OP token incentives, Hop to decentralize and more - The Daily Gwei Refuel #357 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the delegate refuel where he kept the latest news in the ethereum ecosystem i'm your host team susana and today's the fourth of may 2022 all right everyone let's get into it so saj zee from the hyperledger baesu team today published a new kind of i guess notion site called testing the merge which is a merged testing leaderboard so if you head over to this site here on notion i don't think it requires an account to kind of like view this but you can kind of like see here and see everything there is uh going on with the merge testing now i've spoken about this a lot in the past like how testing is obviously really critical to the merge and to getting it done as quickly as possible and there's a lot of testing going on right now it's pretty

much in the in those kind of like final stages right because i mean the specs done the the client implementations are pretty much done um they're just kind of like being tested in order to essentially uh make sure that it all works and we don't have like critical bugs and all that sorts of stuff so that's kind of like what's been going on the past few months and this is kind of like this new dashboard is basically documenting that with a bunch of different resources tweets all that sort of stuff here so you can see the merge testing leaderboard on the i guess like top of the page here where you've got different kind of like operators within the ecosystem such as lido rockapool uniswap et cetera et cetera what category they fall into you know if they're actively testing uh what that what they kind of like it was tested and

with links to tweets and all that sort of stuff there so if you're interested in following along even closer with the merge with testing around the merge definitely check out this leaderboard it's a really great resource um and yeah i'll link it in the youtube description for you to do so all right so jasper uh i guess like um i should call jasper maybe like a rocket pool mega fan uh shared today a uh github kind of like a pull request that proposes a consensus change to the bitcoin change that could reduce rocketpool's collateral requirement by multiples uh potential for single-sided rpl staking and native customizable staking as a service layer so that anyone can scale an operation now i guess in plain english i think you know what i take away from this is that oh i guess let's take a step back let's put

some context around this rocker pool has i think suffered their growth has suffered mostly from the fact that they're limited by how many how much kind of like our ether they can mint uh because of the fact that they have to have that 16 eighth kind of like minimum clutter requirement now i think they want to bring this down to 4 8 or something like that uh so that they can obviously uh be a lot more capital efficient and means a lot more r eth so that a lot more stakers can get involved a lot of people can get involved within rocketpool and i think because of this and because of this limitation a lot of people have actually gone to something like lidar and that's actually made lighter kind of a little bit of a centralizing force force within the ecosystem right now and i spoke about

them on the two-hour marathon episode i did on monday so i'm not going to rehash that there but if this change was to kind of like be implemented it would really help rocker pull out but you can read kind of like here i'll link this in youtube description you can read the full kind of breakdown and you can read replies from various different people in the ethereum ecosystem it only got posted i think uh yesterday or just kind of like earlier earlier today so there isn't much discussion going on uh now but there's also links to previous discussions around this and stuff like that so definitely check this out for i guess uh kind of like a read on this and what's happening in the uh in this kind of like world here but i think um you know i guess like i wanted to add a

little bit of my thoughts around not just kind of like these changes but just state port staking in general and kind of like how it's a bit unfortunate that kind of like rocker pool they work for so long to get to the point that they're at today and then they're still limited by um you know by that kind of like um that 16-8 limitation there where something like lighter isn't but this goes back to my previous points and i brought this up a lot about decentralization like actual decentralization being really really hard like you could solve as i've said before you could solve every single issue in this ecosystem by just centralizing it but obviously that defeats the whole purpose and doing things in a decentralized way doesn't always get rewarded uh like obviously lido is not a decentralized taking protocol at least not as it exists today

um and but the thing is because of that they're able to scale up a lot faster and they've been able to capture a huge part of the the kind of um i guess staking market now that's not to say that there it's always going to be like that not so that's not to say that rocketpool can't keep scaling up and keep succeeding i think they can but uh due to that these kind of like hard limitations that they have things need to change you know on kind of like the protocol layer which just makes it harder because that's a that's a slower moving layer than something else so i don't want rocker pool to centralize to fix these things i would prefer rocker pool to stay decentralized but it usually takes longer for the decentralized kind of like option to i guess grow or win out especially when they

have kind of like these limitations on them now i wouldn't consider that like a bearish thing it's just kind of like a design decision at the end of the day or a design choice i should say at the end of the day uh and you know it's just kind of like the way it is now i do wish that we had kind of like more competition or more players in this ecosystem than just lido and rockapool right now there are others that i know of uh out there such as like stakewise and swell and things like that but they're either not live yet live in limited capacities or just fail to gain traction and i think that it's kind of bizarre to me that this has kind of like happened because the staking i guess like the liquid staking or the pulled staking opportunity in ethereum is

absolutely massive and as i said before i think that we may see a reshuffling post withdrawals and we're going to see how kind of like people kind of you know maybe some people shuffle out of being a solo staker and they'll go be a pulled staker or maybe some people will have will shuffle out of being pulled stakers and kind of go to solo stakers i'm not sure how that's going to all play out but i think that it's going to be interesting and until then it's it's yeah i don't know like i i'm looking at the validated queue right now and like there's over 18 000 validators in that queue that makes me really happy because it means that more ethics being staked the network is becoming more secure but then i look at where that ether is actually coming from and just from eyeballing it it seems

like 90 plus percent of that eight is going into lighter and that's not healthy guys like it's not a good thing that ninety percent of the or whatever percentage it is it's a really high percentage is going into one staking service provider now don't get me wrong it's better than it going to a centralized exchange because at least lido has i think almost 30 staking operators that they're uh kind of like using right now so it's not just going into one central place and i don't believe that the lido protocol itself can control the the ether stake or the validators or anything like that i remember reading something about that you guys can correct me if i'm wrong there but still we would like it to be like what it's like with client diversity right distributed we don't want just one kind of like service being uh i guess you know a high

percentage of the network or anything like that and uh i think that it won't be long term but in the short term it's kind of hard to tell i think in the short term lido's been able to attract so much kind of like capital because of that liquidity beginning liquidity phenomenon that i spoke about the other day where st is just becoming so liquid so whales are very comfortable staking their eath with lido because they're able to enter and exit at will with the st token right in one of these liquidity pools but in saying that r8 has decent liquidity as well but but as i said the problem is is that not enough r8 can be can be minted because of that kind of like a minimum 16th required to spin up these nodes and things like that so hopefully this proposal can can

help rocker pull out and help change that not sure on the timeline here of when this will be implemented but uh but yeah cool to see this i think it's uh it's kind of like a great idea i think that anything we can do to help rocketpool continue to grow uh and not be limited by these kind of like hard design limit kind of like choices that have been put in place i think the better it will be for the entire ecosystem all right so hot protocol has basically announced their token today uh they published a blog post uh called uh building bridges and at the end of this blog post they basically said uh we're excited to announce that we'll be decentralizing hops governance and turning it over to the community to guide the future of hopped stay tuned details to follow this week so that to

me is an obvious token announcement if you have used top protocol in the past maybe you'll be getting an air drop soon i'm not sure but i've spoken about hop plenty of times on the refuel so uh you know if you haven't farmed the airdrop at this point then maybe you won't get it i don't know i don't know what the airdrop criteria is going to look like maybe it looks more like optimism than a typical airdrop who knows but yeah this is just as another protocol that he's looking to decentralize looking to kind of like um i guess create a dowel hand ownership over to the community all that good stuff and you know outside of that hot protocol has actually been growing quite well without um i guess like a token right so since they've said here since last summer hop has grown to 130 million

dollars in tbl and 2 billion dollars in cumulative volume uh for their kind of like um assets that they support so they don't support every asset they just they only support a handful of assets but they've been growing quite nicely and they have a pretty big community as well from what i've seen so cool to see them i guess like officially announce i mean in so many words they're going to have a token they haven't explicitly said that they have having a token but i mean this is obvious that they're going to optimism did the same thing where they basically kept teasing oh you know we're descent we're basically decentralizing the protocol we're kind of like um you know going going on to the next step of optimism and that's exactly what hop is is kind of like saying here so expect the token announcement later in this week i would

assume maybe on the weekend we'll see obviously i'll cover it on the reefer when that happens but yeah no no further details at this point about what you know distribution is going to look like what an airdrop's going to look like now that sorts of stuff there but i'll keep an eye on it and keep you guys up to date all right so speaking of optimism today they announced their first i guess op stimpak which is activating a pool of 230 million op tokens to incentivize project growth on optimism this is basically optimism's liquidity mining program for their layer 2 which we all expected would come now this is actually quite a large i guess like stimulus pack if you want to call it that quite a large liquidity incentive because if you take the op token and you kind of like extrapolate how much it's going to

be worth when it hits the market let's say it's worth a dollar when it hits the market that's 230 million dollars of incentives instantly right let's say it hits two dollars 560 million i don't think it's far fetched to say it could even go up to you know something like five dollars at least in the short term based on i guess like uh the craziness of the markets and things like that because that wouldn't give it a you know too high of a market cap i don't even think at five dollars it would have a 10 billion dollar market cap on a fully diluted basis yet so imagine if it gets to five dollars that's almost a billion dollars in incentives that they're able to kind of like hand out here which is very very cool so very uh uh uh uh very very happy

to see this for an optimism announced so soon as well but i think what is really cool is kind of i guess um uh how this is gonna all be managed so this is gonna be managed by the token house of course and then it's actually going to be managing different phases so rollout will occur in two parts phase zero and phase one phase zero starts you know now and runs for three weeks and it reward rewards early movers on optimism who have demonstrated attraction via on-chain criteria so you can see the eligible projects here and what criteria um they're going to be judged based on so there's different tiers tier one is if the project has 100 million dollars of tvl and 10 000 transactions per day on a 30-day average then they're they're eligible to claim 3 million op tokens and then there's a tier 2 and tier 3

there as well um and then phase one is going to be open to any project that aligns with the optimistic vision and can demonstrate a clear path for using the op token uh to incentivize future project growth and optimism to the token house um and phase one begins after airdrop one which is still slated for q2 of this year i thought this was cool i thought the name was cool as well stimpak i really like that name but yeah i mean we've all kind of like been talking about this for a while now i've talked about it a lot on the refill about how these layer twos do need token incentives in order to just bootstrap that initial growth and i think that they've grown quite nicely without them but yeah i mean it's going to be crazy to see how fast they grow with with the

token now especially with kind of projects fighting for tokens for i guess their own projects in order to incentivize growth it's going to lead to a really nice flywheel and as i discussed the other day a nicer flywheel is going to be that public goods funding that's going to come from this because all of the i guess profits that are going to the centralized sequence so that optimism runs right now is going to be funded through the retroactive public goods which means more money's going towards uh kind of like public goods funding from this so they're not just giving out tokens for the sake of it also just bootstrap growth they're also going to be bootstrapping or at least kind of like starting that flywheel of of kind of like public goods funding which is really really cool so if you want to read more details about this

there's a there's a blog post here titled a summer of optimism uh where you can read everything about this stimpak i'll link it in youtube description below for you to do so uh and just before i move on from the optimism stuff uh mjs here from lyra has kind of like put together a um a proposal for lyra to kind of like get op tokens now i've spoken about lyra plenty of times on the refill before they're building an options protocol on optimism native options protocol as part of the synthetics ecosystem so now they've kind of like put forward a proposal in order to get some op tokens to continue their growth here so you know very very cool if you're into liar if you're into options if you want to check out their kind of like proposal i'll link it in the youtube description

for you to do so all right so ens today announced the official ens constitution book the constitution book is a beautiful artifact that represents the founding of the ens dow so there are going to be three different versions of this book a digital edition a print edition and a no expense sped limited numbered edition you can get yours right now at constitution.ens.domains you'll the digital edition is unlimited i think the print edition is also going to be unlimited uh to a certain kind of like time where people can just kind of like order this book and get it and then the no expense spread limited numbered edition i think there's only 50 of them and only 25 of them are up for grabs via some auction so you can see here what this book is going to look like so it's going to have a bunch of e s names in it

for people who signed the ens constitution uh there's also going to be a kind of like people who had an avatar set for their s name will be featured in this book in in in a fully colored way which is very very cool um and you know if you if you'd like a physical copy as i said you can order them today and they are printed on demand as well it's not cheap i believe but i think the price i mean i can't remember what it was without shipping but it's over 100 usd but i think it's well worth it i mean as you can tell i've already ordered my book here and i also put a bid on one of these super limited ones but the criteria for these is that uh i think uh uh let me have a look here the criteria

i read somewhere here so bidding on on it is is limited to qualify you must have voted on the constitution and the person you delegated your votes to to must have voted on at least half of all votes if not you have to buy a token off someone who did so i did place my own bit on this but i haven't gotten a book token yet so i'm still trying to figure out how that works maybe i'm just missing something here maybe i'm dumb but but i did i do place my bid on it but uh because i really do want to get one of those but i did buy my unlimited edition anyway just in case i didn't get one uh but yeah so the super limited edition is going to be you know embossed and printed slip case with foil leatherette cover painted page edges all the fancy

stuff there so i really do want that i mean i love collecting these things you guys know i'm a big collector of certain things but anyway if you want to get involved with uh sorry get get your hands on one of these you can right now as i said at constitution dot ens dot domains and buy one i'm not sure when it's going to be delivered as as it stated here it's printed on demand so it may take a bit longer than usual to get delivered here uh but i can't wait to get mine and it's really really cool there's something really cool that ens has done i think and i think we think today is their five-year anniversary as well of ines so just a little anniversary kind of i guess um kind of like a thing a little i guess like anniversary celebration from them

as well so definitely go get your hands on one yeah by clicking on on this link in the twitter thread or just going to constitution.ens dot domains all right so uh hegel here from uh dune analytics posted a great tweet today basically highlighting something that i've been banging on about lately but essentially he just highlighted dunes growth recently and about how they've been growing really really uh nicely even though the market is bearish you can see here the amount of queries created per month is just kind of like up and to the right here but i wrote today's newsletter about this and what i wanted to kind of talk about was this concept of building through bear markets now there's a few different things to talk about here one is that like i personally think that there are like a lot of teams right now

building in bear markets that no one's paying attention to and i mean why would they if the tokens not going up if the token's actually going down if the market's quiet people may not be paying attention to things like community calls developer amas you know github like what's happening on the github repos all that sort of stuff there but this is personally i believe the best time to be paying attention to this stuff i mean using ethereum as the quintessential example here if you have been paying attention to ethereum in in 2018 and 2019 the the peak of the kind of like bear markets you would know that the building never stopped and it's anybody in 2020 it can keep continued on we got d5 we got like um the beacon chain spun up we got all these cool things happening we got the early signs of like actual layer twos

like roll-ups and stuff like that happening and you would have been able to stack eighth during that with confidence and you would have done well for yourself but on the flip side and this is what i actually wanted to focus on i think people get caught up in like looking at eth and looking at the fact that it came back from a 94 drawdown and ethereum went on to basically become as big as it has and they apply that to their favorite project out of some bias now maybe that bias is the fact that they're still holding the token and they're underwater on it and they're hoping that you know and they see their project's still building and they're hoping that that building is just going to lead to better outcomes later on and it's going to lead to the token increasing in price two things here

i mean most of us will be aware that 90 of businesses fail after i think it's five years or something like that or or kind of like um even even shorter than that right and that's that's non-crypto businesses i would say that crypto businesses fail like much more fail at kind of like a much faster rate i would say that 95 plus percent of crypto businesses or crypto protocols fail within the first two years two or three years maybe so that's the first thing so that means you've got like a five to ten percent chance of actually hitting a winner doesn't matter if they're still building they could be building something that no one wants they could be building something that they get out competed on they could be building something that's just a crap product right there's a million different variables that go into this so just because some a

project is still building during the bear market doesn't mean they're going to succeed and also doesn't mean that the value is going to flow to the token and now i think the quintessential example of this is the cosmos ecosystem now the atom token hasn't really accrued much value um since december 2019 i actually checked this today it's down 80 against 8th but the cosmos ecosystem has developed a bunch of great products or a bunch of products that actually do have a lot of usage some of you won't know this but um solana actually runs on tendermint consensus which came out of the cosmos ecosystem the ibc bridging protocol is actually really cool came out of the cosmos ecosystem i believe terra is also built on tendermint you know again cosmos ecosystem but the adam token has not really captured any of this value and that's because the

tokenomics are really bad it's not desired to capture this value and from what i can tell um the cosmos ecosystem or at least kind of like the um the founding members and the higher ups i guess you could say uh don't really want adam to accrue much value which is bizarre to me but that's kind of like my read on it so you can have both you know very successful uh i guess like products in their own right or very successful ecosystems but the token doesn't capture any of that value and then you can have like uh projects that are building you know building really hard building a lot of different things um and and and just building something that no one wants right and the product that fails so i just wanted to kind of like hide that because i think too many people fall into this

trap of hey they're still building they're doing awesomely you know they're doing great like they're still going there's all these products that they're releasing and and they think that that that's kind of like a sign of you know the token is going to eventually go up everyone's going to moon and everything's going to be well and good that's not necessarily the case guys and then there's also the kind of like case of building going on the products are awesome that but the token captures value but then it only does that for a short period of time and this thing this usually happens during bull markets not bear markets where people get a false sense of security around their products and say oh wow we have product market fit but in reality people were just using their product because they were maybe farming a token or there were

liquidity incentives or everyone was just using everything in the hopes of kind of like making money or something like that right when in reality it just wasn't real product market fit so i just wanted to kind of like hide that for you guys i know there's been a lot of talk recently about value investing which is the act of basically investing in things that are on public markets that may seem extremely undervalued because the market has been bearish and has just kind of like not rated these things correctly you could have done this for things like synthetics and rv last bear market and made a lot of money and maybe you can do things for certain protocols this bet this bear market and make a lot of money too but again it's very very hard to pick these things very hard i mean it gets harder as time goes on because just

more projects are out there i would say that as i said five to ten percent like picking that five to ten percent is really really hard and i would actually say it's less than five percent where the token would actually accrue value from the success of the ecosystem so uh again very hard to invest in these sorts of things uh not to say don't go for it not and not to say you shouldn't kind of like try but just be aware of all these things when you do that because there's a lot more to it than just like like looking at it i'm like okay they're still active they're still building that means this is gonna moon no that couldn't be further from the truth and i just kind of like wanted to wanted to share that with you guys because i've been there myself before i've learned those lessons

the hard way uh and i just wanted to kind of like save you guys the heartache but maybe you do have to learn the lesson the hard way that's a good way to learn lessons in this industry at the end of the day all right so a tweet that i put out just before that i wanted to kind of like dive a bit deeper into was uh something that i said here i said the airdrop dilemma you don't do an airdrop and the community hates you because they didn't get free money slash responsibility you do an airdrop and community hates you because the distribution isn't fair aka they didn't get enough then the token goes to zero anyway this is the the kind of like dilemma that a lot of teams face right and we see this time and time again someone made a comment in the discord channel

before that apparently in the hop discord people are already complaining about the distribution of the hop token when it hasn't even been announced yet so you know people are never going to be happy that's like kind of like the takeaway from this but i think that airdrops are kind of i guess like an overplayed thing at this point and and mooney actually made a good tweet about this and we kind of got into a discussion about where he said i don't think airdrops are as effective as they once were unless the goal is to just get float out if it is then release airdrop schema have community check it's clear edit if necessary re-release drop and i agree with him here i think crypto suffers from this fa this thing where the metagame changes so frequently because crypto moves so frequently as an ecosystem and all these trends get

played out like really really quickly and i said that to mooney in one of my replies where i said you know i agree with you but i think given how fast this industry moves and how fast the meta changes it's basically a euthanasia roller coaster for every single thing yield farming airdrops you know the l1 trade everything in this industry just gets completely farmed out completely speculated on in a very short period of time and that's why we have this kind of like phenomenon of a few months where everything is like awesome everything's pumping everyone's making money it's all well and good and then that inevitably ends and then we have a couple years of just like a really quiet period and these things just always trend in those kind of like directions and i don't know if it's good or bad i would say it's

frustrating and i think for teams is especially frustrating especially because they want to do air drops they want to get their token out but it's just never going to please everyone as i mentioned the other day no airdrop design is ever going to be perfect uh far from it and i think that in general airdrops maybe aren't the way to go for a lot of projects at this point in time like but the thing is i don't know how to do a good token distribution i think the best token distributions in crypto are bitcoin and ethereum and i think they had unique uh kind of like um circumstances with their token as well i mean for one they had a proof of work distribution phase they've had multiple market cycles they launched when i guess like the i mean bitcoin launch and ecosystem was non-existent ethereum

launch when it was still quite small but because of this phenomenon of everyone knowing the game right and because um everyone knows the game the game has to change to make money from it uh what ends up happening is that like air drops just become kind of like these ineffective tools and as mooney points out here so i don't know what the solution is i think the solution might just still be iterating on air drops as much as we can and just dealing with the fact that we're never going to get to a perfect kind of like airdrop or token distribution mechanism and just i guess maybe focus on driving value to the token itself rather than the distribution to counterbalance the the issues with the distribution around that so i'd love to see how that plays out just wanted to kind of like highlight

that as well there because it's something that i think about a lot especially as someone who is invested in a lot of teams and is privy to uh some of the information around them and i get asked like hey like what should we do with our token you know what our distribution look like i always give the same advice and that the distribution should definitely be weighted more heavily towards the community than the core team and the investors but at the same time that's not enough there needs to be so much more done here and i spoke about optimism's kind of like token design the other day and how i really like it but it's it's far from perfect guys and it didn't please everyone there were still people upset about it and you're never going to please everyone i think that if if the goal of a team

designing their kind of token and their airdrop is to please everyone then they've already lost i think the goal should be to get a fair as distribution as possible don't worry about pleasing everyone and then just focus on driving value to that token in any way that you can to counterbalance the i guess like weird distribution kind of like stuff that that that that inevitably will happen uh due to just distribution being a really really hard unsolved kind of like problem within crypto so yeah just wanted to highlight that let me know your thoughts jump in the discord channel um we have like a whole air drop channel so dedicated to this sort of stuff so um definitely kind of like let me know your thoughts there i'm curious to hear what other people think about this all right finally here we have a new

feature from eat the scan called the transaction heat map so basically this lets you get a one glance view of an addresses activity over the last year so what you can do is you head to any address page click on the analytics tab and select transaction heat map and you'll be able to see each day of each month over the last year and how active an address was for that month i actually checked cecil.ed and for some reason i was really active in like the last six months of last year but haven't been that active this year not sure why that is i thought it was more active maybe because i'm using my other addresses more my non-public addresses and things like that but you can plug in your address and to either scan and kind of check it out here but you can also

check out any address that you want to so just another really nice quality of life feature from um and you know they do lots of these things i love these these kind of like features um either scan is still the best block explorer by far i believe uh it's kind of like i guess i've spoken about this before but it's kind of like i wish they had competition but at the same time i don't think they even need competition because they just keep releasing so many good features but i think they need competition from just kind of like i mean a decentralization perspective we obviously don't want to just centralize around one block explorer but they're so good that it's kind of like hard not to right so there's that kind of like feature for you guys to check out there now i have a

few minutes left i just wanted to make one comment about kind of like uh the markets again just because i've been seeing people kind of like talk about this a little bit more uh frequently lately the markets guys like i mean i've said it before we're in a bear market we're in the kind of like this crab market i spoke about it on um on the marathon refill did the other day at the end of it where i said that you know everything's still really bullish for ethereum there's nothing to be bearish about um but i just wanted to make one comment and i kind of like have my i was thinking about this today if it wasn't for ethereum in this industry i don't know what this industry would have to kind of like stand on right now like if you look at everything

else going on what's there to be bullish about i actually don't think there's anything to be bullish about when it comes to bitcoin i as i said before i think bitcoin has plenty of headwinds ahead of it not many tailwinds and then i look at other ecosystems out there and they're all just copying ethereum like the the l1s are just copying ethereum most of the time there are some things going on here and there but really the most exciting stuff is all happening within ethereum the merge layer twos nfts d5 it's all still happening on ethereum and ether is capturing a lot of that value and uh staking of course is obviously a big thing um so what else would we be bullish about if ethereum wasn't out i don't think very much i think this industry would still be very small i think crypto as a whole would actually

be very boring without ethereum i'm not sure if there would have been even another smart contract platform that kind of like filled the hole there but but yeah just something that i was thinking about today i just wanted to kind of share with you guys as i had a couple of minutes left here but i think 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 the video a thumbs up subscribe to the newsletter join the discord channel and i'll catch you all tomorrow thanks everyone