the other

um Beacon chain uh client implementers and execution layer implementers are all pretty heavily involved in the next ethereum upgrade which is dencoon and obviously a lot of them are prioritizing 4844 right now because that is the biggest upgrade as part of that that whole upgrade that's the biggest EIP is part of that upgrade so that's what I was talking about before about you know these people aren't just sitting around thinking okay well I got to think about these finality issues no they've got a lot of different things on on their plates what the finality issues thing is one of them uh and you know I'm sure they're trying to work across all of these different domains while maintaining their sanity so as well right but yeah you go give these implementers call thread a read I'll link it in the YouTube description below all right so lighter has finally enabled

withdrawals this has been I guess like a long time coming uh a long time being a month since uh chappella went live and it's already been a month guys like how crazy is that it's already been a month since Beacon chain withdrawals uh went live but anyway Lido stuck to their promise of going live uh mid-may which is really awesome to see and now if you want to unstake with with Lido you can submit a withdrawal request to do that you don't have to just go to the secondary Market where you know there are obviously now two ways to exit you can sell your stf on the open market on the secondary Market uh or you can redeem that Ste for eth directly from uh Lido which then goes and and redeems it from the beacon chain uh now I think so

here put out a little tweet saying if you wanted to move your eath to a more decentralized more minority protocol now is the time I have mentioned before how I thought how I think there's not going to be like a mass Exodus of stake from Lido um for I mean the simple array reason that anyone who wanted to exit besides maybe like the big whales would just go through the secondary Market because there is quite decent liquidity for St eth so I don't think we're going to be seeing a particularly smaller stakers switch over but the thing about smaller stakers is that I think over time they switch over once they stack more eth so for example say you're a small Staker and you've only got like four eighth and you as well say you're a small ear holder you've got like four eight and

you want to stake it well what are your options right now well okay you can buy you can buy R8 right but that's been trading at a at a premium so you may not want to buy that because you're actually getting a raw deal uh then you can go by St you can go by CBE or or binance if you can go stake with coinbase and binance so you maybe you just go choose Lido right and and maybe you buy stf or maybe you stake directly with Lido but those are really your options you can't solo stake you can't stake with rocket pool you can't spin up a mini pool not yet hopefully when we get four eth LEDs but you know that's not the that's not the um the uh the state of the the protocol right now uh but then over time let's say you stack more wait let's say

you stack another four eighth and then you have eight and maybe you have enough money to buy the RPL tokens that are required to bond in order to spin up a mini pool and you decide you know what I don't want to stick with Lido anymore I'm going to sell my stf and I'm going to go spin up a mini pool or say you stuck enough to do solo stacking or say you you basically um uh want to move away from lighter to something more more of a minority protocol there are very various different ways that people will leave Lido um I just don't think there's going to be a mass Exodus right and obviously the the small mistake is uh they only put a dent in the numbers if there's a lot of them doing this and again it won't happen all at once it'll be a a kind of

process over time but I do believe it will definitely happen especially as more and more services come online they compete as well I I've mentioned before how I think we're going to see vampire vampire attacks happen here but again it's a slow process because of that execute from the beacon chain and the entry queue as well obviously that slows things down considerably there now speaking of lighter withdrawals will Sheehan here from Finance has put together a great little dashboard you can monitor to see all the withdrawals that have gone going through uh so on the right hand side here you can see the withdrawals requested as measured by amount of St eth now if I just go to like the uh I think there was like an aggregate view that I could use before when I went like this yeah I think if

I'm if I'm calculating it correctly here just napkin math off the top of my head I think there's about 12 000 each or something that or top thousand s teeth I should say that I've requested withdrawals so far so not a huge amount right as I said there is not going to be a mass Exodus okay but on the bottom left here it actually shows the total so yeah the total is almost 12 000 eighth it's not going to be a mass Exodus of of stake it's going to be a slow moving thing but this is where you can monitor it and speaking of staking monitoring dashboards djen Spartan put out a great little tweet here today with a bunch of links to different dashboards that you can check out uh some some of my favorites are the this one here the validator queue monitoring so you can

see here that this shows the estimated waiting time for new validators and the pending validators in the queue so right now it's 670 hours which uh you know I believe is about a month uh there's uh over 50 000 pending validators now and you can see down here the amount of active validators and the uh there are some other dashboards that track this as well such as when merge.com which you can load up here and I think scroll down and yeah it shows you here 27 days five hours is the current queue so it actually shows it in days not just hours there and then a bunch of other dashboards I've shown before he's got Hill dobbies E2 staking dashboard here as well as Lido specific dashboards as well so I'll link this in the YouTube description for you to check out since there's a bunch of really great

resources oh there's actually one last thing that I wanted to point out which was this website while this section of the big and chain website called eth.store which is a ethereum staking reward reference rate so basically the average kind of rate I believe across various different uh staking providers I think so if they've got like an FAQ here and I just can't remember exactly what this was uh so they uh they uh yeah okay look the accounting is in various different ways which you can actually see uh in the FAQ here which which is on the page which I'll link in the YouTube description below but this is basically the reference rate and it changes a day to day of the each staking reference rate you can see its spikes here it goes down obviously it's it's variable because of execution layer rewards it

becomes pretty highly variable actually some days it's like five percent other days it's over eight percent obviously measuring it day by day is not the best way to go about it because it's not going to show you any kind of like Smooth right that's why we kind of quote these things over longer periods of time and the raider.network website actually has a way of showing you backward looking APR as well if you go here uh and you go the top right select I guess like uh let's just do the last 30 days you can see the backwood APR for each staking service here uh most of them are over six percent some of them are over seven percent and then if you go rating time window all I don't know if all means since the beacon chain went live uh you can see here it's it's been

around six percent as well but uh hopefully they can introduce more time periods yeah I'd love to see like six months 12 months not just 30 days in all uh but yeah that's that's more of a I guess like a better way of looking at at APR but it is highly volatile because of the execution layout rewards uh there but yeah you can check out that one as well and also check out the gen's uh tweet here for a the full list of dashboards that I was just speaking about all right so Emmy V burn has been the Talk of the Town for a few weeks now Justin Drake and domothea did a great podcast episode with bankless all about me V burn uh and just like Mev generally and PBS so you should go check that out you can just search uh I guess search

for it on the bankless YouTube it was really great I enjoyed listening to it uh but today uh or I guess yesterday Justin posted a new uh eighth research post talking about a new design for Mev burn oh and he also linked to the bankless episode yes you can just find it in the in the Tweet which I'll link in the YouTube description below um but he's calling me V Byrne the natural continuation of eip1559 and the trdr of this post is that uh they uh we are the people that uh pen this post describe a simple enshrined PBS or proposer build a separation add-on to smooth and redistribute Mev spikes Spike smoothing yield Security benefits redistribution yields economic benefits like erp1559 uh and you can read the whole thing here it is quite a lengthy

post with a bunch of replies here that you can read but yeah expect this to become the next big shift I believe in kind of it it's kind of economic properties I should say because it doesn't technically affect the I guess I mean it does to an extent but it's not like a monetary policy change of um of issuance it's more of it's something like erp1559 where it does have like the ultimate effect of altering the monetary policy but it's more about driving more economic value to either as an asset like what Erp 1559 was um as a as a byproduct I guess because a lot of people I think are still under the um misconception that arp1559 was put in place as a way to just uh just just to upgrade eth as an asset right

just to drive a lot of value to it as an asset when in reality that was just a byproduct the uh the the fees the burn I mean it didn't have to be a burn right the base fee doesn't have to be burned as part of 1559 it could go anywhere but as I've explained before it was decided that it would be burned because that was the only credibly neutral way to handle that right to handle the base fee um but brp1559 obviously was a massive upgrade to the ethereum fee market and it has I mean it I I can't actually overstate how much of a massive upgrade it was if you had done transactions in 2017 you'll know because in 2017 a lot of transactions got stuck for a long time there were huge backloads that needed to clear because we didn't have this

mechanism and it made those spikes in gas prices not just last maybe a few minutes or tens of minutes they lasted days and it was it's just a really time for the network uh so that was a huge upgrade there it's just in a similar vein Mev burn isn't just being done to drive more value to eth that's just a nice property that we get from this what Mev Bern is trying to do is it's trying to uh basically remove the negative externalities of Mev or at least eliminate or mitigate some of them such as Builder centralization and things like censorship resistance getting compromised via Builder separation and just toxic externalities for users generally there so yeah anyway now that

you know that context you should definitely go give this uh poster read there are different parts and it's been split into it's actually a very interesting read it is a little bit technical but I think that if you uh I mean I think that if you listen to the refill you'll probably be able to understand it and there has been a bunch of discussions around it in the Discord Channel as well so you can join the Discord channel to join in on those discussions uh but I'll link this in the YouTube description below for you to check out and just again I want to note that this will become more and more out of a bigger topic as time goes on I don't expect it to go into the network obviously as part of the dencoon upgrade but it could go into the network as part of the network the upgrade after

that uh next year maybe it goes in like in the one after Dean Kuhn or just the one after that we'll have to see because there is a lot up in the air I think right now about what's going to go into the upgrade after dencoon what's going to be the driver of that upgrade Mev burn may end up being the driver or it might be something like a vocal trees it just depends it might be PBS itself right so this is a add on to PBS so maybe this gets this becomes a passenger of that upgrade but we'll have to see It'll become clearer as as time goes on as we get closer and closer to that upgrade uh but for now it is really a lot of it is still in research phase and it seems that we're getting closer and closer to a something that looks like a

spec that can be implemented at the client level and then implemented on the network but uh it's still worth reading this stuff and still worth uh kind of getting your head around it because it is definitely going to be a bigger theme going forward all right big news out of the optimism ecosystem so they have announced that the official date of the Bedrock upgrade for mainnet will be going uh live on June 6th at 4 P.M UTC now I remember I said that I believe that there would be a I think it was mid to late mail early June or something like that for this upgrade so I guess like nice to see that uh that the the the um the timing lines up there uh but what I didn't anticipate was that the upgrade would actually require downtime for the optimism main net so the op mainnet will

be down for two to four hours a worth of downtime for this upgrade to go through uh which I guess isn't too surprising but it kind of speaks to how I guess uh amazing it is that the ethereum network does upgrades without any downtime especially upgrades like the merge uh when you know the layer two still need to have downtime in order to upgrade which is totally fine I mean I don't think it's a huge deal and I think this might be one reason why optimism haven't been going too hard on uh on kind of like getting as much adoption as possible getting as much uh economic activity happening as possible just yet I think they wanted to get bedrock out of the way because it is such a big upgrade for the op main Nets and they knew that they probably needed to do to

have down time so so yeah but I I believe after Bedrock it will definitely signal a kind of like New Era for optimism and I do think that uh the you know fees are going to be cheaper there's going to be a lot of other cool stuff happening under the hood and you can actually read the full details at their mission control section which I I spoke about I think a couple of weeks ago on the refuel it's also linked in the U it'll be linked in the YouTube description below and there's also a Twitter thread here as well for you guys to check out so very exciting to see that optimism is about to undergo its biggest upgrade ever I think to date um and it follows obviously arbitrimented their Nitro upgrade I believe it was uh later late last year or something like that uh it's funny

because Bedrock was supposed to come out I believe uh they had originally said Q4 and they said q1 and now it's Q2 obviously this has just been a big undertaking so those dates have gotten pushed back there but I think that over a time these that layer twos they're going to learn the lesson that ethereum layer 1 devs learned is that giving any kind of time frames is quite dangerous uh because like you you know nine times out of ten you're probably going to miss the first date that you give but I don't think that people will um knock optimism like they're not uh you know ethereum in the same way I don't think they knocked the l2s like that not yet they probably will in the future but I think that it's okay and I can't believe we're almost in June guys like it's actually actually

crazy thinking about that that uh it is May 16th right it feels like yesterday that we did the merge but I guess in crypto time just goes very fast even in Bear markets but uh anyway and enough of that you can go check this out I'll link the thread in the YouTube description below all right so sugar I'm from eigenlayer had a really great tweet out today that I wanted to speak a little bit about so he was quote tweeting someone uh called Ken who was who tweeted defy code is launched into the most adversarial of environments non-stop attacks from financially motivated actors it's damn hard to get right but what comes out the other side will also be the most resilient and valuable code ever written and then uhuram uh quote tweeted this and said open source means that the

attacker can read the code open State means that the attacker can choose an opportune moment open entry for the attacker due to censorship resistance and open exit for attacker due to immutability it's the harshest environment code can ever be deployed in so I want to break down each of these points open source so it means that as ashiram says yeah the attacker can read the code look for any bugs in it look for anything wrong with that and exploit it because there is open State and open entry right open state mean meaning that they can choose when they want to exploit it and open entry meaning that uh from anywhere in the world they can exploit it on the ethereum network because the ethereum network is censorship resistant it is permissionless it doesn't ID you it

doesn't try to stop you from doing anything as long as you are following the rules of what you're interacting with even if those rules are not what they're supposed to be right even if it's a if it's a rule that has a bug in it um and I mean the bug is the rule in that case right um then you can do that and then open exit the attack attacker can exit because there's immutability the ethereum chain doesn't get rolled back right it got it did that once and once only with the Dow because that was such a big deal at the time but these days are hacks happening quite often and there has not been a rollback and not even for uh the uh the the second biggest hack I believe which was the parity multi-sig uh bug it wasn't a hack it was kind of like an exploit which

froze the funds which led to over 300 000 each being frozen uh not even that got rolled back and for those of you who don't know parody is the team that built the parody ethereum clients uh that was uh co-founded by Gavin wood who is one of the co-founders of ethereum so not even there he could get the chain rolled back there so the next time your favorite Bitcoin Maxi says that Vitalia can just roll back the chain whenever he wants uh you should remind them of that but uh but anyway um yeah the open exit is because the train can't be rolled back and really if they're in assets like eth where there's no back doors like there are with centralized stable coins they can uh they can mostly exit and we've seen this with uh attackers like North Korea right they've been able to end exit by going

to eat and then just like tornado caching that eight that's why or at least that's the stated reason why tornado cash was sanctioned by ofak uh and then Triumph says you know it's the harshest environment code can ever be deployed in and and then and it is because what's more valuable than a financial incentive right like there is obviously plenty of code out there and a lot of the times it gets exploited for financial incentive but the financial incentive in crypto is just so much larger what would you rather do look for a bug and and um spend your time looking for a bug and then exploiting it in a bridge that has like a hundred million dollars in it or spend your time looking for a bug and then exploiting it and in like web 2 and trying to monetize whatever you're able to exploit such as

uh user data right emails and things like that the payoff is much smaller and it's also much harder to I guess like move that and and and and cash in on that so to speak so uh you know in crypto it is just the financial incentives are just absolutely massive and when you really put the the biggest numbers to it the financial incentive for exploiting uh the actual protocols themselves are just huge right just absolutely massive like you can you imagine uh having an exploit ready to go uh for Bitcoin or ethereum and then doing a massive shot of Ethan BTC on on an exchange for example and then that uh that being paid out now obviously if the exchange suspects that you were behind the attack that would freeze those funds you know centralize exchange but there

is going to be a time where essentially you'll be able to exploit one chain and then short the token on another chain and then profit from that short still so the the economic incentives is just just very very great and that's what makes it the harshest and most adversarial environment to write code in but as Ken says here but what comes out the other side will be the most resilient and valuable code ever written and by extension the most resilient and valuable Financial system in the history of mankind which is a pretty good thing to to aim for right yeah you know we have to go through trials by fire via hacks and things like that but what comes out the other side is an amazingly beautiful machine in my opinion at least so great little thread from a great little tweet I should say from Sri RAM

and uh Ken as well thanks for putting that out guys all right last up here we have an update from a coinbase's chief legal officer Paul grebel here so this was the update on uh the coinbase uh asking or I guess like uh filing a motion for the SEC to reply to I guess like their motion they filed last year and I remember I covered this a couple of weeks ago on the refuel so they did reply and Paul says yeah the set the SEC responded to coinbase's petition for a writ of mandemus asking for the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry the sec's answer a resounding maybe now I'm not surprised that it was a maybe they're not going to say anything definitive VR because that

holds them to to something which obviously is not something that they want to be doing uh the standout tweet from this thread here is that uh the SEC said the public statements by chair Gensler are not formal guidance or policy statements from the SEC and the public cannot rely on them as such so I guess Gary ganza can just say whatever he wants and just confuse the out of everyone right and apparently there's no consequences for that which is which is really really shitty and then uh Paul also said that the SEC acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future but not to worry those enforcement actions may eventually inform not yet planned rulemaking so just more hand waving and just more kind of like gaslighting and just more bad policy but just

more bad regulations as I said I didn't expect much from the SEC and I'm still kind of disappointed uh that this happened but it's good that coinbase is pushing this it's good that we're actually getting this stuff on the record because now I guess like we know on the record I mean we always knew but like we know now where they stand basically anything Gary Gensler says should literally be thrown in the trash because it means nothing and the SEC would rather just do regulation via enforcement than making any rule they're making any guidance or making up any um actual legislation or push getting that push through which is just the stupidest way I think to to to provide I guess like a um a regulation provide a safe way or I guess like a way for people to

to to build and and not be put in jail for and not be fined for it and things like that and this is going to directly result in the continued bleed of the crypto industry from the US to other nations around the world this is by far the stupidest thing that the US could be doing uh is letting gensla run the SEC like this run it like a mafia and basically let it push the industry out of uh the uh the US which is not going to be long-term good for the US in my opinion but anyway you can read Paul's thread for yourself I'll link that in the YouTube description below um but yeah I've got a couple more minutes yeah I just wanted to to talk about one last thing uh again about staking I know a lot of you are always in the Discord Channel asking about

staking who to stake with all this stuff yeah I actually am of the opinion that you can go stake with anyone you want I'm not going to try and say that you have to stick with a decentralized provider you have to sell it stick you have to do this you have to do that I'm happy for you to stick with whoever you want except Lido right now as said before going with Lido right now is is is pretty silly they're a huge part of the network they don't offer the small mistake as anything that you can't get from other staking providers because you don't need that much liquidity if you don't have tens of millions of dollars you don't need the liquidity that uh that that stf offers you you can go with another smaller one if you are able to do it spin up a rocker pool mini pool

it's easy you don't need expensive Hardware to do it it really is pretty straightforward there is helping the rocket pool Discord go do it there if you can solo stake do that I know that the barrier for entry in terms of eth that's required for solo staking is quite High look out for other Solutions like DVT coming right look out for a rocker pool going from eight eighth mini pulse to Fourth mini pools eventually um but even if you don't have enough if you don't actually want to run the validators yourself just stake with anyone but lighter at this point guys like glider has just too much market share we shouldn't be encouraging people to stake with them I'm not saying that Lido is a bad service not at all I mean obviously it's a good service there's a lot of people that want to stake with

them but it is not something that we need to be giving more stake too they already have a large part of the market Let's uh you know let's stay with other providers and let's encourage people to stick with other providers um but yeah I mean I can say that as much as I want obviously I don't think it's going to move the needle in a huge way but I I feel like saying it anyway maybe maybe it does hopefully it does right but as I've said before the biggest needle movement is going to be from the providers themselves offering better more competitive Services than Lido and also offering things uh like token incentives and doing vampire attacks stuff like that it's going to be wild it's going to be a long-term play but I'm excited to see it all play out 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