Uniswap record volumes, ethOS 2.0 released and more - The Daily Gwei Refuel #548 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily way refuel where I cut the latest news in ethereum ecosystem I'm your host here Denise as honor and it's the 13th of March 2023. all right everyone let's get into it so I guess some closure on the usdc drama over the last 72 hours or so I did speak about this on yesterday's episode but it seems that everything is all well and good so Jeremiah Lair here the co-founder and CEO of circle who are the issuer of usdc said in this tweet thread 100 of usdc reserves are also safe and secure and we will complete our transfer for remaining uh Silicon Valley Bank cash to bny Mellon as previously shared liquidity operations for usdc will resume at banking open tomorrow morning so essentially they'll be turning back

on the redemptions so you'll be able to redeem well not you you in particular but like the people who have access to this feature will be able to redeem usdc for actual USD and because of this uh usdc basically went back to its dollar Peg because if you can buy it cheaper and then just redeem it today you can close that Arbitrage there and make a bit of profit so yeah all's well that ends well there now obviously there's a lot of things surrounding this that have got you know it's it's far beyond usdc itself there was three major banks in the US that have been shut down over the weekend uh Silicon Valley Bank uh Silver Gate and Signature Bank as well uh and two of these Banks I believe uh Silicon

Valley Bank had over 200 billion dollars worth of deposit so obviously very big it's either signature or or um or silvergate that has over 100 billion and then I think one of those two also has about uh 10 billion dollars worth of deposit so obviously two big uh one relatively small but still those that's three banks in a weekend that have been uh shut down by us Regulators which is kind of crazy and people were confused as to why I believe signature uh Bank was shut down or silvergate was shut down didn't really make much sense there but I think it was for the same reason as uh Silicon Valley Bank there was uh I guess worry about a bank run so to speak and it's funny because I think a lot of people in and Outsider crypto are finally realizing that you know Bank

runs in the digital age are really scary because think about how fast information can actually move it's no longer and and and all the digital banking as well it's no longer people reading about something in the newspaper and then going to their local bank branch and lining up and withdrawing money and that's what causes a bank run no you can literally withdraw the money online now right and the News spreads extremely quickly I mean how quickly did the new spread uh on on Twitter I mean this is only over the weekend that this happened right and there was potential Bank runs forming on uh two other Banks because of the Silicon Valley Bank stuff so I think when you take that into account and you contextualize it you kind of realize that we're in a new era now where Bank

runs obviously always been scary but it's even scarier now because of the digital age so the um US Government The Regulators they're the treasury they all came out today or yesterday and basically said that they're willing well they're going to basically backstop everything and bail out everything in so many words which means that everyone that was a depositor in these Banks is going to get all of their money back and it's all going to be well and good uh and you know it's it's totally uh it's totally fine now the reason why they did this is obviously because they need to instill confidence in the banking system and they need to make sure that people don't attempt Bank runs on other Banks because the only thing worse than inflation uh in the financial system is a bank run if your inflation is like the thing that

the government really worries about uh and can destroy you know a currency a bank run can destroy a country uh and enough bankrupts I should say can destroy a country because it means that the entire Financial system basically falls apart and if the government can't get a handle on it to I guess stop the bleeding or or kind of bail out where they need to bail it out then no joke the country can fall apart like this is not something that is hypothetical this has happened plenty of times in the past uh and I obviously I think that the US is are very far away from something like that happening they have a lot of tools in their tool belt in order to stem this and one of them really I mean the the first tool that you use is make sure that you instill confidence in the

banking system by uh basically promising that you'll backstop any kind of issues here now people also talked about what this means for things like rate risers um obviously that's been a big theme over the last 12 months and obviously uh what it means for any kind of money printing that's coming look I don't have the best grasp over the macro environment I'm not an expert there but it definitely seems like the markets are pricing in a pause to rate Rises at least right now or a reversal and from what I've read the Rate rates going up so quickly is one of the reasons why these Banks had liquidity issues because they bought these as I mentioned yesterday they bought these kind of treasuries when rates were much lower and then rates went up and they're kind

of underwater and they're not earning the yield they could be earning and and you know these these different things have different dates of maturity so it gets pretty comp complex pretty quickly the the banking system in uh especially the US is quite complex it's actually very fragile um the fractional Reserve banking system is is very fragile and I think it also is a very good advertisement for crypto if we really think about it I mean the dollars in your bank account they're there they're guaranteed by the government to an extent but they're never really yours right and even the the the dollars that you have the Fiat that you have whether it be US dollars or Australian dollars again that's all backed up by the government right it's all backed up by the nation state that it's a part of with and for the US dollar is a bit of a

unique case because it's the global Reserve currency but still if the US dollar wasn't backed up by the US military it would probably be worth a lot less right and definitely would not be the the world's Reserve currency uh so when you really start thinking about money you start thinking you know what do I really own like what what money do I actually own and for me the way I think about it is that I actually own my eighth you know eighth only has value because we've collectively come together as a society or as a global society and said hey you know ethi's worth this much at any given time yes it's volatile yes it's not very stable uh it can go down you know fifty percent in a week it can go up 100 in a week right but that's not the point I think the point of these

things and not just eight but BTC as well I think it's better to see any of the only things that can act in this capacity but uh that's the the kind of money that and story value that people have said you know this is this is what I want this is the value that I'm giving to it as a collective and this is what it's worth today and this is what it could be worth in the future and and so on and so forth right rather than Fiat currencies which are basically forced upon you and it's the government basically saying well this is worth this because we say it is and you have to pay your taxes in this which I think is an underrated Point people don't really think about is the fact that you have to pay your taxes in the native currency and that's obviously

done on purpose because that's where a lot of the value gets derived from uh but also the fact that from birth the government and I guess everyone around you is telling you this is the money that you use in this country right in Australia this is the Australian dollars you use it here and it's worth this and this because the government says it is basically whereas something like eth or BTC being used as money that's just the choice people make that's the government's not telling you to use it the government's not giving it any value itself people have given these things value which I think is incredibly powerful and Incredibly interesting and really I guess speaks to the the whole reason why we're actually building this sort of stuff obviously we integrate with the existing Financial systems through stable coins and stuff like that but at the end of the day for me I feel

very comfy holding my eighth I it's actually I actually feel much more comfy holding my aphid and the other asset even my cash in a bank account even though I know that it's relatively safe because I'm in Australia I still feel comfortable more comfortable holding my eighth now of course I can't pay my taxes in eighth I can't uh pay a lot of my living expenses in eighth and I would rather hold my eighth and stake it and use it as a story of value than a money uh but but still it's there right it's something that I can be like okay this is actually mine I self-custody this no one else has custody of this eighth right it's mine it's worth what the market thinks it's worth at any given time and I can use it as money as I want I can use it as a store of value I can

do whatever I want with it which I think is pretty cool anyway I'm gonna leave that one at that you can read Jeremy's full thread uh if you would like to as well and there's also a couple of threads from Kraken and coinbase uh basically I guess instilling confidence in people as well saying that everything is all well and good on their end their banking Partners seem to be fine uh coinbase actually banks with JP Morgan they think they're one of the only centralized exchanges that actually have access to JP Morgan for crypto banking uh Kraken has a bunch of different banks I think they use but yeah it seems like Kraken and coinbase are are fine even though those other Banks were kind of shut down over the weekend so yeah you can read their little mini threads as well which I'll link in the YouTube

description uh below there but that seems to be the end of the drama right now in terms of I guess the crypto specific drama there's definitely going to be a lot of talk about what this means for the broader economy especially in the US as I said before like does it does this mean that rate right the the hiking cycle is over does this mean that rate risers are going to stop doesn't mean that the interest rates are going to go uh are going to go down so does is that going to be positive for the markets doesn't mean we're going to get a new bull market these are all questions that people are going to be asking over the last over the next few months especially you know what other banks are potentially going to go under is this it like is there just three banks that have

kind of been shut down or is there going to be more uh these are all open questions right we don't have the answers today but people are speculating that's what they do I think uh you should definitely not get too spooked by these sorts of stuff as i said information moves really really quickly in the digital age and a lot of this stuff is probably new to you it's new to me I'm learning as I go but always good to keep your head screwed on and not get caught up in the craziness too much because it may lead to you making rash decisions and you may regret it uh just like people who sold usdc under 90 cents because I had no idea what was going on well if you just took like 10 minutes to just collect yourself and look at the facts you would have known that usdc was

going to be fine as I say yes on yesterday's episode and I was going to go back to a dollar and be all well and good of course there's always a risk that it won't like that I'm not going to say it's 100 certainty that anything is going to happen but looking at the facts with a level head and actually looking at the incentives and looking at the most likely outcome you can make sure uh to kind of keep your your head uh screwed on and make sure you don't make any rice decisions decisions there all right so related to what was happening with usdc over the weekend there was a lot of volatility and a lot of volatility within uh defy and Unchained stuff especially which led to a lot of Mev extraction so you see here Bert Miller from the flashbots team put

a tweet where he said Mev Boost payments were at an all-time high yesterday totaling almost 8 000 eighth which is nearly double the previous all-time high of almost 4000 eth during the FTS FTX Fiasco uh back in November a few statistics on Mev on ethereum yesterday in this thread so yeah this thread I'll link in the YouTube description for you below uh for you to check out below but I talked about this as well yesterday about how when there is a lot of movement on chain uh the analog volatility on chain there's a lot of Mev to be extracted and that causes the payments to go up the closest gas fees to go up I mean we saw gas at above 300 gray consistently for I think it was over an hour it was there which is

pretty crazy considering that uh it's still I guess like generally a bear market right we're not in the craziness of a bull market again but it was simply because of this because essentially what happened was with usdc depegging there is a lot of opportunity to front run back run sandwich attack uh liquidate positions uh and do General Arbitrage and because it wasn't just d-pegged to like 95 cents right it didn't just go from a dollar to 95 cents it was moving around it was floating it went to 91 cents into 93 cents then went to like 88 cents so all of that needs to get up right and because you expect uscc to be at one uh there was so much volatility because no one knew what the actual price was there was all the speculators taking advantage of it and because of

that there was a ton of Mev to be extracted so that's why we saw that uh it was a lot more I guess like uh volatile than it was during the FTX class which is obviously quite big as well uh which was pretty pretty I guess like fascinating to see and there's a thread here as I said from Bert that you can check out I'll link in the YouTube description below but Tony also had a a kind of tweet here we said at the end of the day almost eight thousand eight were distributed to validators to Mev boost almost double the amount we saw during the FTX breakdown just another chart for you to visualize this yourself so you can see here that the gas fees actually were a very small portion uh as compared to the Mev so normally the gas fees make up about 80 percent of all um of of this

chart and Mev revenue is about 20 while just eyeballing here it seems that gas fees were about I guess like 30 percent and Mev was about 70 percent over the the weekend here or or yesterday or Saturday I think it was so pretty crazy amount of Mev extracted there and as Tony said this was all distributed to validators through the Mev Boost network unfortunately I wasn't lucky enough to propose a block during this time it would have been cool to get one of those really high proposal payments like if you're a solo validator and you propose the block with a a validator payment or a proposed a payment of like 30 eat you would have gotten 30 eighth as a reward for that block which is just crazy right the and this is what the Mev

uh boost ecosystem is like during periods of high volatility especially periods of all-time high volatility and all-time high proposal payments you can win the lottery imagine getting a 38th block that's just crazy uh of course a lot of blocks are not uh proposed by solo stickers they're proposed by pools obviously rocketball has the smoothing pool which is opt-in and then Lido distributes out the Mev to all of the people that are staking with them through through St and then uh coinbase and binance and crack and they all do the same thing right so there it is a relatively low chance as a solo validator to get a block with a high proposal payment because not only do you need to get a block which is actually you know to get a block uh to propose a block uh each day so to propose one

block every 24 you have to have a lot of validators already I don't know the exact number but you definitely have to have uh you know 20 30 validators or something like that which is obviously a lot and then you also need to be lucky enough to propose a block with one of those High proposal payments and not just a block that was a low proposal payment for whatever reason so it's definitely as I said a lottery but if you win it you stand to win a lot and people love playing the lottery of course so so yeah anyway you can check out this tweet as well I'll link it in the YouTube description for you to do so all right so a bit of a weird announcement out of Aztec Network today so they've announced that they're sun setting as Tech connect so they've said

here one week from today deposits into the Aztec connect contract will be disabled users will be able to withdraw funds with no fees for one year all code is open source and you can read the full announcement post here now for a refresher Aztec connect was the layer 2 kind of network here I guess like feature on the Aztec network uh the Aztec layer 2 Network that allowed you to do private transactions at layer 2 while tapping into layer 1 liquidity it seems like they are sunsetting this or at least they're not going to be running the sequencer anymore for the network and I think we can all imagine why there's been an attack on privacy over the last few months since the tornado cash sanctions came out it seems that either their lawyers told them to stop doing this or Regulators uh I guess

leaned on them about this they don't confirm that I say anything about that in the post they kind of gloss over the actual reason why they've shut it down here but I think there is a silver finding what's really cool is that they've open sourced everything so if people want to run their own Aztec connect Network they actually can the sequences open source the codes open source and they say that they that the Aztec team is still going to be building out their Noir uh language for zero knowledge and the Next Generation encrypted blockchain so the language is a bit weird here people take this to mean that they're going to be developing a layer one uh as far as I know that's not the case they're going to still be developing a layer 2 but they're saying here this is their next Generation encrypted blockchain whatever that is

whatever that looks like remains to be seen but yeah a bit of a definitely a big uh sad announcement out of Aztec today as I said there's not they don't really give a reason as to why they're doing this but I think we can all imagine but Silver Lining things are open source they're still going to be working on what they've been working on in the past um and yeah it doesn't seem like they're going to be slowing down there but of course I believe uh most of Aztec is based in the US so it would make sense for them to to ER on the side of course in here are but unfortunately uh it's just really frustrating that privacy is I guess attacked like this at the end of the day privacy is actually a constitutionally protected right in the US and the fact that it just keeps

getting attacked not just in the context of crypto but the context of just everything digital generally is really really sad but it is what it is we can't expect the people that are U.S citizens or us persons to take these big risks themselves because they definitely stand to uh uh get punished pretty severely for this depending on what law they break or depending on how strict the government wants to be with these sorts of things but that's just me speculating anyway as I said Aztec themselves didn't confirm anything about this but I'm just reading between the lines here especially when it comes to privacy preserving things and that's exactly uh what what I think has happened here right what I'm speculating on has happened here but anyway you can read their full announcement for yourself I'll link it

in the YouTube description below for you to do so all right I'll do some news that only came out about uh an hour or two ago so Euler Finance has unfortunately been exploited and they have lost I think up to 200 million dollars of user deposits which is one of the biggest exploits in D5 history of course now as I said this is breaking news it is definitely not something that I have a full view over or anyone has a full view over just yet uh we can probably confirm that it is a black cat not a white hat hacker because they're using tornado cash to wash the funds uh and they did export another protocol a few weeks ago using the same address uh Ola said here they are currently working with Security Professionals and law enforcement who

knows what the result of that is going to be but the actual exploit itself wasn't a smart contract Explorer a smart contract hack it was a mechanism exploit basically what it means is that picture details it here they say the hack is made possible due to the flawed logic uh in the donation and liquidation mechanism specifically the donate to your reserves function needs to ensure the donator is still over collateral realized and liquidation needs to ensure the correct conversion rate from borrow to Collateral asset in plain English it was an exploit on the liquidation mechanism that Euler uses which obviously got past the Auditors because they've been audited I think by six different security firms and I've talked about this before on the refill about how I've said that it depends on the auditing firm and it depends on the

scope of the audit and mechanism exploit isn't necessarily going to be caught in a smart contract order because a smart contract order is looking at the actual code and if the code is doing it what it should be doing if there are any glaring issues in there of of being able to be exploited and being and funds being able to be stolen from the contract themselves a lot of the time they won't actually look at mechanism exploits like what's happened with oil icr so very unfortunate as you guys know I'm an investor in Euler I'm a very big fan of the of what they've built and what they what they have been building I feel for the team because I I know them and I I know the founder and he just had a kid so this is obviously not something that he wants to do dealing with right now uh

hopefully not many of you had funds in Euler I didn't have any funds in all at the time of the exploit I have actually used them before but I didn't have any funds in there now and if you did unfortunately it seems like the funds are all gone I don't think there's much funds left in the the contracts themselves I don't know if they're going to be returned typically with with I guess like exploits of this magnitude it's very hard to actually hide the funds like I don't think it's going to be easy to wash 20 million dollars worth of eth or or I think it's 150 million dollars worth of eighth through Toyota cash uh one because a lot of tornado Cash's liquidities actually um gone since the sanctions um and and two there are still breadcrumbs that can be left uh trying to wash that amount of money and three

if at any point during their I guess um exploit that they revealed who they were uh whether that's through an IP leak whether that's through funding their wallet via an address that was kyc or something like that uh typically you could see law enforcement get involved and the funds be returned now I'm not making any promises here of course I don't know as I said this is still fresh news we don't know what's happening here um but yeah very unfortunate it's not something that we're not used to within crypto in D5 uh I guess at the end of the day but I think that it happening to Euler is very sad because as I said like it is a protocol that a lot of people love a lot of people get a lot of value out of they're not trying to do any cowboy stuff or any DJing yield firing or

anything like that they've just been trying to build a really cool money market which I still think is very cool by the way but unfortunately uh they suffered an exploit here and uh maybe I'll have some some more news for you guys tomorrow on there so it doesn't seem like there's any other updates I'm just going on their Twitter right now there's no other updates right now about this there's just the tweet from Peck Shield describing the exploit itself and the tweet from oil Oiler Labs announcing it here so yeah hopefully you guys aren't affected by this I know there was one person in the Discord channel two people actually in the Discord channel that said they were affected by this so that's unfortunate there but hopefully there is some kind of fun recovery that can happen here we'll have to wait and see but I'll keep you guys updated on

that all right so in more some more positive defy news a uni swap had 12 billion dollars in Daily volume yesterday which I believe is an all-time record here uh as you can see uh on the chart what that looks like obviously this was due to the usdc d-pag as I said when things depay there's a lot of Arbitrage opportunities a lot of front running back running all that kind of stuff opportunities and that will definitely play out in uni swap since uni swap has uh the most Integrations in D5 and the you know biggest liquidity pools in D5 as well so what would happen is that a lot of people were trading in and out of usdc arbitraging between different liquidity pools a little bit more speculating a lot of people were doing a lot of Mev

extraction on chain which led to a lot of this volume and you can see that it's just a massive outlier and the funny thing is is that you can actually see on this chart the various events that lead to a lot of volatility within crypto so for example you can see that last time it was this volatile was the FTX stuff that happened right you can buy Ball here it was in November and then before that you can see that it was uh it was during the collapse uh of um I guess the market in June July uh 2022 and then you can keep going back and back and back and see all the all the kind of stuff that's played out uh and how like you know in May there was uh there was the um the terror collapse obviously led to a lot of volatility so

it's always fun to see the outliers here uh but yeah this is the biggest one by far and this was a huge amount of daily volume 12 billion dollars which I believe was just on layer 1 ethereum it wasn't including everything uh there is a dune analytics query here that Austin Adams put together which is what Hayden Adams is uh is uh I guess um uh retweeting here I wonder if Austin is uh Hayden's brother because they share the same last name here I don't know anyway that's an aside but yeah you can go check this out for yourself I'll link it in the YouTube description below but I guess some positive news out of the defy ecosystem that we saw a lot of um I guess volume on unisopia and new shops seemed to handle it uh just fine all right last up here we have an update

out of the eighth OS ecosystem so I've talked about ethos before it's basically this piece of software that you can load onto an Android device I believe they they support pixel 3 uh three a and five right now so you can load this onto your device and it's basically an ethereum phone so ethos 1.0 was quite limited it wasn't much you could do with it but with the release of ethos 2.0 there's a lot more going on now and I actually had a walkthrough of this um a bit earlier uh with one of the people one of the the founders of this project and they walked me through it and it's actually really cool so the the cool things about this uh one it actually runs a light node a light client in the phone itself so basically what it does is it it runs a

light node as uh I guess you could call it like an optimistic light node where it will still talk to third-party rpcs but will validate the or I guess like the validity validity of the of the the data that's being sent back to you by using the consensus layer on the beacon chain to do do that so that's very cool obviously we don't have full-blown proper light clients in ethereum yet that'll hopefully come with the Verge uh but right now we have like this optimistic light no client as part of if OS that you can use it has its own inbuilt uh wallet that actually directly integrates with the uh browser so I got a demo of this basically you can go to UNI swap on the browser you can you can go and connect your wallet there and instead of it taking you out to a

separate Wallet app it all happens on the same screen so there's no kind of changing screens or anything like that it all happens directly on the screen and it all hooks into the wallet that is built into the etheros itself which I thought was very very cool uh there's a new app store called the Aurora App Store which basically allows you to uh access the Play Store and people will be able to develop their own apps on there for ethos specifically uh they have an nft Mint app so that they've detailed here that allows you to Mint nfts uh within a 30 seconds or something like that uh using that app on mainnet they also support Every evm Chain uh right now they're only supporting the the top l2s natively but they can basically support

every AVM chain and it's very cool you can actually so in a unisop demo I was talking about if you wanted to change from uni stop on mainnet to optimism for example you could just uh pull down at the top on on the notification bar pull down select uh uh you know push a button and be able to change chains uh basically from ethereum Mania to optimism or arbitrim very very easily so a lot of very cool features going on here I can't wait to load this onto my my pixel phone so I originally did load ethos 1.0 which as I said was very limited there wasn't much going on with it but with ethos 2.0 you can actually use this as a daily driver now as I said it's got a it's got the Play Store on there now uh where you can actually

download a normal Android apps and experience uh the etheros um or all the ethos apps and all the things that are built in there while still using it as a daily driver so yeah if this is something that interests you you can go check this out at ethosmobile.org uh just to be clear here this is a new OS for your phone this is not something that you just kind of put it's not an app that you install on your existing phone they only support three phones right now as I said like pixel 3 3A and five I believe um and you you know if you've got one of those phones you basically wipe your existing OS and you replace it with ethos 2.0 but you can use it as your daily driver and it actually works pretty well from what I saw in the demo

that was shown to me that but anyway you can go check this out for yourself I'll link it in the YouTube description below uh but on that note that's going to be it for today's episode 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 Ulta mer thanks everyone