Mithril Cash launched, Opyn v2 live and more - The Daily Gwei Refuel #26 - 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 is the 30th of december 2020. all right everyone let's get into the news from today so i guess the biggest kind of thing that happened in ethereum today was this new i guess algorithmic quote-unquote stable coin launch called mithril cash um now this kind of got a lot of attention because they reached i think it was 1 billion tbr you can see here one billion tvl within a few hours um which is quite crazy actually and the reason this happened was basically i mean i'll explain what this is it's basically a new uh as they describe that algorithmic stable

coin that is being dispersed via a liquidity mining program that lasts for five days and in order to you know earn these tokens you can put a bunch of d5 tokens in you can stake a bunch of different d5 tokens you can stake stable coins and things like that um and this i mean the reason that's why the reason sorry that's why the tbr went up so fast is because they basically tapped into all these different communities and all these different holders of different tokens and basically said you know here's a risk-free uh staking kind of um uh staking mechanism to earn tokens that were worth some amount of money and you can just basically farm and then and sell these tokens off now when i say risk free i don't mean that like there's no smart contract bugs

right there's no there's no other risks associated with it what i mean is that usually a lot of these farms have uh uh ways to fund their token with you know unisop or sushi swap liquidity uh provider tokens which are a lot more i guess risky because they come with impermanent loss risk right because if you're providing liquidity you're taking on this kind of impermanent loss risk where if the market moves against you you can lose money like that so that's why you'll see a lot of these other farms not getting you know as much tvl nowhere near as much tbr as this whereas with mithril cache or myth cache whatever they're calling it you can basically just deposit your wi-fi tokens or your arbit tokens or your link tokens into their smart contract

and that's it right you're just depositing them there and then you can earn these kind of mic tokens so that's what a lot of people did it reminded me a lot of yam and wifi because that's how those tokens were dispersed uh it actually reminded me a lot of those of those experiments um and i and i didn't kind of participate in this one because i didn't trust like the contracts or anything like that i mean i saw some people saying that the contracts were fine that was safe and everything but you know i was i'm kind of over it as well i mean i did a lot of this stuff during d5 summer and i'm kind of like totally over it at this point where i'm like i've done this i know what it is you know maybe i'm missing out on some money

whatever like it's just i don't think it's it's something that you know um a lot of people i guess that i usually speak to and that participated in during defy summer actually participated in uh even though this reached so much tvl i think what happened was a bunch of whales came in like really really big whales and kind of like i saw people complaining that their gains were going down because whales were coming into this farm with a lot of capital and their kind of like rewards were going down so there's that aspect to it as well but yeah at this point i mean these things are not stable coins you know mithril cash is a fork of basis cash which is based on the original basis project which is you know quote unquote algorithmic stablecoin which is trying to

i mean they're trying to be stable coins i guess but it's just i i don't see how it's going to work and i kind of like um went into a little bit more detail on today's daily grain newsletter about these things i call them money games more than kind of you know algorithmic algorithmic stable coins things like empty set dollar dynamic set dollar mithril cash basis cash debase there's a bunch of these things now they're basically excuse me they're basically money games rather than uh you know anything resembling a stable coin because they're never stable pretty much like you know maybe they'll be stable for a few hours or something like that but the mechanisms that they run off uh basically reward people for the token not ever being stable because um when it's above a certain

price you know people can profit a certain way when it's below a certain price they can they can profit another way and that certain price obviously being a dollar because they're trying to be a stable coin so i mean i i don't i'm not an expert on these things i'm not going to claim to know that they're never going to work but you know i've seen a lot of smart people kind of talk about this and they're basically saying you know this this stuff just doesn't fundamentally work you know it doesn't matter how many parameters you tweak how many different experiments you try it's just never going to work now you know just because someone says it's never going to work doesn't mean we should take their opinion on face value and not try these things i'm all for trying these experiments you know that's what ethereum is for

um you know a lot of the time basically trying a lot of things trying experiments seeing what sticks seeing what works but i really wish these projects would stop actually advertising themselves as stable coins because they're not and maybe one day if it works and they become a stable coin then they can do that but you know it's kind of deceiving and misleading at this point i think and you know mithril cash isn't the only kind of culprit here pretty much all of them do this some of them are serious projects that actually want to be you know a stable coin if they can through this algorithmic kind of feature set that they've got going on here or like mechanism i guess you could call it but yeah so this was this was quite big today uh if i mean if you are in it you know and you

know you definitely should know what you're doing definitely should know the risks associated with it uh the number one kind of thing that i think people should be aware of is definitely that it's just not a stable coin and it's not going to be you know if if these things ever become stable coins they have to grow to such a large size where no kind of like whale can move the market because at the moment on these smaller ones whales can very easily move the market on these things so i think you know we're very very very far away from that ever becoming a reality uh and if it does at that point in time these things aren't even going to be interesting anymore for most people because the only reason that they're interesting in my eyes to the majority of people is that they can speculate on it and

they can make money on it you know if you can't speculate on it if it's stable if it never goes you know more than maybe a tiny amount above or below peg then people aren't interested in speculating on it um you know if it actually is a stable coin so that's my kind of reasoning as to why i think these things can never be stable is because once they are they're boring and they can't grow anymore and they kind of like you know it just it breaks a lot of the incentives around it uh but maybe there are ways around that and i think there are i think you know projects like empty set dollar are having a really good good go at this i know a few people involved with that and they're having a very good goal at this trying to actually make it work

now people will make money people will lose money like every experiment on ethereum and i just think that if you're playing in this you should be aware of that for sure um so yeah just wanted to wanted to put that out there if you want to read more about that it's in the daily grade newsletter and there's tons of people talking about this on twitter i'm sure you've seen that as well and i think there's actually a blog post on derebit insights if you want to go search for that um that explains algorithmic stable coins and the other stable coins and kind of how they're different how they all work so i recommend going to check that out as well open v2 went live today so i was discussing yesterday about how i thought um or how i basically i think and i know that options are going to be

a big kind of thing in 2021 on ethereum uh we had primitive finance go live uh yesterday we have open going live uh today and basically uh opens you know been live for a few months now but this is their v2 which comes with a lot of different upgrades so if you scroll through here you can see they give a bit of background here they give a kind of like update on what's new with v2 so they have uh what's called their gamma gamma protocol which they're claiming is the most powerful capital efficient default options protocol and an updated interface for trading use options using their gamma protocol there's a bunch of different improvements as well such as margin improvements uh call options without multipliers

european cash settled options as well which is pretty cool um uh you can earn yield on and and governance tokens on your collateral uh there's there's a bunch of things here like flash means there's so many features here this is really really cool to see that they basically got this delivered you know a day or so before the end of the year so and i think i said yesterday i'm counting these things as like 2021 like even though they're happening in 2020 i still i still think they fall into like the 2021 narrative of options and derivatives and stuff coming to the ethereum main net uh but yeah i recommend going and checking this out i'll link this in the youtube description you can check out the i guess like the blog post go play around with it yourself you know learn about uh what they're

offering here it's really cool because they've actually got options on the default pulse index which i thought was really fun where you could speculate on where you thought the d5 pulse index would be at any particular point in time uh which was the first i think the first option on a d5 index so that was cool to see but yeah really interesting uh go check this out if you haven't already all right so this i just spoke about like the money games and the algorithms algorithmic stable coins and you know the rebasing coins fall into that kind of arena as well and i think you know back in d5 summer we had uh ample fourth as one of the most popular one of these kind of like i guess as i said they're not really stable coins but like as these money

games on ethereum and then yam finance came out as well and that was another very popular one so it's kind of a little bit ironic that uh yesterday yam disabled their rebasing so the yam token no longer rebases it's not trying to target one dollar you know if i think it's around one dollar right now but if you know more people buy it then are selling it like a normal token it'll go up in price and vice versa so yeah this is this is pretty big i think this is the first one that has actually removed the rebasing and i think this was done because it wasn't actually adding any value to the protocol anymore um it wasn't like for i think like i guess months now the rebasing was actually a hindrance to the growth of the protocol no one wanted to buy it because everyone

was burnt by the rebasing mechanism right uh and and it just wasn't a fun game anymore and speculators weren't in it anymore so it was serving no purpose so and yam has evolved past being basically a pure play kind of like let's use rebasing to grab a treasury and we'll do stuff with that treasury they've moved on to different things now you know they have the umbrella protocol coming out and i spoke about you know degenerative finance the other day they're actually making a set to manage their yam treasury as well so they're going to be investing that and doing different things with that which i thought was very cool so yeah i mean i think this is a great move for yam i think uh the community is very happy with this i'm personally very happy with this because

i actually ended up buying some yam the other day so just a disclaimer there uh because i saw that the vote uh to remove rebasing had gone through so i was like okay you know i didn't want to buy it before because i really didn't want to speculate and buy these rebasing tokens because they're just so risky and i hate i hate them honestly i really do they they just feel really crappy because you never know when it's going to go into an expansionary phase or a positive rebase phase where it'll you know positively rebase and you'll earn money or go into like one of these death spirals where it goes the other way and it negatively rebases so i hate that and it's a bit of a headache from an accounting perspective as well so that's why i kind of wasn't involved then but yeah i saw it it kind of the

vote went through and was like okay i'm comfortable you know putting a little bit of money into this because i want to support yam go be exposed to their growth because i actually think it's a really great project so yeah just the disclaimer there i'm i i know i talk about yam a lot but i only bought the token uh you know very recently so i've been following the project anyway since kind of launch i think i you know i was one of the biggest supporters of yam at launch i think you know i i respect the people working on it i think their original vision that they're still executing on is really great so uh yeah uh definitely good to see them remove the rebasing here uh red phone crypto on twitter today put out a really great thread uh and before i get into his thread

actually this is one of my most uh a favorite recent follows red phone crypto i try to not follow too many people on twitter uh because i really want to make sure that i'm across uh the people that are putting out like really great content so that i can obviously bring it to to you guys on the daily refuel and that so my feed isn't just clogged all the time of course but you know in this thread he basically uh says that one of his biggest conceptual shifts for 2020 was fully accepting that ethereum is going to be a global settlement layer um and and ethereum is becoming the deepest most liquid market of any asset uh for any sorry for any asset of any form of value and now this was interesting to me because this is exactly how i think about ethereum

i've written about it in the daily way before i i basically call a theorem this economic nexus where lots of value will flow in and out of ethereum it doesn't necessarily have to live on ethereum but it will be that home for that value it'll be where all this sort of high value high security stuff needs to happen will be where all the assets live i mean you saw this recently with compound chain so the compound is launching compound chain but they're keeping the comp token on ethereum they're not putting it on compound chain and i you know there's many reasons for this right ethereum has all the liquidity you know it has all the composibility all the standards every like it has a bunch of benefits for for kind of having these assets there so and ethereum has the most security so

being a global sediment layer is exactly what it can be and it's now processing more value than bitcoin so i think you know i i mean and what i mean by economic nexus as well is that you can imagine the nexus being the middle and ethereum's there and then around ethereum you have basically you know layer two you have side chains you have new blockchains or other blockchains you have centralized solutions and but they all feed into ethereum they all go in and out you know and ethereums like the the the home the the nexus right um so that's kind of got me thinking you know when red phone put out this thread about that and he goes on to say you know for him the most obvious example is bitcoin trading on ethereum

uh that was phase one uh and now we're seeing basically every blockchain project in the world create a bridge to ethereum and that's what we're seeing we're also seeing all these tokens trying to get on ethereum in a wrapped form so there was wrapped bitcoin there's going to be wrapped z cash you know i think they wanted to do wrapped taizos i think wrapped xrp was on the cards for a while uh until recently um so there was a bunch of those things going on and still going on and that's simply because ethereum is not only an economic nexus but it's a liquidity vortex and what i mean by that is that it actually sucks in liquidity from anywhere that it can get it and it keeps it because liquidity begets liquidity the more that you have right the more people want to be involved because they're like okay well

the liquidity is there i'm going to bring my assets then i'm going to do things with it and that just compounds and compounds and compounds and this is what we mean by network effects as well it's not just liquidity it's network effects of ethereum across like everything right the more you know money legos we build the more people build on ethereum the more people build new money legos and that just compounds same with the more developers on ethereum you know the more people working with solidity programming language the more developers come because that's easier for them to get started on ethereum than another chain so it kind of speaks to all that as well so yeah i think this is a really great thread i'll link it i mean i shield my blog post here so you can go check that out there as well but i'll link this

thread in the youtube description and you can go check it out for yourself all right so it's that time of the year where everyone's giving their 2021 predictions i think so yesterday i talked about kane's 2021 predictions today we have a thread we have two threads i'll go through the other one in a sec but we have one from dc investor who is a long time ethereum community member slash mega eath bull um i think he's he's as bullish as me on eth um thinks it's going to 10k as well i think but anyway so his five predictions um were laid out in this twitter thread and basically number one is that he believes institutions are coming and many will start to buy eth and the reasoning for this is that liquidity

cme future is um basically state that ether is not a security reflexivity as number two narrative of all apps being built on it many existing fear on-ramps and flailing competitors so this is why he thinks institutions are going to buy eth as but obviously they're buying bitcoin but they're going to buy ethnics and there's literally no number three right i mean you could have made the argument that xrp was number three until recently um simply because they were already selling to institutions but outside of that i don't know if institutions are going to be buying you know ltc in droves or bitcoin cash or any of this sort of stuff and one of the biggest things for institutions is if they're buying something that's a security or not um uh you know in these markets sort of

thing so i think that plays a big part again uh his second prediction is that he believes that d5 use will explode again uh starting with a big surge in q1 and again in late q3 the emphasis he believes the emphasis will shift from food tokens to synthetic assets financial contracts and collateralized lending this will be fused by centralized exchanges pulling customer funds to allow for small participants now i i totally agree with this i spoke about this um i don't know if i spoke about it yesterday i think i've spoken about it before where i believe that um centralized players are going to tap into d5 liquidity and offer it to their customers and i think that is going to be what a lot of people kind of default to um and that's going to help define grow across the board

we've already seen players doing this like tons of players doing this like you know um so we're going to see more and more of that and more and more money pour into d5 because of that his third prediction is that layer 2 will take the main net by storm heating up in earnest during q3 uh these the layer 2 will be based on roll-up technologies and will help ethereum not only scale to more users but also create far better ux and allow for new services all together totally agree with that i mean 100 i spoke about this yesterday uh we're going to see a lot of adoption of layer 2 in 2021 uh we're going to see unison v3 go live which i think is going to go live with the layer 2 implementation synthetics is hard at work on their own

there's a bunch of other teams working on there's like dydx as well there's so many teams working on it so that's definitely going to be a big big thing in 2021 uh his fourth prediction is that eth will establish its brand as a programmable store of value reinforced by d5 deposits and staking in eth2 this will propel eth on its inevitable journey to become the world's first programmable macro asset and over 5 to 10 years the implications will be staggering totally agree there right this is like the 8th mega bull thesis right here that you believe that eth will not only be a store of value you know it will not only be some form of like i don't know i'm not going to call it digital gold because i think that's too limiting but some form of a story of value it will be programmable

and it'll be the first programmable like natively programmable on ethereum story value in history fully decentralized fully self-custodial natively programmable um and be incredibly valuable because of that and i truly believe that as well we spoke about this a lot like dc investor eric and eric connor and i on um bankless's episode um recently so if you go to bank list on youtube you'll be able to find that episode of us talking more about that uh and dc investors last prediction here is that erp 1559 will launch onto eth1 introducing the world to what could be a truly deflationary eighth which just reinforces ether as a store of value ending discussions around ace endless supply quote-unquote

and start them around why proof-of-work hard caps are unworkable i mean i fully agree with this as well i think that one five five nine is the most bullish thing that can happen to ethereum ever like basically sorry not a theorem ethy asset because it unlocks that final pillar that we need to make eth a net deflationary asset and what did i what do i mean by that i mean that if there's enough transactions happening on the ethereum main net and there are enough fees being paid during an eth2 world where issuance is really low that is paying being paid to stakers we could see if annual issuance go negative so minus uh so basically less than zero percent

um and this is uh obviously going to make if an incredibly scarce asset if it you know if it gets to the point where we have so much activity on ethereum so many fees being paid so much ease being burnt you know maybe sometime in you know decades into the future the eighth supply actually contracts so much that there's just barely any eight for people to to to to use um and you know all the eight is like locked up in different things being used for different things and this would cause in theory the price of each to skyrocket and you know maybe my ten thousand dollar target for eighth is conservative in a world like that i i you know maybe it is i actually do think it is if ethereum and ether achieves all of its

goals um so yeah that that is really really bullish there and i mean that's part of my one of my main ball cases for eth as an asset is that we get to that point where it's net deflationary and then the world won't even know what hit it right um you can't beat that like a hard cap can't beat that uh you know i don't think something like bitcoin will ever put in fee burning because the community doesn't want to change the core protocol um and if it does then then i actually think that's really bullish if bitcoin did that so yeah um without going on too much of a tangent there i i fully agree with all of his predictions he front ran me a little bit on some of them because i was going to make these predictions maybe i should stop being lazy but i'll

get mine out soon enough um because i definitely want to uh you know make sure that i've got them out there so that in years time if i'm right or wrong i can i can look back on it and see what happened there so another prediction thread from hudson jameson and he focused less on d5 and kind of like ethers and asset and more on what ethereum can do beyond d5 which i thought was interesting so two examples he gave is decentralized car sharing and incentivized private wikileaks so these are kind of typically referred to as the web 3 use cases of blockchains in that i actually think web 3 is still a bit of a long ways away i think obviously d5 financial use

cases are going to come first um and web3 will come a bit later especially because web3 requires a lot more scale for it to be effective but basically i mean i i have i mean honestly i spend a lot more time on the d5 side of things than i do on the web 3 side of things so i'm not an expert here but hudson does spend more more time here so i actually trust his kind of predictions here on what we will get what we will be able to see uh so he basically describes it here i'm not gonna i'm not gonna read through the whole thread um because i won't do it uh a great service but i'll link it in the youtube description but he basically describes like how these will work and i actually wanted to focus on the private wikileaks because i thought that was the

most interesting so basically what he posits that you could do is that you could divide the dap into communities such as u.s politics new york government major gaming industry etc and each community would have news outlets or even individuals who are looking for speaks for speaks for leaks specific to their community bounties could be set up and on-chain reputational systems built for both the leakers and the outlets receiving the leaks payments will be on chain and new cipher would be used to privately share the data in a decentralized way leaks that are accepted can be ranked and you can maybe even build in time stamping so if an outlet leaks your secrets without paying you uh you have you can prove that and you can you can prove that you shared the

data beforehand and shame them uh which means their reputation would go down of course uh secrets market was a gitcoin kernel project that tried some of these ideas um in the in the the kind of like colonel but he can't find them anymore um and then he goes on to say his overall point is that d5 can be great at times but we need to not lose sight of the fact that there are use cases beyond finance for ethereum and it's only the beginning i mean i totally agree with that and as i said i think that i mean web 3 will come later financial use cases will come first and that's simply because of of scale a lot of the time you can basically move unlimited amounts of value on ethereum for the same fee as moving ten dollars right so if you're moving ten dollars of

eighth uh or you're moving a million dollars of eth it's going to cost you the same amount in fees to do so um whereas with web3 it doesn't scale like that because you can think of each kind of unit of value as being a one individual so if you want to have one million individuals interacting with each other obviously that's going to clog the whole network and it's just not going to be very cost effective and the interactions are different too you know moving money around and you know doing yield farming and things like that is worth it when you're paying those fees but if you're trying to do things like you know maybe upvote a post or like give someone a review or do reputational scoring and things like that it doesn't make sense from an economic perspective to pay like ten dollars in

fees to do that so i think we're going to need scaling before we can actually get to a world where these things take off and as i said i think scaling is coming in 2021 but i think it's coming for d5 first i actually would say that we'll probably see more of these web 3 things proliferate in probably 2022 but yeah i i don't see it happening anytime soon unfortunately even though that i think it's a they're really great use cases the technology is just limited right now maybe they happen on other chains maybe they don't happen on ethereum and then you know ethereum is still that economic nexus that that kind of other you know uh chains plug into but it just doesn't host these apps but we'll see you know i think we can host these on

layer 2 on ethereum and still secure them with ethereum so we'll see what happens there but yeah great great thread from hudson here to highlight highlight non d5 use cases all right that's it for today everyone uh so tomorrow there won't be a daily great refuel as it is new year's eve for me uh but i hope you all have a great new year's i'll be back on new year's day to to share a daily grey refill update for you all um so yeah if you haven't subscribed to the youtube channel subscribe to it uh give the video a thumbs up subscribe to the delegate newsletter join the discord channel as well there's some good conversations going on in there at the moment so i recommend that you join um and yeah i'll see you all in the new year

happy new year everyone thanks