Lyra Finance detailed, Index Coop chat and more - The Daily Gwei Refuel #143 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel where i recap the latest news in the ethereum ecosystem i'm your host anthony sosano and today's the 15th of june 2021 all right everyone let's get into it so just wanted to give a quick shout out here to ethan global who are running at another hack money conference conference uh hackathon here uh so if you're a developer or a hacker or just want to you know get building definitely go to apply to this they've extended the application deadline to the 17th so on thursday and you can compete for over two hundred thousand dollars worth of prizes uh at this hackathon so all you have to do is go to d5.ethglobal.co and you can kind of just click register for hackathon here now this will run from june 18th

to july 9th you'll have a lot of time to build your app and everything like that and there's a lot of prizes to be won as well so yeah and you can view the schedule on this website and everything like that or well in your local time zone too which is nice but it's also hilarious because all this stuff always happens when i'm sleeping this is like 2 a.m 5 30 a.m this is pretty funny uh when you look at it in australian time but anyway if you're a dev definitely go check this out and register you should you should get involved here i think the eighth global hackathons are my favorite i've judged a few of them i definitely think that it's something to to get involved with and not and something not to miss so i put out this tweet today in response to something that michael

sayler said on coindesk where he said the us dollar will be the reserve currency of the world and it would move on bitcoin rails and i'm like uh what first of all the us dollar uh is obviously already pretty big part of the world right i mean it is considered the reserve currency for most of the world maybe not uh i mean even even parts even even china i would say it's still the reserve currency for that but anyway um even you know and sailor's saying that it's it's just going to be the reserve currency for the world maybe he means that even more so than today i'm not sure exactly what he meant by that but i was focused on what he said about it would move on bitcoin rails this is simply not the case at all right now and i doubt it's going to be the

case in the future because if you see this website uh basically uh money movers website i did i i was going to have it kind of like loaded up out there but i had the wrong site loaded up um but this website basically shows you kind of like where the value is being settled uh and essentially you know ethereum obviously is completely dominating bitcoin here and this is just stable coin volume this is not including uh btc volume or eth or or wrapped eath or wrapped bitcoin on on ethereum this is purely just usdt on on bitcoin and usdc usdt and dye on ethereum this isn't even including the other stable coins on ethereum because there's plenty more but obviously these are the most dominant ones so you can see here that over the last 24 hours heath did 14.34 billion dollars worth of

settlements in stable coins whereas bitcoin and it's not even really bitcoin it's the omni network um did 30 million dollars uh a day so that is obviously a very very uh major difference between the two here and obviously we know that that usd stable coins are integrated into pretty much every d5 app on ethereum today so this is in large and that's a large reason why ethereum is settling more value here and even if you want to even go further than this you can look at something like tron where um tether's been issued on tron and and it's got some volume on there i think there's more tether on tron than ethereum right now um fun fact but even tron is is settling more value in usd stable coins than bitcoin so taking all that together i just don't

kind of get this comment from sailor and to be honest like i don't really um expect him to be saying something anything different here he's obviously a massive bitcoin bull uh all in on bitcoin but i just thought it was was quite weird um maybe he doesn't know about ethereum maybe he doesn't know about d5 which again i would consider weird as well considering how involved he is with with bitcoin but people have blinders on i don't think many people actually know about this stat i've posted about it before i'm sure a lot of you have seen it and i've written a lot uh about kind of like ethereum's use as a settlement layer as these payment rails um in my newsletter before but really uh i don't understand how at this point someone could say oh bitcoin is going to be the the rails that all

this stuff operates on i really don't think so and you know i i i often think about this because obviously bitcoin has memes bitcoin as digital gold like that was the meme that they uh kind of like uh perpetuated in the narrative that they perpetuated over the last few years um specifically after i guess like the bitcoin cash folks forked off of bitcoin and like the block size debate was pretty much over at that point the bitcoin is then said well if bitcoin layer one is basically this kind of digital gold settlement layer thing um and uh basically it's uh it's not for for payments or whatever we'll do that at layer two now what i'm seeing from a lot of the bitcoin crowd is that they're trying to basically re kind of i guess jig the narrative to

include d5 because they've seen that d5 is huge it's a it's it's massive for blockchains you know they've seen if ethereum kind of like eclipse bitcoin in fees by a wide margin um and basically overtake and stay overtaken they've seen that ethereum now settles more value than bitcoin so i think they're just trying to reduce the narrative there which i don't think is going to work because fundamentally you can't build on bitcoin when you can build on ethereum and i know people are saying well you can build them on like um bitcoin pegged side chains and things like that like root stock and and liquid and stuff but they're side chains that's not that's not bitcoin you know technically that's not bitcoin and they say okay well the lightning network will build stuff there the lighting network is so limited and and it has some fundamental problems

that i haven't seen kind of like solved yet and it relies on centralized intermediaries to work in any way so i don't you know it whenever someone says to me bitcoin's just going to take all the use cases that ethereum has and it's just going to do what ethereum does but better i'm like well you know what at this point the bitcoins have been saying this since ethereum was announced uh i i do think that uh we should just like wait and see how it plays out obviously my bet is that bitcoin is just going to settle into its kind of um digital goal narrative and niche and i think that because of that it's its value is basically whereas value accrual is basically capped and i've said this before where i think that if you're going to set into like the digital gold niche then your value cap is

essentially those who care about holding digital gold at the end of the day and that is not a large part of the population really because think about how people actually own gold as an investment vehicle not a very large part of people uh a very large pool of people do and then some may argue okay well you know the pool's greater for bitcoin because uh bitcoin is better than like a hundred times better than gold it's digitally native and and that's true but but then you have with eth on ethereum and you just have ethereum in general that is a hundred times better than bitcoin at everything in my mind so i don't know this isn't just to me bashing bitcoin or anything like that but it's just funny to see that people try to change the narratives when uh i guess like they realize that

they've kind of uh put a cap on on the value of something because that you should never do that you should never and and and and you'll see commonly on twitter people give like the ethereum community uh kind of crap for not having a defined narrative why would we want to bucket ethereum into like one defined thing it's not it's ethereum itself can't be defined by one thing because ethereum itself is everything you can build anything you want on ethereum so why would we even try to bucket it like you know we make up some joke memes like ethy's money or ethies ultrasound money and whatever like those are just like little memes and stuff like that that's got nothing to do with um trying to basically define ether as just one thing like is money but it's like so much more than that so

bitcoin is kind of memeing bitcoin as digital gold and that's it they've kind of cornered themselves now i think they're trying to backtrack here um and i think they're not going to succeed at that because there's no like bitcoin i mean d5 on bitcoin is not going to really be anything more than like a niche within a niche within a niche i just i don't get why out of every single chain you could build on you would build on bitcoin like i'm pretty sure people would rather build defy on or most people would rather build d file one of the numerous ethereum competitors instead of bitcoin and then obviously like just building on ethereum anyway so i i i'll kind of leave it at that for now i won't go on too much about this but i just thought that you know there's such a big disconnect here between

people like mike michael saylor who represents what i think the hardcore bitcoin community um and there's a disconnect i guess between people who expect bitcoin to be you know everything when it's not it's really just one thing and i'm curious to see if bitcoin is keep trying to change the narrative around this and keep trying to meme bitcoin as more than digital gold because i think they will because eventually it'll become very apparent to most of them that they've cornered themselves and it'll take over and i don't think they're going to win that narrative war i think they're gonna be seen as hypocrites i think they're gonna be seen as um you know cringy or it's just gonna be really bad for them so i do think that you know i do think that uh it's positive for ethereum that we

haven't backed ourselves into a corner and i also think that uh it's kind of like an i i mean it is a major reason why i believe in the flipping is because ethereum and eth just have so much more of a total adjustable market than something like bitcoin does and ethereum and eight doesn't have a problem where it's backed itself into a corner and said well we're only going to do this one thing and do it really well well you know that's fine nothing wrong with that but that's not a theory that's that's what bitcoin is but anyway i'll leave it at that for now this site is i think it's called moneymovers.info maybe i think you can google for it uh if you want to kind of play around with it because it's interactive so definitely go check that out so the index co-op uh is growing like at

a rapid pace yeah so i've talked about the index co-op a lot on um on the refill of course and i think i even spoke about it yesterday but you can see here kind of like a a chart of the different kind of products that the index co-op offers the dpi is obviously the biggest then there's the two times fly product which actually there's another kind of blog post that was put out about this product so the eighth 2x fly is otherwise known as the the flexible leverage index for eth you may have come across this before and there was a lot of chatter about how volatility drift affects the flexible leveraged index products now what's volatility drift well i mean you can read this blog post for a detailed answer on this there's i mean this is an eight minute read so it goes into a lot

of detail i read it it's really really great but essentially what it is is it means um that because this is a leveraged product what happens when uh you know the price goes down and then it kind of rebalances but then the price goes back up and the index ends up buying like say eight for example at a higher price than it deleveraged from that would basically eat into the profit profits so that's what um volatility drift means here and i think that's what a lot of people have been i guess curious about and and wanting a better explanation on this so i would suggest going and reading this blog post on those products but you can still see that the products are very popular like dpi is the d5 pulse index that uh it has been very popular in the past i think that

it kind of stalled out because d5 has kind of i guess taken a bit of a back seat lately in terms of the token prices because of the the crash that we had i mean against eighth it's kind of taken a backseat there but you can see that the eighth flexible leverage index is an extremely popular product the btc uh flexible leverage index is this is the third most popular and there's a bunch of others underneath that um what are the mvi which is the metaphors index and then there's uh five other products there which aren't part of the index co-op they're part of competitors so the point of this kind of i guess graph here or chart is to show that the index cop really does dominate its competitors uh which is really really cool to see so yeah uh definitely go check out this

blog post as i said if you want to learn more about volatility drift and the flexible leverage index i think it's a really important topic especially if you hold the fly because you may not even notice that this is happening that uh you're you could essentially be losing out because of those rebalances so definitely make sure you know the risks and you know the kind of like how this mechanism works and this blog post will do a really great job of explaining that for you so speaking of the index card well i forgot that i had three things i was going to talk about today uh the bankless uh bed index has now been uh approved i'm pretty sure by index co-op governance so this is a new index that basically has 33 bitcoin 33 e 33 dpi and that's why it's called the

bid right bitcoin 8 dpi um and this will rebalance on the first friday of uh of every month um now this thread from crypto texans a great read on why bed and why you know why it's a good thing to hold and why why aren't bankless kind of created and things like that so definitely go read the whole thread but what i kind of like wanted to give a view here is that this kind of index is definitely something that i would suggest some to someone who wanted low-ish volatility right like obviously in crypto everything's volatile but if you wanted lower volatility than um say just holding random tokens then this would definitely be the bet here but also just for someone who's new and doesn't know what to invest in and they're like oh i don't know if i should

invest in bitcoin or eth or defy it's like okay why not get into bed right why not uh why not buy this bed index and obviously this product isn't going to outperform any of its senior singular um kind of underlying here but it's going to give you more i mean over the long term maybe maybe not here but it's also going to give you more certainty and it's going to prevent you from doing like um i guess like bad trades because it's it's funny i see on on twitter a lot that people say well what's the use of holding you know etho or bitcoin when you can just buy all these other stuff and outperform it um well i mean the point is is that most people don't outperform bitcoin or eth because it's very very hard to do and i've described this before i think on

the refuel where i basically said it's so hard to do because when you're trying to outperform these things you have to figure out like how long you're holding something for if you go look at most defy tokens over the last year a lot of them haven't actually outperformed eighth by that much and a lot of them have actually underperformed eighth because i was actually looking at it earlier today in july july yeah july 17th uh the wi-fi token launched and shortly after that i'm pretty sure i bought some when i bought wi-fi the price of eighth was 265 dollars now i didn't use ether to buy it i uh used um dye to buy it but in saying that uh 265 dollars like even as as east crashed here eighth is still 10 times what it was back then um now wi-fi

if you bought when wifi first kind of launched at that price against eth you would be up but most people didn't do that most people bought the wi-fi token you know much later in like the thousands of dollars and have underperformed eth in doing so now this isn't to say that wi-fi token isn't isn't uh isn't good it doesn't serve a purpose it's not to say that yeon is a bad project but the the fact of the matter is is that uh it's just about what people want to hold long term most people just want to hold btc and eth long term they don't want to hold any individual default token so from that respect it's very hard to pick which one's going to be a winner it's very hard to pick something that's going to outperform eth and usd over the longer term it's very hard to like manage taxes

around this too because for those of us in like uh uh in places that with capital gains tax here's the kicker with this in trying to outperform eth if you buy something and it outperforms eth uh by say like uh 10 if you end up having to pay more than that in taxes um you're paying the taxes on the dollar amount so if you're in the us you're paying taxes on the us dollar gain and if you're in australia i'm paying taxes on on the aud dollar gain i'm not paying taxes on the on either nominated taxes so what ends up happening is that you could end up paying more in tax that puts you and even if you've outperformed eighth you could end up buying back less eight because of the tax hit because your government isn't gonna uh it doesn't care if you're up beneath or

down and eat its benchmark is aud you're taxed uh sorry on your tax based on the native uh on the nation's currency so even that's another thing that people don't consider is that you may outperform eth but are you out performing ethan enough to make up for the tax hit that that you you that you that you suffer because you're taxed on the dollar amounts so bringing it back to this bed index here this is just a much much simpler way to get exposure to the three biggest sectors of d d5 sectors of crypto eth and d5 like that's it and i think that's what this is this is really good at doing it's r i think this is something that i would suggest to even people that are in crypto right now i feel like this is something that i would suggest to them

it doesn't have to be for just total noobs because at the end of the day most of us i'm i mean most people i guess not most of most of us but i i believe most people end up just underperforming due to all those reasons i outlined like not accounting for the tax hit holding something too long not realizing that um they're bought into something that is not going to outperform ethan and they just hold it forever and then you know they give up their precious ethan things like that because at the end of the day everyone that i know that speculates on these d5 tokens they go back to eat they don't go to dollars and they're not holding these things over the long term especially things that um uh don't have any kind of value capture people just don't like to hold them because they're

very speculative especially things for early stage projects and i know i discussed yesterday on the refuel and in my newsletter that there are actually valuable governance tokens out there and i stand by that but are they valuable enough to outperform eighth over the long run you know while you're holding them as well and are they valuable enough to essentially um not only outperform eth but give you a return for the risk that you're taking because it's all about risk reward if i'm taking a lot of risk well you bet that i want to outperform eth by like 5x at least if i'm taking a lot of risk because if not then there wasn't any point for me doing it because i'm taking on like just so much risk on these early projects and i'm not even talking about like the brand new ones like some early

projects that have been they've been around for a few months but they can still still considered early are very very speculative and you know even even the the i guess more mature projects still trade as if they're early stage i mean you can look at things like rv which i consider to be one of the i've talked about this before one of the best projects in d5 with one of the best token designs in d5 i'm pretty sure it's still down like 50 from its high uh and you know that's that's one of the best ones out there and even um going further btc and eth i mean bdc uh at its bottom was down fifty percent uh over fifty percent on its all-time high eth got like 60 when it hit its bottom from its all-time high so just because these things you know

are considered good doesn't mean they can't drop like that as well so if you're looking at the long term you know you're obviously not not too concerned with these short-term movements but what ends up happening is that every time you have one of these dumbs people go to eat btc or dollars they don't go and then and then for them to go back and play with the more speculative stuff the market has to heat up again and that's the problem the market only heats up if btc and eth are hot and btc and eighth have pumped a lot so because it will take their profits from that and put it into other things and and and the thing is if you don't get in and out at time you end up underperforming uh uh btc and and and dollars potentially as well but anyway i'm not going to go on too

much about that because i'm i don't want to be giving investment advice because none of what i said is investment advice but i just think it's something to consider when playing in this stuff it took me you know a while to to kind of get to that point where i deeply understood that and understood that it's just much simpler to keep stacking each like as i've said before i just buy eighth every day then try to speculate on these things now i do hold other tokens but if i'm being honest you know the risk that i took on these other tokens honestly i didn't outperform either as much as i should have on them and as i said i didn't put eight into them but the thing is i could have put that die into eighth that i borrowed instead of into these defy tokens for example

so yeah i'll leave it at that for now definitely go read this thread from crypto texan it's a really good one goes into a bit more detail about bed here so lyra finance officially announced themselves today these are this is one of the protocols that it's spinning out of the synthetics ecosystem so what this is it's it defies first complete options amm so the core features are unified liquidity across all strikes and expiries market driven volatility surface fit into a black skulls pricing model if you don't know what any of that means that's okay i've talked about how options kind of protocols and options are very exotic financial products before i'm not going to say that i am an expert on them or anything like that so if you want to read more about them there's plenty of literature online but

the other two headline features here are automated delta hedging for liquidity providers and instant transactions with long and short options positions now what i wanted to focus on with with lyra is this instant transactions because lyra is actually launching on optimism first they're not launching on ethereum layer one which is is is pretty cool because it's been natively designed for a layer two from the get-go and i think this is what the future's gonna look like for ethereum where projects are just gonna completely forego launching on layer one ethereum and just going to a layer two like a roll-up or even something like polygon and i think this is incredibly healthy because it means that these projects don't have to essentially deploy kind of like a two-layer one uh hope they get some kind of action on there

and then you know deploy to layer two later why not just start on layer two first and be there when all the users are there because layer two is going to be adopted much quicker than i think people realize because people are hungry for it even at cheap gas prices on layer one layer two still gonna offer a better experience so i'm really glad to see that and it's cool that they're going on optimism because synthetics is going to be on optimism so obviously they're going to stay in the same home there and there's a bunch of other protocols that are spinning out of synthetic synthetics ecosystem as well that will be going on to optimism i think fails is another one uh and there's one more that i can't remember my head and then there's also quinta so uh yeah that that's really cool to see and as i

said i'm expecting more and more projects to do this as time goes on but if you want to learn more about lyra you can the super linked in the youtube description um and you know if you're an options trader if you're interested in options this is definitely something that i i'm assuming that you'll be interested in so definitely go check this out so nader from eduno today uh put out basically a little video showing that he was able to create a uh sign-on with ethereum uh i guess a proof of concept here which leverages identity index uh and ceramic network and decentralized identities in general to implement authentication and profiles with an ethereum wallet so essentially i've spoken about the kind of sign in with ethereum concept previously on the refuel where using your ethereum wallet because it's

a public private key pair you can basically sign in to anything and that would be your login details instead of a username and password now this is taking it a step further where you can essentially take your decentralized identity and your profile with you all across the web so there's no central party that needs to read this you're just reading this from a decentralized identity provider when you're using your public private key pair to log in because your public ethereum wallet is the wallet that holds the identity right the decentralized identity so it's tied to that um and this ties into like things like ens as well you know i've got my ans sassel.eth and things like that that has my identity attached to it where you can kind of like uh see my my profile picture because i have a

uh i think i have something with um three box uh set up as well so this is to me the future of like web 3 because when you really think about it username passwords have just been like a pretty horrible way to do things you know for a long time now because people reuse passwords people kind of like get their password stolen um and obviously from databases and there's database links and things like that whereas with the signing with ethereum that doesn't happen because your private key stays on your device your all you're doing is signing a message when you log in um and that allows you kind of like access to to everything that you want access to and this works especially well with a decentralized web because the decentralized web shouldn't be storing credentials anywhere so as long as you have the credential uh

your private key on your kind of device like for metamask you have it sitting on your your device uh if it's through your ledger then it's on the ledger device um then you know there's no way for someone to get your private key like that uh so yeah this is really really cool i'll link this in the youtube description you can go check it out it's on github and you can check out this little video here which is a pretty cool uh pretty cool watch to see how it works so speaking of uh security here and i mean i spoke about bobby ong's tweet thread yesterday about um security uh with regards to your crypto metamask is pushing this new uh terminology instead of saying uh seed phrase they're saying secret recovery phrase and this was done by i remember who pushed uh this on um on

twitter recently but someone did who said that the words or the phrase seed phrase doesn't actually make sense to most people and they may not understand that they have to keep this secret and if you ever ever show this to anyone then that person can have access to your entire um you know ethereum wallets that fall under that seed phrase so if you uh accidentally give your your seed phrase to to someone or lick it or someone for your ledger then all of those ledger addresses that you have and all the funds in them um uh would get stolen or could get stolen because they have the the seed phrase so saying secret recovery phrase basically changes the wording here and changes the phrase to make people understand that this is a secret and you should never ever ever show this to anyone ideally when you write this this um this

phrase down on a piece of paper or something you should uh split this up and into and like leave one at your like a parent's house or something if you trust them leave one at a friend's house and so that you have to basically get them to give you um the seed phrase uh all of them together so it's kind of like a multi-sig um in order to access kind of like your backup for your funds um because in doing so i mean if you just keep your your kind of seed phrase at your at your house or whatever or just on you or whatever um that's just like a central point of failure there now i mean really the only way people are going to be able to get it off you is if they know you're carrying it if you have it on you

which i'd suggest not do not doing that but if they know where it is in your house or whatever but generally i think people whatever people end up doing is that they don't want to write it down physically so they'll actually take a screenshot of it on their phone or something to back it up or they'll um they'll write it down digitally and that's very easy to to be kind of leaked or for a hacker to get in and steal that so i think that just changing the language and saying this is a secret recovery phrase and really telling people that like you really really really really shouldn't ever put this thing online put this into a computer i just write it down physically and then um you know and never definitely don't take a screenshot of it but write it down physically and you'll keep yourself safe here so

there's a whole blog post i guess like uh describing why keeping secrets is essential for web3 on uh about metamask here so i'll link this in the youtube description and you can go check it out so speaking of security the last thing here is that zappa announced yesterday that they discovered a vulnerability in their old polygon bridge smart contract that unfortunately would allow an attacker to steal funds that had unlimited approvals so the zappa basically exploited the vulnerability themselves and all the funds were rescued so this is what's called a white hat uh kind of approach where they found the the the exploit they did it themselves they withdrew the funds and they've um been basically giving um users the opportunity to get their funds back

from from zappa so uh if you had previously kind of interacted with this old bridge you will be notified on your zapify dashboards you haven't checked if you haven't checked it lately please do so in case you know you have some funds that you need to kind of claw back here but i'm really glad to see that zappa caught this before uh you know a black hat hacker did because this could have been pretty bad i'm i'm not sure how much how many funds were in there but there was there was a you know it wasn't a small amount of funds that was in this bridge smart contract and again this just talks to security and how when you're basically interacting with smart contracts one you i mean a lot of them ask for unlimited approvals of tokens which i guess is is up to the developers

to to do that or not um but two if you're not using these smart contracts anymore you should revoke their permission to spend your funds because if they still have permission to spend your funds if there is a bug in this contract that allows anyone to kind of steal the funds then they could steal everything that you've given approvals through so if you approved the um wrapped ether token for example and you have like 10 wrapped eighth in your wallet um that contract could steal your wrapped ether so definitely something to uh to keep you know keep top of mind here and your security best practices and definitely something that uh you know you should check out and go visit your zappa dashboard if you uh interacted with this old bridge because it will prompt you to kind of um claw back funds if uh if you need to

but i think that is it for today everyone so thank you for listening and watching be sure to subscribe to the channel if you haven't yet give that video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone