Rocket Pool news, dYdX 2020 recap and more - The Daily Gwei Refuel #41 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of the daily gray refuel where i recap the latest news in the ethereum ecosystem i'm your host anthony sasano and today is the 22nd of january 2021 all right everyone let's dive into the news from today so rocketpool put out this explainer thread today uh basically well explain a blog post really diving into an overview of rocketpool and kind of you know how it all works for those who don't know rocketpool is a trustless staking service so basically a decentralized staking service for eth2 um it i mean it has a it's doing a lot more than that but that's like kind of like the gist of it the overview of it uh and it's been in the works for quite a while now um a bit of history here this project i think actually started

all the way back in 2017 and for those who weren't around back then uh there was actually an expectation that eth2 was going live in like 2017 or 2018 no one knew that it would take as long as it did obviously it took much longer than that right a lot of things changed and and pretty much like a lot of the roll out changed you know there wasn't going to be a phase zero right beacon chain separate chain or anything like that at the time it was going to be basically an upgrade to eth1 but obviously things changed a lot since then but you know obviously that changed rocket pools plans you know they they they kind of like i think um you know kind of got screwed around a little bit there but you know they've stuck to it they've kept building and i think they're very

very close now to an implementation that's going to go live and then people can use to to do decentralized staking and not only um and i i guess i should say like why would you want to do this you can just stake on your own right why would you want to use rocker pool well rocker pools customer base are those that don't have 32 8 to stake on their own so as you all know you know you need a minimum 32 east to spin up your own validator on your own hardware now that's a lot of money that's over 32 000 right now obviously it was a lot cheaper back in the day but it's not now um so to get more people in to decentralize staking rather than using exchanges to stake uh rockapool's created this this network here and it lets you stick with um

kind of like little amounts of each you can stick with one eighth or you know 0.58 or whatever or two eighth whatever you have um whatever you feel comfortable with staking through their service so if you wanna learn more um this is part one of um of a blog series they're doing about the decentralized staking protocol i think this is just giving an overview uh so that people can learn how to use it what what it's all about you know the tokenomics of of the rpl token how that works um and the launch details and everything like that so they've got like the launch details down here at the end here i think yeah so they're in live beta right now um and you can and you can go test it out if you'd like to i think um uh they're saying here the beta fish is on 27th of jan

so maybe we're getting a main net relatively soon i don't know if uh that the main net uh has been announced yet the date has been announced yet i've missed that but i'm assuming if it had been it would have been you know reiterated here so you know i'm still expecting this to come out relatively soon as i said it's been in the works for a while they have a lot of things going on they seem very close to a to a mainnet launch so very excited to see this go live i'm very curious to see how many people will do this decentralized staking with rocketpool because we we want the network to be as distributed as possible right the eth2 network we don't want people staking with exchanges ideally that's going to happen anyway of course but we would like to encourage people not to do that so giving them the tools

to be able to do this is much better than um you know just hoping people will uh stake on their own or or or you know um if they're using an exchange to stake it won't centralize around one exchange because really the only option you have if you don't have 32 eth is to either use one of the i guess staking services on ethereum that give you um a tokenized uh kind of stake position like what lido finance is doing or use an exchange a centralized exchange to do it right there's not really a decentralized alternative that's where rockapool comes in so i'm very very uh excited to see them go live and and to see their kind of system in action and see kind of how much uptake it has i assume it's going to be

slow at the start like everything is but you know as we get kind of like more new users coming in they find out about staking and they're like you know i don't really want to do it on exchange what's the other options we can send them to rocketpool right which which i think is very important for the for the whole ecosystem so jacob franek shared this chart on twitter today which i thought was really cool so this shows the ethereum and bitcoin transaction counts now ethereum is obviously way ahead and has been way ahead for quite a while i do want to make a note that this is ethereum transaction accounts um counting everything on ethereum all the tokens right you know whether that's erc20 tokens or nfts um basically any asset like a lot of this would be stable coin transactions

obviously eth transactions as well but predominantly uh it's not eth because he shared another chart down here i think somewhere i saw it where he oh man if i can find it quickly um because he definitely did share that uh it wasn't just eighth um oh sorry if you just look at the eighth transactions that are being shared uh here it is i don't know why it was hidden there but basically you can see here that just the pure native um transactions so pure btc being moved on the bitcoin network pure eighth being moved on the ethereum network if eth is still lower than btc here which makes sense i think because you know more people uh you know on i mean on bitcoin you only have the option of moving btc

right that's the whole thing of the network you can't move tokens there's nothing else really to do on the network so whereas with ethereum you can move e if you can move you know stable coins you can move your other erc20s you can move nfts whatever you want to move around so that's why ethereum's a lot higher there so this metric's cool but it doesn't really paint a picture of of kind of like i mean anything substantial i would think i actually think it's quite bullish that eth is moving less than than um kind of bitcoin on its own network because when you think about it you don't want the the kind of reserve asset of the network or the store value asset of the network to be moving around too much um because you know for something to to kind of um

go up in value over the long term you want people to be holding it not spending it because it's it's this theory of the like kind of uh the velocity of money so the more peace like money moves around right and ethies money of course and so is btc but the more it moves around right and the more it changes hands that means people aren't really interested in holding it they want to they want to get rid of it right they want to discard it they want to dispose of it uh which is you know if we saw really really high transaction counts for both ethan btc on their networks it would be bearish for those for those tokens um because of the fact that it means that people are wanting to dispose of it right rather than hold on to it and that's not

the best metric to see that you know there are other metrics out there that show you how long people have held for you know um kind of like when they held from basically and what price they bought into stuff like that but i still think it's interesting that ethereum has obviously been um you know ahead of bitcoin on transactions for quite a while now that is in part due to i mean it's due to ethereum being more scalable but it's obviously also due to a lot of the default activity happening and especially the stablecoin activity so good to keep that in mind that kind of these charts they're cool they're fun to look at but there's a lot of nuance that you need to go into to actually understand what they're showing and a lot of the time they're not really showing anything um like between the comparisons between

the two networks because the two networks actually quite different in how they kind of operate they're both blockchains but they do very different things and they appeal to very different bases of people so uh you know i mean i'll be doing a um another uh daily grade data pump um next month that'll cover the months of december and january you can go watch the first one on the channel if you haven't already and i basically go through all the different on-chain metrics that you can look at to compare like growth and kind of like um see how the ethereum network's going see how d5 is going from an on-chain perspective and i actually have come to believe over the last few months that on-chain analysis is so much better than technical analysis even from like a trading

perspective or from a long-term investor perspective because if you know where to look and you know you know what on-chain kind of metrics to look at and and how to spot certain things you can make some pretty informed investment decisions um that that can play out really well i actually remember there was a there was a fund beginning of 2020 that that since blew up but the the reason they blew up was because of black thursday obviously the the coronavirus related dump that we had um apparently they were they were really levered up and um you know they had a massive leverage position they got washed out because of that dump but their investment thesis and it was actually working was that it was on chain analysis only they looked at all the on-chain

indicators and they were a bitcoin based fund um but they looked at all those on-chain indicators and they saw that now was the time for the market to recover right and it was if we didn't have the coronavirus dump in march right or the or the black kind of thursday dump in my in march uh we would have just kept going up because if you look at january and february in february we were recovering quite quickly i think eth got to 300 something before the before that dump happened if my memory serves me correctly or almost 300 um from from like 120 or something like that so we were moving up it was the early stages of a bull market so this fund was right but unfortunately they didn't account for this black swan which obviously washed them out

um and and so that fine went unt went under no one really hears from them anymore but if black thursday hadn't happened they would have probably had the best returns out of any fund simply because they were so confident in their on-chain analysis that they opened up this massive leverage position right where that would have paid off handsomely for them um i think over the over the long run but you know unfortunately no one foresee for foresaw that coming right that was such a brutal dump if you think about it we went from 300 um 8th to like 80 or 90 i think it was in in like a very very short period of time no i knew it was was happening it felt like the world was ending and now look at us right 11 months later i spoke about this yesterday

it's at 1200 um you know even after dumping over the past couple days so yeah that's why i'm very very um you know someone who pays a lot of attention to on-chain analysis because i think it is extremely important it works right you might think oh you know can't people fake this can't people like um you know do psyops or whatever i mean they can but they don't because there's just too many players in the ecosystem you know retail investors aren't doing psyops for on-chain analytics right they're not thinking oh if i buy this token on uni swap will it trigger some on-chain analysis well yes it will but no one is thinking that right 99 of people are not thinking that i don't even think that and i know that it's going to trigger on chain analysis right

i just do it because i can get a good trade on unisoft right i can buy a token that i want to on uni swap no one cares enough to do these psyops at this point in time maybe in the future it happens maybe it's already happening in some areas right some whales are doing it but for the most part it's it's something that i don't think is manipulated yet so i love looking at on-chain um metrics for both for investment decisions and also just out of curiosity i just love it i call it chain archaeology right digging into the chain seeing what's happening seeing the growth it just makes me like really bullish even times when the price isn't doing really well you know seeing that growth you can front run uh the the next bull market right uh or front run you know tokens

right there are some tokens that you can actually watch in real time if you look at on chain analysis than being accumulated by new buyers and then you think okay well if the buyers are increasing if the holder base is increasing then naturally these tokens probably going to go up so you can make investment decision decisions based on that i know a lot of people that do this and they make money doing this so yeah i mean i know i've gone off a little bit of a tangent there um but i think on-chain analysis is something you need to add to your toolkit going forward so an interesting tweet from jay uh today so they said basically it's just like one like three words basically but uh it got me thinking so it reads ethereum not blockchain and i i'd never seen it put so succinctly

before right so so kind of like simply because when you think of blockchains right i mean you you think of the technology you don't really think of the platform the platform themselves like i think the term blockchain will actually end up getting kind of washed out kind of like um you know the internet wasn't always uh referred to as the internet right it was referred to as uh the information super highway at some point which was just bizarre and you know weird and cringy a little bit but it was uh and there were other names for the internet there were like proprietary names like aol and things like that for like different networks but the internet that we know today is just you know called the internet and then some people you know

i guess the younger generations call it wi-fi for example like i was hanging around some young people recently uh and i'm talking like uh teenagers and younger than that and they don't really say the word internet they say wi-fi it's like do you have wi-fi and it's like okay well i mean i get why they're saying this um but you know before kind of wi-fi and social media and smartphones were prevalent right and all these ipads and things like that people would say just the internet and i still say the internet right i'm i'm probably a boomer at 28 right you know if if i'm comparing myself to the younger generations i'm not with it anymore so to speak but you know i think the same thing is going to happen to the word blockchain i think in 10 years you know blockchain is just going to be

used by the professionals in the industry it's not going to be used by everyday people they're going to literally call it what the winning platform is and you know i believe obviously like truly believe that ethereum is that winning platform it is the platform that the world is going to come to know its name right just like they know bitcoin they're going to know ethereum and they're going to know ethereum as this platform that hosts um all their financial apps right all these other web3 apps and things like that they're using it's like you know um but then eventually i i even think the term ethereum will just be used by professionals as well they'll probably be a new term that people come up with to describe this kind of new network that we've that we've built but ethereum not blockchain resonates with me

because pretty much all the other blockchains aren't really doing much right now besides bitcoin right and and bitcoin is never like to to talk about blockchain right there was a way they've got battle scars from when people were pushing the narrative um blockchain not bitcoin right um so yeah i mean that's really funny to think back on and and kind of um i kind of see the kind of similarities there but that that got my brain sp this this tweet got me got my brains spinning today sorry mumbled my words there uh it got my brain spinning today because of of this implication of you know where are we going to be in 10 years right where where's blockchain going to be the word blockchain as i said i don't think it's going to be part of the common lexicon you know that people use

um what about the word ethereum is that going to be something that gets abstracted away too you know it could be uh i maybe i don't think so simply because i mean i think there's a low chance of that happening because of the fact that uh there's an asset tied to it right where uh if you know ethereum ether very tightly coupled when you're like you know promoting eth or investing in eth right you think of ethereum when you're when you're talking about d5 you think of ethereum right you know i mean we already have like actually thinking about it now we already have a term uh that people use without mentioning ethereum that's defy right um but i i do think the d5 term as good as it is and as popular as it is may get abstracted away eventually as well

maybe we'll just call it finance one day i mean that that is the end goal right to just call it finance um maybe we just come full circle and we just call this finance no one says ethereum or d5 or blockchain we're just like finance and no one says web3 they just say whatever right i don't know what they're going to say but they just you know they just maybe they just say like twitter but the decentralized version of twitter for example so yeah um that's why this tweet got my brains being and i just wanted to kind of share those those thoughts with you guys so interesting pro uh tweet out from ryan today so he's actually shared a screenshot from the off chain labs discord so what off chain labs is is a layer two scaling solution uh they're building roll-ups as well

they've been around for quite a while they're pretty close to mainnet i think um and they have they're building optimistic roll-ups so something similar to optimism but basically this discord post what it says is that they're um they're chained they're up there they're kind of optimistic chain is going to be what they call a community chain and it will just use eight for fees and there will be no new token i thought that was really cool because we don't actually know how a lot of these layer twos are gonna monetize what tokens they're gonna take for fees things like that i suspect that optimism will have a token right um that'll run the validators that'll be paid for fees it'll act as like economic incentives for things like

mev which is minor extractable value which is quite technical you can google it if you want a breakdown of what that is but uh i think that's going to happen i'm not sure you know if starkware is going to do a token over i mean loopring already has a token for their protocol right not necessarily for their layer 2 solution but you know i'm sure that'll become integrated at one point but yeah i thought it was really interesting that that off chain labs is just going to use e for fees with no new token i think that makes a lot of sense right that's that's a quick way to bootstrap a community too and get broad support from the ethereum community but at the same time i don't think that um people you know creating their own tokens i don't think optimism creating their own token for their network

should be frowned upon or anything like i'm very bullish on tokens in general i think they're fine when done right uh and i assume that you know there'll be some sort of like fees being paid to the validators that hold the tokens right in some kind of maybe proof-of-stake system maybe there's a block reward or something like that i'm sure you know they're working on it i i wouldn't be surprised at all for optimism to do a token and not just them pretty much a lot of the layer twos to do a token um they don't need to as shown by off chain labs here they can just use eth but it depends on the construction it depends on what you're trying to incentivize it depends on the behavior you're trying to optimize for there's a lot that goes into it so i'm curious to see which ones do and

don't tokenize this year because pretty much all the layer twos are gonna be out this year um you know in in one form or another so you know i'm curious to see how that plays out there and as i said i wouldn't blame any teams for issuing a token here as long as it makes sense which i think it does in some cases so dydx put out their 2020 in review post today i'll link it in the description for you to read the whole thing but basically they had a pretty big 2020 they increased their trade volume by a 40 times uh in terms of like uh in terms of money going through the system they had thousands of new traders they launched their perpetual contracts you can see the charts here of them kind of the community trailing volume going

up to you know i guess the start of 2020 it was quite quite slow but then it rapidly kind of accelerated and they've accelerated even more recently at 2.5 billion dollars here and they've got a bunch of other metrics and charts here that i won't go through right now but it's really cool to see you know how fast they've grown they've grown with the rest of d5 as well which is which is great to see and they also talk about how they're going to be scaling with starkware so going to layer two with um you know zk roll ups here which is going to be big for them i think their protocol is already incredibly popular um you know as seen by the growth there at least in the context of d5 can you imagine what it unlocks on layer 2 when we have scalability because i

think scalability is holding them back um i mean i know it is it's not even an opinion i think scalability is holding dydx back from being able to achieve their kind of full vision here of a fully decentralized um kind of like uh exchange that focuses on like perpetual products uh and once they have that i think they're gonna unlock so much more liquidity i could see them doing hundreds of billions of dollars with the trading volume uh uh maybe this year into next year you know same with all the other exchanges like unisop and stuff like that you just when you have that scalability there you know there's no there's no limits anymore everyone can trade on it right the fees are really low it's really quick uh the arbitrage between layer one layer two is gonna be quite wild for a while i

think until that becomes more efficient so we're gonna see a lot of that happen in 2021 and into 2022 so i'm very excited for that so quick update from yeon finance today so they updated their version two of their y vaults with a new fee truck fee structure there's no more withdrawal fees so they were criticized for this because the withdrawal fee was 0.5 percent so if you put your money in and didn't stay in for a little while didn't even make the yield back you would get um you know kind of like uh taxed with this fee more than you made so now they've done a 20 fee on revenue and a two percent management fee so it's basically a fee on the performance or the i guess like the the yield generated by the

by the protocol so if you make you know ten just as a simple example if you make ten dollars of yield they'll take uh 20 of that which is two dollars and then a two percent management fee which would be 20 cents so that's a normal 2 120 structure right that you see in a lot of traditional finance i think this is fine um i don't mind paying a fee if i can put my kind of yield on autopilot and this fee is of course going to the treasury um where it can be used by wi-fi holders and and the kind of a core team and things like that but you know obviously protocols need to monetize i do wonder how defensible this is though because when you think about it these things are fully open source right

and because they're fully open source these strategies can be copied so if someone just forks this strategy and drops the fee down um then you know people are just going to go into that other strategy so i think that there's a lot of different modes you can you can have within d5 outside of that because of everything being open source integrations is a big one and the your own ecosystem is obviously quite vast right now with all their partnerships and things like that so you know that might be something that's defensible for them the yearn brand is definitely very defensible there the fact that maybe the strategies have to be manually kind of managed to an extent right and then because of that they basically uh can't really be copied or if they're copied you know the people that copied

the code would have to manage it the same way yearn does and all this kind of you know nuance to it that you don't just get when you say oh the the the strategy and the vault could just be copied right i mean it can but yeah as i said there's a lot of different things there to consider and to consider different modes and where where yon shines basically so uh red phone crypto put out this thread today about uh btc coming to d5 i mean it already came to d5 but like apparently he's saying it's gonna go full beast mode uh within d5 in 2021 uh thanks to bridges like aren uh boring dao and thor chain and also projects like badger dao for those who don't know badger dao is a a project that's focused on bringing btc

to d5 and they actually have like hundreds of millions locked up in their protocol predominantly bitcoin liquidity and this is because as as as they're they're kind of advertising they're tapping into that btc community uh which you know badger is like honey badger don't care rather take a meme from the bitcoin community so they're obviously appealing to to this kind of um i guess uh a space here right there the bitcoin of space that may not be interested in like holding eve and doing things with ether because of one reason or another but they're interested in bitcoin so red front crypto basically uh goes through this and goes through you know how btc is going to come to ethereum and d5 it's only a few short tweets here through these bridges and kind of maps it to ethereum i kind of agree with

this because i was actually surprised and blown away by how much btc came over to ethereum already and it came over predominantly through draft bitcoin the centralized version i can imagine that there's a lot of bitcoiners that don't like that right they don't want to use the centralized version um but but they will use a credibly decentralized one so we'll have to see how that plays out but i'm expecting to see plenty more btc come over to ethereum in in the near future so interesting blog posts from coin list here today they go through basically how tokens have evolved over time or coins have evolved over time i'll link it in the description for you to go read it just wanted to give some quick thoughts here i don't want to dive too deep in

but basically reading through this it was kind of amazing to see how different tokens kind of have have been over the years right we had like the ico era from i'd say it was from 2016 to like early 2018 or something like that predominantly in 2017 of course and that model was was pretty poor right it resulted in a lot of capital going to a lot of the wrong projects then we had the ieos kind of evolve from icos in 2018 right which was quite poor as well um and then i think in 2017 and 2018 we also had air drops uh but different the air drops were different to what they are today the air drops were given to like everyone you didn't have there wasn't a specific criteria for the

air drop it would just be air dropped to every every kind of active ethereum address the most famous one being the amisa go airdrop and also liquidity for these airdrops was hard because now with uni swap and decentralized exchanges anyone can provide liquidity right but back then there wasn't any of those services so you had to just pray that exchange listed this token when you start when you created a new token so that's why i think air drops are more successful today and then they go into like basically how there's liquidity mining now right in in 2020 uh or yield farming whatever you want to call it there's all these different novel mechanisms of issuing a token like the balance of pool sales and there's uh the mesa auctions uh sales as well there's like icos

kind of coming back sort of in some limited way but not really and then of course there's the as i said the proper air drops as well so i just thought it was interesting to see the evolution go give the piece a read if you want to want to dive deeper there so this is an ethereum related but i thought it was very important so over the last couple days there was reports of a double spend on the bitcoin network now if that actually happened well first of all it didn't happen right there was no double spend on the bitcoin network um but if it actually happened it would be extremely bad probably one of the worst things to happen to bitcoin in its history and the reason is is because a double spend basically means that someone was able to spend the the same bitcoin twice on the network

essentially inflating the supply now that as i said would be the worst thing to happen in bitcoin's history so um you want to make very very sure that that was actually the case before you publicize this and the reason why it went so far was because bitmex actually said this their research desk and their research this is actually quite good normally so people trusted it right it came from a credible source but they should never have tweeted that because it was literally a normal behavior for the bitcoin network and i'll link this thread in the youtube description but the tldr is basically that you know the bitcoin network has a uh works up with proof of work mining right and um if you just wait for one block of of a um of a transaction to be confirmed just with one block

that block could later be orphaned in the next block right and become an orphan in bitcoin it's called an uncle block in in ethereum and then um that that could be basically uh that block could be kind of as i said orphaned which means it's not part of the main chain and then it would and then that original transaction you thought was a double spend isn't because that because that block is not part of the main chain right i know i'm bastardizing it a bit here because it is a little bit technical if you don't have context here uh but go read this thread for the full kind of thing there but i did want to did want to kind of bring it up just because it actually led to a lot of fun and i don't know if it left it led to the sell-off i think that's a bit of a

stretch um but it did lead to a lot of fun and it plays into ethereum as well because ethereum runs on proof of work right now too and this you know double spent could technically happen in ethereum too but as i said for bitcoin it would be the worst thing that could happen ethereum pretty much the worst thing that could happen as well so you really whenever you see this news you want to make 100 sure that it is right and cr and even if it's coming from a credible source you want to obviously check different sources because this kind of stuff is just so bad if it was to actually happen that it would be i don't know if it would be the death of bitcoin or like crypto in general um but it would be it would be so bad that it would require people to

re-evaluate things right it would mean that someone was able to get majority control of the bitcoin network essentially um or there was some bug in in bitcoin that and the bitcoin protocol that allowed this a bug allowing this would be better someone could get in control of the bitcoin network would be a disaster scenario i think a nightmare scenario so this is why when i saw this i was like no surely not because i first saw the bitmex tweet i was like no no this isn't right there's no way there's a double spend on bitcoin because this would be catastrophic and then i went and sought out these other sources and many in the bitcoin community put out tweets uh um and put out and andreas antonopoulos put out a video as well so you can go watch that on his youtube channel but basically um i had to check it

because i was in disbelief about i was like there's no way this is true and sure enough it wasn't but if you're if you're new to the ecosystem and you don't actually know how bad a double spend is um or you know or can be if it was actually to occur then it's easy to kind of like fall for this right and not fall for it in the way that you get tricked or whatever but believe it especially if it's coming from a credible source like bitmex so or bitmex is research desk so i'm actually very disappointed in them for doing this because it probably did play some part in the market action but on top of that it required like so much people to to to kind of come together to debunk this because kind of bad news or drama or [ __ ] spreads much faster than

than kind of like the truth right um so it's it's very hard to kind of like correct this misinformation and it required an ecosystem-wide effort to do it so that's why i'm bringing it up as well just for anyone that didn't see these explanations here so yeah nothing to worry about with uh with bitcoin because that would be bad for ethereum as well you know if if bitcoin had a double spend and the market was like holy [ __ ] i need to sell my btc and get out of this stuff um east dumping along with it like i'll be honest if there's no way that eth would survive that um you know in the short term long term you know we'll see what happens but short term the whole market would sell off and everything would crash i i think maybe that's hyperbole but

honestly i mean i would personally be considering kind of like my position at that point it'd be like okay this is really bad what's happening um but as i said there's two different ways if it's a bug i'd be like okay if it's just a bug they can fix it um you know even though they don't want to fix it because they don't like hard forks the bitcoin community they would fix that because it's catastrophic uh but it was actually a 51 attack where the majority of the network was overtaken by one party that would be yeah catastrophic so good to keep in mind but i'll digress for now i don't want to you know i think i've got overtime here over 30 minutes already all right i'll stop there so that's it for today everyone so if you haven't subscribed to the youtube channel do so give the video a thumbs up

uh subscribe to the delegate newsletter join the discord and since it's a friday i'll catch you all next week thanks everyone