Polygon 2.0 announced, SEC drama and more - The Daily Gwei Refuel #603 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily way refuel we recap the latest news in ethereum ecosystem I'm your host here there's a signer enters the 13th of June 2023. all right everyone let's get into it so the SEC clown show continues uh with a bit of a funny thing uh out today from a couple of uh congressmen in the US so they've basically introduced a bill so there's a House Republicans have introduced a bill to remove uh Gary gensla as the SEC chair now I want to start off by saying that I don't think this bill is going to go anywhere I don't think this is going to get Gary ganza removed and I also don't think it uh we're moving here but will necessarily change anything because unless the person that replaces him was someone that was like really Pro crypto

I don't think it would actually move the needle on what we actually want moved uh from the SEC what we want from the SSC for crypto is really just clear guidelines on uh on regulations that centralized parties in the crypto ecosystem such as exchanges like coinbase need to follow and the rules they need to follow are we need clear guidance on what the SEC considers a security and what it doesn't based on actual kind of legislation and we also need someone that is rather impartial uh and not just looking out for their own best interests now as part of as part of this bill it wasn't just to remove uh Gary Gans that was also to basically remove the position of SEC chair generally which is something that I

actually agree with from moving the SEC chair position and basically having a council uh replace that so I think a Count Council of like eight people or something like that rather than a chairman at the top and an executive um kind of director sitting underneath for the day-to-day operations there that would actually be better because right now the way it kind of works is that the SEC like a lot of things in in the US is just very politicized right the reason why Gary ganzler gets so much support from the Democrats uh is because he is a Democrat appointee right so no matter what he does the Democrats can't be seen to be going against him because it means that they'll be going against their own appointee so it's very partisan right it's very kind of like divisive politics but I guess that's what the US is known

for these days unfortunately so I think that removing the chair position and replacing it with like eight different people the you know each political party it's not just exclusive to the Democrats it's it's each political party would probably not necessarily like to do that because it means they couldn't use it as a kind of like political football right they couldn't use it as a way to score political points but it would be better for the SEC in my opinion it would be better for the country rather than just having one kind of figurehead that seems to dictate what happens dictates the enforcement enforcement actions dictates the ssc's policies against things like crypto which as we've seen hasn't resulted in a healthy kind of um Outlook a healthier environment for for crypto

generally here and also speaking of the SEC there was this uh these Hinman documents that were released just before uh that so I think the Ripple Community has been going on about a lot because it was part of the rip the sec's lawsuit against Ripple to get these uh and ripple you wanted to get these documents released and get the contents on uh unsealed from them and the tldr is that they basically say that isn't a security like the former ACC chair I believe stated that uh they didn't want to pursue anything against Ethan they didn't consider ether security which is kind of funny because now I I think this was back in 2018 but now uh Gary ganzler obviously is refusing to answer whether ether's security or not but he has

implied that he thinks ethers a security in the past and again this just goes back to all that uncertainty that surrounds this sorts of stuff and why uh Gary gensley is definitely not doing a good job and why you know uh the the SEC generally is not fulfilling its mandate here but again it won't do that because who's going to pull him up on it the only people pulling him up on it are the Republicans now you know the funny thing is is that the Republicans are also doing this for political points because they see that it's a way for them to get political favor and that's and that's what I'm saying it doesn't matter what team you're on or what side you're on or whatever it is whichever party it is politics is politics it's the same thing uh and I guess like in the US it's very

divisive because there's really just two political parties and there's no kind of rank Choice voting uh so you really at the federal level uh for pretty much like Most states for voting for for the president although you basically have two choices you do you can't really do preference voting and ranking Choice voting which leads to all this divisive stuff and all these politics that I guess you know pretty much all of us I think would be sick of at this point uh I I mean I'm not in the US but I it feels like in Australian politics it's become a bit more us like over the past a few years especially post covered uh but anyway I don't want to kind of get bogged down in politics talk yeah but I I think it is relevant obviously to all the stuff that's going on with

the with the SEC and there was also an interesting video here posted by Sam Lyman showing Gary Gensler literally the SEC chair this is before he was the chat it was the chair this was in 2018 but Gary genza was giving a presentation I believe to a fund or something I don't know if it was a crypto I don't think it was a crypto fine I think it might have been a just a normal Trad five fund but in the video he says that Bitcoin ether Litecoin and Bitcoin cash are not Securities uh and then he says three quarters of this Market is probably not security so his tune has just changed completely since then obviously people can change their minds on things and and obviously he has but again this doesn't look very good for him this isn't consistent um and he's actually given presentations

here which from the ones I've seen have actually been quite good but he seems to have changed his tune completely and I explained just today why I think that's the case because he's really just doing it for uh I guess political points himself in order to get promoted but yeah this video is quite damning so I'll link that video in the YouTube description below uh for you to check out there all right so moving on CZ has shared this article that uh from Queen Telegraph that shows that the banker of China has issued 28 million dollars in digital structured notes on ethereum now I haven't seen a um I I kind of like etherscan uh transaction transaction hash so sorry I should say a transaction hash I haven't seen like an ether scan link or anything like that so I guess

generally uh when looking at these things I like to verify and not don't just trust especially not trusting uh anything coming out of China here but I like to verify that the source on this so I haven't seen anything just yet but if true this is quite cool I think that this speaks to a lot of things that I've spoken about in the past with ethereum becoming a basically a global sediment layer for pretty much every country every person every individual entity whatever it is settling their value on ethereum whether it's me and you sending each to each other and we're settling that on the ethereum chain or it's nation states and and Banks within those nation states settling or issuing things like structured notes on on ethereum layer one and even layer twos but

obviously layer one is uh the the kind of layer of choice here for a number of different reasons I think security decentralization are the top ones here but also the infrastructure is already there they can tap into existing DFI infrastructure and get this stuff integrated with existing things so just very cool to con to see that continuation of uh ethereum becoming that global settlement layer that I've talked about for a very long time now and I've written about it in the in the newsletter quite a bit as well and I think to me that is like the key value prop of layer one ethereum is to be that settlement layer not just for these value things but also for things like l2s uh other real world assets like stable coins which obviously ethereum L1 and even L2 is now a succeeding at uh but yeah just great to see that the Bank

of China has has chosen ethereum to to do this yeah as I said I haven't verified this but if true and I I mean I don't really have any any reason to believe that it's not true it seems like a weird announcement to make just to I I don't know why they would say something like this uh and lie about it but but yeah I guess like the the details are in the article and and I I should read out this little expert here because it's actually quite interesting they said working together with UBS we are driving the simplified so simplification of digital asset markets and products for customers in Asia Pacific through the development of blockchain based digital Structured Products designed specifically for customers in Asia Pacific so this also speaks to I guess the growing kind of divide between the East and the West on

crypto East it seems to be embracing crypto and I mean not all of the West the UK also seems to be embracing crypto I'm sure you guys saw the announcement the other day that a16z is moving uh or opening an office in the UK uh and I believe there is a few other companies going there and the prime minister of the UK wants to become like a web 3 Hub or wants the UK to become a web 3 Hub and then you have China being much more friendly to crypto lately especially Hong Kong so and then you have obviously the US in in the west just being very hostile towards crypto so there's definitely a growing divide here but I think that any of the US's losses are the East gain and Singapore has also been a pretty big Hub there I think

India is warming up to crypto more generally they're still I think pretty harsh on crypto pretty uh I guess like uh pretty similar to the US on it but they are definitely warming up other places and the developing markets like in Africa definitely warming up more there but these things are going to take time us is still the biggest Market Europe also I should mention as well obviously uh the the UK is is not part of the EU anymore so they have their own strategy but they are definitely following the EU strategy here of embracing Innovation putting in place proper regulations and and proper guidance instead of doing the U.S approach of basically gaslighting everyone which is not something that anyone is happy about right now but yeah I think we're going to continue to see

more of this come out of non-us places around the world and I definitely welcome it all right moving on to a tweet that I put out uh today I started this tweet off and I said the theme of the next 12 months will be crypto projects shutting down some will be good intention approach intentioned projects that just didn't find product Market fit but most will be things that never should have been created funded in the first place the cleansing phase of the bear Market is healthy so there are a few projects that have already shut down um there are a couple actually that I I'm invested in as an angel it hasn't been publicly announced yet but it will that have shut down um for various different reasons so there's reasons stemming from not

finding product Market fit or finding product Market fit but not finding a way to monetize it and not wanting to continue down a path of a project for years and years and burn through all the money that they raised just to build something that they know isn't monetizable or isn't something that actually has a business case behind it and it's something that might be better off as a public good on ethereum or better off as just like a hobby project or a niche project or someone can can take up on rather than having a business case and I think this is extremely honorable when projects do this rather than continuing as zombie projects because as we know in crypto there are plenty of zombie projects especially the projects that have tokens and the reason why they continue as zombie projects or there's a few reasons I think the the

number one reason is because they have a token they have token holders and if they said that they were you know shutting down the project that they were stopping development on it the token would pretty quickly go to zero and they'd burn all of these holders more than they've already been burnt and then they'd have a potential lawsuits on their hands and other stuff like that right so when you have a token it is really hard to shut down a project gracefully you can potentially get bought out by another project and do like a token Swap and things like that or you can basically use the treasury if the treasury has like stable coins in it to buy some of the token and guarantee a value a floor value of the token but generally it's quite hard to do that and another reason I mentioned regulatory stuff is that

continuing as a zombie project you have less uh chance of being pursued by Regulators than if you were to shut the project down and have a bunch of angry investors uh you know at your doorstep telling you know reporting you to Regulators reporting you to other authorities to try and you know potentially suing you to try and get some of their money back so when a project has a token you'll typically see that project not wind down for a long time or when they do wind down uh you know they do it in such a way where they basically say oh it's in the community's hands now right we've exited to community the community to continue building it and the core team is going to take a step back so are there various different things that happen here but but generally it's healthy when projects

shut down when they realize that they don't uh you know that there's not a business case there they don't have product Market fit and they don't expect to have product Market fit because it means that the founders and team can go work on something else that maybe does a product I could fit uh it means that they don't continue as a zombie so less people get burnt especially if they haven't issued a token and only taken private Investments that's a very clean uh kind of shutdown there so that's my preferred one but then there are a lot of projects out there that shouldn't have been funded or created in the first place a lot of froth from the bull market a lot of crap I mean I'm not talking about just like meme coins I wouldn't consider those things projects really they're just gambling vehicles at

the end of the day but I'm talking about lots of these projects that get spun up and they're just really bad ideas and you know that they're going to fail they have a very very small chance pretty much zero percent chance of succeeding but people spin them up because they get caught up in the froth of the bull market there's money flowing everywhere obviously lots of money was raised for VCS and funds and they needed to splurge that money and they were willing to give it to any project uh no matter what it was and you kind of see that froth playing out over time now these projects will also either shut down quietly or or otherwise a lot of them do have tokens for the ones that I'm thinking of in my head I'm not gonna name names here because it's rather irrelevant but the

ones that have tokens it's going to be very hard for them to gracefully shut down their tokens are already wrecked don't get me wrong they're already down like 95 plus percent um but the problem is is that it doesn't matter that they're down that much because the people holding the tokens will always hope that uh the team's you know building the devs are doing something the token's going to go back up and they'll compare it to other tokens that have gone back up I mean the amount of times I've seen people make comparisons between the bags that they're holding and eth uh in going down to 2018 94 and coming back from that he's crazy because there is basically a zero percent chance that uh your thing that you're holding your favorite token that you're holding is going to do what eth did for a multitude of different

reasons right one you a lot of the times you're comparing something to eat that shouldn't be compared to eat you're comparing your app layer to the protocol layout two if you look at what came back from 2018 and actually went to its or it went to a new all-time high against USD let alone Ethan BTC there was hardly anything that did that right so you shouldn't be comparing the one exception which is eth add to to your thing you should be comparing it to the rule and you should be understanding that there's a very very low chance of a lot of these tokens coming back against USD let alone eth and again I'm not going to name names here because it's irrelevant and I also anger people if I name certain things here um but that's just the reality of the

situation and and because of that I think that uh people even the projects where the token is already down 95 plus percent even if they were to say that they're shutting down it would still be really bad for the the existing I guess the people holding the token because they would be like well there's no chance now of me getting my money back because you know that's kind of like removing all the Hope from them you always want to want to help people having the hope whatever and they're yeah there are so many projects like that unfortunately but this is just the way it is that you know you have the froth of the bull market froth gets washed out you have the bear Market you have that time-based capitulation that I've been talking about a lot over the last few months and part of that is

projects going under because they run out of money or because they just know that it's not going to go anywhere uh and as I said it's easier for projects to do that when they don't already have a token uh very hard to do that once you have a token because you obviously have the public investors here that are expecting a return on their investment uh whether they should be expecting that or not so yeah hopefully that gives more context over this tweet today in case you saw it all right a fresh eip4844 implementers call notes from Terence as per usual you can give this a read I'll link it in the YouTube description below this is the 24th call and as usual 4844 seems to be making some very nice progress here and you can check out the the thread for for updates

on that I'm not going to read through uh read through all the all of this um but yeah I remember I mentioned on the all core Dev school there was discussion around the size for for blobs here whether it was uh two slash four or three uh six devnet six is gonna use three slash six and also the 4844 implementers agreed that three slash six is very desirable because it gives 50 more throughput which makes a big difference to L2 and given the lack of network topology some concerns are raised at three out of three slash six on devnet may not produce a satisfactory result because it's not going to properly mirror our mainnet here I believe that there is a um test net being spun up a new test net being spun up I can't remember the name of it it

was detailed in Tim baiko's all-core dev's thread I think it's called whole skill something like that um that aims to have more validators on it than ethereum mainnet and I think obviously the whole point of that is to be able to test things in as close to ethereum mainnet as possible obviously we have things like Shadow Fox as well which will happen as we get closer to the release of of dencoon but they really want to make sure that that three slash six uh blob size on on mainnet will not destabilize the chain because if it does it means that there would need to be another hard Fork to change this because this value can only be changed via a hard Fork so obviously testing is underway here and that is something that is under active discussion uh that you can read about in this thread which I'll link in the

YouTube description below all right we have a new uh kind of a chart here from Tony on the Mev boost dot pix the Pix website so this chart now displays a breakdown of the relays to which individual Builders submit their blocks so you can see it's it's quite even actually this actually surprised me with how with how evenly distributed it is here as you can see over the last 20 last 48 hours bid submitted per Builder to each of these relays is is rather even I mean you have some obvious leaders here some I guess like the purple which is uh block native uh and uh red which is blocks route and also blue which is the ultrasound money relay uh but really the difference between each of them isn't isn't very

much I think that the smallest is the austis relay second smallest is um is agnostic uh gnosis but generally they're all pretty similar and as I said you can view this uh live on the Mev boost.pics website which still continues to be one of the best websites to keep track of all the Mev boost related stuff I think it's in the relay section here I believe uh yeah you can see it bids received over the last 48 hours you know I didn't realize that uh uh that um a block native had actually grown that much which is pretty cool to see yeah block native is in is in green here so you can see uh actually I should open the Mev watch dot info website as well because you can actually see a breakdown of market share here as well if you if you um disable include all blocks you can

actually see obviously split into uh sensor relays and non-censoring block native is actually grown quite a bit they're at 6.6 percent of all um not of all blocks of all um Mev boosted uh block CR whereas ultrasound money obviously is still leading on the not on the um uncensored blocks front and on all fronts they're at 42 now which is pretty big um and then uh flash Bots out 27 still on the censoring side of things but yeah great to see that it's more evenly distributed than I thought it was actually but uh you know it's funny because ultrasound money is is quite big now I actually think that they're too big I think that they I think there was a plan to limit themselves to like 33 of the network or something like that even though that they're a non-censoring

relay they could for whatever reason at any time be either compelled to be a censoring relay or shut down their relay for whatever reason right and then we'd probably see this uh kind of um of compliance shoot up again unless someone comes along and replaces the ultrasound money relay but I guess it speaks to just how good that relay is and how many bids they uh they receive here but yeah anyway you can check out this chart for yourself I'll link it in the YouTube description below all right so polygon's big announcement that I talked about yesterday is live well not totally live as they do have plans to release more information as time over the next few weeks yeah but essentially what they announced is something called polygon 2.0 which

they're calling a blueprint to build the ultimate value layer now they have a description here of what this is they say polygon 2.0 is a set of upgrades that radically reimagine almost every aspect of polygon from protocol architecture to tokenomics to governance it is a roadmap for how polygon will become the value layer offering unlimited scalability and unified liquidity via ZK Tech and then you can see important dates listed here so this will be going over the next month on June 19th they'll be talking about the polygon POS chain and the future of it on the 26th of June that we're talking about the architecture and stack of the polygon 2.0 Suite on the 10th of July the token will be talked about and plans for that on the 17th of July uh they'll be talking about decentralized

governance now if I had to speculate here on these things you guys know I'm an advisor apolly gone but I'm speculating here based on comments that I've seen from the polygon Founders I think that they may announce that the polygon POS chain is going to be converted into a ZK evm because to me it makes little sense for them to continue developing the POS chain because it splits their attention on the BD marketing side of things but also splits their attention on the technical side of things and also the POS chain is not something that has long-term sustainability it is definitely not the the BL end-all of of of polygon I think they definitely want to focus on their ZK VMS but in saying all that the polygon POS chain is huge it has a lot

of users on there it has a lot of volumes a lot of tvl a lot of activity so they don't want to just throw that away they want to essentially from from my read on it convert it to a ZK VM which is secured by ethereum which obviously would be very very big a very very big deal so I think that's what's going to happen there in terms of the future architecture and stack of polygon 2.0 I think based on the comments that they made in this thread on the um their blog post TR it's going to look a lot more like the op stack super chain uh than anything else so essentially they're imagining a world of interconnected l2s running on polygons ZK technology which is very similar to optimism super chain imagining a world

of interconnected op stack l2s um you know all running in kind of Harmony there which I think is really great I think that you know if Cosmos wasn't dead already from opt from op stack this is going to kill it even more because why would you build a cosmos chain over uh something using either polygons Tech stack or optimism's Tech stack which give you the flexibility to obviously settle on ethereum but not you know you don't have to settle your data on ethereum you could settle your data somewhere else whether that be on eigenlayer or maybe Celestia or some other data availability layer um you know and then the whole point of like Cosmos was to have like this app chain thing which is seems like uh ethereum is doing with polygon and

optimism focusing on this specifically so I think that's what they're going to reveal about their architecture and stachia and talk more about token I mean like we can all speculate on the stuff about the token I've said before in the daily grade Discord Channel around the token and again just disclosing how many advisor to polygon I hold Matic tokens it is my second largest position um besides eth so just want to disclose that there but in terms of speculating on the token and and the tokonomics I think that the two biggest things will be enabling the token to be used as a governance token because right now it can't be used as a governance token and also making it a staking token for the l2s in order to decentralize things like sequences and validators on L2 in terms of it being used as a fee token I don't

really think that uh tokens accrue value based on being a fee token really at all um you know in ethereum's case it's a bit different because there's so much of that of those fees being burned but even then I don't consider it like a huge deal for is other things that drive value to eighth so I think that in terms of Maddox uses a fee token I wonder if they're going to still use Matic as a free token on the POS chain or if they're going to swap it out for eth and then just use Matic as a staking in governance token and then you obviously stake is capture fee revenue on the ZK VMS and then that's how the value is driven there and obviously governance as well on that front so I think that that might happen but we'll have to see on

the revamp there and then lastly obviously they're talking about decentralizing up the governance of the whole polygon ecosystem of the ZK VMS and and doing similar to what optimism is doing with OP uh where people spin up chains but then they can tap into op and use the op governance stack and use the optimism governance process to govern their own chain instead of having to start something on their own from scratch there so I'm super excited to see all the details around this over these dates I'll obviously be covering it on the refuel as they come out here but yeah that's my personal speculation on what this is here and honestly I think this is a huge undertaking for polygon because this is a huge uh kind of and the the naming of polygon 2.0 is very aptia because they seem to be

fundamentally uh kind of changing their architecture but also just aligning everything so it seems like obviously they've had a few different experiments running over the past couple of years since they rebranded from Matic Network obviously the POS chain was a big deal then they developed their zkvm stuff after after acquiring those teams like Hermes and Maya uh or Mir and and polygon zero as well uh which was the uh the former I think like Facebook people working on Starks um and then bringing that all together and they're unifying it under this new polygon 2.0 umbrella which I think is very sensible but uh yeah you can read the thread and the blog post for a full breakdown of that I'll link it in the YouTube description below and I'll of course keep you guys updated as more information comes out about this

all right lastly here uni swap Labs is teasing something that is going live today so either this announcement has already happened uh and you're watching the refuel after it has happened or it hasn't yet but I think we all know what this is they've been teasing it for a few days now uniswap V4 now I don't think V4 is actually going to go live today I think they're just going to announce it and I don't think V4 can actually go live until uh that EIP I think it's 11 53 goes live on the ethereum network because the the V4 architecture actually relies on that EIP and that and as I've said before the dencoon upgrade won't be live till the end of the year so I think that V4 will either Target going live you know just after dencoon goes live or maybe in the

new year but I don't expect V4 2 to go live uh today right I expect the announcement to happen um I'm very excited to see what the announcement is I I can't even imagine what they've got planned for V4 considering V3 was such a step change compared to V2 but I do think that it's going to be very exciting so I'm I'm very much looking forward to this obviously I'll cover it on tomorrow's refuel but yeah as I said I don't think V4 is going to go live until after dencoon unless they fundamentally changed their architecture to work without it but I think that they wouldn't do that because they'd rather just wait the six or so months to deploy V4 then change the architecture uh completely just to I guess like launch before and then have to do what they wanted to do in in a V5 it would just

it'd be messy right so I think they're gonna wait until dencoon goes live and then launch V4 but if they're announcing it this early I would speculate that they probably want to get uh people involved with it in some capacity so maybe that they're finally doing what people have been asking for which is essentially decentralizing out the development of uni swap to the community because right now it's just really unisop labs and maybe some co-contributors from other D5 protocols uh working closely with unisop Labs on this but I think that they may want to make it so that people in the public can build on this because that's been a top criticism of uni swap's development process for a little while now and that it to me is true to centralization of of uni stop as an ecosystem because it

means the community can finally uh have a say in what gets built how it gets built and actually contribute to it as a proper open source project here but anyway on that note that's going to be it for today so thank everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone