Real-world assets, True digital cash and much more - The Daily Gwei Refuel #523 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily gray refuel where you kept the latest news in the ethereum ecosystem I'm your host Anthony 13th of January 2023 alright everyone let's get into it so first up today we have Ben edgington's uh quick notes from the ethereum uh well the latest ethereum consensus layer call also now known as AC DC uh abbreviated there which I thought was a pretty cool abbreviation but essentially uh there's quite a bit of notes here that Ben has put together that you should definitely go uh check out they discussed things like um uh Shanghai obviously and the test nets for withdrawals and things like that which you can read all about here uh some issues I think with uh certain technical things which are also discussed here

they also talk about 4844 as you can see with a quick client status update uh and I mean the status updates are here but just to read out some of them Lighthouse said that they're passing all but the one test prism is similar uh lodestar as well uh Basu I think is is pretty similar with some pieces to add uh Nimbus as well and techu as well so I mean they're all pretty much passing the test doing well doing what they need to be doing which is great to see there's some updates on Research specs Etc and a highlight section that Ben has actually put together with chat highlights uh from the actual uh I guess chat that happens at the same time as the call the text chat so as I said you can go check this out for yourself and read all about

it it'll be linked in the YouTube description below um you know the funny thing is about the I guess like uh consider Slayer and execution layer calls or execution implementers cause the consensus implementers calls is that they happen quite uh frequently and you'll get the notes of them but you can miss a lot of things like I read through the notes but I still miss things or forget things and this really is the place to get all the latest Alpha of what's happening in ethereum if you want to be up to date uh you know fully on ethereum uh at least the core protocol layer uh these calls are where to be and if you want to be as up to that as possible you can watch the call yourself on YouTube via the live stream basically that time that it happens now depending you are in the

world obviously it may work out for you it may not when it when it's happening but yeah that I mean it's kind of amazing that you get like this I guess deep insight into the core protocol work uh via a live stream and you get to follow along really really closely and that's why you know especially leading up to the merge I kept telling you guys I'm like guys like the merge you see how it's coming this is happening with the merge you know and same with withdrawals I'm like this is where we're at today I just go through the notes I don't watch the streams myself because they're at An Inconvenient time for me uh and I prefer to just read because it's a much easier and faster way for me to digest information but that's all that's all I do really I just read the notes and and

keep reading them as they come out make sure that I'm on top of everything talk to any relevant people talk to friends about it and keep up with it and be able to I guess translate that for you guys on the refill now obviously you all have the benefit of the refuel where I've already done all the hard work for you that's the whole point of of what I do um but but yeah I mean just behind the scenes there's a lot of I guess research that goes into it because keeping up with this stuff can be difficult even though we have everything available to us as I said we have the notes we have the live streams things like that but it can be quite time consuming and difficult uh so yeah but in saying that if you wanted to I guess go to the

source yourself you can always do that I always link it in the YouTube description for you to do so you don't have to wait for me to cover it on the refill maybe I miss it one day it's good to get used to going to the source as well of yourself to make sure that I haven't gotten anything wrong if you've heard about it on the refuel or you just want to learn more about it as I always encourage you guys to do so yeah anyway check out this one in the YouTube description below all right so optimism has completed a successful upgrade of the optimism girly test net to bedrock uh deposit deposits and withdrawals are re-enabled and the optimism girly sequence size back up and running and they said yeah big thanks to all our partners for their support in making this migration possible so

obviously this was the uh a big step that needed to happen before they can deploy Bedrock to mainnet which seems like it will still come in q1 which is which is great to see they did say Q4 originally but obviously uh they had to do a bit more work to get this ready but it seems like the fact that it's aren't live on the um the girly testing it the optimism girly test net now seems like it is going to happen in q1 which I've really been looking forward to because I think right now you know arbitrary and optimism are pretty much the The Front Runners of the layer 2 space I mean we all know that right and there is a healthy competition between them but I think arbitrim has the upper hand right now with their Nitra implementation right uh so once optimism I guess

implements Bedrock I think they're going to be maybe more so neck and neck than they are today a which is great for everyone because as I've said plenty of times uh on on the refuel and I've said this on Twitter as well like a protocol or a project having a monopoly isn't necessarily a good thing from a competition perspective and there are certain protocols that have something that looks like a monopoly on ethereum today for example uni Swap and they're an exception because they do innovate and they innovate a lot um and that they're you know they're still pushed to innovate via other means but if a protocol has or a project has a monopoly at a total Monopoly something that that basically has 90 plus percent market share there's not really much

incentive for them to I guess build more for them to do more because they don't have the competition pushing them to do that so the competition is very very healthy especially when it comes to generalized platforms like optimism and arbitrim where they're fighting for a community I mean we know that these platforms whether they be layout ones or layer twos a lot of the time they live or die based on what community they they're able to cultivate and now the best communities in crypto are the ones that are full of missionaries and not mercenaries as I've explained before because as we've seen plenty of times there are certain platforms especially with the the L1 space or the layer one space where they'll gather up a community of of mercenaries and those people will only last as long as the money is Flowing which is where you know

what happens in the bull market then once that goes away they're gone straight away and there's very few if any missionaries left to pick up the pieces and to get things going again uh and I think you know I've I've personally experienced this with ethereum because ethereum only had missionaries after the Ico boom to get it through that slog of 2018 2019 and part of 2020 and I think that layer twos are following the same path where they're cultivating their Community but they're wanting to cultivate a community that is full of missionaries instead of mercenaries and it can be quite difficult to do especially because uh if you have a token it it um distorts things if you don't have a token it also distorts things from people trying to farm stuff uh you never know who's going to be in it for the long term versus not

it's basically you basically just have to play it out right and depending on on I guess the culture that you set as well as part of your uh community and part of your platform that can dictate things too so taking all that on board I think optimism and arbitrum are doing a really great job I think both of their communities are quite organic quite uh uh missionary versus mercenary but at the same time they do have mercenaries in there because there are people farming a potential second op airdrop for example right and there are people farming a potential arbitrim airdrop so there are going to be those people they're not necessarily bad I think the way I look at them the mercenaries if if there are if there's a healthy chunk of missionaries I actually view the mercenaries as net positive because what

they do is they bring in all these new capital and money which should in theory I guess reward the missionaries for being early Believers right like that maybe the token goes up and they're holding a bunch of the token or maybe they're they're holding tokens of the projects um on on the actual Layer Two For example or any any other such means of where they're rewarded I think that's where it can be a positive but if your ecosystem is just all mercenaries and they're only around when the money's good and then they're gone when it's not well then your ecosystem is going to fail and that's actually what I look at when I look at a lot of these other ecosystems and that's not the only thing I think it's a big part but it's not the only thing of how these things live on

live and die and I've I've noted before that I think there are certain select few ecosystems outside of ethereum that have a missionary driven Community but I don't know well I don't think that that's going to be enough to make them long term sustainable to to make them carve out anything but maybe a niche and even then it'd be quite hard to do and some of those ecosystems include something like Cosmos for example but I've been very critical of cosmos's design and how I don't think it actually lends itself to Value capture for the atom token which has its own host of problems but Cosmos as a as a community from what I've seen seems to have a lot of missionaries in there that really do care about building the tech out to their Vision even if I don't agree with their Vision still they have those

mission scenaries there I think I've been seeing a little bit of missionary activity in the Solana ecosystem but 95 plus was mercenaries it remains to be seen if they can cultivate that missionary uh I guess a community missionary driven community and turn that into something more than it is today again I disagree with the architecture of Solana I don't think it's long-term sustainable from that perspective but it doesn't matter if that I can give credit where it's Dura they have a small little missionary Community there there are some other platforms as well um that I've seen but it's kind of hard because a lot of these platforms are quite young as well all the older layer ones don't really have any obviously Bitcoin does but bitcoin's not the smart contract layer one so it's in its own

kind of a niche there for for instance but that's how I view these things and as I said missionary having a missionary driven Community or having a community full of missionaries I should say is is an important thing but it's not the only thing it's not going to save you in if you if your architecture is wrong if your monetary policy is wrong if you're I guess value capture for the token is wrong so for example I mean using the example here that I just used before Cosmos has a missionary Community full of missionaries but their token value accrual is is pretty bad their architecture in my eyes is pretty bad and their vision for how they see the crypto space playing out is not one that I agree with so from that perspective I think the market has shown that as well is that like they're always trailing far

far behind even the other ecosystems even the newer ones uh because of that I believe but maybe they they return that around in the future maybe they build something that actually appeals to to people and is actually sustainable there are some projects here and there popping up I think Kanto is one of them made by Scott Lewis uh who's a he's one of the founders he's a good good friend of mine uh and there's a few other things popping up as well but I think Tara really set the cosmos ecosystem back even though Terror I mean really just use the cosmos technology but wasn't really part of it it was kind of this funny thing right but there are there is something there in terms of missionaries but as I said it's not enough you need to have more than that but anyway I'm I'm rambling a little a bit here I'm

going to end that discussion there for now uh but if you've got thoughts on that please let me know I'm always interested to hear other people's takes on on that stuff uh because I don't want to be viewed as someone who's just like dictating to people what they should think hey I'm always up for discussion about these things all right so Ryan Wyatt here from uh the polygon team put out a tweet where he said some huge Tech updates on the polygon front ZK VM so this is an update related to zkvm the final public test net is now up and running it's coming years sooner than anyone expected and I've talked about this before about how obviously polygon has their zkvm testing that up and they're having their final public test net up and it is coming much earlier than people expected which is great to see

and then also there's going to be a hard Fork on the POS chain to reduce the severity of the gas spikes and addresses chain reorgs to reduce the chain uh finality which I think is also pretty cool in saying that right like the funny thing about layer twos versus layer ones is that like these layer ones are much much much harder to scale because of things like you know these potential gas spikes especially if it's ebm based right uh reorgs and and and finality time and things like that so I think even even the technical team at polygon will be saying you know hey we really would love to move the POS chain to a layer too because would just be easier to work with but for now they have to keep maintaining and upgrading the POS chain because there's a lot of users there there's a lot of people using it

getting value out of it but in my eyes it's definitely not going to be long-term kind of uh sustainable or the long-term solution I'm sure they're going to want to bring that over and it'll transform it into a ZK ebm as fast as possible or what might end up happening uh which which might which is probably going to take a while to play out if it does play out people just naturally migrate over to polygon ZK VM instead of being on the POS chain and essentially the POS change just basically dies out in favor of polygon ZK VM which would be pretty cool as well but it that's a that's a tall order I think I think it would be probably much easier for them just to convert the POS chain into a zkbm rather than waiting for users to migrate across race to be

seen how that plays out but I think users migrating across will take a lot longer than them just I guess converting the chain here all right so speaking of layer twos Aztec has put out a little tweet here making fun of the Bears uh being in disbelief as encrypted blockchains become the narrative Catalyst of 2023 and this is a little tvl chart that they're showing here they're up to around 15 million at TBR now obviously this is nothing to I guess write home about a 15 million tvl is very small but what I think is really cool is that it's growing right there is a trend here as you can see on the chart of consistent growth uh in in the TBL here and on top of that I do I'm not entirely sure if

they still have caps in place because they originally did of of caps per address I believe of how many people how much money could be deposited here and Aztec is still very early in very early stages on their Layer Two on their privacy reserving Layer Two as well but what I think is cool is the trend the trend is up that's what we want to see it doesn't matter if it's it's only 15 million uh the trend is is our friend here and you can actually follow along with this dashboard on D5 llama which is uh yeah yeah you can see the trend for yourself you can kind of I guess uh scroll over it and and see at different points in time uh what what happened here so basically from when they I believe in October that's when they kind of set their mainnet live or more I had

a more open main net and they've just been consistently on an up only Trend uh since then which is great to see as you guys know I'm a huge fan of Aztec I did mention that they changed their branding a bit from like a a privacy protocol to an encrypted blockchain so to speak but don't let the term blockchain fool you here they are a layer 2 on ethereum and technically our layer 2 is a is a blockchain right like it's a it's its own thing but it just outsources its consensus and slash security to ethereum layer one but it can still be referred to as a blockchain and I saw some people get confused about this when Aztec did their recent funding announcement um and they did their Rebrand they're like you know Aztec is an encrypted blockchain uh and they didn't say like

Layer Two or roll up I don't believe or at least they use the encrypted blockchain terminology a lot more and I think that's a lot I got to do with them going for two reasons I think the first reason is that they want to change the narrative here they want to change from The Narrative around privacy uh to encryption because as I've discussed before it seems to be a much more palatable term for the mainstream and they also want to catch the attention of I believe uh businesses and Enterprises to come work with build on and use Aztecs technology uh that's what I got from their um I guess kind of announcement a few weeks ago but regardless of that just great to see the upward Trend here on Aztec just lay a two season continuing into 2023 alright so Aura Labs here uh today

announced that they're launching doon.ora.so which is a website which is a new search experience search experience for doing analytics powered by llm so now you can find dashboards by describing what you're looking for like how's Dex activity on eth rather than relying on keyword matches so let's try that if I copy paste this how's Dex activity on eth and then type it into the search bar here and then just click enter let's see what pops up here uh they're searching for dashboards there you can go they you can see each decks activity uh dashboard popped up straight away from just using natural language which is very very cool and then it links to the Dune analytics dashboard there maybe if I say uh okay um uh but what was the question how's Dex activity

on ethereum house layer 2 growth let's see what happens when I type that in uh layer 2 adoption is the first one that they've come up with here from Markov and you can see the layer two growth charts here very cool I like this I like this natural language uh processing that's going on here so yeah just something cool that I wanted to highlight for you guys because you guys know I'm a huge fan of doing analytics use them a lot uh and I do sometimes have trouble finding the relevant dashboards so this is definitely a tool that I'm going to get a lot of use out of I think uh but something that you might get a lot of use out of as well you know I would love to see this expanded Beyond analytics dashboards as well could you imagine having like I

guess like a Google of D5 where you could just type in I want to get such and such yield or the bit sorry sorry say you say I want to get the best yield on my US dollar stable coins and then it will pop up with all these results I remember there being something like this in the works if not live I remember covering it a while ago I can't remember the name of it but imagine having that right there's having that nice nice little Google for unchain stuff basically and it's not it doesn't even have to be limited to D5 you could basically type in you know uh register a ens name such and such for x amount of years and then it automatically processes that in the background for you and then you just on the transaction and confirm it and pay the fees or whatever

and then maybe you say hey find me the latest trending nft collections uh on ethereum or on arbitrim or on optimism so I really hope that someone's working on that and if they are please let me know because I don't know of any that's working on it and I've forgotten if there are people that are working on that kind of natural language Google like search uh processing for unchain activity but that would be really cool to to see but anyway you can go check out this one for doing analytics I'll link it in the YouTube description below all right so rated.network one of my favorite websites uh for tracking uh uh metrics around ethereum staking has uh brought out a new kind of page here

called trending so uh you can go to arader.network slash trending to see what this is all about and what this is about is basically showing you different metrics around the performance and Effectiveness and APR of the top five operators and the top bottom five operators so at the top you can see top five operators by Effectiveness and this is identified operators and you can see that Cucas Global here with with around 2500 validators has an effectiveness of 98.3 percent which means that they are extremely good at testing to blocks proposing blocks being part of sync committees and just all um all around doing the job that they should be doing and then you can see the bottom five percent here uh with figment at the top around 7000 validators with

an effectiveness of 93 now that's not actually too bad right I mean it's and then the rest of them are around 96 plus and there are usually specific events that happen or specific reasons uh why this this is like this um so yeah even the Bottom Fire doesn't look too bad there but then you can keep scrolling down you can see the top five operators by deposit address uh the top five validators by Effectiveness so uh this all nodes validated here um it has a 99.1 Effectiveness which is pretty crazy and then you can see the bottom five validators by Effectiveness obviously they're going to be zero percent because there are a bunch of validators that are basically just sitting there uh they're not withdrawn they're not slashed they're not exited because they they kind of can't be yet

but uh I don't know I think they can be exited I just don't think you can withdraw the assets but there are some that just sit there on zero percent for whatever reason and then you can go down the bottom and see uh buy Mev facilitated so the top five operators uh buy that and bottom five uh and then by slashing history see which uh operators have been slashed the most stake.us has been slashed 92 times uh which is pretty I guess I guess it's funny because like they're almost doubled the second place yet but they have 13 500 validators so yeah I mean they have a lot of validators there and you can see that the um top five operators by slashes collected so this is pretty cool seeing which um operators are collecting the uh I guess money for slashing another

validator here so very very cool to see this new page from raider.network which you can check out for yourself I'll link it in the YouTube description below all right to round out the last 10 minutes here I have two tweets that I'm going to be focusing on so I'll try and spend five minutes on each but basically this is a tweet from uh me I said yesterday the ethereum ecosystem onboarding real world assets into D5 is going to lead to a huge amount of legitimacy for the ethereum network the outside world will shift from viewing ethereum as a quote-unquote toy to viewing it as a major upgrade to existing systems and institutions now I got a bit of pushback on this I did read through the replies I didn't reply to all of them but I did read through them um but I want to start off this

discussion by by defining what a real world asset is the way I Define it is basically anything that's not native to a blockchain specifically in this case the ethereum blockchain so what is that that is uh US dollar stable coins as the prime example centralized US dollars I should say usdt and usdc uh not native to ethereum they can only exist in IOU form but they represent a real world asset they represent dollars in a bank account right or treasuries or whatever other assets are backing them uh that's what they represent so those are the obvious examples but then there are other things that are being being brought on Chain by a number of different uh projects including things like stocks and bonds and property deeds

and really anything that you can think of or that either has value or does doesn't doesn't necessarily have to have value but these are things that I would consider real world assets now because they are not digitally native to ethereum they weren't issued on ethereum they will never exist in a form where ethereum will be the settlement layer for them the ultimate settlement layer for those things will be the off-chain ecosystem right so for example the ultimate settlement layer for stocks uh and would be the stock exchange that is using ethereum and issuing them on ethereum or the broker or the company that's doing them that will be the I mean I mean they might not be the ultimate settlement there but they are the the responsible for for settling those and settling them in the off-chain

world so does that mean that they're valueless does that mean that we shouldn't bring them to ethereum no not at all we definitely should and we have proof that they're a big deal because of the stable coins that are are a big deal now the pushback that I got on this idea was that something you know Dan McArdle said here you know it's probably what I said is probably true but real world assets are ultimately a major source of centralization uh risk and an easy attack Vector for governance which definitely is true like I'm not disagreeing with that at all but then I said we're kidding ourselves if we think we can replace the existing Financial system without onboarding real world assets so there is going to be a kind of I wouldn't call it like a split but there will be two kind of types of defy

and on-chain finance there'll be the type that is completely native to ethereum where all where it's all got to do with assets issued natively on ethereum and ethereum secures and settles those assets so eth and erc20 tokens and nfts things like that right well nfts that it issued on ethereum are not nfts that run present Real World assets right and same with erc20 tokens um but then you're going to have all these reward assets which are but de facto centralized because they cannot be decentralized because they're part of a company that's issued them as ious or some other institution that's done this and brought them on chain uh but it's still a centralized thing so I totally understand the risk here but there is no way we're going to be able to replace the existing Financial system without

onboarding these assets I mean it's required for the financial system to function right so that's why I think that they're very much needed and they will also add legitimacy to the ethereum network because it will it will upgrade ethereum as I said from looking like a toy which it has in the past because ethereum uh to the outside world definitely looks like a toy it looks like a machine for ponzis and for speculation but by bringing real real world assets on chain we start showing the outside world like hey you can do legitimate everyday things on ethereum that you would do on in the I guess traditional Finance system but now you can do it on ethereum you can do it you know the non-custodial way right you can do it at a speed of basically the internet right or the speed of ethereum whether that's at layer one or Layer Two

and you don't have to wait all this time you don't have to deal with all these crappy old world infrastructure you have this new these new rails that you can deal with and then the other note of pushback I I got rather than the centralization concerns was people saying that they don't think that real world assets are going to be necessarily popular and I I'm like what do you what do you mean there are over 100 billion dollars worth of centralized stable coins today that is a real world asset they're incredibly popular centralized stable coins are probably all stable coins in general I should say are probably the number one use case for blockchains today I mean they are used by everyone like literally I'm sure literally all of you have used a stable coin doesn't matter which one it is but I'm sure all of you have used that one

at least once right in your journey within crypto I've used them hundreds if not thousands of times to do all manner of things like probably thousands of times at this point right and you know before that the only time I ever touched US Dollars was when I was going to the US and I maybe got some cash right or I was doing a conversion with typing my card but that's not the same thing but with having US dollar exposure on chain it's much easier for me to get access to it as an Australian Citizen and much easier for me to interact with it and I get to do it at the speed of crypto which is much faster than chadfy and I get to and and the Practical use case that I have is that I get to send money to people without having to go through a

wire right and I can send it to them like obviously I could send it to them in eighth but I would like to send it to them in in a stable asset I don't want to send them my eighth so I send US dollars to them to do that via a wire would take from so from Australia to someone in the US over a wire I think takes at least three days and I have no visibility over that and I've discussed this before on the readfield where I basically said zero visibility over this I basically have to pray that it gets there whereas in crypto I can do it in one block I have full visibility of the life cycle of the transaction and then I have some settlement guarantees that ethereum gives me that the recipient has got that so it's great for both parties

there so to those who say that it's not going to be a big deal real sorry that real world that's not going to be a big deal I challenge you to uh uh kind of uh tell me why we have over 100 billion dollars worth of centralized stable coins uh right now on uh ethereum layer twos and some other blockchains out there but anyway gonna leave that one at that running out of time I wanted to talk about this last thread here from Tim Robinson who is a daily gray Discord native so he starts off this thread by saying we still don't have digital cash and no the thing you were thinking of right now is not digital cash here's what digital cash means and he defines digital cash as something that has no company no login no seed phrase no address book no account numbers no

traceability and no Gatekeepers it's cash it should function exactly like cash and we have the tools to build it today but nobody has taken on the challenge and then he just starts to describe how this could work now you may be wondering uh you know exactly why the what we currently have is not going to see the digital cache well so say for example you spin up something like a metamask wallet you add some eth to it okay well you have a login for that technically I mean it's not a login for your private key but to log in for the metamask extension but you still have a login right uh you have a seed phrase you have an address book you have account numbers so to speak right uh you have a traceability and there's no Gatekeepers but there is traceability

there because of the fact that it's not private on ethereum layer one by default obviously so the whole app here as the whole app uh for digital cache would work like this as Tim describes the initial home screen is your balance nothing else there is no account creation no login no seed phrases just a screen with your balance on it so say you have a hundred dollars that's that's what the screen says you swipe left to reveal your QR code that allows others to send you cash you swipe right to open your camera to scan someone else's QR code and send them cash that's the entire app no thrills no options it's digital cash and then the asset that it should be should be be something like the most decentralized stable coins such as die uh or and it could be on a privacy L2 like Aztec Network that

enables these cheap secure and private payments as well but then you may be wondering like then this is a question I had but as I kept scrolling and read the uh the thread um it's funny like I had these questions like okay like what about um if you lose your your wallet for example how would you get your cash back well Tim answers that he says uh what if you want what if you lose your phone right where your wallet stored tough luck if you lose your wallet your cash is gone this is the same so it really is meant to function exactly the same as cash just in a digital form where yeah if you have 100 cash in your wallet and you lose your wallet well that's gone there's nowhere you can go to get that back the bank's not going to give you

that back you can't go to the bank and say hey I lost my wallet give me 100 bucks back it's not going to happen right you can't go to the police and ask for it if the police find your wallet sure but it's the same concept if you lose your phone right you lose access to those funds there's no way to get them back so it's the same thing as as digital cash now obviously as physical cash I should say obviously you're not going to keep you know your life savings on your person in physical cash just like you wouldn't keep a substantial amount of crypto on your phone as in this digital cash kind of wallet right so if we did get something like this it was built to be fully private uh working like Tim's described I think it would be a huge value add to I guess the world

because it would mean that we get true digital cash that uh it doesn't inherit all the other stuff that comes with I guess blockchains like seed phrases and stuff like that so definitely an interesting idea from Tim I'll link his thread in the YouTube description below for you to check out for those of you who don't know who Tim is he currently works at balancerlabs he's he's quite a smart guy I've actually met up for lunch with him when he's been down in Melbourne I've done that uh two times now and it's just great chatting to him he's definitely an ethereum native he definitely knows what he's talking about and this was an interesting idea from him so I'll link that thread in the YouTube description below for you to check out but 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 newsletter join the Discord Channel and I'll catch you all next week thanks everyone