Uniswap v4 announced, MEV on L2's and more - The Daily Gwei Refuel #604 - Ethereum Updates

Transcript

hello everyone welcome to another episode of dailyway refuel where we wake up the latest news in ethereum ecosystem I'm your host Dennis Asana it has the 14th of June 2023. all right everyone let's get into it so you may have missed some of these uh things that happened over the last few days in the regulatory uh kind of side of things in crypto so William uh mugaya here has put together a tweet going through and he starts off the Tweet by saying six recent small wins from the crypto industry today so uh these wins consist of the SEC uh basically replying to coinbase and saying that they want 120 days to respond to coinbase's rule making deadline which shows that the SEC stalling and felt cornered and Paul grebel actually has a great Thread about

this uh coinbase is Chief legal officer which you can read I'll link it in the YouTube description below but yeah it seems like they are stalling and it they feel cornered here because they're trying to basically ask for a four month window here to reply to coinbase and really the thread kind of um the way the the thread describes this and describes exactly what the SEC actually replied with yeah it just seems like the SEC is saying well screw you coinbase we don't care about you we don't treat you as like a serious uh company and we don't want to play you know play ball with you we're just going to do stalling tactics so that's seems to be what they're doing which I guess is a positive thing because it really does mean that the SEC I think about has bitten off more than it can shoot

probably didn't expect the fight yeah and also I don't think that they have as strong as a case as uh you know as they think they do of course and then William says that the judge ruled the SEC can't shut down a binance us and asked both parties to compromise on a solution so there was some news floating around about how the SEC I believe wanted uh binance us assets Frozen but then the judge overruled that and said the SEC can't uh do that and can't shut down by 92s and ask the um and ask the SEC and binance uh binance's us arm to come to a uh a compromise here uh I'm as I mentioned yesterday the Hinman emails revealed that the sac didn't follow through on the path that he opened for allowing some tokens to be classified as

non-securities showed he had tested approval but no follow-up uh there is another update here from I believe this is the financial services uh the Republican Financial Services committee had a hearing on Clarity in digital assets and it went well and uh and and the uh Tom Mahia who I've spoken about before revealed that Gary Gensler told Congress last year he needed legislation to regulate the digital asset industry yet this year he's saying he doesn't need it uh fifth thing 2018 Gary against the video surfaced with him saying BTC eth Litecoin and Bitcoin cash are not Securities I mentioned that yesterday and last week Caitlin Long's custodia Banks was allowed to pursue fed supervision membership via other channels despite the Federal Reserves objections so yeah a bunch of positive

regulatory news over the last week in the face of all the negative news obviously with the SEC going after binance and coinbase but I really do think that we're in a great position here because as I said the Republicans seem to have made this a core issue for them and they seem to be hitting the SEC very hard here now as I mentioned yesterday you know there's a lot of political games being played here and they're doing it for a lot of just political reasons but at the same time does it really matter if the me you know if the end is the end result is what we're looking at because the end result is what what we want to see is basically more uh guidance from the SEC clear guidance from the SEC more legislation uh for crypto and making it easier for companies or making it possible for

companies to comply with that so I think that the ends justify the means in this case uh and not to overuse that expression there but I do think that the ends justify the means in this case and I'm really glad that there are some people that are fighting for crypto right and and fighting on on our behalf there and obviously it's not just the Republicans it's also the companies like coinbase and even binance I mean as I've said uh plenty of times in the refuel I think binance is definitely guilty of some of the Shady stuff that they're accused of doing especially in the earlier days it was really an Open Secret that they were doing that that kind of stuff but at the same time I don't think the SEC should win a case against them based on the security stuff like trading uh obviously they alleged

both coinbase and binance are running unregistered uh brokers in the US and trading unregistered Securities but at the same time uh you know combat has been saying for a long time that the SEC has offered or afforded no path forward for really any exchange based in the US to register or to come into compliance at all so I don't think the SEC should win on that at all and I don't think they're going to win on that honestly I don't I really think that they're going to to lose on those points but at the same time uh you know there's obviously some things uh that that are shady there and I believe that that should definitely be be chased down if so because we obviously want things to be fair in the centralized kind of exchange space we don't want another FTX obviously and unfortunately FDX is just

one in a long line of centralized exchanges that has either gone under or done a lot of dodgy stuff over the years so we want clearer rules there we want clear guidance then I think we're going to actually get it it's going to take a while it's probably going to take a couple of years at this at this rate but I think that the main concern from people is around the SEC being able to shut down these exchanges or being able to get these these assets listed as security so that they're they're listed from the exchanges and stuff like that as I've said I don't think that binance or coinbase are going to de-list these assets binance us maybe we'll do it but uh we'll have to you know we'll have to say there uh but but coinbase I don't expect to do this and I don't expect

binance level to do it either there has been some smaller I guess like just exchanges but they're not crypto exchanges they're they started off in in Trad fire and then added crypto assets like Robin Hood and a couple others that have delisted the assets that the sac named in the lawsuits but they don't really count I think Robin Hood was probably the biggest of them and the volume that Robin Hood did last month for all of crypto so all the assets that they trade on there including Ethan BTC was like 2 billion or something like that binance does that like every day right so and that's just one exchange there so I don't think Robin Hood really matters that much and people using Robinhood to buy crypto are probably like the ultra retail Normie investors who and and tourists who are really only around in the peaks of bull market so

again it doesn't really matter I think in in that respect and honestly I could see them adding it back if there was a sufficient demand there if we enter another bull market but I don't expect coinbase or Finance assets there but anyway just a great little summary thread from William uh or tweet I should say from William you can read it fully if you want I'll link it in the YouTube description below and also a thread from Paul Grove about that SEC reply two coin bases back and forth they've been having you can read that little thread there all right so moving on to some ethereum related news uh there's a new poster on the finality incidents that happened on the beacon chain a few weeks ago now so this is on the E3 search for Forum it is titled cascading Network effects on

ethereum's finality so this is actually quite a deep dive into exactly what happened here with a lot of really really cool insights so I wanted to post it on your guys radar which and you can obviously check this out I'll be linked in the YouTube description below but it has a bunch of pretty charts a bunch of great explanations about exactly what happened what the impact was on network on end users and some simulations as well so I highly recommend giving this a read if you're interested in any of that sorts of stuff which you should be honestly it's very interesting reading and you should go definitely check that out but the funny thing is I was reading this yesterday and I saw that the finality events actually happened over a month ago now man time flies it really does feel like the finality stuff

happened last week but no it's been a month it happened on May 11th and May 12th uh which it's just crazy that time has gone gone by that quickly and it's been two months since uh chappella went live without since staking withdrawals went live so so yeah it it definitely feels longer than um what it uh sorry it feels shorter than what it has been here all but yeah no it's been it's been quite a while so I just felt that was a funny thing to point out but yeah you should definitely give this post a read um I'll link in the YouTube description below for you to do so I'd call out some key insights normally on posts like this but there's a lot in here and it's quite dense so I I don't think it'd be wise of me to try and summarize anything here

because you guys already know what happened with the finality incidents it was due to some bugs in the clients that were fixed uh because of the fact that more validators were coming online and there was a lot more work being done by validators because withdrawals were enabled but those have since been fixed and we haven't seen any finality issues since then but you should definitely check out this post just for full details on that all right speaking of uh ethereum uh just generally in core development generally I saw this tweet from light clients who is basically uh showcasing here in this in this screenshot uh a lot of the calls going on in the ethereum core development ecosystem right now so there is a call for the whole ski or whole Sky test net launch uh which is a

new test net that's being spun up uh that I believe is going to replace Gurley uh there is a call for vocal implementation which is part of the Verge upgrade there is the normal consensus layer call there is the erp4844 implementers call there's there is the eof implementers call and there is the execution layer meeting uh the normal execution layer meetings as well so a lot of different calls going on right now in the ethereum core development space but I think this speaks to what I've been saying really since the merge went live that ethereum core development in and research is in its best place it's ever been and they just keep executing and it's really great to see that there's so many different calls being spun up and there's actually enough people on these calls to justify there being a call and

things are moving along really nicely because after we deliver danco initia the main focus I think of next year will will turn to things like on potentially Mev burn and PBS and vertical trees and stuff like that but obviously that stuff still needs to be researched specked out and then built out so it's it we don't know exactly uh you know when that's going to happen next year and honestly I couldn't even tell you exactly what's going to go in or go into the uh the network upgrade after dencoon I think it's still a little bit early to to tell I don't know if vertical trees are going to be in that upgrade it just depends if we get a spec by then or anything like that and they're only on their second Implement influencers call here so it seems like we do have a bit of a spec

but maybe it needs refinement and things like that uh but maybe we get that but we could even get things like Mev burn and PBS honestly Mev Burns a bit up in the air for me though because I think that the the community is going to be split on Mev burn and the reason I say this is because people like the Mev Lottery that current exists if you're an ethereum validator because you stand the chance even though the chance is really really small you stand the chance of getting one of those big block rewards right now I think that when you actually work this out and you do the math you run the you run the numbers on this and you average it out over like a year two years those Big Blocks even if you were to get one like you'd have to get one of

the really big ones I'm not talking about like a one-eat block reward I'm talking about like a 68th block or one of those ridiculous blocks and as I've explained before the chances of you proposing one of those blocks as a as a solo validator and getting all the rewards for yourself are extremely small like it it's so it's so small that I don't I haven't done the proper comparison on this but I think you may have better chances of winning your country's Lottery than you would of proposing a block like that just because the chance is so small of that happening so I think that concern is really overblown there and I think that with Mev burn you basically just redistribute the I guess value from validators to all all of eighth holders and it's not like validators still aren't making a nice

amount of money even with just a normal execution layer rewards uh not counting Mev and the consensus layer Awards I still think the reward would be like three or four percent a current amount of each staked I don't know exactly actually I should I should look this up so I'm not just giving um giving uh spitball numbers here you can actually look this up on the ultrasound money website if you scroll down to uh to where is it yeah so here so yeah just issuance and tips so not including the Mev uh Revenue it would be around a four yeah four to five percent so actually higher than uh than I thought it would here so you'd still be earning a healthy amount even if it went down to three percent this is Easter nominated right you'd still be earning a healthy amount because you have to factor in the the

fact that uh logically uh burning more Eid should it should over time lead to a higher eth price as measured in US Dollars which makes obviously a better store of value I better a a better a hold for people and and more investable asset so it really just kind of shuffles the things yeah so but I do think that just based on people's desire to win that Mev Lottery Mev burn might become a bit controversial do I think that that it'll become so controversial that it doesn't get into the network maybe it depends on the implementation because there's multiple different ways it can go it also depends on uh if we you know if it's argued by the court of helpers and researchers that it's something critical to the network because I think that the whole goal of Mev burn isn't to just burn it the Mev

to pump ether to like make it more deflationary the whole point is to make the network healthier overall because the end state of Mev really is an unstable network that's why we're working on PBS and epbs and other and and that's why Mev boost is a thing so our Mev burn is a thing and other solutions to that uh it's it's really to make the beacon chain or the ethereum network healthier and more secure so we'll cross that bridge when it comes to it probably Mev burn isn't going to go into the upgrade after dencoon maybe it goes into the one after that because it still needs to be a lot of discussion a lot of um things done for that but I don't think PBS is controversial I don't think vertical trees are necessarily controversial and there's a bunch of other stuff that fall off of that as

well that I don't put I don't regularly think that it's going to lead to more controversy but we'll see we'll see what happens on that front all right so Jasper from the rockapole community has shared a little tweet thread here talking about uh what the I guess like stacking ecosystem looks like two months post withdrawal so he says here let's see who the big winners are in market share and spoiler alert it is rocker Paul so you can see here that uh that Shanghai or chappella upgrade occurred on April 12th of this year and the LST market share on the day before it was as follows so stas was around 74 a market share uh CBE equals 15.5 re that 5.8 frax eighth at 1.4 OS eth at one percent and anchor eth at 0.7 and

then exactly two months later uh CBE is down 25 and falling from 15.5 to 11.5 percent and you see the numbers here that is obviously later gained a little bit it's at 76 percent uh Ari also gained or rocketball gained it's at 7.2 percent uh frax Heath as well there were the big winners here uh and then uh yeah I mean most of the loss seems to have been in CBE it went went from uh 15.5 percent down to 11.5 there now the reason why Kraken isn't showing in this is because Kraken doesn't have an LST but Kraken would have shown up as being uh you know having a I guess like a 50 reduction or something like that since they had to unstake a lot of their eat there uh but yeah it just shows that the

lsts obviously continue to grow here it's nice to see rocket pool continuing to grow obviously Lotto going uh is not ideal because later already has such a big market share but I don't think Lido's share of out of lsds is really going to go up from here that that much right it's at 76 percent I I don't think it's going up to like 80 85 90 or anything like that I think that the fact that you know rocket pool is growing frax Heath is growing uh and that's obviously going to be other lsts that uh that are coming online uh something like stakewise V3 and other such things like that it's going to chip away at that lighter microchip but as said before it's going to take a while for that to

play out and I think that uh you know two month recap is is obviously great to see but still probably too short to see uh the effects of any kind of like reshuffling or anything like that but yeah you can check out uh Jasper's thread I'll link it in the YouTube description below all right so I think the biggest announcement over the last 24 hours was uni swap announcing uniswap V4 now uh this isn't V4 live on the network as I speculated yesterday uh there's an early implementation of the code that can be read on the GitHub repository here but it seems like the main focus of unisot V4 is getting the community to build on top of it and to be more involved in the development process which is what I speculated on yesterday as well so the

main feature seems to be this thing called Hooks and and they describe hooks here by saying hooks add entirely new functionality to pools such as dynamically adjusting fees or creating new order types and then as you can see here they've written a few sample hooks to demonstrate their expressiveness and capabilities you can have a Time weighted average Market maker or team Wham you customize on-chan oracles and on-chain limit orders so it seems like these hooks are basically a way for people to customize their uni swap liquidity pools in any way that they want to do that now obviously this isn't a new feature to the different system there are other projects that have this feature but I think it's pretty cool that it's coming to unisop V4 and another major feature was that all the V4 pools will now live in a single

contract reducing the cost of pool creation or gas cost of full creation by 99 when combined with with the new Flash accounting system this greatly reduces the cost of routing across many pools now again this isn't unique to unusual balancer has had this for quite a while now but still it's great to see it come to unisot because unisop obviously is the dominant decentralized exchange on ethereum and l2s and even other networks out there so it's it's great to see that there but yeah overall a pretty cool announcement here pretty cool to see uni swap uh V4 just becoming more expressive than than it has been in the past it seems like they're do they're approaching the development of V4 the same way I think optimism is approaching the development of the op stack where

they want to build as open as open in the um uh sorry as openly as possible but also build kind of like a module a stack where people can customize things to their heart's content which seems to be a theme that is growing more and more now this modularity thing which I obviously I mean I've talked about it on the refill in the context of uh I guess like protocols like layer Twos for a long time now probably uh as early as maybe 2021 when when Paul and I are started talking a lot about it on on Twitter uh but generally this concept of modularity is something that I think is going to be a main theme for the foreseeable future because you not only have things like Unison V4 and the l2s but you also have things like eigen layout which enable more modularity

polygon announced polygon 2.0 which seems to be taking a more modular approach to things so generally I think that that's a theme to pay attention to uh there's definitely going to be a big narrative I think during any kind of bull market or Market activity so so yeah it's great to see that unisop is following down this path because I do believe that modularity giving developers and users more Choice uh over basically everything is uh the way I really do believe that that's going to lead to a healthier more expressive and better ecosystem and it really feel falls into that um kind of like bizarre model of developing instead of the cathedral model and I've described these models before basically you can think of a Bazaar as like an Open Marketplace essentially right beside literally Is An Open Marketplace you go there

everything's chaotic there's no kind of centralized entity controlling which stall goes where you just set up your stall you put your prices up right and you sell your goods and Wares or whatever whereas a cathedral model is a centralized thing or you have like a cathedral and you have a hierarchy in that Cathedral um and you know Cathedral obviously uh in a cathedral model don't take it too literally because then it falls into uh into religious analogies but just think of like the hierarchy like and and how a lot of companies obviously operate that a lot of marketplaces operate like that but in terms of modularity it fits into the bizarre model and ethereum has been developed as a bizarre model itself for a very long time now so it's great to see the ecosystem kind of wrapping themselves around that and uh and having

uh and building their products like that but anyway you can read the full detail tell us about V4 here which I'm sure you guys have already seen and you can read the code as well I'll link it in the YouTube description below all right so a big announcement out of the Avo ecosystem today so I remember I've talked about Avo on the refill before they are a layer 2 uh roll-up on ethereum uh focused on um I believe trading uh of uh what is it Perpetual trading I think I I've forgotten forgotten now here but they're using the uh the op stack to build out their Layer Two here so what they've announced today and they've said here big announcement is that uh uh they they've actually got two new releases first they've announced

the open mainnet so you no longer need an Avo pass to trade on Avo uh and I think the uh the second announcement is Bitcoin trading as well so you can now trade a Bitcoin there no that's right Avo is a um as a juvedere's protocol so they trade like options and things like that on there and you can actually see that here and this interface actually looks really nice reminds me of of Dy DX obviously dydx is kind of not abandoned in ethereum but they're pursuing like their Cosmos app chain which between you and me I've always thought was a mistake and I think it's become even clearer that it's a mistake because they can just build on the op stack like afo has done and and and you know it's all well and good but anyway I'm not gonna I'm not gonna go down that that road there

uh but yeah cool to say that this is released in a kind of like an open mainnet fashion now and Bitcoin trading is on there as well so you can go check this out for yourself I'll link it in the YouTube description section below alright another announcement out of the polygon ecosystem today so balancer has been deployed onto the polygon ZK VM marking a significant stride towards optimize ethereum scaling and liquidity growth in the ZK D5 ecosystem so obviously you guys know balance I mentioned them just before they've been around for quite a while now they have done a lot of innovative things within defy so it's great to see them launching on polygon ZK VM which is still in obviously early days and still getting on you know the polygon dkvm still needs

to get all of these apps on there to make the you know make it a more attractive place for users and even developers to build on the balancer is one of those core protocols that need to go live before certain other protocols can go live here so it's just great to see that that they've that they've gone live on the on ZK uh sorry on polygon DK VM here and there is a pretty lengthy blog post about this that you can that you can actually read there's a lot of cool stuff in here actually uh the different initiatives different uh descriptions of things like boosted pools and and LST liquidity flywheels and hubs and stuff like that so there's actually quite a lot Long blog posts a nine minute read for an announcement here so you should definitely go check that out if you haven't yet I'll link it

in the YouTube description uh below all right so Tycho has a new blog post out today so they say here in this article we map the difference oh sorry we map the current landscape of l2mev thinking about different Mev consequences for different L2 designs we are also briefly overview different ways of l2's decentralizing and how it may impact l2mev now this is a really great blog post it is definitely not a short read it's quite lengthy here but if you're at all interested about how l2s are possibly going to handle Mev and about how l2s are going to decentralize their sequences and stuff like that and how that plays into Mev and how this all maps together then this is definitely a recommended blog post to read here I had

a really great time uh reading this I learned a lot from it honestly it again talks about the modular architecture and and things like that shared sequences all these sorts of stuff that I've been talking about on the refill for quite a while now this kind of all brings it together and explains it in a really easy to to kind of read way so yeah highly recommend checking out this article blog post for yourself I'll link it in the YouTube description below all right so orbit of Finance has put out a thread today describing why they are building a cross roll-up bridge and not a cross Chain Bridge so they said yeah they are delighted to share with everyone that Orbiter across the rollout protocol uh sorry that orbit across roll-up protocol uh is optimistic for the obedient majority and severe

arbitration for malicious minority so it feels like they're doing like a play on words here but essentially uh this is their way of saying that I believe they're building like an optimistic Bridge uh optimistic cross roll up Bridge yeah I've talked about Orbiter Finance for quite a while now uh as well uh but you can check out this thread to learn more about them they've got an explanation about how exactly their design works yeah why they believe it is um you know it is a good design why they're building across roll up Bridge instead of just a cross Chain Bridge and all that that kind of stuff there so I'll link this in the YouTube description below for you to check out but I did want to have a bit of a discussion here off the back of this about bridges generally so Bridges there's going to be a lot of them and

and I've said this for a while but there's going gonna be a lot of different Bridges and they're going to have a lot of different designs obviously Orbiter has their own design connects has their own design hop has its own design and because of they have all these different designs there's going to be different risk trade-offs for each of these Bridges some of them are going to be like totally centralized some of them are going to be liquidity based some of them are going to be optimistic some of them are going to attempt to be decentralized but not really because maybe they're rely on something like an oracle which isn't decentralized so there are going to be different designs here and also when you bridge native assets to somewhere else so for example if you bridge East from ethereum to another Network such especially another layer one network

such as as uh you know just for example binance smart chain your actual eth still living on ethereum it just get gets locked up on the ethereum mainnet and you get issued an IOU on uh on on the binance smart chain right but it is natively issued on the ethereum network and that's where it's always going to live but then you have things like Circle issuing usdc natively on arbitrim but having you a native usdc issued on ethereum layer 1 as well but if you bridge the usdc from uh the native usdc on arbitrum arbitrine one I should say two ethereum mainnet then that becomes the IOU so this whole concept of bridges and how these all things interconnect with each other is going to get quite confusing and the l2beat website

actually is is putting together a lot of documentation around this in order to track this but this is also why I believe that we shouldn't actually have too many bridges I feel like we should only have a handful of them and and ideally we should really only have one uh and the reason why I say this is because you want to make it really easy to reason about these things and I'm talking about bridges sorry I should say in the context of third-party Bridges there's Bridges obviously that are a part of the layer 2 protocol for example optimism has its of its own um canonical Bridge arbitrim has its own one the ZK VMS have their own one not talking about those they're fine right they're part of the the pro the layer two Protocols of the rollout protocol itself so that's not what I'm talking about I'm talking

about the Third party Bridges like orbital and hop and connects and stuff like that in an ideal world you would have just one of these things that's fully decentralized no one can mess with it it's very simple and everyone understands what what's going on there but we don't live in an ideal world and I think for a number of different reasons it's not going to play out like that but at the same time I think the worst case would be there being like tens of bridges or hundreds of bridges that have all these assets in them and then people are just bridging everywhere and it gets very confusing from a social standpoint like doing the accounting technically is is relatively easy because you can keep track of everything with with using smart contracts but the social side of things agreeing on what's the real asset and what's the IOU and

what's the native asset and what's not it becomes very messy when you have too many of these things so in saying that Bridges I believe also are a kind of like liquidity begets liquidity thing where the more liquidity on one Bridge the more located they're going to get because it's it's it's it's more profitable for LPS because more people are using it because it's more liquidity there for them to use and all that sorts of stuff there but just something to keep in mind around Bridges generally and for me personally because I'm not really in a rush a lot of the time I generally prefer to use the canonical bridge to get in in and out of l2s even if it's going to take seven days so for example I regularly do withdraws from these l2s through the canonical Bridge like I'll use uh some

of these Bridges like whole protocol and stuff like that like that's that's fine I'm not saying you shouldn't use those but if you're in no rush if you can wait the seven days then you're probably better off using the canonical Bridge just from like a risk perspective right um and I mean ultimately it can work out to the same thing uh if you're using these other Bridges because the risk is just getting passed around but generally I just like to use the canonical bridge to to go in and out of of these things uh just for for peace of mind for myself I'm very risk-averse these days so that's just the personal preference of mine and especially because I'm not in a rush like if I'm withdrawing eth from an L2 and I uh and and that is I'm not planning to stake or anything like that

because it's not enough to spin up a validator or something then whatever I can wait seven days for it to hit my account and then I get a notification when it does that's all well and good but if I'm in a rush then definitely I'm going to use hot protocol or connects to orbit or any of these Bridges um but I I still also try to stick to just like the ones that I'm used to the ones that I I know how to use rather than uh than using everything and also I should mention that there are uh there is there are bridge aggregators as well like uh Levi Li dot f i um which I I'm an investor in just just a disclosure there but that is also a really good tool as well because that just kind of like brings all the liquidity together uh tells you what the

best path is and then you can choose from there so really I think Bridge aggregators are going to be the most popular thing and the best thing for people to use to get across all these Bridges because as I said there's going to be lots of these different Bridges around and you're going to want a central place to basically kind of bring them all together and know which the what the best liquidity path is for you depending on where you're bridging to and from but anyway on that note that's going to be it for today's episode so thank everyone for listening and watching uh subscribe to the channel if you haven't yet give a video a thumbs up subscribe to newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone